Orthofix (NASDAQ: OFIX) Achieves 47% Revenue Growth in First Quarter; BREG Acquisition has Incremental Effect
BY JOHN MCCORMICK, MAY 3, 2004
Orthofix had its first full quarter that included the BREG acquisition and the results were solid. Revenues grew year-over-year by 47% to $70.7 million in 1Q:04 from $48.2 million in 1Q:03. We note that $2.4 million of that growth comes from foreign currency effects. Earnings per share this quarter were $0.53 versus $0.41 a year ago and fell slightly behind analysts' consensus of $0.55 owing to some new sales reps and acquisition related interest and amortization costs.
Of particular note, was the Company's trauma business segment which grew at a stunning 25% owing largely to successes in both external fixation products and the Physio-Stim ® bone growth stimulators. Orthofix, without much fanfare, neatly finalized the conversion of its distribution license for the PCCP hip fracture repair system into a mini-acquisition which is already beginning to show results. Spine growth was a lackluster 7% owing to challenges in reimbursement for certain products. Despite considerable plaudits from the industry and even a Wall Street Journal Article early in the quarter, even the vaunted Orthotrac back brace faced it's fair share of reimbursement struggles. BREG, now a part of the Company's reconstruction division, grew at a rapid 14% - rapid, that is, for bracing.
Orthofix appears to have made some astute moves this quarter including longtime LBO veteran Robert Gaines-Cooper handing over the Chairman's reigns to medical technology executive and longtime Orthofix board member, Jim Gero. The Company also announced progress with its PMA application for cervical bone growth stimulator on its analysts' conference call on Friday. The Company also decided to scale back its commitment to OrthoRx for a number of good reasons if nothing else than it was losing money. To us, reducing exposure to OrthoRx was a wise decision.
