07.22.14
$3.05 Billion
Key Executives:
Jeffrey R. Binder, President and CEO
Robin T. Barney, Sr. VP, Worldwide Operations
Wil C. Boren, President, Biomet Sports Medicine, Extremities and Trauma
Bart Doedens, President, Biomet 3i
Daniel P. Florin, Sr. VP and Chief Financial Officer
Adam Johnson, President, Biomet Spine and Bone Healing Technologies
Stuart G. Kleopfer, President, Biomet U.S.
Hadi Saleh, President, Biomet International
Renaat Vermeulen, President of Biomet Europe, Middle East and Africa
Daniel E. Williamson, President, Global Reconstructive Joints
No. of Employees: 8,400
Headquarters: Warsaw, Ind.
Throughout its history, Biomet Inc. has made headlines—both in arenas of business and orthopedic innovation—growing, in a relatively short time, from orthopedic upstart to among the industry’s largest companies. Its 37th year has been no exception. In 2014, the company was part of one of the year’s (and indeed the sector’s) biggest buyouts.
On the morning of April 24, Zimmer Holdings Inc. announced plans to buy rival Biomet in a deal worth $13.35 billion—which, in a way, brings the Biomet story to an end. The transaction, which is subject to customary conditions and regulatory approvals, is expected to close in the first quarter of 2015. Zimmer will pay $10.35 billion in cash and also will issue to Biomet’s equity holders an aggregate number of shares of Zimmer common stock valued at $3 billion. At closing, Zimmer stockholders are expected to own approximately 84 percent of the combined company, and Biomet shareholders are expected to own approximately 16 percent.
The merger will position the combined company as a force to be reckoned with in the $45 billion musculoskeletal industry. It’s been an amazing ride. Dane Miller, co-founder and longtime president and CEO of Biomet (prior to current CEO Jeff Binder), has been the face of the Warsaw, Ind.-based company for most of its existence.
How’d it all start? Like so many great beginnings, it started innocuously enough. This one happened during a discussion while drinking a beer on a sailboat. Miller—who has a master’s degree and Ph.D. in biomedical engineering and had worked for other medical technology companies—came up with the idea along with friend and coworker Jerry A. Ferguson while sailing in 1975. They then brought in Niles L. Noblitt and M. Ray Harroff to start Biomet in a converted barn in Warsaw in 1977. The group had only $725,000 in capital from their own money and a loan from the Small Business Administration. The company posted sales of $17,000 and $63,000 net loss that first year, but it didn’t stay that way for long.
So confident was he in the new company’s product, Miller’s maternal grandmother, Grace Shumaker, became the first Biomet joint recipient when she underwent a total hip replacement.
By 1980, Biomet earned $1.1 million in net sales. The company went public in 1982, garnered significant attention from Wall Street by 1983, and in 1987, with $96.7 million in net sales, was called a “hot growth company” by Businessweek magazine. With that kind of momentum, it’s easy to see why in 1984 Miller predicted Biomet would be a billion-dollar company by 2000.
“They all thought I was nuts,” Miller told students during a presentation last year at Indiana University’s Kelley School of Business as part of the Distinguished Entrepreneur-in-Residence Series at the Johnson Center for Entrepreneurship & Innovation. “How could anyone imagine by the year 2000 we’d be doing a billion dollars? And, in fact, in the fiscal year 2000, we reached a billion dollars.”
But the roller coaster ride slowed a bit for Miller in the mid-2000s. In 2006, Biomet’s board of directors thought it was a good time for Miller to “retire.” He did so, only briefly. He came back less that a year later to lead a consortium of private equity firms to make Biomet privately held once again. For a sale price of $11.4 billion in 2007, a private equity consortium including affiliates of Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co and TPG took ownership of the company.
Biomet had been planning to go public again with an initial public offering this year. After the merger was announced, however, those plans were put on hold.
Fiscal 2013 (ended May 31, 2013) was a productive one for Biomet. At the beginning of the fiscal year, the company closed its acquisition of the trauma operations of DePuy Orthopaedics Inc., which included facilities in the United States, the United Kingdom, Australia, New Zealand and Japan, as well as DePuy Trauma’s manufacturing operations in Le Locle, Switzerland.
New-product rollouts, of course, were part of the year’s offering. Among the first technologies of fiscal 2013 was the Comprehensive Nano stemless shoulder, which was released in Europe (the Nano is currently undergoing clinical trials for U.S. Food and Drug Administration approval in the United States). The Comprehensive Nano shoulder was developed based on the clinical heritage of the Biomet T.E.S.S. stemless shoulder, which has been clinically successful since its launch in Europe in 2004.
The bone-conserving shoulder design allows the surgeon to fit the implant to each individual patient by reproducing native humeral head version and inclination. The Nano is compatible with all configurations of the company’s Comprehensive shoulder system, and is the first stemless device to provide surgeons with intra-operative flexibility to convert from a Comprehensive Nano hemi-arthroplasty to a reverse or total shoulder arthroplasty using the same core instruments and without removal of the well-fixed humeral component, according to the company.
In February 2013, Biomet divested most of the assets of its bracing business.
In March 2013 Biomet partnered with OrthoSensor to combine the latter’s Verasense technology with Biomet’s Vanguard knee system. OrthoSense develops intelligent orthopedic devices that use embedded sensor technology to provide real-time data to physicians and healthcare systems with the goal of improving health and reducing costs. The Verasense knee system provides dynamic intraoperative feedback through an intelligent, single-use sensor to enable evidence-based decisions regarding component position, limb alignment and soft-tissue balance. The technology also is licensed by other orthopedic companies such as Smith & Nephew plc, Stryker Corp., and Zimmer.
Early in fiscal 2014, the company announced plans to acquire spine company Lanx Inc., broadening the company’s minimally invasive spinal technology offerings. Terms of the deal weren’t disclosed.
Also early this year, Biomet agreed to pay at least $56 million to settle a multi-district lawsuit relating to defective metal hip replacements, ending a protracted legal tussle. The litigation involves Biomet’s metal-on-metal hip replacement device known as M2a Magnum. Hundreds of plaintiffs claimed in various courts across the country that the hip device led to injuries. The lawsuits were combined and jointly heard in Indiana federal court, in the state where Biomet is headquartered. The multi-district litigation began in 2012. As part of the settlement reached in February, Biomet deposited $50 million into an escrow account and another $6 million into an attorney fee fund, according to a court filing. The agreement with the plaintiffs shall extend to all pending cases, and any future lawsuit filed in a federal court on or before April 15, 2014.
Number-wise, fiscal year, though now a distant memory for the company, showed solid performance.
The company’s top line for FY13 was a solid one. Biomet posted $3.05 billion in net sales, up 7.6 percent from fiscal 2012. U.S. sales increased 8.7 percent to $1.86 billion, while Sales in Europe rose 1.1 percent (including currently fluctuations, up 5.3 percent without) to $710 million. Remaining international markets posted the strongest gains, with net sales increasing 13.8 percent (18.4 percent in constant currency) to $480.5 million.
The bottom-line story was a little different. The company posted a net loss of $623.4 million for fiscal 2013, an increase compared to a net loss of $458.8 million.
Biomet’s Sports, Extremities and Trauma (SET) sector was the jewel in the company’s crown, with increased sales of $600.1 million, up from $361.1 million in fiscal 2012—a 66 percent increase (roughly 20 percent of Biomet’s total net sales). By comparison, sales of large-joint reconstruction products (hips and knees) were flat (down by a tenth of a percent) at $1.69 billion. Spine and bone healing dropped 5.1 percent to $291.3 million. Sales of dental products slipped 4 percent to $257 million.
“Fiscal 2013 was a very important year for our SET franchise, which had a fabulous year,” Binder said at the time. “We’re encouraged by the momentum in our SET and microfixation businesses during fiscal year 2013, and we’re excited by the growth potential we see in our spine, dental and biologics businesses.”
Looks like there’s a lot for Zimmer executives and shareholders to be excited about, too.
Through the end of the third quarter of fiscal 2014, which had ended by press time, the company reported solid sales gains for all sectors. Sales were $2.38 billion for the period ended Feb. 28, up from $2.27 billion for the same period for FY13. Again, SET sales outpaced the rest with 8.6 percent growth to $478.8 billion for the first nine months of FY14. But knee sales weren’t far behind —growth percentage wise—at 6.2 percent growth to $743.3 million. The company improved losses as well. Net loss through the end of the first three quarters was $65.9 million compared with $304.5 million for the same period in fiscal 2013. The United States and Europe posted sales gains—5.4 percent and 8 percent, respectively. International sales dropped slightly by 2.2 percent.
Key Executives:
Jeffrey R. Binder, President and CEO
Robin T. Barney, Sr. VP, Worldwide Operations
Wil C. Boren, President, Biomet Sports Medicine, Extremities and Trauma
Bart Doedens, President, Biomet 3i
Daniel P. Florin, Sr. VP and Chief Financial Officer
Adam Johnson, President, Biomet Spine and Bone Healing Technologies
Stuart G. Kleopfer, President, Biomet U.S.
Hadi Saleh, President, Biomet International
Renaat Vermeulen, President of Biomet Europe, Middle East and Africa
Daniel E. Williamson, President, Global Reconstructive Joints
No. of Employees: 8,400
Headquarters: Warsaw, Ind.
Throughout its history, Biomet Inc. has made headlines—both in arenas of business and orthopedic innovation—growing, in a relatively short time, from orthopedic upstart to among the industry’s largest companies. Its 37th year has been no exception. In 2014, the company was part of one of the year’s (and indeed the sector’s) biggest buyouts.
On the morning of April 24, Zimmer Holdings Inc. announced plans to buy rival Biomet in a deal worth $13.35 billion—which, in a way, brings the Biomet story to an end. The transaction, which is subject to customary conditions and regulatory approvals, is expected to close in the first quarter of 2015. Zimmer will pay $10.35 billion in cash and also will issue to Biomet’s equity holders an aggregate number of shares of Zimmer common stock valued at $3 billion. At closing, Zimmer stockholders are expected to own approximately 84 percent of the combined company, and Biomet shareholders are expected to own approximately 16 percent.
The merger will position the combined company as a force to be reckoned with in the $45 billion musculoskeletal industry. It’s been an amazing ride. Dane Miller, co-founder and longtime president and CEO of Biomet (prior to current CEO Jeff Binder), has been the face of the Warsaw, Ind.-based company for most of its existence.
How’d it all start? Like so many great beginnings, it started innocuously enough. This one happened during a discussion while drinking a beer on a sailboat. Miller—who has a master’s degree and Ph.D. in biomedical engineering and had worked for other medical technology companies—came up with the idea along with friend and coworker Jerry A. Ferguson while sailing in 1975. They then brought in Niles L. Noblitt and M. Ray Harroff to start Biomet in a converted barn in Warsaw in 1977. The group had only $725,000 in capital from their own money and a loan from the Small Business Administration. The company posted sales of $17,000 and $63,000 net loss that first year, but it didn’t stay that way for long.
So confident was he in the new company’s product, Miller’s maternal grandmother, Grace Shumaker, became the first Biomet joint recipient when she underwent a total hip replacement.
By 1980, Biomet earned $1.1 million in net sales. The company went public in 1982, garnered significant attention from Wall Street by 1983, and in 1987, with $96.7 million in net sales, was called a “hot growth company” by Businessweek magazine. With that kind of momentum, it’s easy to see why in 1984 Miller predicted Biomet would be a billion-dollar company by 2000.
“They all thought I was nuts,” Miller told students during a presentation last year at Indiana University’s Kelley School of Business as part of the Distinguished Entrepreneur-in-Residence Series at the Johnson Center for Entrepreneurship & Innovation. “How could anyone imagine by the year 2000 we’d be doing a billion dollars? And, in fact, in the fiscal year 2000, we reached a billion dollars.”
But the roller coaster ride slowed a bit for Miller in the mid-2000s. In 2006, Biomet’s board of directors thought it was a good time for Miller to “retire.” He did so, only briefly. He came back less that a year later to lead a consortium of private equity firms to make Biomet privately held once again. For a sale price of $11.4 billion in 2007, a private equity consortium including affiliates of Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co and TPG took ownership of the company.
Biomet had been planning to go public again with an initial public offering this year. After the merger was announced, however, those plans were put on hold.
Fiscal 2013 (ended May 31, 2013) was a productive one for Biomet. At the beginning of the fiscal year, the company closed its acquisition of the trauma operations of DePuy Orthopaedics Inc., which included facilities in the United States, the United Kingdom, Australia, New Zealand and Japan, as well as DePuy Trauma’s manufacturing operations in Le Locle, Switzerland.
New-product rollouts, of course, were part of the year’s offering. Among the first technologies of fiscal 2013 was the Comprehensive Nano stemless shoulder, which was released in Europe (the Nano is currently undergoing clinical trials for U.S. Food and Drug Administration approval in the United States). The Comprehensive Nano shoulder was developed based on the clinical heritage of the Biomet T.E.S.S. stemless shoulder, which has been clinically successful since its launch in Europe in 2004.
The bone-conserving shoulder design allows the surgeon to fit the implant to each individual patient by reproducing native humeral head version and inclination. The Nano is compatible with all configurations of the company’s Comprehensive shoulder system, and is the first stemless device to provide surgeons with intra-operative flexibility to convert from a Comprehensive Nano hemi-arthroplasty to a reverse or total shoulder arthroplasty using the same core instruments and without removal of the well-fixed humeral component, according to the company.
In February 2013, Biomet divested most of the assets of its bracing business.
In March 2013 Biomet partnered with OrthoSensor to combine the latter’s Verasense technology with Biomet’s Vanguard knee system. OrthoSense develops intelligent orthopedic devices that use embedded sensor technology to provide real-time data to physicians and healthcare systems with the goal of improving health and reducing costs. The Verasense knee system provides dynamic intraoperative feedback through an intelligent, single-use sensor to enable evidence-based decisions regarding component position, limb alignment and soft-tissue balance. The technology also is licensed by other orthopedic companies such as Smith & Nephew plc, Stryker Corp., and Zimmer.
Early in fiscal 2014, the company announced plans to acquire spine company Lanx Inc., broadening the company’s minimally invasive spinal technology offerings. Terms of the deal weren’t disclosed.
Also early this year, Biomet agreed to pay at least $56 million to settle a multi-district lawsuit relating to defective metal hip replacements, ending a protracted legal tussle. The litigation involves Biomet’s metal-on-metal hip replacement device known as M2a Magnum. Hundreds of plaintiffs claimed in various courts across the country that the hip device led to injuries. The lawsuits were combined and jointly heard in Indiana federal court, in the state where Biomet is headquartered. The multi-district litigation began in 2012. As part of the settlement reached in February, Biomet deposited $50 million into an escrow account and another $6 million into an attorney fee fund, according to a court filing. The agreement with the plaintiffs shall extend to all pending cases, and any future lawsuit filed in a federal court on or before April 15, 2014.
Number-wise, fiscal year, though now a distant memory for the company, showed solid performance.
The company’s top line for FY13 was a solid one. Biomet posted $3.05 billion in net sales, up 7.6 percent from fiscal 2012. U.S. sales increased 8.7 percent to $1.86 billion, while Sales in Europe rose 1.1 percent (including currently fluctuations, up 5.3 percent without) to $710 million. Remaining international markets posted the strongest gains, with net sales increasing 13.8 percent (18.4 percent in constant currency) to $480.5 million.
The bottom-line story was a little different. The company posted a net loss of $623.4 million for fiscal 2013, an increase compared to a net loss of $458.8 million.
Biomet’s Sports, Extremities and Trauma (SET) sector was the jewel in the company’s crown, with increased sales of $600.1 million, up from $361.1 million in fiscal 2012—a 66 percent increase (roughly 20 percent of Biomet’s total net sales). By comparison, sales of large-joint reconstruction products (hips and knees) were flat (down by a tenth of a percent) at $1.69 billion. Spine and bone healing dropped 5.1 percent to $291.3 million. Sales of dental products slipped 4 percent to $257 million.
“Fiscal 2013 was a very important year for our SET franchise, which had a fabulous year,” Binder said at the time. “We’re encouraged by the momentum in our SET and microfixation businesses during fiscal year 2013, and we’re excited by the growth potential we see in our spine, dental and biologics businesses.”
Looks like there’s a lot for Zimmer executives and shareholders to be excited about, too.
Through the end of the third quarter of fiscal 2014, which had ended by press time, the company reported solid sales gains for all sectors. Sales were $2.38 billion for the period ended Feb. 28, up from $2.27 billion for the same period for FY13. Again, SET sales outpaced the rest with 8.6 percent growth to $478.8 billion for the first nine months of FY14. But knee sales weren’t far behind —growth percentage wise—at 6.2 percent growth to $743.3 million. The company improved losses as well. Net loss through the end of the first three quarters was $65.9 million compared with $304.5 million for the same period in fiscal 2013. The United States and Europe posted sales gains—5.4 percent and 8 percent, respectively. International sales dropped slightly by 2.2 percent.