International Sales Growth Means Exactech Q3 Revenue Up 13%

Abstract

Exactech, Inc., a developer and producer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced revenue of $47.3 million for the third quarter of 2011, a 13% increase over $42.0 million in the third quarter of 2010. Net income decreased 12% to $1.3 million compared with $1.5 million in the same quarter a year ago. Net income for the quarter, excluding Health Care Professional (HCP) compliance expenses of $1.0 million related to the Department of Justice (DOJ) settlement, increased 19% to $1.9 million.

Highlights

Third Quarter Highlights and Segment Performance

  • Third quarter revenue increased 13% to $47.3 million
  • Knee implant revenue increased 15% to $17.9 million
  • Extremity implant revenue increased 34% to $9.8 million
  • Hip implant revenue increased 22% to $8.0 million
  • Biologic and Spine revenue decreased 15% to $5.4 million
  • Other products revenue remained flat at $6.2 million

Company Comments

“Gross margins increased to 68.5% for the third quarter of 2011 from 67.4% for the third quarter of 2010, primarily due to the increase in international sales in direct markets.”

Exactech President David Petty said, “In the third quarter, international sales grew 56% to $15.8 million and increased to 33% of total sales from 24% of total sales for the third quarter of 2010 as we continued to leverage recent investments in our OUS distribution channels.  For the first nine months of the year, international sales increased 29% to $53.3 million from $41.2 million for the same period of 2010. As a percentage of sales, international sales in the first nine months of 2011 increased to 35% from 30% in the first nine months of the prior year.  For the quarter, U.S. sales decreased 1% to $31.5 million compared with $31.9 million in the third quarter of 2010.  This performance was below our expectations as both knees and hips aligned more with market trends than we expected.  For the first nine months of 2011, U.S. sales rose 2% to $99.0 million compared with $97.5 million in 2010.”

Chief Financial Officer Jody Phillips said, “Net income for the quarter was down 12% to $1.3 million from $1.5 million in the same quarter last year.  Gross margins increased to 68.5% for the third quarter of 2011 from 67.4% for the third quarter of 2010, primarily due to the increase in international sales in direct markets.”

“Total operating expenses for the quarter were $30.3 million, an increase of 20% from $25.2 million in the third quarter of 2010. As a percentage of sales, third quarter operating expenses increased to 64% from 60% for the third quarter of 2010.  Total sales and marketing expenses were up 15%, and increased to 38% as a percentage of sales from 37% during 2010, as we continued to incur expansion expenses in our Spanish subsidiary. General and administrative expenses rose 32% in the third quarter to $5.1 million from $3.9 million primarily due to the compliance costs. Research and development expenses increased 17% to $3.5 million from $3.0 million in the third quarter of 2010.”

Source: Exactech