07.24.12
29. Biomet
$2.7 Billion
KEY EXECUTIVES:
Jeffrey R. Binder, President & CEO
Daniel P. Florin, Sr. VP & Chief Financial Officer
Glen A. Kashuba, Sr. VP, President, Spine & Bone Healing Technologies
Jon C. Serbousek, Sr. VP, Group President, Orthopedics
Maggie Anderson, Sr. VP, President, Biomet 3i
Renaat Vermeulen, Sr. VP, President, Europe, Middle East and Africa
Robin T. Barney, Sr. VP, World Wide Operations
NO. OF EMPLOYEES: 7,000
GLOBAL HEADQUARTERS: Warsaw, Ind.
Some history is worth emulating. The post-World War II economic expansion, for instance, might be a suitable candidate, particularly considering the world’s financial troubles of late. Another potential contender could be the technological revolution that created such modern marvels as the Internet (though an argument theoretically could be made against revisiting that part of the past), the electric automobile and human genome mapping.
But some bits of history—specifically those involving war, civil unrest, political instability and of course, natural disasters—should be left to fade into memory and relived only through discussion and/or recollection.
Europe, however, is in danger of reincarnating a dark part of its history as it wrestles with a debt crisis that threatens to drag the world into another debilitating recession. Europe’s peripheral economies already appear to be in depression: According to the International Monetary Fund, gross domestic product will contract this year by 4.7 percent in Greece and 3.3 percent in Portugal. Earlier this summer, unemployment reached 24 percent in Spain, 22 percent in Greece and 15 percent in Portugal. Public debt, which already exceeds 100 percent of gross domestic product in Greece, Ireland, Italy and Portugal, is only adding to the pecuniary misery.
“Those of us who repeatedly warned in the 1990s that the experiment of monetary union would end badly would be gloating now—if we were not so troubled by the prospect of history repeating itself,” British historian/Harvard University professor Niall Ferguson and U.S. economist/New York University professor Nouriel Roubini wrote in a commentary that recently appeared in newspapers worldwide. “The EU [European Union] was created to avoid repeating the disasters of the 1930s. It is time Europe’s leaders…understood how perilously close they are to doing just that.”
Such a scenario would be calamitous for businesses that depend on the European market for a significant portion of their sales. The unfolding crisis already has curtailed profits at Biomet Inc., an orthopedic manufacturer in Warsaw, Ind., that has long been considered a bellwether for the U.S. orthopedic market. Losses at the firm soared during the fourth quarter and fiscal 2011, due largely to a $941.1 million writedown related to its reassessment of the European market.
The writedown was necessitated by “the continued market slowdown in Europe relative to the original purchase accounting assumptions” when a private equity consortium took Biomet private in 2007, according to a company news release.
“During our fiscal fourth quarter, our sales results continued to be challenged by industry volume and price pressures that affected our sales throughout fiscal 2011,” President/CEO Jeffrey R. Binder said in prepared remarks. “In addition, we have not been executing to our standard of above-market growth in most of our businesses. We are working hard to return to that standard as quickly as possible.”
Biomet posted net losses of $806.5 million on sales of $715.2 million for the three months ended May 31, 2011. The figure represents a net loss increase of roughly 5,462 percent, despite top-line growth of 1.8 percent, compared with the same period in 2010.
For the full year, Biomet reported an operating loss of $576.9 million; excluding special items though, adjusted operating income totaled $837.7 million, or 30.7 percent of net sales. On a reported basis, the company posted a net loss of $843.5 million, compared with a net loss during fiscal year 2010 of $47.6 million. Excluding special items in both periods, adjusted net income came to $211.5 million during FY2011, a 12.4 percent decrease compared with the $241.5 million in adjusted net income Biomet garnered in fiscal 2010. Excluding special items, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 1 percent to $1.01 billion, or 37 percent of net sales.
Reconstructive products generated the most revenue for Biomet in fiscal 2011, boosting worldwide sales 2 percent to $2 billion, or 76 percent of the firm’s overall net sales. Global knee sales slowed significantly, rising 1 percent worldwide and remaining flat in the United States. The sluggish sales are somewhat troubling for the company, considering the impressive performance turned in by knee products in fiscal 2010, when revenue surged 13 percent worldwide and 11 percent in the United States. Executives attributed the stagnant growth to a sputtering global economy, high unemployment rates, a reluctance among patients to undergo elective surgical procedures, increased medical deductibles and co-pays, and the expiration of COBRA subsidies.
In both of the most recent fiscal years, the main growth driver in knee products was the firm’s Vanguard Complete Knee System with E1 antioxidant infused tibial bearings. The Vanguard System accommodates up to 145 degrees of flexion and is supported by five instrument platforms that can adapt to various workflows and techinques: Microplasty, Premier, Microplasty Elite, Vanguard Tensor and Vanguard Anterior Referencing.
During FY2011, the company began the clinical evaluation of its newest revision knee offering, the Vanguard SSK 360 Revision System. Biomet also received clearance to market the Signature System, which uses magnetic resonance imaging or computed tomography scan to produce patient-specific positioning guides for surgery. The Signature System was developed through a partnership with Materialise, a Belgian provider of rapid prototyping and CAD software development for medical and industrial applications.
Global hip implant sales rose 1 percent worldwide and domestically in fiscal 2011. During the year, the company introduced its Active Articulating E1 System and Active Articulation ArcomXL System—dual-mobility acetabular devices designed to provide the benefits of a large head design, including low wear. Also added to the company’s hip product lineup was the Arcos Modular Femoral Revision System, a comprehensive system that provides surgeons with 117 proximal/distal combinations, multiple auxiliary fixation options and one basic instrumentation platform.
Extremity product sales increased 20 percent worldwide and 30 percent domestically. Primary growth drivers were the Comprehensive Primary Shoulder and the T.E.S.S. (Total Evolutive Shoulder System), a product the company claims can be used in all shoulder arthroplasty procedures. T.E.S.S. is only available outside the United States.
Dental sales climbed 2 percent worldwide and 3 percent in the United States, bolstered in part by the launches of the pure titanium Tapered Certain Implant and the OSSEOTITE 2 Parallel Walled Dental Implant, a product developed to accommodate patient demands for shorter treatment times and the prevalence of both soft bone dental implant replacement and tooth extractions with immediate placement/loading and earlier loading. The OSSEOTITE 2 product, executives said, is designed for more immediate bone-to-implant contact for primary stability. In addition, Biomet 3i began offering Low Profile Abutments and restorative components during the fiscal year to provide better access to, recovery of, single and multiple-unit dental implant restorations.
Biomet’s Spinal and Fixation divisions were the only two segments to lose money in fiscal 2011. Each garnered a similar amount of cash and posted nearly identical losses, though executives gave different reasons for the respective declines. Fixation generated $232.9 million in sales, a 4 percent decrease compared with FY2010, while Spinal revenue slid 3 percent to $224.9 million. Bigwigs blamed the deficit in Fixation on pricing, but said Spinal sales were affected by a general slowdown in procedure volume, a challenging reimbursement environment for some fusion procedures, and a continued trend toward physician-owned distributorships.
Double-digit sales growth in Biomet’s sports medicine division helped push sales of “other” products to $190.2 million, a 7 percent increase compared with the $177.6 million those devices brought to the company in fiscal 2010. Top sellers in this category in fiscal 2011 included the JuggerKnot Soft Anchor, the ComposiTCP Interference Screw, the MaxFire MarXmen Meniscal Repair Device, the Toggle Loc Femoral Fixation Device with ZipLoop technology, and the ALLthread Knotless Suture Anchor.
$2.7 Billion
KEY EXECUTIVES:
Jeffrey R. Binder, President & CEO
Daniel P. Florin, Sr. VP & Chief Financial Officer
Glen A. Kashuba, Sr. VP, President, Spine & Bone Healing Technologies
Jon C. Serbousek, Sr. VP, Group President, Orthopedics
Maggie Anderson, Sr. VP, President, Biomet 3i
Renaat Vermeulen, Sr. VP, President, Europe, Middle East and Africa
Robin T. Barney, Sr. VP, World Wide Operations
NO. OF EMPLOYEES: 7,000
GLOBAL HEADQUARTERS: Warsaw, Ind.
“Those who fail to learn from history are doomed to repeat it.”
— Sir Winston Churchill
Some history is worth emulating. The post-World War II economic expansion, for instance, might be a suitable candidate, particularly considering the world’s financial troubles of late. Another potential contender could be the technological revolution that created such modern marvels as the Internet (though an argument theoretically could be made against revisiting that part of the past), the electric automobile and human genome mapping.
But some bits of history—specifically those involving war, civil unrest, political instability and of course, natural disasters—should be left to fade into memory and relived only through discussion and/or recollection.
Europe, however, is in danger of reincarnating a dark part of its history as it wrestles with a debt crisis that threatens to drag the world into another debilitating recession. Europe’s peripheral economies already appear to be in depression: According to the International Monetary Fund, gross domestic product will contract this year by 4.7 percent in Greece and 3.3 percent in Portugal. Earlier this summer, unemployment reached 24 percent in Spain, 22 percent in Greece and 15 percent in Portugal. Public debt, which already exceeds 100 percent of gross domestic product in Greece, Ireland, Italy and Portugal, is only adding to the pecuniary misery.
“Those of us who repeatedly warned in the 1990s that the experiment of monetary union would end badly would be gloating now—if we were not so troubled by the prospect of history repeating itself,” British historian/Harvard University professor Niall Ferguson and U.S. economist/New York University professor Nouriel Roubini wrote in a commentary that recently appeared in newspapers worldwide. “The EU [European Union] was created to avoid repeating the disasters of the 1930s. It is time Europe’s leaders…understood how perilously close they are to doing just that.”
Such a scenario would be calamitous for businesses that depend on the European market for a significant portion of their sales. The unfolding crisis already has curtailed profits at Biomet Inc., an orthopedic manufacturer in Warsaw, Ind., that has long been considered a bellwether for the U.S. orthopedic market. Losses at the firm soared during the fourth quarter and fiscal 2011, due largely to a $941.1 million writedown related to its reassessment of the European market.
The writedown was necessitated by “the continued market slowdown in Europe relative to the original purchase accounting assumptions” when a private equity consortium took Biomet private in 2007, according to a company news release.
“During our fiscal fourth quarter, our sales results continued to be challenged by industry volume and price pressures that affected our sales throughout fiscal 2011,” President/CEO Jeffrey R. Binder said in prepared remarks. “In addition, we have not been executing to our standard of above-market growth in most of our businesses. We are working hard to return to that standard as quickly as possible.”
Biomet posted net losses of $806.5 million on sales of $715.2 million for the three months ended May 31, 2011. The figure represents a net loss increase of roughly 5,462 percent, despite top-line growth of 1.8 percent, compared with the same period in 2010.
For the full year, Biomet reported an operating loss of $576.9 million; excluding special items though, adjusted operating income totaled $837.7 million, or 30.7 percent of net sales. On a reported basis, the company posted a net loss of $843.5 million, compared with a net loss during fiscal year 2010 of $47.6 million. Excluding special items in both periods, adjusted net income came to $211.5 million during FY2011, a 12.4 percent decrease compared with the $241.5 million in adjusted net income Biomet garnered in fiscal 2010. Excluding special items, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 1 percent to $1.01 billion, or 37 percent of net sales.
Reconstructive products generated the most revenue for Biomet in fiscal 2011, boosting worldwide sales 2 percent to $2 billion, or 76 percent of the firm’s overall net sales. Global knee sales slowed significantly, rising 1 percent worldwide and remaining flat in the United States. The sluggish sales are somewhat troubling for the company, considering the impressive performance turned in by knee products in fiscal 2010, when revenue surged 13 percent worldwide and 11 percent in the United States. Executives attributed the stagnant growth to a sputtering global economy, high unemployment rates, a reluctance among patients to undergo elective surgical procedures, increased medical deductibles and co-pays, and the expiration of COBRA subsidies.
In both of the most recent fiscal years, the main growth driver in knee products was the firm’s Vanguard Complete Knee System with E1 antioxidant infused tibial bearings. The Vanguard System accommodates up to 145 degrees of flexion and is supported by five instrument platforms that can adapt to various workflows and techinques: Microplasty, Premier, Microplasty Elite, Vanguard Tensor and Vanguard Anterior Referencing.
During FY2011, the company began the clinical evaluation of its newest revision knee offering, the Vanguard SSK 360 Revision System. Biomet also received clearance to market the Signature System, which uses magnetic resonance imaging or computed tomography scan to produce patient-specific positioning guides for surgery. The Signature System was developed through a partnership with Materialise, a Belgian provider of rapid prototyping and CAD software development for medical and industrial applications.
Global hip implant sales rose 1 percent worldwide and domestically in fiscal 2011. During the year, the company introduced its Active Articulating E1 System and Active Articulation ArcomXL System—dual-mobility acetabular devices designed to provide the benefits of a large head design, including low wear. Also added to the company’s hip product lineup was the Arcos Modular Femoral Revision System, a comprehensive system that provides surgeons with 117 proximal/distal combinations, multiple auxiliary fixation options and one basic instrumentation platform.
Extremity product sales increased 20 percent worldwide and 30 percent domestically. Primary growth drivers were the Comprehensive Primary Shoulder and the T.E.S.S. (Total Evolutive Shoulder System), a product the company claims can be used in all shoulder arthroplasty procedures. T.E.S.S. is only available outside the United States.
Dental sales climbed 2 percent worldwide and 3 percent in the United States, bolstered in part by the launches of the pure titanium Tapered Certain Implant and the OSSEOTITE 2 Parallel Walled Dental Implant, a product developed to accommodate patient demands for shorter treatment times and the prevalence of both soft bone dental implant replacement and tooth extractions with immediate placement/loading and earlier loading. The OSSEOTITE 2 product, executives said, is designed for more immediate bone-to-implant contact for primary stability. In addition, Biomet 3i began offering Low Profile Abutments and restorative components during the fiscal year to provide better access to, recovery of, single and multiple-unit dental implant restorations.
Biomet’s Spinal and Fixation divisions were the only two segments to lose money in fiscal 2011. Each garnered a similar amount of cash and posted nearly identical losses, though executives gave different reasons for the respective declines. Fixation generated $232.9 million in sales, a 4 percent decrease compared with FY2010, while Spinal revenue slid 3 percent to $224.9 million. Bigwigs blamed the deficit in Fixation on pricing, but said Spinal sales were affected by a general slowdown in procedure volume, a challenging reimbursement environment for some fusion procedures, and a continued trend toward physician-owned distributorships.
Double-digit sales growth in Biomet’s sports medicine division helped push sales of “other” products to $190.2 million, a 7 percent increase compared with the $177.6 million those devices brought to the company in fiscal 2010. Top sellers in this category in fiscal 2011 included the JuggerKnot Soft Anchor, the ComposiTCP Interference Screw, the MaxFire MarXmen Meniscal Repair Device, the Toggle Loc Femoral Fixation Device with ZipLoop technology, and the ALLthread Knotless Suture Anchor.
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