$1.12 Billion
Prior Fiscal: $1.08 Billion
Percentage Change: +3.7%
No. of Employees: 5,200
Global Headquarters: Vista, Calif.

In November, a former DJO independent distributor All Pro Sports was alerted to a cyber-attack that occurred late last summer. It potentially affected DJO product recipients in the central Florida area and personal information was possibly disclosed in the attack.

According to its press release, DJO “became aware that an email account of an All Pro employee may have been compromised as a result of a malicious phishing email scheme.” During the attack, the exposed email account forwarded “malicious emails” to email addresses in the account.

The exposed information possibly included “name, address, email address, date of birth, physician name, product information, as well as other information related to the product prescription, and in limited circumstances, Medicare numbers.”

The company hired an information technology forensic investigation firm to examine the All Pros email account. After investigating the matter, DJO confirmed its own email and internal systems weren’t exposed in the attack.

Despite COVID-19’s ravaging of orthopedic company revenue, DJO (referred in the annual report as the Medical Technology segment of Colfax) rose 3.7 percent to accrue $1.12 billion in revenue. The main cause was $199.5 million from about two additional months of acquisition-related sales last year, partially offset by sales volume decrease due to the pandemic. All in all, the firm completed five acquisitions for total consideration of $67.5 million.

Last June, a documentation verification services (DVS) program was added to the company’s Dr. Comfort diabetic footwear. DVS assists with managing documentation to meet evolving Medicare requirements, including verification, collection and storage, and tracking of all steps within the process and practitioner notification when products can be ordered and claims filed.

The DonJoy X-ROM post-op knee brace was rolled out last June. To help recovery from ACL repair and other knee surgeries, X-ROM touts an easy-to-use strap, tab, and buckle designs. Independently telescoping sliders with push button controls enhance brace placement, stability, and comfort—the resulting freedom of adjustment helps minimize peroneal nerve compression at the fibular neck. A strong, lightweight design boosts varus/valgus contouring. Folded ankle pads and strategically placed contact points are included between the leg and the brage to reduce slippage, and an antimicrobial coating neutralizes odor. X-ROM’s hinge design and quick-lock feature were also revamped.

Two new EMPOWR systems were announced last August, EMPOWR Acetabular and Partial Knee. Designed based on anthropometric data, the acetabular system’s titanium coating aids bone apposition and its HXe liners were designed for ball and socket kinematics and blended with vitamin E to reduce oxidation and long-term wear. The partial knee system was also designed based on anthropometric data to create anatomically shaped femoral and tibial components for comprehensive bone coverage in medial or lateral components, while minimizing overhand potential and maximizing natural motion. Both systems feature single-tray instrumentation.

August also saw the release of Motion iQ software. A simple-user friendly app lets patients send text messages, video messages, and images to the care team and access personalized info, physical therapy exercises, and other resources. The care team can remotely track progress, patients and surgeons can communicate via direct messaging, and personalized educationhelps promote compliance. A provider dashboard tracks patient data and issues progress reports, flagging patients not meeting recovery benchmarks or who may need clinical interventions.

The AltiVate Anatomic CS EDGE stemless shoulder replacement hit the market in November. It features a canal-sparing, three-fin humeral stem with serrated fin tips so the implant can be used to cut into the bone. Its titanium porous coating aids in bone apposition for in-growth performance and press-fit implantation. It’s compatible with the AltiVate Anatomic e+ glenoid component with patented Drop-and-Go technology for immediate fixation.

In October the firm entered a deal with Stryker to receive its STAR total ankle replacement, as well as finger joint replacement products in connection with Stryker’s then-not-yet-closed acquisition of Wright Medical. The deal was completed a month later.

“Ankle and finger arthroplasty are two fast-growing arthroplasty segments, and this acquisition reflects DJO’s focus on providing market-leading solutions to meet the greater needs of surgeons and their patients,” DJO CEO Brady Shirley told the press. “This expansion allows us to address a larger patient population and enhances our goal of helping patients return to an active lifestyle.”

In December, the firm acquired in a $39.6 million deal a developer of therapeutic laser technology, LiteCure, adding it to the firm’s Recovery Sciences business. New products gained were LightForce therapy lasers for humans and Companion for animals, which includes Pegasus equine laser technology. The high-powered lasers are found in professional and college athletic training rooms, and are preferred to treat world-class athletes. High power lasers are a fast-growing modality for physical therapy.

“With DJO’s expanded reach and resources, we are excited to increase awareness and adoption of deep tissue laser therapy,” Brian Pryor, founder and CEO of LiteCure, told the press. “We are passionate about the clinical benefits of photobiomodulation as well as the benefits it brings to a practice when adding this modality.”

$1.08 Billion
No. of Employees: 5,000
Global Headquarters: Dallas, Texas

Late in 2018, diversified technology company Colfax Corporation began the $3 billion acquisition of DJO, which closed last February. As such, specific information for DJO’s revenue was not included in Colfax’s 2018 annual report. But with full integration into Colfax’s Medical Technology business, it has posted revenue that returned it to the list of orthopedic elites once again.

“We are excited to welcome DJO’s strong management team and talented associates to the Colfax family,” said Matt Trerotola, president and CEO of Colfax. “The DJO acquisition is the natural next step to make our company less cyclical and provide consistent, growing cash flows to execute our strategy for compounding value creation. They are a clear leader with a strong history and an attractive potential for future growth and margin improvement.”

By gaining DJO, Colfax added a broad range of products for orthopedic bracing, reconstructive implants, rehabilitation, pain management, and physical therapy to its new Medical Technology business. Its products address the continuum of patient care from injury prevention to rehabilitation after surgery, injury, or from degenerative disease, enabling people to regain or maintain natural motion.

DJO’s global headquarters was also relocated from San Diego to Dallas in late 2018. The company’s Bracing and Supports unit—which houses the DonJoy line of bracing solutions—and Consumer business unit remained in San Diego. Hundreds of new job opportunities were created in Dallas, including many at DJO’s distribution center in Fort Worth. Colfax retained the names of legacy DJO brands Aircast, Chattanooga, CMF, Compex, DonJoy, ProCare, DJO Surgical, Dr. Comfort, Exos, and MotionMD.

DJO (a.k.a., Colfax Medical Technology) accrued $1.08 billion in sales last year. Though 2018 figures aren’t available, Colfax’s annual report states that organic growth of 4.4 percent was achieved for the segment. Colfax expects the addition of DJO to produce higher margins, faster growth, and lower cyclicality, while providing opportunities for significant bolt-on and adjacent acquisitions over time.

The ADAPTABLE Surgical Arm was released at last March’s American Academy of Orthopaedic Surgeons (AAOS) annual meeting. The fully sterile, surgeon-controlled leg and retractor holder is designed for a safe direct anterior approach (DAA) in total hip arthroplasty (THA). The fully mechanical, carbon fiber surgical arm works with any standard operating table and can reduce the number of assistants in the OR. Weighing in at about 10 pounds, ADAPTABLE can be used for retractor placement or leg positioning for femoral exposure, range of movement, and leg length assessment.

“The specialty table model for DAA doesn’t align with today’s cost-conscious healthcare environment,” said Dr. Raymond Kim of the Steadman Clinic in Vail, Colo. “ADAPTABLE is a game-changing device for DAA THA. It empowers surgeons to reduce the number of staff intra-operatively and increase the overall OR economy. Its versatility as both a retractor and leg holder, as well as its promise for future indications, are a much needed innovative solution to patient care.”

At last March’s Spine Summit, DJO unveiled results of an independent study of its CMF SpinaLogic non-invasive electrical stimulation device that showed higher rates of healing after lumbar fusion surgery. The Oregon Health & Science University trial evaluated 46 patients undergoing the surgery. The trial showed a 49 percent increase in overall healing rate in the 27 patients receiving combined magnetic field (CMF) treatment with SpinaLogic over a placebo. No patients treated with the CMF device needed reoperation for pseudoarthrosis.

“There are a number of factors impacting a patient’s recovery from spinal fusion,”  Dr. Khoi Than of Oregon Health & Science University said in prepared remarks. “We suspected post-op therapy could have meaningful impact, so we decided to look at two of the industry’s leading bone growth stimulators head-to-head. There’s more work to be done, but our initial data is very interesting.”

VeriPro real-time insurance verification software debuted last May. Offered under the MotionMD platform, it informs patients and practices of estimated cost of care at time of service. MotionMD’s web-based point-of-care solution streamlines claims management and inventory dispensing. The VeriPro adds real-time insurance verification of individual plan benefits. Patients are given estimated patient responsibility specific to the product they were prescribed and the client’s contracted rate.

“Our practice has seen such an improvement in cash collections since VeriPro,” said Ed Lochrie, DME Coordinator, Boulder Centre for Orthopedics & Spine. “This technology makes our process concise and our patients are grateful to know exactly what remains on their deductible and what they have to pay. This has significantly decreased the number of calls we have had for billing questions.”

Following last April’s FDA clearance for anatomic, reverse, and partial shoulder arthroplasty, last July DJO launched the AltiVate Reverse Short Stem. According to the company, it is the first fully-convertible, inlay, short stem shoulder arthroplasty system available in the U.S. The AltiVate Reverse Short stem is an “inlay” stem, meaning it sits entirely within the humerus. It’s designed for easy conversion from anatomic to reverse without overstuffing the joint and a 135o neck-shaft angle facilitates more anatomic humeral reconstruction. The short stem is also more bone-sparing than a standard length stem.

“The new AltiVate Reverse Short Stem is a major innovation,” said Dr. Gerald Williams of The Rothman Institute in Philadelphia. “I now have one system with a variety of options to treat most, if not all, of my patients. This stem is going to revolutionize the way orthopedic surgeons think about convertibility from anatomic to reverse shoulder arthroplasty, and it’s very exciting to be one of the first to use it clinically.”

$1.2 Billion
NO. OF EMPLOYEES: 4,420

At 23 years old, Lindsay Avner was the youngest woman in the U.S. at the time to undergo a risk-reducing double mastectomy.

She had lost both her grandmother and great-grandmother to breast cancer before she was born. Further, she watched her mother fight both breast and ovarian cancer when she was only 12. Sensing a pattern, Lindsay underwent genetic testing at 22.

The test results indicated a mutation on her BRCA1 gene, which put her lifetime risks of breast and ovarian cancer at 87 percent and 54 percent, respectively. She immediately set out to take proactive measures against these diseases—ovarian cancer is widely considered the deadliest gynecological disease with a nearly two-thirds mortality rate. Unfortunately, she experienced a startling lack of resources for women in her situation, those who didn’t have either cancer but hoped to take a proactive approach to their health.

To combat this and equip women like herself with the necessary tools, Lindsay in 2007 initiated Bright Pink, an organization that inspires women to practice prevention through innovative programs, strategic initiatives, and powerful partnerships. The organization aims to foster a supportive healthcare relationship through education for both patients and healthcare providers. The result of the two-pronged approach to breast and ovarian health education, ideally, is one where informed women have proactive conversations with trusted providers on a regular basis.

Last October, Exos—part of the DJO Global family of brands—partnered with Bright Pink to help advance the foundation’s mission. The Exos line features a portfolio of adjustable, reformable braces for upper extremity, lower extremity, and spine to treat fractures and other injuries requiring stabilization.

“Many people have been impacted by breast cancer or ovarian cancer, either personally or by seeing loved ones confront the disease,” said Kevin Brothen, vice president of marketing, bracing and supports for DJO Global. “Our company champions a proactive approach to health and wellness, and this campaign aligns with that philosophy. By increasing awareness about issues such as prevention and early detection, we can all help make a difference.”

Exos braces are usually available in basic black, but users can choose to configure their own aesthetic options. Reflecting the spirit of the women’s health movement, Exos manufactured a number of pink upper extremity braces for the campaign. DJO Global also agreed to donate the proceeds of all Exos upper extremity “PINK” products sold last October to Bright Pink.

DJO’s Exos braces, along with the DonJoy, ProCare, Aircast, Dr. Comfort, and Bell-Horn brands, make up the company’s Bracing and Vascular business, which offers rigid knee bracing products, orthopedic soft goods, cold therapy products, vascular systems, therapeutic footwear for the diabetes care market, and compression therapy products. Generating 43 percent of DJO’s fiscal 2017 (ended Dec. 31) sales of $1.2 billion—a 2.3 percent rise from the prior year—this business has historically been DJO’s largest moneymaker. Not difficult to imagine, considering the firm’s DonJoy Performance knee braces are a favorite among professional athletes.

However, the segment accrued $507 million in 2017, dropping about 3 percent from 2016’s total. Reduced sales of the DonJoy deep vein thrombosis, Aircast, and Procare products were partly to blame for this slight fall. Also a relatively significant factor in the loss was market pressure in the therapeutic shoe market, which instigated a consequent drop in sales of Dr. Comfort therapeutic footwear products.

The DonJoy brand was the sole member of this segment to introduce new products last year. DonJoy was first introduced in 1992, and according to DJO, has produced over 1 million braces since the brand’s inception. DonJoy braces are widely used in professional sports—according to a 2016 Associated Press “Top 25” poll, 22 of the 25 AP Top 25 college football teams use the DonJoy Defiance knee brace. The business offers bracing for osteoarthritis (OA), ACL injury treatment and prevention, and ankle injuries, among others.

Last March, DJO launched the OA Reaction TriFit knee brace from DonJoy. Designed for pain relief for moderate to severe knee OA caused by overuse, obesity, or aging, three unique technologies combine for a custom fit so OA sufferers can return to an active lifestyle. The Web Tech shock absorber aids in full knee extension and patellofemoral tracking. Exos Tech, a heat thermoformable custom fit, hugs perfectly around the knee. And Boa Tech is a micro tension adjustment system to pull everything together and facilitate three-dimensional protection.

“With more than 40 percent of knee replacements occurring in patients over the age of 65 and the average onset of knee OA occurring at the age of 55, there is an inherent need for non-invasive, non-addictive methods to control pain and to support maintaining an active lifestyle,” commented Steve Ingel, DJO’s then president of Bracing & Supports.

The UltraSling Quadrant shoulder orthosis hit the market last November. To promote therapeutic movement for post-operative or post-traumatic shoulder injuries, UltraSling Quadrant immobilizes the shoulder within four angles—internal rotation, external rotation, adduction, and abduction—to support secure and functional recovery. The precision-based system also lets patients flex and extend their arm to promote recovery. It is made of a cool-to-the-touch antimicrobial to reduce the threat of infection and maintain comfort during extended wear.

DJO’s Surgical Implant business—which makes a comprehensive suite of reconstructive joint products for the hip, knee, and shoulder—was by far its strongest performer last year. With $200 million in proceeds, the segment ballooned nearly 15 percent from the previous year thanks to organic growth in shoulder, hip, and knee implants as a result of new product introductions and new accounts.

Last March saw the AltiVate Anatomic Shoulder System’s launch. The system touts a short, bone-sparing humeral stem anatomically designed through morphologically-based fit analysis to optimize metaphyseal fit and stability. The stem is coated with a proprietary porous material to stimulate osseointegration, with a glenoid component containing technology that encompasses trilobe features on the peripheral pegs for immediate fixation upon implantation.

“The AltiVate Anatomic system allows the surgeon to use a short or standard length humeral stem with the same instrument system and introduces a new glenoid component with outstanding initial fixation. The glenoid instrumentation is low profile and user friendly,” stated Dr. Gerald Williams of the Rothman Institute and a designer of the system. “In summary, this system provides the humeral length you want; the glenoid fixation you need.”

Just two days after AltiVate Anatomic’s launch, the Exprt Revision Hip attained FDA clearance. The Exprt portfolio is all about reduction—according to DJO, the Revision Hip has a price point 40-70 percent less than comparable hip revision systems. The two-tray revision system also reduces instrumentation by 80-90 percent as compared to others. Streamlined instrumentation further reduces money and time spent on sterilization, cuts overall time in the operating room, and requires less storage space. For this reason, the system is viable for both hospital and ambulatory surgical center settings.

Last March, DJO shuffled one of its C-suite spots. Former CoorsTek Medical president Bryan MacMillan was appointed president of the Regeneration business, making him responsible for the company’s commercial growth strategies, corporate payor development, and reimbursement activities.

Two months later, DJO welcomed Jeffery McCaulley as global president of DJO Surgical. With over 25 years spent working in the healthcare industry, McCaulley was most recently president and CEO of Smiths Medical, a $1.2 billion global medical device manufacturer. Prior to that, he was president of Zimmer’s global reconstructive division, president and CEO of Wolters Kluwer’s health division, and vice president and general manager of Medtronic’s global diabetes business unit.

“Our Surgical business’ best in market performance has and will continue to be the key transformation catalyst in our company,” DJO CEO Brady Shirley said upon McCaulley’s appointment. “I am excited to combine Jeff’s talent and experience in the space with our leadership team. Throughout his career, Jeff has a proven track record of accelerating innovation, improving employee and customer engagement, and delivering results. I look forward to this great next chapter for DJO Surgical.”

The Recovery Sciences business consists of the CMF (Combined Magnetic Field) and Chattanooga product lines. The CMF brand of bone growth stimulation products allows clinicians to assist in healing problem fractures and spinal fusion procedures. The Chattanooga line features clinical electrotherapy and traction devices, treatment tables, continuous passive motion (CPM) devices, and dry heat therapy products to treat musculoskeletal, neurological and soft tissue disorders. The segment was flat in 2017 with $158 million in sales.

Last June, a clinical trial began for a new indication for the CMF OL1000 Bone Growth Stimulator. Through the trial, DJO seeks to expand its CMF technology into the fresh fracture market. The prospective, randomized, double-blinded, controlled, multi-center clinical study is evaluating CMF OL1000 as a noninvasive adjunctive treatment for closed, unstable ankle fractures that require surgical treatment for stabilization.

Rather than parse each segment into domestic and international proceeds, DJO lumps all non-U.S. sales into an “International” segment. Net sales in the International business rose 6.3 percent to reach $320 million, comprising 27 percent of the company’s total revenue. Provoking this growth was strong performance in the German, French, and Australian markets as well as continued growth in the company’s export markets.

$1.2 Billion
NO. OF EMPLOYEES: 4,980

“Sometimes the most scenic roads in life are the detours you didn’t mean to take.”

— Angela N. Blount, “Once Upon an Ever After”

As a professional surfer, Garrett McNamara should be used to the unexpected.

He confronts the unknown every time he leaves dry land, with each paddle stroke, each yard gained against unforgiving whitewater and large, punishing breakers. With each wave crest he clears, McNamara ventures deeper into the unfamiliar, relinquishing his trust to the sea’s indomitable power and unbridled energy.

Every now and then, McNamara—known as “Gmac” in surfing circles—will take a well-deserved break from his maritime escapades to watch from the sidelines (or beach, as Mother Nature dictates). Such was the case on Nov. 1, 2011, in a break off the coast of Nazaré, Portugal, where some of the world’s biggest waves collapse dangerously close to the shoreline.

McNamara wasn’t planning to surf that day, but agreed to tow his friend and fellow big wave surfer Andrew Cotton on his jetski. “We went round and I just wasn’t feeling it that much,” he told The Guardian. “When we got round to the break it did seem big but I was just going to tow Andrew. But we still weren’t expecting much. I didn’t feel so good. Then the other guys were saying, ‘you’ve got to go. You’ve got to go’ and—boom! I was on the rope and on a giant wave.”

More like monstrous, actually.

The wave McNamara’s surfing buddies persuaded him to take was a record-setter, officially measuring 78 feet, according to the Guinness Book of World Records, though media accounts at the time sized the swell at 90 feet.

“Even then I just didn’t realize how big it was. So I started and I kept going down and down and the drop seemed like forever,” McNamara recalled. “And I thought—wow! I started making the bottom turn and I felt the lip hit me. Usually I don’t have time to look around but you see me look round twice and then I get hit by the white water…I’ve been hit like that before and I’m thinking: I’ve got to make this. I’ve never been held down by a wave that size and I’ve ridden big waves. I’ve seen waves rip a guy’s arms off so there is nothing holding them on but skin and I’m thinking this could tear my head off. That’s when I knew that it was pretty damn big. It’s only when I got in that I saw the footage. I was in awe. I mean, I felt it was a decent size. But you can see it then pops up 10, 20, 30 feet higher. It just supersizes.”

Fortunately, McNamara had some supersized help that day to minimize the risk of injury from his seven-story aquatic descent. Besides the basic feet straps on his board, McNamara had with him a buoyancy aid (most likely an inflatable life vest activated by ripcord) and knee braces to protect his joints from the battering they withstand while bouncing down huge wave faces, an experience Gmac likens to ski mogul jounces.

McNamara’s knees were well-protected during his encounter with the colossal wave, having been encased in the Defiance III brace from DJO Global Inc. Marketed as the world’s most popular custom knee brace, the Defiance III is used by dozens of professional athletes and is recommended for both high-collision sports (football, motorcross, skiing) and water activities (surfing, wakeboarding, kite surfing). The product is also ideal for patients recovering from ACL and other knee ligament surgeries, as it features DJO’s proprietary four-points-of-leverage technology, an innovation that puts a posterior load on the tibia and helps reduce ACL strain by 50 percent.

“I was so blessed to be wearing my @donjoyperformance braces, which you can see if you look close [at this frame grab from the 2011 world record wave],” McNamara wrote on his Facebook page last spring as he recovered from a gnarly winter wipeout in Mavericks (a break off northern California) that fractured his left humerus bone in four places. “Right then the white water landed on me like a ton of bricks. Without the [braces] it most likely would have buckled my knee. So grateful for the support no pun intended.”

That feeling likely is mutual, as DJO depends partly on professional endorsements to maintain its edge in the global bracing sector and grow sales in the company’s largest moneymaking segment, Bracing and Vascular. Despite a long list of well-known users, McNamara was really the only big-name athlete to faithfully promote DonJoy braces last year, albeit the company did maintain a steady crop of Facebook testimonials from bullfighters and rookie participants of college softball, lacrosse, and football.

While it is virtually impossible to gauge the fiscal benefit of professional sports endorsements on DJO’s overall sales, it is equally impractical to dismiss as coincidental the Bracing and Vascular division’s flat revenue last year. The segment posted a 0.7 percent ($3.69 million) loss from 2015, slipping to $522.6 million in fiscal 2016 (year ended Dec. 31).

DJO’s official explanation for the loss was market pressure and fewer Dr. Comfort footwear sales due to an enterprise resource planning software switch. Not surprisingly, the company ignored last year’s drought in product testimonials, choosing instead to note the Bracing and Vascular segment’s loss was offset by growth in its OfficeCare channel and direct consumer devices.

Bracing and Vascular’s 2016 deficit was also offset in part by a miniscule 0.4 percent increase in Recovery Sciences revenue. Proceeds rose $800,000 to $157 million on strong sales of Complex muscle stimulator devices, though further growth was inhibited by a decline in CMF bone growth stimulators.

Surgical Implant revenue hikes more than compensated for its two struggling brethren—sales blossomed 29.4 percent last year to $174.5 million due to strong demand for new hip, knee, and shoulder products. The segment also benefited from the 2015 purchase of Biomet Cobalt Bone Cement, Optivac Cement Mixing Accessories, and the Discovery Elbow System from Zimmer Biomet (the latter device marked the company’s first foray into the global elbow sector). DJO earned $6.3 million from former Zimmer Biomet products in 2016.

International segment sales neutralized sagging Bracing/Vascular revenue as well. Proceeds rose 1.7 percent to $301.2 million, though the increase swelled to 3.4 percent in constant currency when $5.2 million in foreign exchange rates is excluded from the total. DJO attributed the growth in this division to strong direct market sales in France, Australia, and Spain, along with better sales penetration in emerging markets.

Regardless of size, the gains sustained by three of DJO’s four reporting segments in 2016 helped boost overall company revenue 4.2 percent to $1.15 billion. The solid performance served as a fitting end to president and CEO Mike Mogul’s five-year tenure with the firm: In mid-November, he handed the reigns of leadership over to Brady Shirley and new COO/CFO Mike Eklund.

DJO recruited Eklund from Dell, where he most recently was senior vice president, Dell/EMC Value Creation and Integration Management Office. In that role, he led the value creation and integration function for the $67 billion combination of Dell and business technology giant EMC Corporation. Before that, Eklund was CFO of Dell’s $40 billion Client Solutions Business Unit and Global Operations organization. In this role, he also led Dell’s Global Productivity Transformation Office, where he developed an affordability framework to define the core business model, identifying $3 billion of productivity improvements and executing structural and quality savings of more than $300 million.

Previously, Eklund served as vice president of strategy, business planning, and operations for Dell’s $10 billion Enterprise Solutions Group. In addition, he completed a three-year international assignment based in the United Kingdom, as finance director for Dell’s Emerging Markets business. Eklund began his career in public accounting as a staff accountant in tax and audit, followed by a two-year stint in the oil and gas industry in various staff accounting and finance roles.

Shirley most recently served as president of DJO’s Surgical business (he was appointed in March 2014). From 2009-2013, Shirley was CEO and director of Innovative Medical Device Solutions (IMDS), a company that provides product development, manufacturing, and supply chain management solutions for orthopedic device companies. At IMDS, Shirley managed the integration of four companies, consolidated the capital structure, and led a successful sale of the business in 2013.

“I am honored and excited to lead DJO through what I would consider to be a unique evolution. Our fast growing surgical business, our bracing and vascular business, and rapidly expanding consumer business create a broad base for expansive revenue growth and operational productivity today and tomorrow,” Shirley said upon his appointment as Mogul’s successor.

The Clima-Flex OA Knee Brace from DonJoy provides breathable, moisture-wicking comfort, antimicrobial fabric, and cooling relief to patients suffering from mild to moderate osteoarthritis knee pain. The product debuted last summer. Image courtesy of DJO Global Inc.

From December 1992 to August 2009, Shirley had several key leadership positions with Stryker Corporation, including president of Stryker Communications and senior vice president of Stryker Endoscopy. At Stryker, Shirley was responsible for all domestic operations and profit and loss for the Communications division and was responsible for global product development and sales and marketing for the Endoscopy division.

“We would like to take this opportunity to thank Mike for his many contributions over the past five years,” DJO Board Chairman Mike Zafirovski said. “Under his leadership, DJO has grown significantly faster than our competitors, and our new product innovation has increased four-fold.”

That innovation continued even in the twilight of Mogul’s DJO career, as the company introduced three new products to its lineup last year. The first was MotionMD, an intuitive, Web-based point-of-care solution designed to streamline claims management and inventory dispensing. The paperless software solution helps orthopedic clinics improve patient satisfaction, increase billing compliance and streamline workflow by providing seamless interoperability with clinic records.

MotionMD supports a continuous workflow for physician approvals, flagging inaccurate or missing information throughout the process. The software serves as a checkpoint to promote the creation of clean and timely billing documentation.

About a month after debuting MotionMD in June 2016, the company released two braces to the market: The Clima-Flex OA Knee Brace and Protection On Demand Ankle Brace (POD).

Clima-Flex OA uses new DonJoy C-6 material technology to deliver breathable, moisture-wicking comfort that is soft to the touch, temperature controlled, and incorporates all-natural antimicrobial features. Keyless offloading empowers patients with on-the-fly adjustment for relief from osteoarthritis knee pain.

The POD brace, meanwhile, is designed to engage specifically when needed to proactively resist ankle roll and other common ankle injuries. The brace can be used by athletes of all sports and be worn to support one weak ankle or on both joints to help prevent sports enthusiasts from rolling their ankles during aggressive plays. POD is also 30 percent lighter than the average ankle brace, and features soft EVA lining, low profile cuff, and adjustable underfoot closure.

$1.1 Billion
NUMBER OF EMPLOYEES: 5,260

The CrossFit Games purport to find the “Fittest on Earth” by way of a remarkably strenuous test of the toughest athletes around the globe. According to CrossFit aficionados, the Ironman triathlons or the NFL “neglect to accurately test fitness.” Competitors in the CrossFit Games are rather challenged to perform a broad range of “functional movements,” the hallmark exercises of the CrossFit program, which require athletes to quickly move large loads long distances. Every CrossFit Games features a series of challenges completely unknown to competitors until directly before the competition—because apparently, lack of preparation permits a fair test of fitness.

About a week after its U.S. Food and Drug Administration clearance and launch last July, Compex Wireless USA, DJO Global’s latest wireless neuromuscular electronic stimulation (NMES) device, was featured at the 2015 CrossFit Games in Carson, Calif. The first-ever wireless NMES technology specifically designed to supercharge workouts and speed recovery, Compex Wireless USA elicits involuntary muscle contractions via electronic pulses to maximize muscular effort. Potential athletic benefits include increased muscle strength and density, larger muscle size, boosted speed, enhanced circulation, and speedier recovery times.

“Compex has been a key tool to enhance my performance since I started training,” said Josh Bridges, 2014 CrossFit Games competitor. “It allows me to activate all my muscle fibers, dig deeper, and ultimately get stronger for competition day. With the introduction of Wireless USA, I’m now able to have more freedom and increase the usage of NMES in my training.” Other notable athletes training the body electric include UFC fighter Chad Mendes, the NFL’s Steve Weatherford, and Ironman champion Andy Potts.

The company is no stranger to involvement in sports medicine; DJO’s DonJoy and DonJoy Performance brands have been integral to the performance of a number of famous athletes. You might remember New England Patriots quarterback Tom Brady’s season ending knee injury in 2008 as the result of a low tackle (which the NFL made a violation soon after that some call the “Tom Brady Rule.”) Three years later, Brady was hit in nearly the same manner, but this time wore a DonJoy Defiance knee brace, protecting him from another missed season.

“I’m glad I had a knee brace on. Those are scary, man, when you’ve been through those ones before. He got me in a good spot, and I’m glad the knee brace took the brunt of the force,” Brady said to WEEI sports radio following the near-injury. “Why I never wore a knee brace before, I have no idea. Why every quarterback doesn’t wear one on their left knee, I have no idea. It’s just so unprotected.”

San Francisco 49ers three-time Pro Bowl linebacker became the face of the DonJoy Performance DEFENDER line in June 2016. (Courtesy of DJO Global)

Other notable NFL athletes sporting DonJoy protective gear include recently retired Denver Broncos quarterback Peyton Manning, and three-time Pro Bowl San Francisco 49er’s linebacker NaVorro Bowman. Bowman recently became the face of DonJoy’s Defender line, following recovery from a torn MCL and ACL using the Donjoy A22 Knee Brace. “When I was unsure about recovery from knee injury in 2014, I put my trust in DonJoy to help me fully recover,” Bowman commented in June 2016. “As I go into the 2016 season, I know DonJoy Performance has me protected.”

Famous athlete advocates definitely kicked DonJoy products into the limelight, but star players are nothing without a team to support them. DonJoy represents just one portion of DJO’s largest moneymaker, its Bracing and Vascular segment. The division drew $526.3 million in sales in fiscal year 2015 (ended Dec. 31), accounting for 47.3 percent of the company’s total sales and 4.3 percent revenue bump from 2014. Total revenue followed suit and also experienced a rise in FY15, though didn’t quite perform as admirably as Bracing and Vascular—the $1.11 billion gained in 2015 was a 2.4 percent growth from the year prior.

DJO cited an account acquisition within its OfficeCare channel—which maintains an inventory of soft goods and other products at healthcare facilities—as the main cause for growth in its Bracing and Vascular Business. But halfway through FY15 DJO launched its DonJoy Performance line in retail, making the company’s sports medicine products available to consumers for the first time. The new offering definitely had a say in sales growth, and should continue the trend. The product line-up includes:

• • Bionic—bilateral polycentric hinges that fully stabilize the respective joint against lateral forces

• • Webtech—a silicone web surrounding and suspending the knee joint for pain management, shock dampening, and structural alignment

• • Trizone—compression and bracing combined in one sleeve, targeting the knee, calf, and elbow

• • Proform—provides compression, mild joint support, improved heat retention, and increased circulation/oxygenation

• • Defender Skin—an adhesive “second skin” to defend against cuts, scrapes, turf burns, and bruising

DJO’s Recovery Sciences segment develops products for pain management, rehabilitation, and physical therapy. Continued slow market conditions affecting Chattanooga rehabilitation, coupled with a shift in bone growth stimulation products from reimbursement to direct customers, caused the division to fall 0.8 percent, with 2015 sales of $156.2 million. Retail sales of the Compex electrostimulation devices, led by Compex Wireless USA’s release in mid-2015, compensated for part of that decline. Further, DJO ceased the manufacture, sale, and distribution of products from its Empi business (comprising of TENS devices for pain relief, and other electrotherapy and orthopedic products) as well as related domestic insurance billing operations. A difficult regulatory and compliance landscape, as well as decreasing reimbursement rates, led to the decision to discontinue the business. The termination brought about a $157.6 million loss in 2015, due to asset impairment charges, net income from Empi operations, severance, and other termination costs.

DJO Surgical manufactures and markets products within the company’s Surgical Implant division, which consists of knee, hip, shoulder, and elbow implants, as well as bone cement. In June 2015, DJO Surgical’s subsidiary Encore Medical L.P. acquired a number of bone cement product lines from Zimmer Biomet, including the Biomet Cobalt Bone Cement, Optivac Cement Mixing Accessories, SoftPac Pouch, and Discovery Elbow system. The purchase strengthened DJO Surgical’s position in the U.S. market—the business garnered $134.8 million in 2015, skyrocketing 34.7 percent from the previous year.

The sales bump can’t be entirely attributed to bone cement sales fortified by the acquisition of Zimmer Biomet’s product lines, however. DJO Surgical also introduced two landmark products during the year, both within its knee products portfolio. During the 2015 meeting of the American Academy of Orthopedic Surgeons, DJO Surgical unveiled the Exprt Precision System for highly proficient revision knee surgeons. The system’s compact design reduces turn times, minimizes waste, and contains implant design technology, with a cost of about 40-70 percent less than comparable systems. “The Exprt approach leads to efficient operations that save both time and money, while providing excellent early results,” C. Lowry Barnes, M.D., chairman of Orthopaedics at the University of Arkansas for Medical Sciences, said in a DJO press release. “My operating team especially appreciates the fact that only two pans of instruments are opened. I believe that I can speak for the entire Exprt design team when I say that we have met our goals in offering a high-value, high-quality revision knee system for the accomplished surgeon.”

Further strengthening the DJO Surgical’s knee portfolio was the launch of the EMPOWR 3D Knee in November 2015. It retains the articular surface design of the original 3D Knee, which has demonstrated success in giving patients stability, durability, strength, and range of motion. “Randomized trials show this robust design provides the same clinical results whether or not the posterior cruciate ligament is retained,” said Dr. Scott Banks, co-designer of the 3DKnee and professor of Mechanical & Aerospace Engineering at the University of Florida. “The design retains all these functional benefits in a system that is designed to optimally fit patients’ anatomy while giving surgeons more intraoperative flexibility and efficiency.”

These businesses (Bracing and Vascular, Recovery Sciences, and Surgical Implant) represent DJO Global’s U.S. revenue, which together drew $817.3 million in 2015 revenue and accounted for 73.4 percent of total sales. The company’s International sales took a hit in 2015 with sales of $296.3 million, dropping 8.9 percent from the previous year. Despite stronger performance in the German and Spanish markets, the changes in foreign exchange rates negatively impacted international revenue by $46.8 million, resulting in an overall loss.

$1.23 Billion
NO. of EMPLOYEES: 5,200

There are so many examples of how the medical device industry represents the best of American ingenuity. Who doesn’t love the proverbial story of the big idea that started in a garage and ended up a billion-dollar business? DJO Global is the result of just such a humble beginning.  The company got its start in a garage in Carlsbad, Calif., in 1978—founded by the Philadelphia Eagles’ offensive line captain and a local attorney. Mark Nordquist and Ken Reed named their new company after their wives, Donna and Joy; DonJoy was born. The firm’s first products were simple sleeves made of neoprene that were sewn together and designed to be pulled over the knee, ankle and/or elbow for support. Thirty-seven years may have passed, the name may have changed a little, and a few different owners have come and gone, but the company’s innovative roots are still intact, selling products under more than 10 different brand names. Today, DJO’s medical devices include rigid and soft orthopedic bracing, hot and cold therapy, bone-growth stimulators, vascular therapy systems and compression garments, therapeutic shoes and inserts, electrical stimulators used for pain management, physical therapy products, and reconstructive joint implants for the hip, knee and shoulder.

A Primed Product Pipeline

In August last year, the company announced the first surgical use of its e-plus blended vitamin E polyethylene bearing in reverse shoulder arthroplasty. In 2013, DJO claimed it was the first-to-market with blended vitamin E polyethylene in a total anatomic shoulder offering. At the time of the announcement, with the combination of blended vitamin E polyethylene in both total anatomic and reverse shoulder product lines, DJO said it was the only company to offer blended vitamin E polyethylene throughout an entire shoulder product portfolio.

“We are very pleased to now offer our e-plus vitamin E technology within the Reverse Shoulder product line. Through our e-plus offering, we seek to enhance the clinical success across our shoulder portfolio, including the Turon Anatomic Total Shoulder and Reverse Shoulder implant families. We now proudly offer e-plus technology throughout our entire surgical product portfolio, including knee, hip and shoulder,” said Bryan Monroe, senior vice president for DJO Surgical.

Unique formulations of e-plus have been optimized to reduce wear, eliminate oxidation and maintain mechanical properties in DJO Surgical’s knee, hip and shoulder products as compared with conventional polyethylene. The e-plus formulation, optimized for DJO Surgical’s reverse shoulder prosthesis, reduces wear rates by 92 percent while maintaining the yield strength of conventional polyethylene, according to the company. Officials say that together, the advancements potentially can lead to unparalleled implant longevity.

In 2015, DJO got off to a strong start with new product introductions and strategic technology acquisitions.

During the American Academy of Orthopaedic Surgeons (AAOS) annual meeting in March, DJO launched its Exprt Precision System for knee revision procedures. According to company officials, the Exprt system “redefines” total-knee revision arthroplasty. DJO claims the system’s compact design reduces turn times, minimizes waste, and has proven implant design technology for 40 to 70 percent of the cost of comparable knee revision systems. A simple, comprehensive two-tray system replaces the traditional eight-tray setup used during complex, total-knee revisions, which is intended to reduce prep time and eliminate unnecessary surgical steps.

“The Exprt system offers experienced revision surgeons a toolkit that matches their skill set,” said Mike Mogul, CEO of DJO Global. “The makeup of this revision knee allows for streamlined simplicity at a dramatically lower cost.”

DJO Surgical worked closely with a group of experienced revision surgeons to develop the technology. “The Exprt approach leads to efficient operations that save both time and money, while providing excellent early results,” said C. Lowry Barnes, M.D., chairman of orthopedics at the University of Arkansas for Medical Sciences. “My operating team especially appreciates the fact that only two pans of instruments are opened. I believe that I can speak for the entire Exprt design team when I say that we have met our goals in offering a high-value, high-quality revision knee system for the accomplished surgeon.”

In addition to Barnes, other early adopter surgeons have touted Exprt’s cost.

“In today’s value driven health care environment, cost effectiveness is crucial in order to provide stakeholders with a high-quality result at a reasonable cost,” said Richard Iorio, M.D., a New York, N.Y.-based joint replacement specialist. “Putting the patient ahead of profits, the Exprt System allows skilled surgeons to provide TKA (total knee arthroplasty) patients with a functional knee at a fraction of traditional costs.”

DJO Surgical also played a role in the Zimmer-Biomet merger.

The agreement for Zimmer Biomet Holdings Inc. to divest certain assets was part of U.S. Federal Trade Commission requirements prior to Zimmer Holdings Inc. completing its purchase of Biomet Inc.

DJO Surgical purchased the Biomet Cobalt bone cement, Optivac cement mixing accessories and Discovery elbow system for the U.S. marketplace.

“These product acquisitions are a part of a broader strategy to invest in our fast growing implant business,” said Mogul. “We believe our surgical division is poised to continue its position as the fastest growing orthopedic implant company. I have always admired Cobalt bone cement’s color features, which offer better visualization and much simpler packaging and the Discovery elbow is extremely well-regarded.”

The Cobalt bone cement is used with hip, knee, shoulder, elbow and other orthopedic implant technologies. Cobalt offers a complete range of viscosities as well as antibiotic solutions for enhanced performance and patient safety, according to DJO. The unique Softpac packaging technology creates a “safer, glassless environment and the user-friendly Optivac system provide the best in modern cementing techniques for Cobalt as well as other cement technologies,” company officials said in a release.

The Discovery elbow will be DJO’s first elbow technology and adds to the company’s upper extremity portfolio and shoulder arthroplasty products. The Discovery elbow has more than 12 years of successful clinical outcomes.

“This acquisition is very timely for us based on our disruptive entrance into the revision market with our Exprt revision knee launched at AAOS this year and the Discovery elbow provides great breadth to our strong upper extremity portfolio,” said Brady Shirley, president of DJO Surgical. “With three major launches planned across the knee, hip and shoulder segments in each of the next three years, we are excited about our continued opportunities for growth.”

New Management

DJO Global named Shirley as the new president of DJO Surgical, a division that makes implants for hips, knees and shoulders. Shirley has more than 20 years of experience in the orthopedic industry in a variety of roles, including most recently CEO of Innovative Medical Device Solutions (IMDS), an organization that provides product development, manufacturing and supply chain management solutions for medical devices companies. Prior to IMDS, he held several key leadership roles, spanning 17 years at Stryker, which include the president of Stryker Communications and senior vice president of Stryker Endoscopy. At Stryker Communications and Stryker Endoscopy, Shirley was responsible for all domestic operations and profit and loss for the Communications division, as well as global product development and sales and marketing for Endoscopy, representing approximately $1 billion worldwide. “With DJO Surgical’s current market position and growth potential; brand momentum, innovation and market leadership are our most urgent priorities,” said Mike Mogul, DJO Global’s president and CEO. “Brady’s strong Orthopedic background and proven track record and ability to develop and lead top performing teams, drive shareholder value and innovation will support the outstanding team we already have in place to transition DJO Surgical to the next level.”

The company also appointed Susan Crawford as the company’s new chief financial officer. Crawford joined DJO from Life Technologies Corp., where she most recently served as vice president of business transformation, responsible for integrating newly acquired companies and engineering business processes throughout the broader organization. Crawford also assisted the Life Technologies board of directors with evaluating strategic options for the company. Prior to her stint as business transformation vice president, Crawford was vice president of corporate finance planning and analysis at Life Technologies, providing finance leadership on the company’s growth strategy, forecasting and analysis, supply chain productivity and financial modeling for mergers and acquisitions. Before being hired by Life Technologies in 2005, Crawford was chief financial officer for RealNames and PowerTV, as well as head of investor relations and financial planning at Covad Communications. Crawford received a bachelor’s degree in accounting from Rollins College in Winter Park, Fla., and an MBA from the University of Central Florida.

Dollars and Cents

DJO recorded sales of $1.23 billion for FY14 (ended Dec. 31), up 4.6 percent year over year. Despite the gain, the company reported a net loss $90.5 million, an improvement compared to a net loss of $203.5 million in FY13.

“We are pleased to end 2014 with full year constant currency growth in net sales of 4.8 percent and leveraged adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 6.6 percent,” said Mogul. “I want to especially congratulate our Bracing and Vascular, Surgical Implant and International teams, for delivering strong organic growth of 6 percent, 15 percent and 9.8 percent, respectively, in 2014.”

Net sales for DJO’s Bracing and Vascular segment for 2014 were $504.6 million, up 6 percent. Sales for DJO’s Recovery Sciences division were $299.1 million, down 4.5 percent from 2013. For 2014, net sales for the International segment were $325.3 million and increased 9.8 percent. Net sales for the Surgical Implant segment, driven by strong sales of each of the company’s shoulder, knee and hip product lines, were $100.1 million, an increase of 15 percent.

$1.2 Billion
NO. OF EMPLOYEES: 5,470

There’s no set formula for name synonymity. Achievement surely plays a role but is not the sole determining factor. Consider, for a moment, the tragic tale of Major General James Brudenell, the 7th Earl of Cardigan, who led the Charge of the Light Brigade (British light cavalry) against Russian forces during the Crimean War, but whose name is most affiliated with woolly sweaters. Or John Montagu, the 4th Earl of Sandwich, who held various military and political offices in Britian, including Postmaster General, First Lord of the Admiralty and Secretary of State for the Northern Department, but will always be best known for (reportedly) being the first to put meat between two slices of bread.

Michael P. Mogul is hoping to avoid the same fate by attempting to live up to his surname, a cognomen that constantly has prompted questions and comments: “Can you ski the bumps?” kids would ask Mogul when he hit the slopes as a child. “With a name like mine, you’d better be able to ski moguls or kids will give you a hard time,” he wrote in a 2012 New York Times article.

The questions have subsided significantly in adulthood, but haven’t altogether ended. The occasional volley is still fired Mogul’s way, but the answer has become considerably more complicated. “Now some people ask me if I’m a billionaire mogul,” he said in his Times commentary. “I tell them: ‘Not yet. I’m working on it.’”

Technically, Mogul is correct. As chief executive of DJO Global, he earns $1.01 million ($750,000 base salary and $266,678 in non-equity incentive plan/other 2013 compensation)—a far cry from the net worth of multi-billionaires like Bill Gates, Warren Buffett, Larry Ellison, Michael Bloomberg, Mark Zuckerberg, Jeff Bezos and Larry Page.

But Mogul certainly is well within his rights to measure his overall wealth by his company’s success (he does, after all, own 218,712 total shares). By that standard then, the 49-year-old qualifies as a financial mogul and finally can squelch the snarky questions.

Net sales at DJO Global rose 4 percent last year to $1.2 billion and gross profit climbed 2.5 percent to $703,040, according to the Vista, Calif.-based firm’s 2013 annual report. Losses, however, skyrocketed to $202.5 million in 2013 (year ended Dec. 31) from $118,368 the previous year. The deficit at the company’s operating subsidiary, DJO Finance LLC, was just as large, mushrooming 70.7 percent to $203.4 million. In explaining the massive shortfalls, DJO reported it took non-cash losses of $107 million attributed to impairment of goodwill, and depreciation and amortization losses of $129 million for the year.

Despite the setback, DJO grew revenues and gross profits in three of its four business segments, with the Surgical Implant division scoring a leading 19.3 percent sales gain and 15.2 percent gross profit hike compared with 2012 data. Executives attributed the increase—$14.1 million in additional sales and $8.3 million in newfound profits—to solid demand for shoulder implants and new products, though they did not specify the bestsellers.

Nevertheless, growth likely came from such new product introductions as a vitamin E glenoid component for total shoulder arthroplasty; the Linear dual-tapered hip stem and the Revelation microMAX anatomic hip stem with lateral flare technology; the Movation Total Knee System With e+ technology; and the Trabecular Titanium Acetabular System. The latter product provides an aggressive fixation cup solution for tough primary or revision hip procedures. The Trabecular cups are manufactured using an electron beam melting technology, which allows the porosity to be controlled and integral to the cup (not a coating).

The Movation knee, launched at the American Academy of Orthopaedic Surgeons 2013 Annual Meeting, is a total knee arthroplasty (TKA) system developed at the Hospital for Special Surgery in New York, N.Y. DJO licensed this patent for a classic PS Knee solution, and re-defined it with modern features, including a constant axis femoral component, contoured insert condyles for reduced rotational stress, reduced and rounded trochlear transition, and anatomic femoral and baseplate components.

The Movation system comes with a newly developed instrument set designed for easier and more efficient implantation.

Bracing and Vascular followed a similar path to prosperity, leveraging the debuts of its Exos Rapid Splint System, Exos FORM Spine Bracing System and AirSelect Elite walking boot to expand sales 7.2 percent to $476.4 million and increase gross profit 6.3 percent to $243.9 million.

The Rapid Splint system treats acute fractures and injuries that require stabilization but requires fewer preparatory steps, saving time. The splints have integrated foam padding, smooth edges, and are applied warm and dry, according to DJO.

“These new Exos products have the potential to inspire a paradigm shift in the way we brace, support, and stabilize patients,” said Fariborz Boor Boor, vice president/general manager of Exos. “We are just scratching the surface of what is possible with Exos thermoformable technology.”

The Exos Form spine bracing system incorporates Exos thermoformable technology in a modular, prefabricated, semi-universal patent pending design that features Boa Technology’s closure system.The Exos Form spine bracing line includes five products in a series of lower lumbar spinal orthoses that include different thoracolumbosacral, lumbosacral, lumbar, and sacroiliac orthoses.

DJO claims its AirSelect pneumatic boots speed the healing of stable lower leg, foot and ankle fractures as well as severe ankle sprains; reduce edema and enhance patient comfort. Designed with a selector dial and integrated inflation system that allows patients to select each aircell independently for a customized fit, AirSelect Elite incorporates SoftStrike technology that puts a matrix of shock-absorbing material in direct contact with the heel for structured cushioning and provides a rocker sole to maintain a natural gait. Airflow and mass are controlled with engineered vents in AirSelect Elite’s shell design.

DJO’s International segment scored a double win, posting a 6.6 percent increase in 2013 net sales ($299 million) and 6.7 percent jump in gross profit ($165.6 million). Bigwigs linked the gains to new products, improved sales execution and better “sales penetration” in certain world regions.

Those areas might very well be Australia/Asia-Pacific and Canada, where revenues spiked 30.7 percent and 10 percent, respectively. Admirable gains also were made in Germany, where proceeds rose 4.4 percent to $88.2 million; the United States, where sales climbed 3.2 percent to $876.3 million; and Europe, the Middle East and Africa, where profits increased 3.1 percent to $139.2 million.

Recovery Sciences was the sole dark horse last year: Sales slipped 5.6 percent to $312.7 million and gross profit tumbled 6.1 percent to $234.4 million due mainly to changes in reimbursement for certain Empi business unit products and a weak market for the capital equipment sold by the company’s Chattanooga business division.

$1.3 Billion
NO. OF EMPLOYEES: 5,200

DJO Global is headquartered just north of San Diego, Calif., in the town of Vista, not too far from Highway 101, which hugs the southern California coast and runs parallel to the deep blue waters of the Pacific Ocean. It’s a pretty idyllic locale—if you enjoy a Mediterranean-esque climate and a laid-back way of life. Despite a setting perfectly suited for surfing or having a margarita in the sand, DJO goes about its business seriously.

Founded in 1978 as DonJoy, the company was started in a Carlsbad, Calif., garage by Mark Nordquist (who played nine seasons in the NFL as an offensive lineman for the Philadelphia Eagles and Chicago Bears), and a local lawyer named Ken Reed. The first products were simple sleeves made of sewn-together neoprene that were pulled over the knee, ankle and elbow joints for support. Thirty-five years later, the privately held company makes medical devices for musculoskeletal health, vascular health and pain management, and is the third-largest employer in Vista (following the local school district and the superior court).

It was a busy year (FY12 ended Dec. 31) for DJO—with a number of important product launches, acquisitions and regulatory decisions impacting the business.

Let’s start at the end. In December last year, the company announced plans to acquire Arden Hill, Minn.-based Exos Corp., which makes thermoformable external musculoskeletal stabilization systems. Exos’ bracing system is a waterproof, removable, adjustable and reformable solution for the treatment of fractures and other injuries that require stabilization. DJO had been the distribution partner for Exos since October 2011. Terms of the deal were not released.

Among the notable product releases for 2012, the company launched its Movation total knee arthroplasty (TKA) device in September. The Movation posterior-stabilized knee design (PS, used in posterior cruciate ligament deficient knees) is licensed from the Hospital for Special Surgery in New York, N.Y.DJO Surgical licensed the patent for a classic PS knee solution, and includes a constant-axis femoral component, contoured insert condyles for reduced rotational stress, reduced and rounded trochlear transition, and anatomic femoral and baseplate component. “Patients needing a knee replacement are approaching surgeons with more demanding activity requirements,” said Bryan Monroe, general manager of DJO’s Surgical division.“Our goal was to develop a knee system with features that we know have historically performed extremely well, but also incorporate assets that allow TKA patients to remain active, such as high flexion allowance, enhanced stability through flexion, and e-plus vitamin E polyethylene.”

Instrumentation to implant the Movation Knee was a key focus of the design team. Reducing the overall quantity of instruments and making the instrument flow efficient can contribute to a reduced surgery time, which benefits the patient, the surgeon and the hospital. Simpler quick-connect handles, color-coded buttons and magnetic attachments contribute to the improved flow and reliability of the procedure, according to the company. The Movation System made its full launch at the American Academy of Orthopaedic Surgeons annual meeting in Chicago, Ill., this year.

Summer 2012 brought the introduction of the OA Nano, which the company claims is the world’s lightest (14.2 ounces) off-loading knee brace for patients with mild-to-moderate osteoarthritis. The brace is sold under the DonJoy brand. The brace is designed to accommodate the needs of a younger, active and growing market. It is manufactured using nanoMAG TTMP, a metal that is as light as magnesium with the strength of aircraft-grade aluminum. OA Nano decreases pressure on the knee by offloading stress.

A survey of 1,001 Americans older than 40 years of age conducted by Arlington, Va.-based Wakefield Research and DJO revealed that nearly three out of four (73 percent) have experienced knee pain in the last year. Surprisingly, nearly eight out of 10 Americans who don’t experience knee pain wrongly assume that they will never experience it. According to the National Arthritis Foundation, one in two people may develop symptomatic knee osteoarthritis. The survey also found that 58 percent of Americans older than 40 have ignored knee pain because they didn’t think that it was a big deal.

Among Americans who have experienced knee pain in the past 12 months, 41 percent aren’t doing anything to manage their knee pain, 36 percent are taking over-the-counter pain medicine, 17 percent regularly are taking prescription medicine, 14 percent are using cold compression therapy and only 12 percent are using a knee brace.

According to DJO, physicians increasingly advocate for a conservative care treatment regimen that preserves joints and helps patients avoid or stave off more expensive, addictive or riskier treatments.Noninvasive, non-addictive treatment options, such as knee bracing, can empower patients to proactively take control of their osteoarthritis without the cost, recovery time or potential for adverse events associated with surgical procedures or narcotic pain management, company officials noted.

The survey was conducted in May 2012, and polled respondents on their knowledge and perceptions of osteoarthritis, knee pain and treatment options.

At the beginning of the year, the company’s Surgical division rolled out the new RSP Monoblock shoulder system, an extension of its Reverse Shoulder Prosthesis shoulder system (RSP).The RSP Monoblock expands the indications for reverse shoulder arthroplasty to include fractures, which will increase the number of patients that can be treated with RSP. In addition, DJO Surgical released a number of conversion modules that will permit surgeons to easily transition from a primary total shoulder to a reverse shoulder arthroplasty, and from a reverse shoulder arthroplasty to a hemiarthroplasty (a shoulder replacement in which the broken humeral head is replaced with an artificial joint and the fractured bone is reconstructed around the artificial joint).These new modules enhance the surgeon’s ability to treat a number of modalities with the system and will allow for greater interoperative flexibility, according to the company.

Regulatory Letdown

Along with having your product reviewed and okayed for sale by the U.S. Food and Drug Administration, ensuring your system or device is reimbursed by the Centers for Medicare and Medicaid Services also can be an arduous process with significant revenue implications down the line depending upon the agency’s coverage decision.

In June last year, Medicare issued a non-coverage decision for the company’s transcutaneous electrical nerve stimulation (TENS) system for chronic low back pain (CLBP). According to the agency, the system “is not reasonable and necessary for the treatment of CLBP,” and therefore would not cover it. The treatment works by issuing electrotherapy—small electrical shocks—to the skin with the aim of pain management. In part due to Medicare’s decision, the company’s Recovery Sciences division has performed as well as the firm’s other units, such as Surgical or Bracing and Supports.

The Bottom Line

Fiscal 2012 was a record year for sales, with the company bringing in $1.3 billion compared with $1.07 billion for 2011. According to the firm’s leadership, the results of acquisitions made in 2011—Circle City Medical acquired in February and Dr. Comfort in April—helped significantly to add to the company’s coffers. Sales were slowed slightly by foreign currency exchange rates. Net sales for DJO’s Bracing and Vascular segment increased 8.2 percent to $441.3 million; net sales for the Recovery Sciences fell 2.3 percent to $334.6 million; International segment net sales increased 5.7 percent on a constant currency basis to $280.5 million; and the net revenue for the Surgical Implant segment increased 12.4 percent to just shy of $73 million.

Despite the sales gains, the company posted a net loss of $119.2 million, compared to a net loss of $214.5 million for 2011. For 2012, the company reported operating income of $92.9 million, reflecting significant improvement compared to an operating loss of $92.3 million for 2011. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $271 million, or 24 percent of net sales, an increase of 2.5 percent compared with $264.3 million, or 24.6 percent of net sales, for 2011. Adjusted EBITDA for 2012 was unfavorably impacted by $3.2 million related to changes in foreign currency exchange rates compared to the rates in effect in 2011. In constant currency and pro forma for the acquisitions and excluding the $4.2 million adjustment recorded in the fourth quarter of 2011, adjusted EBITDA for the year was $274.2 million, growth of 2.4 percent compared with $267.9 million for 2011.

“We are pleased to end 2012 with full year constant currency growth in net sales of 4.5 percent compared to pro forma net sales for 2011. Our successful new product launches and improving commercial execution continue to drive strong momentum across most of our businesses and provide a solid foundation for incremental growth in 2013,” said Mike Mogul, DJO’s president and CEO. “I want to especially congratulate our Bracing and Vascular, Surgical Implant and International teams, for delivering strong organic growth of 8.2 percent, 12.4 percent and 5.7 percent, respectively, in 2012.

Although we continue to face market challenges in our Recovery Sciences business unit, with sales declining 2.3 percent in 2012 compared to 2011, the strength of the sales results from our other businesses compensated for those headwinds in 2012.”

Mogul is bullish on DJO’s prospects for the current fiscal year in progress.

“We have a very exciting slate of new products for 2013 … and we are targeting total company full-year revenue growth rates of at least 5 percent for the full 2013 year,” he said. “[For 2013] we expect to absorb the impact of both the Medicare CLBP decision and the new medical device excise tax and still deliver growth in adjusted EBITDA that is at least as high as our revenue growth.”

So far in 2013, the company seems to be making good on Mogul’s claims.

For the second quarter of 2013 (ended June 29), sales were $294.7 million, up 3.1 percent, with net sales of $286 million for the second quarter of 2012.

$1 Billion
NO. OF EMPLOYEES: 5,110

Laurel Touby couldn’t stop herself from laughing at the media reports that branded her an overnight millionaire.

“I thought it was a total joke,” she told journalist, career coach and book author Debra Shigley, reporting for Psychology Today.

The stories might have been amusing had they not taken on a solemnity usually reserved for the most hard-hitting news. “CNBC Gets the Scoop on the Boss’s Big Bucks,” announced one headline, which ironically, came from Touby’s own company—mediabistro.com, a content-related resource site she sold to Jupitermedia for $23 million in 2007.

“Tonight…she [Touby] shares her story of instant millions on the premiere of CNBC’s ‘Untold Wealth: The Rise of the Super Rich,’ “ read a promo from TV Newser, a mediabistro.com-owned website that reports on television news.

Perhaps most entertaining (or troubling) about that promo and other reports of Touby’s “instant” wealth was the lack of details about the 12-hour workdays and middle-of-the-night anxiety attacks that defined her 14-year road to “overnight” success.

“Nobody really took note that from the point I committed to it full-time, it was an 8 in the morning till 8 at night job—with waking up in the middle of the night for years,” she said. “It was non-stop. No vacations. Nobody—including my family—understood any of it and they still probably don’t.”

Maybe not, but those who have traveled a similar path to Touby certainly empathize with her long workdays and nocturnal neuroticism. Unlike the instapreneurs, Facebook-inspired computer prodigies and reality star-struck wannabes now colonizing the corporate world, the established industrialists of yesteryear realize that overnight success actually is a myth perpetuated by Hollywood filmmakers and pipe-dreaming novelists.

“Most of us are seduced by the idea of overnight success. We want to believe the myth that success is easy to come by,” Barrie Bergman, a entrepreneur, author, public speaker and self-proclaimed “empire builder” argues on his website, barriebergman.com. “But success in business takes time, energy and hard work—lots of all three. Personally, I’ve never met an overnight success. I’ve met people who’ve done something well for a long time and were suddenly discovered. Then everyone assumed they came out of nowhere, that their fame happened overnight. But the real truth is that it takes a long time to be an overnight success.”

For DJO Global Inc., success has taken more than three decades. Born 34 years ago in a Carlsbad, Calif., garage to founders Mark Nordquist (a Philadelphia Eagles offensive line captain at the time) and Ken Reed (a San Diego, Calif., attorney), the company spent its formative months making support sleeves for the knee, ankle and elbow. It has undergone several identity changes in its lifetime—initially calling itself DonJoy (a reference to the founders’ wives, Donna and Joy), then DJ Orthopedics, DJO Incorporated and finally, DJO Global. Its product portfolio has evolved to include bone growth stimulators, cold therapy devices, medical equipment and most recently, therapeutic footwear.

“Nothing ever goes in a straight line, but it’s been exciting,” Vickie L. Capps, executive vice president, chief financial officer and treasurer, told The San Diego Union-Tribune in April. “We’re in a very fun space in the market, and we’ve had a lot of opportunities to expand geographically and acquire more products—that has been key to our growth.”

Such a simple strategy helped the Vista, Calif.-based firm top $1 billion in sales last year for the first time in its history. The $1.07 billion in revenue represented an increase of $108.7 million, or 11.3 percent compared with 2010. Gross profit rose 5.8 percent to $656.6 million and interest income climbed 11.3 percent to $345 million, according to the company’s 2011 earnings report.

DJO executives attributed the historic achievement in sales last year to favorable currency exchange rates and the purchase of several companies within the first 100 days of 2011. The first acquisition occurred shortly after the year began: On Jan. 4, bigwigs announced the $46.4 million buyout of Asheboro, N.C.-based Elastic Therapy Inc. (ETI), a designer and manufacturer of private label medical compression therapy for various venous disorders. Its device portfolio encompassed anti-embolism stockings, sheer products, surgical weight stockings, and compression socks across multiple compression levels. Executives said the move gives DJO a stronger foothold in the estimated $1.5 billion global medical compression market.

“As evidenced by the size of the global compression therapy markets, the addition of static compression products to the DJO product line has been a high priority for our international teams for several years,” former President and CEO Leslie H. Cross said when the deal was announced. Cross stepped down from his position in June 2011 and was replaced by Michael P. Mogul, former group president of Orthopaedics for Stryker Corp. (Cross, however, has not sat idly by since leaving DJO; he has been chairman/CEO of Alphatec Holdings Inc. since Feb. 28, 2012).

“DJO’s channels of distribution in most developed international markets are very well positioned to add the ETI range of products and we view this as a significant growth opportunity moving forward.”

Other growth opportunities arose from the winter acquisitions of BetterBraces.com ($3 million for certain assets) and Circle City Medical Inc. ($11.7 million), a Carmel, Ind.-based firm that markets orthopedic soft goods and medical compression therapy products to independent pharmacies and home healthcare dealers. Growth also came from the $254.6 million cash purchase of therapeutic footwear maker Rikco International LLC, D/B/A Dr. Comfort. Industry analysts claim the deal gave DJO top market share in the “large and under-served diabetic footwear market,” a sector that rapidly is growing for podiatry practices, orthotic and prosthetic centers, home medical equipment providers, and independent pharmacies.

Last year’s acquisitions most benefited DJO’s International and Bracing and Vascular segments, where sales ballooned 14.2 percent and 24.5 percent, respectively. Executives said DJO’s first-quarter shopping spree boosted International segment sales by $10.5 million, pushing its total FY2011 revenue to $279.2 million.

Similarly, the new additions contributed an additional $75.6 million to the Bracing and Vascular segment, which changed its name from Bracing and Supports to better reflect its more diverse product lineup. The Bracing and Vascular segment posted $388 million in 2011 sales (year ended Dec. 31), though part of the 24.5 percent increase in overall segment revenue also can be attributed to robust sales of the VenaFlow Elite dynamic compression therapy pump, a device that treats deep vein thrombosis by mimicking ambulation and accelerating venous velocity through rapid inflation and graduated sequential compression.

Recovery Science segment sales fell 1.3 percent last year to $342.5 million, due largely to considerable reimbursement price changes for home electrotherapy, iontophoresis and home traction devices.

DJO’s reverse shoulder products and its new Turon Modular Shoulder System advanced Surgical Implant segment revenue by 3.5 percent to $65 million and helped offset declines in both hip and knee implant sales. Launched in July 2011, the Turon Modular Shoulder System incorporates the company’s IMIN (Intrinsic Modular Indexable Neck) technology, a patented clocking feature that allows surgeons to dial in the humeral neck shaft angle position, thereby enabling them to fit a patient’s anatomy without using adjunctive screw fixation and complex jigs and back table fixtures.

Knee sales were disappointing last year despite the introduction of two new products. In April, DJO announced the first U.S. implantation of the e-plus total knee replacement, an artificial joint with Vitamin E blended into the resin of the polyethylene comprising the insert. The company described its e-plus product as a next-generation formulation of high density polymer blended with the natural anti-oxidant of Vitamin E. According to executives, the Vitamin E improves the implant’s strength and helps prevent wear from the polyethylene component.

The Empi Active Knee TENS System, made its debut in September, shortly before the company signed a distribution agreement with Exos Corporation, an Arden Hills, Minn.-based device firm that has developed a thermoformable external musculoskeletal stabilization system. The agreement gives DJO exclusive rights to sell Exos upper extremity products in North and South America.

The Empi Active Knee has an electrode built into its specialized wrap that delivers a TENS (transcutaneous electrical nerve stimulation) waveform to the knee to manage acute, chronic and arthritic pain. Available with a doctor’s prescription, the Empi knee delivers a similar physiologic response as pain medication but has none of the side effects.

“The Empi Active device can be helpful in decreasing the amount of pain medication that a patient may take,” Melisa Estes, M.D., a physiatrist and board certified pain medication physician, said in a news release about the Empi product. “I also find it very useful for patients who have difficulty tolerating usual medications such as muscle relaxants or non steroidal anti-inflammatories.”

$966 Million
NO. OF EMPLOYEES: 4,700

There’s a lot to be said for smooth sailing—particularly after a few challenging years. At the end of fiscal year 2010, DJO Inc. had managed to grow sales and was on the cusp as a new corporate identity. At the beginning of 2011, the company changed its name to DJO Global to better reflect a broader product line and international reach. Today, the company’s product portfolio consists of eight global brands integrated into four reporting segments, including Recovery Sciences, Bracing and Supports, Surgical Implant, and International, which—as the name implies—sells all DJO Global brands outside the United States.

The company’s product lines include rigid and soft orthopedic bracing, hot and cold therapy, bone growth stimulators, vascular therapy systems and compression garments, electrical stimulators used for pain management and physical therapy products. The surgical division offers reconstructive joint products for the hip, knee and shoulder.

“We are pleased to have completed 2010 on a strong note in spite of challenges that impacted our industry during the year,” said Les Cross, president and CEO, who announced his retirement at the beginning of fiscal 2010. Cross is now non-executive chairman of the board of directors. Michael P. Mogul was named president and CEO on June 13 this year.

“In the last few years, we’ve focused on joining together a large group of essentially independent businesses into a single company,” said Cross. “Our last integration step focused on horizontally integrating our marketing and commercial shared services while maintaining our vertically aligned brand-focused sellers. With this integration now complete, DJO Global stakes its claim as a worldwide leader in orthopedic rehabilitation. Together with our healthcare provider customers, we enable people to regain the joy and comfort of natural motion.”

In fiscal 2010 (ended Dec. 31), the company’s earnings totaled $966 million, a modest 2.1 percent increase compared with 2009. Despite top-line gains, DJO reported a net loss of $51.6 million in 2010, compared with a loss of $50.4 million for 2009.

Sales in the company’s Recovery Sciences division were $347.1 million for 2010, reflecting an increase of 1.5 percent compared with net sales of $342 million for 2009. Increases in sales of new products in the firm’s Empi (pain management) business unit and improved sales of Chattanooga rehabilitation products, partially were offset by the impact of discontinuing certain Chattanooga products, which had contributed revenue of $3.8 million in 2009.

Net sales for the Bracing and Supports division were $311.6 million, a 4.3 percent increase. DJO officials attributed the increase to growth across most product lines, in addition to higher revenue generated under a new soft goods contract with the Novation group purchasing organization.

Net sales in the company’s International segment were $244.5 million for 2010, an increase of $3 million. Strong sales of bracing and support products across all major international markets, and continued improvement in Chattanooga sales were tempered by the discontinuation of certain Chattanooga products sold in international markets, which contributed revenue of $3.5 million in 2009.

Net sales for the Surgical Implant unit were $62.7 million, compared with $63.9 million for 2009, representing a decrease of 1.8 percent. According to the company, the decrease was the result of the loss of “a few key customers” of hip and knee products, in addition to the impact of the 2009 sale of a non-core spine product line that had contributed revenue of $1.9 million in the prior fiscal year.

The drop in sales was limited, however, by increased sales of shoulder products and strong sales of a new hip revision product offered under DJO’s partnership with Lima Corporate. DJO and Lima, an Italy-based orthopedic implants company, began their collaboration in 2009. DJO Surgical launched the first of Lima’s products in the United States, a revision hip system, late in the third quarter of 2010. Lima is distributing DJO Surgical’s 3D knee and Foundation total knee system in select European markets. The firms planned to expand their partnership this year.

$946 Million
NO. OF EMPLOYEES: 4,480

DJO Incorporated executives just couldn’t help themselves. In assessing the company’s financial performance last year, decision-makers used a word to describe the overall pecuniary climate in the orthopedic sector in 2009, a word that is likely to become the unofficial tagline of the final 12 months of the “Oughts” (or, considering how badly the decade ended, the “Naughts”).

The word, of course, is “challenging.”

“We are pleased to have finished a somewhat challenging year on a strong note with both net sales and adjusted EBITDA results for the fourth quarter establishing new company records,” Les Cross, DJO’s president and CEO, said in releasing the firm’s 2009 earnings report earlier this year. “In spite of one of the worst recessions in history, 2009 was a good year for DJO.”

The definition of good, though, changed dramatically in 2009 for orthopedic companies such as DJO. Financial growth that was considered “good” last year either was flat or crept up 1 or 2 percent—increases that would be considered substandard in more economically stable times. Indeed, DJO’s earnings shriveled considerably in 2009 compared with previous years, but the company’s overall performance still garnered kudos from bigwigs for “a job well done…under difficult market conditions.”

Those conditions led to a $2.3 million decrease last year in total net sales, which the company claims was negatively impacted by $13.9 million of “unfavorable changes” in foreign currency exchange rates. Sales also were impacted by a significant drop in new product revenue ($12.3 million last year compared with $27.2 million in 2008) and a decrease in sales from customers outside of the United States (25.5 percent of total sales in 2009 compared with 26.6 percent in 2008).

Still, the company’s overall financial results perhaps warranted those kudos from DJO executives. On a constant currency basis, the firm’s net sales climbed 1.2 percent last year to $946.1 million. Gross profit rose 1.5 percent to $607.4 million, while operating income more than doubled and the company’s net loss fell nearly by half. DJO posted $78.8 million in operating income last year, a monstrous 136.5 percent increase compared with the $33.3 million the company reported in 2008. Similarly, its net loss plunged 48.4 percent to $50.4 million, according to the 2009 annual report.

DJO earned the bulk of its revenue last year from the sale of knee braces, cold therapy products, orthopedic soft goods, home traction devices, bone growth stimulation products, clinical electrotherapy devices, dry heat therapy items, and electrostimulation goods. Those products are included within the company’s Domestic Rehabilitation segment, which is divided into five businesses: Bracing and Supports; Empi; Regeneration; Chatanooga; and Athlete Direct.

Net sales in the Domestic Rehabilitation segment totaled $640.7 million last year, a 1 percent increase compared with the $634.5 million the segment generated in 2008 revenue. Gross profit in the segment rose 5.4 percent to $425.4 million, whileoperating income jumped 28.4 percent to $178 million.

Executives attributed the slight uptick in Domestic Rehabilitation segment revenue to higher sales across the majority of its product lines. The higher sales, however, was offset by an extremely tight capital equipment market in 2009 as well as declining revenue in the company’s Chattanooga business, which oversees sales of clinical products and supplies such as continuous passive motion devices and dry heat therapy.

Declining revenue in the company’s Chattanooga business was one of several factors that led to its consolidation. In June 2009 (ironically, only a month after the Chattanooga division was awarded a Kruesi Spirit of Innovation Award for developing a product that introduces weight-bearing exercises to deconditioned or bedridden patients early in their physical rehabilitation), executives announced their decision to consolidate all activities at the Hixson, Tenn., site into the company’s existing facilities in Vista, Calif.; Indianapolis, Ind.; and Tijuana, Mexico.

“We believe this is a decision that will make our company stronger and enhance our abilities to serve our customers,” Cross explained in a news release about the consolidation. “While the Chattanooga site will close, the Chattanooga Business Unit has been, and continues to be, a very important part of the DJO story and our product portfolio and we will continue to invest in new products and new technologies for this business unit.”

One of those new products is on the horizon. Late last fall, the Chattanooga division was issued a patent for its Moveo XP, the product for which it won an award five months earlier. Officials said the Moveo XP provides patients undergoing rehabilitation with a customized workout intensity that lets them progress at “tolerable” levels and enables them to see objective and incremental progress.

Shortly after announcing the consolidation of its Chattanooga business, DJO executives unveiled another cost-cutting measure: the sale of the rehabilitation equipment and supply catalog business of Empi Therapy Solutions (a franchise within its Empi business unit) to Patterson Medical, a division of Patterson Companies Inc., a specialty distributor serving the dental, companion-pet veterinary and rehabilitation supply markets. Terms of the deal were not disclosed, but DJO officials said Empi Therapy Solutions generated about $32 million in sales in 2008.

Cross said the sale would allow DJO to devote its full attention and resources to “higher-margin, industry-leading brands and products.”

Perhaps no other segment was affected more by the crumbling economy last year than the International sector, which generates most of its revenue in Europe. Sales were down 4.3 percent to $241.4 million, while gross profit plummeted 9.7 percent to $137.1 million. The segment posted an operating income of $49 million, an 11.2 percent decrease compared with the $55.2 million the division reported in 2008.

While sales in Germany were up 13.7 percent to $74.1 million, revenue throughout the rest of Europe, the Middle East and Africa fell to $110 million, a 23 percent drop compared with the $143 million the region generated for DJO in 2008. U.S. sales were flat last year at $705 million (an $8.7 million increase compared with 2008), but Asia Pacific and other parts of the world experienced strong sales. Asia Pacific amassed $15.5 million in revenue for the company, a 23.4 percent increase compared with 2008, while other parts of the world garnered $41.3 million in sales, a 31.2 percent increase compared with 2008’s total of $31.4 million.

In an effort to beef up international sales in 2010, the company acquired three small international distributors — DonJoy Orthopaedics Pty., Ltd. in Australia; and Chattanooga Group Inc. and Empi Canada Inc., both of Canada. DJO purchased DonJoy for $3.4 million, while the Canadian distributors cost $14.6 million combined.

DJO’s Domestic Surgical Implant segment, which sells various knee, hip and shoulder implant products, posted solid sales last year. According to the company’s annual report, the segment reported total net sales of $63.8 million, a 3.7 percent increase compared with the $61.5 million the sector recorded in 2008. Gross profit was down 1.3 percent to $49.7 million, but operating income climbed 1 percent to $12.9 million.

$980 Million
NO. OF EMPLOYEES: 4,700

For DJO Inc., fiscal 2008 wasn’t only the start of a new year. In many ways, the firm began the year as a new company. At the end of 2007, DJO Incorporated was bought out by Austin, Texas-based ReAble Therapeutics in a deal worth approximately $1.5 billion. ReAble (formerly known as Encore Medical) was itself purchased by private-equity investment firm The Blackstone Group for $870 million in 2006.

As a result of the deal, DJO’s common stock ceased to trade on the New York Stock Exchange. In addition, once the deal was closed, ReAble Therapeutics took the name DJO Incorporated and relocated its headquarters to Vista, CA (near San Diego), where DJO is based.

DJO specializes in rehabilitation products such as knee braces and pain management devices as well as regeneration and bone growth stimulation products for the non-operative orthopedic and spine markets. The device maker sells its products under the DonJoy, ProCare and Aircast brands through agents, distributors and a direct sales force to orthopedic and spine surgeons, orthopedic and prosthetic centers, as well as hospitals, physical therapists and other healthcare professionals. DJO’s Surgical division—which became part of the company after the ReAble deal—manufactures a range of reconstructive joint products for the hip, knee and shoulder. DJO Surgical is located in Austin.

And becoming a slightly restyled, larger company brought with it larger sales—almost double, in fact.

Net sales results for 2008 (ended Dec. 31) were $980.2 million, reflecting an increase of approximately 99.2 percent, compared with net sales of $492.1 million for 2007. The company said the hike was in large part due to the merger as well as other smaller key acquisitions and sales growth in most of its units, as well as continued growth across the company’s operating segments. On a pro forma basis, as if the merger had closed on Jan. 1, 2007, sales for fiscal 2008 would have reflected growth of approximately 5.9 percent, compared to pro forma sales of $925.3 million for the full year 2007.

Despite sales gains, the company reported a net loss of $97.8 million, compared to a net loss of $82.4 million for the full year 2007. The results for both years were impacted by significant purchase accounting adjustments, non-recurring charges and other adjustments related to the merger.

Company executives expect the new firm’s expanded product pipeline to continue to fuel growth and broaden the company’s reach.

One such new product was its new X-alt highly cross-linked polyethylene liner for DJO Surgical’s FMP acetabular hip system. The liner received U.S. Food and Drug Administration approval in March 2008 last year.

The FMP system combines DJO’s existing cobalt-chrome and ceramic femoral heads with a new wear-resistant, highly cross-linked polyethylene cup liner to form the hip ball and socket joint. According to the company, the new liner substantially increases the resistance to ball and socket wear compared to traditional polyethylene cup liners. In laboratory tests, the new cross-linked polyethylene liner reduced the generation of wear particles by 87 percent compared to the firm’s previous liner, the company reported. Polyethylene wear debris in total hip replacement is a leading cause of osteolysis, an inflammatory response to wear particles. Osteolysis can lead to subsequent implant loosening in patients who have undergone hip replacement surgery.

Also in March, the company rolled out its new Aircast Cryo/Cuff IC Cryo-compression system. The Aircast Cryo/Cuff IC is the first product from DJO to combine focused compression with cold therapy. The combination of cold and compression provides optimal control of swelling to minimize hemarthrosis, edema and pain. The Cryo/Cuff IC features a new integrated pneumatic pump within the cooler lid that provides automated compression along with cold therapy for use in post-operative recovery, trauma, athletic training and home use.

During fiscal 2008, the company also had a change in management. President Peter Baird left DJO “to pursue other opportunities,” according to a statement released by the firm. As of press time, no replacement had been named.

The company continued to grow in 2009, with the acquisition of its Australian distributor, DonJoy Orthopaedics Pty. Ltd., in early February. For the past several years, this distributor has focused on selling DJO’s orthopedic rigid bracing and soft goods. According to company officials, the business had grown to a size where it “made sense” for DJO to acquire it and sell directly to customers in the Australian market.

For the first quarter of 2009, the company reported net sales of $225.4 million, compared to $239.7 million for the first quarter of 2008.

Sales for the first quarter of 2009 were impacted by approximately $8.6 million due to unfavorable changes in foreign exchange rates. The company also reported that fewer shipping days in the first quarter of 2009—60.5 compared with 63 shipping days—also hurt comparative performance.

On the basis of constant currency and average daily sales, sales in the first quarter of 2009 grew approximately 2 percent compared with the first quarter of 2008.

$492 Million
NO. OF EMPLOYEES: 4,000

In another example of the deal making and private-equity investment that characterized the medical device industry for much of 2007, the big news out of DJO Incorporated for the year was its buyout by Austin, TX-based ReAble Therapeutics in a deal worth approximately $1.5 billion.

ReAble (formerly known as Encore Medical) was itself purchased by private-equity investment firm The Blackstone Group (not to be confused with the spinal implant division of Orthofix, which has the same name) for $870 million in 2006. The merger of DJO and ReAble creates a new orthopedic powerhouse that should generate close to a billion dollars in revenue for 2008, according to CEO Les Cross. Out of the total price, $1.2 billion was in cash; the remainder was for the assumption of debt. The deal was announced in July 2007 and closed in November. As a result of the merger, DJO’s common stock ceased to trade on the New York Stock Exchange. In addition, once the deal was closed, ReAble Therapeutics was renamed DJO Incorporated and relocated its headquarters to Vista, CA (near San Diego), where DJO is based.

DJO specializes in rehabilitation products such as knee braces, pain management devices as well as regeneration and bone growth stimulation products for the non-operative orthopedic and spine markets. The device maker sells its products under the DonJoy, ProCare and Aircast brands through agents, distributors and a direct sales force to orthopedic and spine surgeons, orthopedic and prosthetic centers, as well as hospitals, physical therapists and other healthcare professionals.

Through its Orthopedic Rehabilitation division, ReAble provides electrical stimulation and other orthopedic products used for pain management, orthopedic rehabilitation, physical therapy, fitness and sport-performance enhancement. ReAble’s Surgical Implant division manufactures a range of reconstructive joint products for the hip, knee and shoulder. Following the merger, in an effort to continue the corporate re-branding effort, the implant division was renamed DJO Surgical.

“DJO and ReAble have established strong positions in the orthopedic and rehabilitation markets,” said Ken Davidson, formerly CEO of ReAble and currently board chairman of DJO. “The resources of the combined company will allow us to develop even better and more innovative products, and to take care of more of the needs of more patients and caregivers than ever before. The strategic fit, both in the US and overseas, is absolutely compelling.”

For fiscal 2007 (ended Dec. 31), DJO’s net sales were $492.1 million, reflecting an increase of 35.8%, compared with actual combined net sales of $362.3 million for 2006, driven by recent acquisitions (Aircast and Axmed in 2006), as well as continued growth in each of the company’s business segments, according to officials. Net loss for the year was $82.4 million, compared with an actual combined net loss of $88.4 million for 2006. The company attributed some of the loss to costs associated with the merger.

“Over the course of 2008, we will be highly focused on the elimination of duplicate corporate and general and administrative spending and opportunities to reduce our costs of goods sold,” said Cross. “We also have the opportunity to consolidate some of our business operations…for functions such as insurance reimbursement operations and manufacturing, as well as to drive best practices and efficiencies into all of our activities. We expect to generate over $50 million of cost savings as we complete these integration projects.”

As part of the newly integrated company, the DJO Surgical division announced in March this year that it received FDA clearance for the new X-alt cross-linked polyethylene liner for DJO Surgical’s FMP acetabular hip system. The FMP implant combines the company’s existing cobalt-chrome and ceramic femoral heads with a new wear-resistant, highly cross-linked polyethylene cup liner to form the hip ball-and-socket joint. According to the company, the cross-linked polyethylene liner reduced the generation of wear particles by 87% compared with DJO’s traditional polyethylene liner. Polyethylene wear debris in total hip replacement is a leading cause of osteolysis, an inflammatory response to wear particles that can lead to subsequent implant loosening in patients who have undergone hip replacement surgery. The X-alt was designed to reduce post-surgical hip dislocation by incorporating larger-diameter femoral heads. Larger-diameter heads increase the range of motion of the femoral shaft relative to the socket, reducing the chance that the femoral head will pop of the socket.

$413 Million
No. of Employees: 3,000

DJO Inc.—previously DJ Orthopedics before a name change in 2006—is one of the latest medical device companies to get swept up in the market’s current private equity frenzy.

In July this year, the company’s board of directors entered merger discussions with ReAble Therapeutics Inc. for $1.18 billion in cash. Including assumed debt, the transaction is valued at about $1.6 billion. Based in Austin, TX, ReAble is a medical device company focused on rehabilitation, pain management, physical therapy and orthopedics. It also is owned by private equity firm the Blackstone Group. Blackstone has committed to provide the financing that ReAble requires to complete the transaction. That said, the purchase of DJO certainly is a strategic growth acquisition for ReAble more so than a strict private equity buyout.

The deal is expected to close in the fourth quarter, subject to regulatory and DJO shareholder approvals. Terms of the merger agreement allowed DJO to solicit additional bids from third parties for 50 calendar days after July 16. If a rival bid were accepted, DJO would have to pay ReAble a break-up fee of $18.7 million.

DJO specializes in rehabilitation products such as knee braces, pain management devices as well as regeneration and bone growth stimulation products for the non-operative orthopedic and spine markets. The device maker sells its products through agents, distributors and direct sales force to orthopedic and spine surgeons, orthopedic and prosthetic centers, as well as hospitals, physical therapists and other healthcare professionals under the DonJoy, ProCare and Aircast brands.

DJO reported strong financial results for fiscal 2006. Net revenues totaled $413 million, an increase of 44%, compared to $286 million reported for 2005. The company said its domestic rehabilitation, regeneration and international business segments grew by 35%, 16.3% and 144%, respectively. Adjusted net income for the year was $12.3 million, including accounting costs and other fees related to acquisitions as well as a move into new corporate headquarters, compared to $29 million in 2005.

“Our 2006 results reflect the continuing success of our internal growth initiatives, with added acceleration from our acquisition strategy. For the five-year period ending Dec. 31, 2006, these successful strategies have yielded a compound annual revenue growth rate of 22.6%,” said Les Cross, president and CEO.

Cross added that growth was driven by launching a steady flow of 20 new products, in addition to “optimizing the size and productivity” of the company’s sales force.

In April 2006, the company completed the acquisition of Aircast Inc. for approximately $290 million in cash. Aircast, based in Summit, NJ, manufactures orthopedic devices, including ankle bracing products and vascular systems (to prevent deep vein thrombosis following orthopedic surgery) complementary to DJO’s current product line. Also in January 2006, the company purchased Axmed, an orthopedic rehabilitation device maker based in France, for $15 million.

For the first quarter of 2007 (ended March 31), DJO reported net revenue of $115 million, a 39% increase. Net income, however, did not meet the company’s expectations at $5.6 million, compared to $6.5 million in 2006.