$799.5 Million
Prior Fiscal: $747 Million
Percentage Change: +7%
R&D Expenditure: $73.6M
Best FY24 Quarter: Q4 $215.7M
Latest Quarter: Q2 $203.1M
No. of Employees: 1,616
Global Headquarters: Lewisville, Texas

Astute readers may recall that Orthofix was forced to make a number of C-Suite swaps after it came to light that several execs—the CEO, CFO, and chief legal officer—were terminated in September (2023) due to inappropriate and offensive conduct.

The company brought on former LimaCorporate leader Massimo Calafiore as CEO, who took office in January 2024. For the vacated CFO role, the company tapped former Smart Wires CFO and Wright Medical senior VP of Global Finance Julie Andrews, who began serving around the same time as Calafiore. In April 2024, former Stryker VP and Corporate Secretary Andres Cedron became chief legal officer, replacing the last of the maligned former employees.

Seven other top roles for the global orthopedic company were also inhabited by new talent last year:
February: Jason Shallenberger, president of Bone Growth Therapies
March: Lucas Vitale, chief people and business operations officer
May: Max Reinhardt, president of Global Spine
June: Julie Dewey, chief investor relations and communications officer; Aviva McPherron, president of Global Operations and Quality
July: Stephanie Walsh, chief Human Resources officer
August: Patrick Fisher, president of Global Orthopedics

Sales for the company and its new leadership’s most recent fiscal year (ended Dec. 31, 2024) reached $799.5 million, ascending 7% over the previous year. U.S. Spine Fixation proceeds were particularly healthy, increasing 14.2% thanks to distribution expansion and further penetration into existing accounts. Orthofix also recorded a record number of 7D FLASH navigation system placements for the year.

Global Spine sales captured $675.3 million, increasing $44 million (7%). Global Orthopedics collected the remaining $124.1 million of revenue, rising $8.9 million (7.7%) over the prior year. Orthofix pointed to 16.4% U.S. growth due to investments in recent product launches, commercial execution, and strong performance in its OSCAR PRO Line, as well as $4.3 million international growth driven by recent European product launches and offset by the timing of some tender offers and stocking distributor offers.

Bone Growth Therapies sales last year jumped 9.8%, increasing $20.9 million to $233.4 million. An increase in gross order volumes and continued investment in the company’s direct sales channels for the spine and fracture markets powered this growth. Also cited was capitalization of cross-selling opportunities and continued growth of its AccelStim device.

FDA clearance for the Rodeo telescopic nail arrived in May (2024). The device treats deformities or fractures in patients with osteogenesis imperfecta (OI), stabilizing the limb while elongating—or telescoping—to accommodate natural growth of pediatric patients. The nail addresses biomechanical and procedural challenges related to current OI telescopic rod systems, providing strength and reliable bone fixation needed when implanting in the inherently fragile bone associated with OI patients.

Another FDA nod followed in July, this time for the Fitbone transport and lengthening system. It’s used to treat large bone defects in the femur and tibia due to trauma, infectious, or malignant conditions and is the only intramedullary (IM) nail designed to transport or lengthen bone through a single surgery.

Implanted in a minimally invasive surgery, the system consists of a motorized IM nail, a receiver, and an external control set. Once the treatment is finished, the nail and receiver are removed.

Spinal Implants, Biologics, and Enabling Technologies posted $441.9 million in revenue, expanding $23.1 million (5.5%) over the previous year. This was mainly due to increased sales growth from new and existing high-volume distribution partners, particularly in Spinal Implants and Biologics. This segment witnessed growth in each of the company’s cervical interbody, thoracolumbar, and demineralized bone matrices franchises. This rise was somewhat tempered by a decline in motion preservation sales.

Last January, Orthofix began a deal with MRIguidance to distribute its BoneMRI imaging software in the U.S. and completed the first eight cases using BoneMRI with the 7D FLASH navigation system. BoneMRI creates a synthetic CT from an MRI exam without using harmful radiation. v

$747 Million
Prior Fiscal: $461 Million
Percentage Change: +62%
R&D Expenditure: $80.2M
Best FY23 Quarter: Q4 $200M
Latest Quarter: Q1 $189M
No. of Employees: 1,634

Orthofix reentered the top 10 fold this year thanks to a whopping 62% revenue climb to $746.6 million. The main driver of this astronomical growth was full integration of the SeaSpine portfolio—Orthofix celebrated the merger’s completion on January 5, converting SeaSpine into a wholly-owned subsidiary.

The combined Orthofix is a global spine and orthopedics company with a portfolio of biologics, spinal hardware solutions, bone-growth therapies, specialized orthopedic solutions, and the FLASH surgical navigation system. The company has about 1,600 employees, products distributed in 68 countries, and a global R&D, commercial, and manufacturing footprint.

SeaSpine’s wave of revenue flooded Orthofix’s Spinal Implants, Biologics, and Enabling Technologies business, which swelled $152.4% to $418.8 million. Onboarding of new, high-volume distribution partners and multiple product launches also contributed to the franchise’s success, the company boasted.

All of the Carlsbad, Calif.-based SeaSpine’s products share a seafaring theme. The crew aboard this portfolio include nautical names like Shoreline, WaveForm, Admiral, NorthStar, Meridian, Mariner, Regatta, OsteoBallast, Reef, Explorer, Daytona, Cove, Torrent, and Fathom.

The Mariner deformity pedicle screw system embarked in January 2023 along with an announcement of the first patient cases using it. The system’s modular tech is used to treat complex deformity spine cases in adults. Mariner notably requires fewer surgical trays than typically used in these surgeries. Its “gimbal” technology, used in the Mariner fleet of products, aims to more efficiently place the complex instrumentation needed for these procedures.

In April, Orthofix launched the Lattus lateral access and Fathom pedicle-based retractor systems. Both broadened the company’s options for minimally invasive spine surgery.

Lattus features independent blade retractor strength with a “down-and-out” splay feature for access to challenging anatomy. It facilitates use of the company’s WaveForm L and Regatta NanoMetalene interbody devices, optimizing the lateral procedure.

Fathom touts three points of active telescoping blade fixation so the surgeon can control each blade’s precise length and dial in a customized lateral to medial tilt. This provides a rigid construct to address specific anatomy. It enables a reproducible surgical workflow, enhances visualization with minimal soft tissue disruption, and complements the company’s complete TLIF procedural solutions.

The 3D-printed WaveForm A implant for anterior lumbar interbody fusion (ALIF) hit the market via a full launch in June. WaveForm A integrates with Orthofix’s Meridian ALIF system, a modular implant and instrument system to help streamline ALIF procedures with diverse fixation options for single and multilevel ALIFs in a reduced number of trays.

Full commercial launch and the first U.S. cases with the 7D FLASH navigation percutaneous module 2.0—acquired from SeaSpine—followed in August. The module features new planning features and more functionality for the spine surgery navigation system. 7D FLASH harnesses visible light to generate a 3D image for surgical navigation in seconds. The image-guidance system merges proprietary, camera-based technology with machine vision algorithms in an attempt to remove many long-standing frustrations related to other surgical navigation platforms.

The FDA clearance and full launch of the OsteoCove advanced, bioactive, synthetic bone graft commenced in October. Made of biphasic ceramic granule comprised of β-tricalcium phosphate (β-TCP) and hydroxyapatite (HA) combined with type-I bovine collagen, OsteoCove features a specialized granule surface topography designed to elicit a bone-forming response. This specialized surface chemistry and microporosity have been shown to promote superior bone formation when compared to other commercially available advanced synthetic grafts, according to Orthofix.

November saw full U.S. rollout of the WaveForm L lateral lumbar interbody fusion (LLIF) system. The 3D-printed LLIF cage has a porous design for strength and stability and robust fusion environment. The implant’s large core aperture facilitates placement of bone graft material and the implant’s repeating, wave-like structure helps efficiently distribute compressive loads without compromising strength.

The addition of these product lines positions Orthofix to be a major player in the spine market. However, integrating SeaSpine also brought a maelstrom that began raging just nine months after the merger was completed.

When the two companies married, several SeaSpine executives were appointed to the top offices at the newly combined company: Keith Valentine became CEO, John Bostjancic became CFO, and Patrick Keran became chief legal officer.

In September, Orthofix announced that all three executives were terminated from their respective roles following an investigation conducted by outside legal counsel and overseen by the company’s independent directors.

The investigation revealed that Valentine, Bostjancic, and Keran “engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements and was inconsistent with the company’s values and culture.”

“Orthofix’s core values are built around fostering, cultivating and preserving a culture that is respectful, and we do not condone harassing or inappropriate conduct or statements of any kind,” Orthofix board chair Catherine Burzik told the press when the terminations were revealed. “We require all employees—and especially our leaders—to behave in accordance with the company’s values. The Board did not make these decisions lightly. We believe they are necessary to ensure our employees, investors, customers, and other stakeholders have confidence in the company’s leaders.”

No further details were shared. The company pulled out of the Morgan Stanley conference in September and postponed its investor day also planned for that month because of the top executive shake-up.

Burzik was appointed interim CEO as the company began a search for permanent successors. Geoffrey Gillespie, Orthofix VP, corporate controller, was named interim CFO; and Puja Leekha, Orthofix senior VP, chief ethics and compliance officer, was named interim chief legal officer.

In November, the company declared it had named a new leader: LimaCorporate CEO Massimo Calafiore. Calafiore took office in January 2024 following completion of LimaCorporate’s acquisition by Enovis corporation.

He had been CEO of LimaCorporate since September 2022, strengthening and reshaping the company’s strategy and culture priorities during his tenure. He particularly focused on fostering, mentoring, and retaining talent.

Before LimaCorporate, Calafiore was executive VP and chief commercial officer of NuVasive. At the beginning of his NuVasive tenure, Calafiore served as president of NuVasive Specialized Orthopedics (formerly Ellipse Technologies). In this role, he helped to further integrate the Ellipse business with NuVasive.

Earlier in his career, Calafiore worked for Waldemar Link GmbH & Co. KG and served in various leadership positions across multiple business segments, including orthopedics, lower extremities, and spine. He also supervised the sales of the STAR Ankle to Small Bone Innovations and the PCM Cervical disc to NuVasive.

“Having worked in orthopedics and spine throughout my entire career, I know Orthofix well and have long admired the company and its team,” Calafiore told the press. “I was attracted to Orthofix given the many growth opportunities created by its unique, broad-based portfolio and high-quality distributor relationships. I am also impressed with the innovative solutions Orthofix has developed to meet the needs of surgeons and the patients it serves. At this pivotal time for the company, I look forward to working with the board and leadership team to capture Orthofix’s significant profitable growth potential and drive enhanced shareholder value.”

In tandem, the company also welcomed Julie Andrews as its new CFO. Andrews has previously been CFO for Smart Wires Technology, senior VP of global finance for Wright Medical, and VP of finance for Medtronic’s Spine and Biologics division.

Rounding out the trio of new executives came in April of this year. Orthofix named Stryker VP and corporate secretary Andres Cedron as its new chief legal officer.

Moving back to finances, the company’s Bone Growth Therapies proceeds grew impressively to $212.5 million, a 13.5% increase. Orthofix touted more frequent complex spine procedures and favorable Medicare reimbursement rates as the drivers, along with growth in spine and fracture sales channels and launch of the AccelStim device.

Global Orthopedics sales rose 7.2% to $115.3 million, with U.S. growth reaching 11.1%. Success here was attributed to investments in product launches, the sales channel’s commercial execution, and a strong surgeon education program.

International sales moved slower, climbing 3.3% atop the prior year mainly because of more stocking distributor orders and recent product rollouts.

The TrueLok Phantom and Tornado hinges launched in June. Both technologies are used with the company’s TrueLok circular frames for knee and ankle reconstruction and deformity applications. The Phantom hinge allows for precise alignment when performing joint distraction or contracture correction by maintaining the axis of rotation and joint mobility. The hinge is radiolucent and a flexible, spring-like design allows natural joint motion to be restored after a joint distraction procedure.

$464 Million
Prior Fiscal: $407 Million
Percentage Change: +14.2%
R&D Expenditure: $49.6M
Best FY21 Quarter: Q4 $125M
Latest Quarter: Q1 $106.4M
No. of Employees: 1,087

The Olympics generate its fair share of comeback stories. This one, however, never quite made it to the grand stage, but it’s a substantial success story all the same.

At 39, 2000 Olympic platform diving gold medal winner Laura Wilkinson was planning to give the competition one more try. While coming out of retirement in 2017 at her age would certainly have been enough of a challenge for most, she soon realized that years of hitting the water at high rates of speed had done significant damage to her spine. Just a year after she started her quest to make her return at the Tokyo Olympics (originally planned for 2020, but took place in summer of 2021 due to COVID), she became an Orthofix patient. She went through a successful spinal fusion procedure that married an Orthofix cervical plate system to stabilize her spine, the Trinity ELITE allograft to aid in bone fusion, and the CervicalStim device to stimulate bone growth post-surgery. Following her recovery period, Wilkinson was able to return to the pool to continue her quest for Olympic glory.

“When my doctor first told me that I needed spinal fusion surgery, I have to admit it was a little scary,” Wilkinson said. “That’s one of the reasons why I started sharing my journey on social media and posting the different stages I was going through. I wanted people to see that you can overcome these challenges and get your life back. It was important to me to encourage other people who were dealing with cervical disc degeneration and showcase a possible path for recovery.”

In May 2021, Orthofix proudly announced it was continuing its sponsorship of the diver and her hope to reach the games. Unfortunately, on June 13, 2021, Wilkinson finished 10th in the women’s 10-meter platform finals, which was the last step in qualifying for the Olympic team. She exited the pool to a standing ovation from all in attendance.

“I didn’t even realize it was going on in the whole pool,” Wilkinson revealed to KPRC 2’s Christine Noel. “I wish I could have taken a minute to see that, but that was very special.”

Orthofix enjoyed its own special moment in 2021. The firm announced it reached a significant milestone in September—more than 60,000 of the company’s M6-C artificial cervical discs had been implanted worldwide. The implant is a next-generation artificial disc designed to mimic the natural motion of a native disc. Developed to replace an intervertebral disc damaged by cervical disc degeneration, the M6-C disc is indicated as an alternative to cervical fusion. First approved for distribution under the CE mark in the EU and other international geographies, the M6-C disc received FDA approval in 2019.

The successful spine solution was just one of the reasons for the favorable financials the company enjoyed in 2021. Its end tally for the fiscal was $464.5 million, an increase of 14.2% over the previous period.

All business units also enjoyed positive growth for the 12-month period. Global Spine, which is comprised of three segments, contributed $359 million to the company’s coffers. The largest division—Bone Growth Therapies—added $187.4 million to the total, an increase of 9.4%. Spinal Implants skyrocketed 21.3% to $115.1 million. Third, biologics celebrated a modest 1.7% rise to end at $56.4 million. All three units attributed the gains to the continued recovery from the decrease in procedures due to the COVID pandemic. In fact, Bone Growth Therapies and Biologics were still below their 2019 revenue totals so the recovery would likely continue into the next fiscal.

Sister division—Global Orthopedics—ballooned 24.4% to finish the year at $105.5 million. Its $20.7 million increase was attributed primarily to the pandemic recovery, as well as continued growth of the FITBONE product line and favorable foreign currency exchange rates.

While the M6-C disc was achieving milestones in terms of number of implantations, it was not one of the new products the company was making headlines with in 2021. There were a number of those, however, including the aforementioned FITBONE product.

In February, the organization announced it was launching the system in the U.S. and Europe. The FITBONE intramedullary lengthening system was developed for limb lengthening and deformity correction of the femur and tibia bones. Implanted through a minimally invasive procedure, the system consists of the implanted intramedullary nail, a subcutaneously implanted receiver, and an external control set that enables the patient to manage the distraction phase at home. In September, the firm announced the first pediatric case involving the technology took place.

April produced a 510(k) clearance and first patient implant of the 3D-printed CONSTRUX Mini Ti Spacer System. Developed to enhance anterior cervical discectomy and fusion procedures, the spacer with Nanovate Technology is the first 3D-printed titanium interbody introduced to the market by the company.

Later that same month, Orthofix announced the 510(k) clearance and first patient implant of the FORZA Ti TLIF Spacer System. The titanium 3D-printed interbody spacer with Nanovate Technology was introduced to help optimize transforaminal lumbar interbody fusion (TLIF) procedures. The optimized design, porosity, and surface allows bone to grow into and through the spacer. The U.S. launch and first patient implant of the system took place in June.

Orthofix also secured the exclusive license to commercialize the portfolio of Italy-based IGEA S.p.A’s bone, cartilage, and soft tissue stimulation products in the U.S and Canada. Under the terms of the agreement, Orthofix obtained the rights to pursue FDA approvals and sell IGEA’s platform of orthopedic products within the two countries. The line expanded Orthofix’s bone growth therapies portfolio of pulsed electromagnetic field products with additional treatment modalities and indications such as low-intensity pulsed ultrasound and capacitive coupling for fracture management.

May saw the expansion of the firm’s pediatric offerings with FDA 510(k) clearance of the OrthoNext digital platform, a software tool for deformity analysis and preoperative planning for pediatric orthopedic procedures. U.S. and European full market launch also took place that same month for the OSCAR PRO Ultrasonic Arthroplasty Revision System. Designed to reduce the challenges associated with revising failed cemented arthroplasties, the OSCAR PRO is an ultrasonic surgical system that aids in the removal of cement during complex joint revision surgeries.

In the middle of the dog days of summer, the organization announced the launch and first patient implants with the fiberFUSE Strip, an advanced demineralized fiber bone-graft solution containing cancellous bone. The fiberFUSE Strip is formulated as a convenient, preformed bone-graft strip to enable optimized application for posterior cervical, posterior lumbar, and degenerative spinal procedures.

On the last official day of summer, Orthofix told of the full market launch of the Opus Mg Set osteoconductive scaffold, a synthetic magnesium-based bone void filler for orthopedic procedures. Opus Mg Set provides a procedure-specific solution for orthopedic fracture care and trauma applications by filling non-structural bony voids or gaps during surgery. Available in both a moldable and injectable form, this solution provides immediate compressive strength at the surgical site post-implantation. When injected or placed into bony voids or gaps, it forms a supportive scaffold to help facilitate the natural bone-healing process.

$579 Million
NO. OF EMPLOYEES: 1,400

Chances are the executives at Orthofix International N.V. weren’t thinking of Britain’s Iron Lady when they were making their upper management decisions during the 2011 fiscal year, but nonetheless the year certainly was marked by a number of changes “at the top.”

And the very top is a good place to start. Robert S. Vaters was promoted from chief operating officer (COO) to president and CEO in August of 2011. Alan Milinazzo stepped down after six years at the helm, but remained on the company’s board. Earlier in the year Vaters had been promoted from chief financial officer (CFO) to COO.

“Since joining Orthofix as chief financial officer in 2008, Bob has delivered measurable business value in our key business drivers, proving himself a tireless worker and terrific leader through a series of increasingly challenging and successful assignments. The board believes Bob is the right person to lead our company during this next phase of our growth and we’re excited that he has accepted the position of president and CEO,” said Jim Gero, chairman of the Orthofix board of directors. “We’re also very thankful to Alan for everything he has done for Orthofix over the past six years and delighted that he will remain an essential advisor to us as a member of the board.”

In October, Bryan McMillan was promoted to president of the Spine Global business unit, where he had been serving as the executive vice president and general manager for the spinal implants division since February 2011. McMillan has been with the company since March 2010 in various roles of increasing management responsibilities. His new role makes him responsible for activities of the spinal implants and stimulation businesses, which previously were managed separately.

“Bryan has proven himself as an exceptional leader in our spinal implants business,” said Vaters. “I am certain that … he can further drive growth while creating synergies and cross-selling opportunities between our best in class spinal implants, biologics, and our market-leading spinal stimulation products.”

Vicente Trelles was appointed senior vice president of World Wide Operations and Shared Services. Trelles joined Orthofix with more than 25 years of experience in the medical device and pharmaceutical industries. Since 2006, Trelles served as partner of a healthcare private equity firm that he co-founded. From 2001 to 2006, he was an executive vice president and chief operations officer at Inamed Corporation, which was acquired by Allergan in March 2006. Prior to Inamed, he was an executive with Allergan, Baxter Healthcare and American Hospital Supply in Europe and the United States.

In March, Brian McCollum was promoted to chief financial officer. McCollum had been serving as the company’s interim CFO since January 2011. He’s been with the company for 10 years in various roles of increasing responsibilities, most recently serving as senior vice president of finance.

In spite of, or perhaps because of, the musical chairs in the front office in fiscal 2011 (ended Dec. 31), sales continued to expand. Net sales for the year were $579 million, up from $564 million in 2010. Net loss for the year was $1.1 million, or 6 cents per diluted share, compared to $44 million in net earnings for fiscal 2010. Adjusted net income (which excludes one-time items such as legal fees including $48 million related to government resolutions, etc.) was $51.1 million, or $2.75 per diluted share, for the year, up 30 percent from fiscal 2010. Spine sales made up $304 million of the total (down from $306 million in 2010). Implants made up $144 million (up 7 percent) of the spine sales total, while stimulation devices were 160 million (down 7.5 percent). Orthopedics netted $165 million (up from $154 million) and sports medicine earned roughly $109 million (up from $104 million in 2010).

The firm’s orthopedics and spinedivisions provide devices for adult and pediatric deformity correction, internal and external fracture fixation, biologics, regenerative stimulation, interbody fusion and minimally invasive surgery. In 2011, Breg Inc., Orthofix’s sports medicine division, was still part of the picture. The unit, however, was divested in 2012 to Chicago, Ill.-based Water Street Healthcare Partners, a private equity firm, for just shy of $158 million.

The company may have had plans to jettison Breg, but not before the division rolled out a few products for the year, including the SlingShot 3 shoulder brace, the LPR ligament knee brace and the Mini Walker boot.

SlingShot has two patent-pending features including a unique shoulder harness that off-loads pressure from the neck and disperses it along the opposing shoulder and scapula, in addition to an abduction pillow that provides multiple options for clinicians to support the shoulder joint after surgery.

The LPR is designed to provide protection for post-surgery patients returning to normal activities, and non-operative patients who require additional ligament support. The LPR brace’s patent-pending triangle “truss” frame is made of aerospace aluminum, which adds strength while keeping the brace lightweight. The brace includes a series of vents and grooved channels in the frame pads that increase airflow, “grip” the skin, and improve brace suspension for better performance. The Mini Walker is for protection for stable fractures and ankle sprains in young patients, from 1 to 9 years old.

In the fall of 2011, the company made the full market release of its Collage osteoconductive scaffold bone graft substitute for use in spine and orthopedic indications.

“We are proud to announce the launch of Collage, our new synthetic platform based on highly-purified biocompatible materials of ß-TCP and type-1 collagen,” said Michael Finegan, President of Biologics. “We have been tremendously successful with Trinity Evolution and can now focus on broadening our portfolio of biologic products so that we can fulfill all the needs of our customers. The synthetic segment of the market is large, attractive, and presents a perfect complement to our existing biologic portfolio.”

The U.S. market for synthetic bone graft substitutes is estimated to include more than 320,000 procedures and is valued at approximately $360 million annually, according to a recent iData Research report.

The end of the fiscal year also brought certain legal matters to a close.

The announcements came in early 2012, but the company recorded most of the related charges in its 2011 financials. Orthofix finalized agreements to resolve a U.S. Department of Justice (DOJ) investigation into its bone growth stimulation business. The case included a federal lawsuit accusing Orthofix and several other medical device firms of misleading doctors into prescribing bone-growth stimulation devices to patients for longer periods of time than necessary, thereby defrauding government programs such as Medicare. The lawsuit claimed the devices generally are used only for three to six months, then left to collect dust in homes and clinics. The Boston Business Journal quoted one document noting, “These devices can often be found selling on eBay for $50.” Orthofix paid $43 million to close the federal investigation and enter into a five-year corporate integrity agreement with the U.S. Health and Human Services Department’s Office of Inspector General.

“I am very pleased with the substantial progress made regarding these three legal matters, which removes a significant amount of risk and uncertainty for the company,” Vaters said, noting that the company had made “significant improvements” to its compliance practices, personnel, and financial standing. “I look forward to a stronger focus on the company’s operations, including investments in R&D to position the company for long-term growth, while maintaining earnings improvement.”

In addition to the federal bone-growth stimulation investigation, the company also reached an agreement in principle with the U.S. Attorney’s Office in Massachusetts to pay $32 million to resolve an investigation into its Blackstone Medical subsidiary (Orthofix bought Blackstone in 2006). Blackstone was named in a number of lawsuits and Orthofix received several subpoenas from various government agencies concerning allegations that the spinal implant maker violated the federal False Claims Act by providing allegedly inappropriate payments and other items of value to physician consultants, U.S. Securities and Exchange Commission filings showed.

The company also reached an agreement in principle with the DOJ to settle criminal violations of the Foreign Corrupt Practices Act (FCPA) that it voluntarily reported to the U.S. government in June 2010 concerning its former Mexican orthopedic distribution entity. In the first quarter of 2011, the company spent $3 million to establish an accrual in connection with this case based on the results of its own internal investigation and an analysis of similar FCPA resolutions.

$564.4 Million

NO. OF EMPLOYEES: 1,486

Professional coaches like to call them “rebuilding” years. Most sports fans cringe at the term, knowing such construction projects usually entail a revolving door of management and player changes, a sharp decline in performance, and a rethinking of the overall strategy that initially brought the team success.

A rebuild can take as little as one season to complete, or drag on for years, fostering feelings of frustration, disappointment, anger, hopelessness, even misery among the most diehard enthusiasts.

(Pity the fans of Major League Baseball’s Cleveland Indians, for example, who seem perpetually stuck in waiting mode for the end of the Tribe’s retooling and the start of its World Series title run).

Rebuilds are not limited to the sports world, however. They occur just as often in the corporate arena among companies looking to regain their footing and return to the top of their game. Orthofix International N.V. was one of those companies last year, seemingly undergoing a rebuilding effort that included changes to its leadership, the reorganization and consolidation of its business operations, and the settlement of a nagging legal dispute with both NuVasive Inc. and Osiris Therapeutics Inc.

Like most organizations spearheading an internal renaissance, the rebuilding effort by Orthofix negatively affected its performance last year, but only in the fourth quarter. Reorganization charges and the legal settlement prompted executives to lower the company’s final quarter (2010) earnings to 39-42 cents per share from 59-62 cents per share. Slow growth in the firm’s spine stimulation unit affected the company’s bottom line as well, lowering fourth-quarter and full-year 2010 revenue projections to $142-$144 million, and $562.6-$564.6 million, respectively.

The lower earnings estimates, however, had little effect on the company’s overall growth last year.

Despite the last-minute double hit to its finances, Orthofix posted a 3.4 percent increase in overall revenue and a staggering 74 percent surge in diluted EPS; amazingly, the company fell precisely within the boundaries of its late-year earnings adjustments, posting a fourth-quarter EPS of 45 cents and full-year revenue of $564.4 million. In addition, gross profit rose 6.2 percent to $432.6 million and operating income climbed 39.3 percent to $89 million, according to Orthofix’s 2010 earnings report.

Executives attributed the company’s revenue growth in fiscal 2010 (year ended Dec. 31) to the market penetration of several new products released in 2009, including the Ascent LE posterior cervical spine system; the Pillar SA interbody device, used for spinal fusion procedures in patients with degenerative disc disease at one or two contiguous levels in the lumber spine; and the Firebird pedicle screw system as well as its new spinal deformity correction module. The new system, in limited release last fall, is designed for treatment of patients with conditions such as scoliosis and kyphosis. The system’s new Direct Vertebral Rotation device provides surgeons with the option of combining rod reduction and direct vertebral rotation in one instrument. The device is designed for quick intraoperative assembly and disassembly.

Sales last year also were driven by the Trinity Evolution allograft, the subject of Orthofix’s legal dispute with NuVasive and Osiris Therapeutics. San Diego, Calif.-based NuVasive sued Orthofix and the Musculoskeletal Transplant Foundation in April, claiming the Trinity Evolution allograft infringed upon intellectual property owned by NuVasive and Osiris. The companies entered a licensing deal covering the Trinity Evolution product, an allograft of cancellous bone composed of viable adult stem cells and osteoprogenitor cells within the matrix and a demineralized bone component. The product provides orthopedic surgeons an alternative to autograft and other bone grafting procedures, according to Orthofix.

The company’s rebuilding efforts certainly added to its bottom line last year. A new, 144,000-square-foot North American Operations and Education Center in Lewisville, Texas, opened in August 2010, enabling the firm to consolidate its Spinal Implants division operations from Wayne, N.J., and Springfield, Mass., and house operations from its Global Spinal Implants and Spine Stimulation divisions as well as its North American Orthopedics division. Orthofix also closed up shop in several locations throughout the United States and Mexico, and subleased a facility in Boston, Mass.

Selling its vascular product line in March 2010 to Covidien plc netted an extra $27.7 million for Orthofix, enabling executives to pay off loans ($19 million of its vascular product line sale price went toward creditors). Through its various cost-saving initiatives, the firm reduced its outstanding credit balance last year by 14 percent to $216.2 million. Its credit ratio, according to executives, was 2.1 in 2010 compared with 2.6 in 2009 (year ended Dec. 31).

Though the company implemented a restructuring plan late last year to further reduce costs and chip away at its outstanding loans, it did not realize any of the anticipated $6 million to $7 million in annual savings. Executives expect the extra cash to impact revenue starting this year.

Despite announcing the restructuring of its three business units (Spine, Orthopedics and Sports Medicine), Orthofix reported 2010 sales data under its former operating structure, dividing sales between its Domestic, Spinal Implants and Biologics, Breg, and International divisions. Using that reporting method, the Domestic division garnered the most revenue for the company, earning $228.2 million, or 41percent of overall sales. Top sellers in this category included the Spinal-Stim and Cervical-Stim products, which Orthofix touts as “non-invasive pulsed electromagnetic bone growth stimulators.” The firm’s Trinity Evolution product also contributed to the 8 percent growth in Domestic sales.

Spinal Implants and Biologics product sales climbed 10 percent to $130.5 million, due mostly to a 17 percent spike in throacolumbar product sales and a 10 percent jump in interbody product revenue.

Much of the increase resulted from strong sales of the Pillar SA interbody device, the Firebird pedicle screw system and the Trinity Evolution allograft.

Sales in the remaining two divisions—Breg and International—both fell in 2010, with Breg revenue slipping 1 percent to $91.7 million and International sales plummeting 8 percent to $113.9 million.

Executives attributed the drop in International sales to the divesture of the company’s vascular operations as well as the June 2010 termination of a distribution agreement for anesthesia products Orthofix disseminated in the United Kingdom. Breg’s dropoff, on the other hand, primarily was due to a 2 percent decrease in bracing sales compared with 2009. Overall sales of sports medicine products was off as well, despite the introduction of three new products last spring: a soft knee brace with an integrated hinge for added stability, a hip pad to be used with Orthofix’s cold therapy devices for pain relief after surgery, and a wrist immobilization accessory for Breg’s T-Scope Elbow brace.

$546 Million
NO. OF EMPLOYEES: 1,484

Orthofix began 2009 in a fighting mood. In December of 2008, Ramius Capital, a large New York, N.Y.-based hedge fund, proposed replacing Orthofix’s chairman, deputy chairman and two other board members. Ramius, which owns a little more than 5 percent of Orthofix stock, was pushing the company to shed its underperforming Blackstone Medical divisions and reduce expenses by consolidating operations.

In April of last year, Orthofix shareholders voted to keep the company’s board-level leadership in place.

“The board of directors and management team of Orthofix are thankful that shareholders chose to reject the short-term focus of the Ramius proposals, instead voting to support the company’s long-term strategic plan to deliver shareholder value,” the company’s chief executive, Alan Milinazzo, said in a statement.

Board room machinations aside, the company made financial gains for the year, despite Ramius’ accusations. In 2009, the company improved profitability and strengthened the performance of its spine stimulation, orthopedic and sports medicine divisions, leadership reported.

A key new product introduction was the Firebird pedicle screw system. More than a one-time release, the Firebird system will be used as platform for the launch of additional implants designed to treat spinal deformities, such as scoliosis.

The company’s Breg sports medicine division added to its line of Fusion knee braces with the introduction of the Lateral OA Brace, which features an ultra-thin, low-profile hinge designed for individuals suffering from lateral compartment osteoarthritis (OA). The brace was developed to off-load knee stress for individuals suffering with OA, and the low-profile hinge is designed to reduce interference during the wearer’s movement specifically on the inside part of the knee. The brace provides support for the anterior cruciate ligament and posterior cruciate ligament, as well as protection for collateral ligaments.

The spine stimulation business delivered double-digit growth, due, in part, to the company’s Cervical-Stim device, which is the only cervical spine stimulator on the market approved by the U.S. Food and Drug Administration. Company officials said the Orthopedics division maintained solid market share in Europe, while continuing to make inroads into new international markets in Latin America and Asia. In addition, the Orthopedics division also introduced Trinity Evolution in the United States. Trinity Evolution is an adult stem cell-based bone growth allograft used by surgeons to facilitate bone fusion.

The operating improvements achieved with the firm’s spinal implants and biologics “played a key role” in an 87 percent year-over-year increase in cash flow from operations that Orthofix realized in 2009, officials said. The significant increase in cash flow was used to make $25 million in early repayments of debt. The Spine division also received new management with the appointment of Kevin L. Unger as president of the company’s spinal implants business. Unger joined Orthofix after more than 14 years with Stryker Corp., where he served last as a vice president and general manager in the MedSurg Division.

Total revenue for fiscal 2009 (ended Dec. 31) was $545.6 million, a 5 percent increase compared with 2008. Total net income was $24.5 million compared with a loss of $228 million in 2008. Most of the loss in 2008 was the result of one-time payments related to the purchase of Blackstone Medical.

Excluding certain items, total adjusted operating income for 2009 was $73.9 million, or 13.5 percent of total revenue, compared with adjusted operating income of $60.3 million, or 11.6 percent, in 2008. This represented a 22.5 percent increase in operating income year-over-year. Consolidated earnings before income, taxes, depreciation and amortization was $102.1 million, an increase of 20.2 percent. Cash flow from operations for the full year 2009 was up 87 percent from the prior year to $50 million.

The company’s Spine division represented 51 percent of sales, while Orthopedics was 24 percent; Sports Medicine was 18 percent; and Vascular products (mostly used as part of orthopedic procedures) represented 3 percent of sales. Sales of “other” products, including airway management products for use during anesthesia, women’s care and other products, accounted for 4 percent of total net sales in 2009.

To help lay the groundwork for future product releases, Orthofix signed a license and product development agreement with Stout Medical Group LP, in Perkasie, Pa., for the development and marketing of a new expandable vertebral body replacement (VBR) and corpectomy device. A corpectomy is an operation to remove a portion of the vertebra and adjacent intervertebral discs for decompression of the cervical spinal cord and spinal nerves due to the removal of a tumor or trauma to the spine. A bone graft with or without a metal plate and screws is used to reconstruct the spine and provide stability. Expandable corpectomy devices provide in situ expansion, eliminate the need to cut the device to a specific size, and provide the surgeon with options for less-invasive incisions.

“Our agreement with Stout Medical is expected to allow us to provide a treatment for the tumor and trauma segment of the spinal market and give our surgeon customers a novel expandable corpectomy implant,” Milinazzo said. “Stout has a proven history of developing novel implant designs for the spinal market, and we are pleased to partner with them to commercialize their design.”

The initial term of the agreement is for 15 years, and gives Orthofix exclusive global licensing rights to the new device, which the company expects to be introduced during the second half of this year. According to a recent research report the U.S. market for VBR devices currently is estimated to be approximately $77 million, with the expandable device segment growing the fastest at approximately 12 percent, according to Orthofix.

Orthofix International began 2010 by selling some of its non-core orthopedic holdings. The vascular business, including its AV-Impulse mechanical compression technology, was sold to Mansfield, Mass.-based Covidien in March for net proceeds of $19 million. Under the deal, Orthofix agreed to provide “transitional services” to Covidien for a period of up to five months.

$519.6 Million
NO. OF EMPLOYEES: 1,406

$490 Million
NO. OF EMPLOYEES: 1,406

Fiscal 2007 was the year Orthofix set about integrating one of its most significant purchases to date. The company acquired Blackstone Medical in September 2006 for $333 million, which was part of a move to make Orthofix a larger player in the spinal market.

Orthofix, based in the Netherlands Antilles, has its US headquarters in Huntersville, NC (a suburb of Charlotte). The company manufactures a broad line of surgical and non-surgical products in spine, orthopedics (joint), sports medicine and vascular market sectors. The addition of Blackstone’s product line provided Orthofix with several new device offerings (and 24% of sales), including cervical and lumbar plates and other fixation systems that incorporate the use of metal bracing and pedicle screws to stabilize the spine; interbody devices and vertebral body replacements used to restore the space between two vertebrae that has been lost as a result of degenerative disc disease or to replace the damaged vertebrae; and an adult stem cell-based biologic bone-grafting product for the growth of new bone around the spine.

Other product lines include non-invasive stimulation products designed to enhance the success rate of spinal fusions and to treat non-union fractures; external and internal fixation devices used in fracture treatment, limb lengthening and bone reconstruction; bracing products used for ligament injury prevention, pain management and protection of surgical repair to promote faster healing; bone cement; and devices for removal of bone cement used to fix artificial implants.

Earlier this year, the company had announced it was looking into the possibility of divesting the fixation assets of its Orthopedic business unit, but it has decided to delay the move in the near term. Orthofix had anticipated using proceeds from the sale to reduce debt and take advantage of “additional strategic opportunities” in the spine sector.

Though the fourth quarter of 2007 underperformed corporate expectations, revenue for the year still showed significant gains—up 34%—to $490.3 million. Reported earnings were $11 million, or $0.64 per diluted share. Adjusted net income, excluding specified non-cash items for 2007, was $44.4 million, or $2.61 per share. Spine revenues were $243.2 million, a 68% increase compared with 2006, due mostly to the Blackstone acquisition. Spinal implant and biologic revenue grew 30%. Orthopedic revenue was $111.9 million, up 17%. Sports medicine revenue rose 11% to $87.5 million.

By sector, the Spine, Orthopedics, Sports Medicine and Vascular divisions made up 49%, 23%, 18% and 4%, respectively, of sales for the year, for a total of 94% of net sales in 2007. Sales of “other” products, including women’s care, airway-management products (for use during anesthesia) and other products accounted for the remainder of sales.

The company’s efforts to build its share in spine continued throughout 2007 and into 2008. Last year, the company prepared to roll out its Advent Cervical Disc implant, the first motion-preservation device developed by its Blackstone unit. The company anticipates it will receive a CE mark this year and FDA approval by the end of 2011.

In 2007, the company also acquired the rights to all of the intellectual property related to the InSWing interspinous process spacer, a device designed to alleviate the leg and back pain suffered by individuals with lumbar spinal stenosis. The device can be used in a minimally invasive surgical procedure involving minimal or local anesthesia, significantly less blood loss and a shorter rehabilitation period than alternative surgical procedures, the company said. Details of the purchase agreement were not disclosed.

In June this year, Orthofix acquired the intellectual property and technology from Intelligent Implant Systems LLC (IIS) for an implantable device that fixes spine disorders. Under the terms of the deal, Orthofix will pay $2.5 million upfront, plus up to an additional $4.5 million based on milestones, to IIS of Charlotte, NC. Orthofix said the spinal fixation device, which is set to launch in late 2010, is locked in place without the use of a torque wrench, which simplifies the procedure for surgeons.

For the first quarter of 2008 (ended March 31), sales were $128 million, an increase of 9%. Net income totaled $3.6 million, or $0.21 per diluted share.

$365 Million
No. of Employees: 1,900

Founded in 1980, Orthofix seems to have made strategic acquisitions part of its formula for steady growth—particularly since the early 1990s. The 2006 fiscal year proved to be no exception. The company, headquartered in the Netherlands Antilles (with corporate administrative offices located in Huntersville, NC, a suburb of Charlotte), acquired Blackstone Medical in September 2006 for $333 million.

Based in Springfield, MA, Blackstone Medical (not to be confused with the private equity firm named Blackstone) merged its spinal implants and related biologic products with Orthofix’s spinal stimulation business. For 2007, the company expects its newly expanded spinal division to generate $260 million in revenue.

The addition of Blackstone’s product line provides Orthofix with several new device offerings, including cervical and lumbar plates and other fixation systems that incorporate the use of metal bracing and pedicle screws to stabilize the spine; interbody devices and vertebral body replacements used to restore the space between two vertebrae that has been lost as a result of degenerative disc disease or to replace the damaged vertebrae; and the only commercially available adult stem cell-based biologic bone grafting product for the growth of new bone around the spine.

For fiscal year 2006 (ended Dec. 31), revenue totaled $365 million, including Blackstone’s fourth-quarter contribution of $28 million, an increase of 17% compared to 2005. Notably, fourth-quarter revenue was a record $116.1 million, an increase of 45%.

The company, however, reported a net loss of $7 million, largely due to costs incurred during the Blackstone purchase, according to Orthofix. Excluding the impact of purchase accounting costs associated with the Blackstone acquisition as well as certain other items, the company said adjusted net income was $36.7 million.

“Orthofix’s results in the fourth quarter were, once again, in line with our expectations, with each of our business sectors reporting sales growth compared with the prior year,” said CEO Alan Milinazzo. “In addition to strong quarterly results from Blackstone, we continue to be encouraged by the improved performance of our other operations, including our orthopedics and sports medicine businesses.”

Spine sales for 2006 were $145.1 million, including Blackstone, which was a 43% increase compared to 2005. Excluding Blackstone, the company’s spine revenues grew 15% compared to 2005.

Orthopedic revenue for the full year 2006 was $95.8 million, an increase of 4%. Growth, the company said, was driven by higher sales in each of its three main product areas, including internal and external fixation devices, deformity correction products and bone-growth stimulators. The company’s sports medicine division reported $79 million in net sales for 2006, an increase of 8%. Orthofix’s sports medicine subsidiary, BREG, Inc. (acquired in December 2003) produces devices for functional knee bracing.

For 2007, the company is off to a strong start.

In February, Orthofix launched two new internal nailing systems. The VeroNail is a trochanteric nailing system for the treatment of hip fractures, and the Centronail is a new family of nails designed to reduce operating room time and increase surgeon flexibility during the treatment of long bone fractures such as those in the tibia or the humerus, according to the company.

For the first quarter of fiscal 2007 (ended March 31), Orthofix reported revenue of $117 million, an increase of 44%, thanks largely to its most recent acquisition. Reported first quarter earnings were $6.3 million.

First-quarter sales for the company’s spine sector grew 101% to $56.1 million. Implant and biologic revenues from Blackstone were $26.4 million, which was an increase of 43% compared with its first-quarter sales in 2006, prior to the acquisition by Orthofix. This growth was due to higher sales of implant products, including Icon minimally invasive pedicle screw systems, Unity anterior lumbar plating systems, Construx vertebral body replacement devices and Pillar interbody devices, the company said.

Additionally, revenue from Blackstone’s biologic portfolio increased as a result of higher sales of Trinity bone growth matrix. Revenue from Orthofix’s spine stimulation devices rose 7%, driven by sales of Cervical-Stim, which is the only FDA-approved stimulator for the cervical spine.

Revenue from Orthofix’s orthopedic business grew 21% percent, to $27.6 million, fueled by the continued growth of internal fixation and deformity correction devices, as well as 18% growth in sales of the Physio-Stim bone growth stimulator for non-union fractures, the company said. Revenue for the company’s sports medicine division rose 10% to $21.2 million.

For the full 2007 fiscal year, the company predicts total revenue of $487 to $502 million.