International Q4 Woes Hit Orthofix Sales

In short

Orthofix International N.V., has issued preliminary unaudited results for the fourth quarter, and year ending December 31, 2012. A poor Q4 has meant that annual sales of approximately $462M are well below the projection of $472-475M made as recently as a quarter ago. A variety of headwinds in international markets are being blamed for the disappointing sales figures.

Background

Orthofix anticipates net sales to be approximately $112 million for the quarter, and approximately $462 million for the year. The negative impact from foreign currency translation is expected to be approximately $10 million for the full year.

Further down teh income statement things look rosier. Full year 2012, adjusted earnings from continuing operations per share are expected to be between $3.01 and $3.06, in the range predicted in its 3rd quarter analysis.

Underpinning the numbers is a strong revenue increase in U.S. Spine Repair Implants and Regenerative Biologics business and an increase in the company’s U.S. Orthopedic Repair business. Fourth quarter revenue was however negatively impacted in international markets by a variety of regulatory and macroeconomic conditions, although quite which of these was not predictable in October is a matter for conjecture.

In addition, Orthofix says its Spine Regenerative Stimulation business was negatively impacted in the second half of the year by sales force turnover as it initially implemented its Corporate Integrity Agreement in June 2012.

Company comments

Robert Vaters, President and Chief Executive Officer, stated, “While I am pleased with our preliminary earnings, I am disappointed in the preliminary fourth quarter revenue. The international markets have presented many challenges in the latter part of 2012 and especially during the fourth quarter. These included general market and regulatory conditions in both the Spine and Orthopedic businesses, mandatory price reductions for public hospitals in Italy, cancellation of reimbursement by the government on Physio-Stim in France, and a delay of surgeries by government hospitals and insurance providers. Despite top line weakness in the fourth quarter, 2012 was a transformative year for Orthofix as we accomplished significant objectives by finalizing the three major legal matters, achieving our operating margin expansion goals, and improving the Company’s financial profile to enable investment in product pipeline and inorganic activities to drive future growth.”

Source: Orthofix International N.V., Business Wire