Texas-based Orthofix, which merged with California-based SeaSpine eight months ago (effective January 2023), continues to exceed Wall Street analyst and institutional investor expectations. Sales at the mid-2023 point reached $362 million, up from $224 million for the first half of 2022.
Of course, most of that $138 million sales increases year-over-year was due to the merger with SeaSpine. Apples to apples, Orthofix sales rose 7%. Most importantly, post-merger with SeaSpine and under the leadership of former SeaSpine (and before that, NuVasive) President Keith Valentine, Orthofix beat Wall Street’s expectations and continued to gain spine surgery market share.
Ladenburg Thalman’s Managing Director, Equity Research Jeffrey Cohen said this to his Institutional Investor clients: “Overall, we are encouraged by the company’s progress related to integration following the merger. Additionally, the company is leveraging cross-selling opportunities, channel and distributor expansion, and product launches to be well positioned for continued growth through 2023 and beyond. Therefore, we reiterate our Buy rating and $42.00 price target.”
In a conference call with Wall Street analysts and professional investors, Valentine said: “We have been successful in managing revenue dis-synergy risks and capitalizing on operating expense synergy opportunities throughout the merger process and are encouraged to see continued market share taking in the U.S. spinal implants, biologics and enabling technologies franchises by leveraging our complementary product portfolios. We look forward to a strong back half of 2023 and remain focused on meeting the needs of our patients and providing value for other stakeholders by continuing to deliver quality driven solutions.”
In terms of business units, Orthofix’s bone growth therapies led overall growth coming in at 10%, followed by global spine at 7% and spinal implants, biologics and enabling technologies at 5.4%.
Characteristically (for SeaSpine and, before that, at Valentine-led NuVasive) Orthofix announce two important product launches just ahead of the mid-year financial report.
- New Phantom and Tornado Hinges for the company’s market leading TrueLok™ Ring Fixation system.
- Commercial launch of Orthofix’s new WaveForm 3D Printed Anterior
Digging into Orthofix’s quarter:
- Orthofix’s bone growth therapies business unit, which reported the greatest rate of sales growth, clearly benefited from the launch of AccelStim as well as investments made in 2022 to create a more focused sales organization.
- Spinal Implant sales, as Valentine noted in his comments to analysts, benefited from cross-selling opportunities between the Orthofix and SeaSpine organization.
- Orthofix’s accelerated new product launches boosted OFIX’s cervical franchise.
- In the 90 days ending June 30, OFIX placed six 7D imaging units.
For the remainder of this year, Orthofix’s management is planning to continue its aggressive product development and launch pace, investing 8% to 9% of revenue into R&D.
Finally, management, based on the strong results so far, raised sales and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) guidance to sales of between $752.0 million and $758.0 million as compared to the previous range of $750.0 million to $756.0 million and EBITDA of between $42.0 million and $46.0 million from the previous range of $40.0 million to $45.0 million.
