Exactech's 2Q:06 - A Good Quarter
BY HUYEN NGUYEN, AUGUST 2, 2006
On Tuesday, Exactech reported 2Q:06 revenues of $26.6 million, which represents an increase of 11% over 2Q:05. The Company reported $0.18 diluted earnings per share (EPS) and beat analysts' earnings estimates by $0.01. Net income for the quarter was a reported $2.1 million; this represented an increase of 11% year-over-year.
Product sales for the quarter saw a 4% increase in knee implants, 13% in hip and 12% in tissue services. The Company's other products category, which includes shoulder, antibiotic cement spacers, etc., grew substantially. By geography, sales were up 9% in the U.S and 19% internationally.
Exactech's international division's sales were primarily driven by its knee products. Within this division, growth was driven by the Optetrak and the rotating bearing knees. With the successful introduction of the rotating bearing knee, growth was achieved by opening up market opportunities in Europe, Asia and the Pacific. Internationally, operational growth was attributed to existing customers, an addition of a new distributor in 1Q:06 and a small effect of changing the distribution model from indirect to direct in the UK.
Exactech's hip sales achieved a 13% year-over-year increase and a 20% sequential quarter-over-quarter increase - an $800,000 improvement over 1Q:06. Strong sales in this division were driven by its Novation system and the GXL crosslink polyethylene product lines. Management commented that they have been focused on building up momentum for growth as they introduced several hip products to the market recently, and they also attributed growth to their sales and marketing teams.
The tissue services division achieved 12% growth for the quarter compared to 2Q:05. Growth in this sector is attributed to the introduction of Optecure (launched last year for spine). This product allowed Exactech to enter the spine sector and deliver the fastest DBM product sales among competitors in the biologics market.
Product Introductions (6-12 months)
Exactech is currently waiting for a FDA decision on their ceramic-on-ceramic hip system. They are hopeful that an approval will be obtained sometime this year or early next year.
The Novation cemented hip and Waldemar Link GMBH & Co.'s hip (BetaCone) will be introduced in Q3 in the U.S. market.
A full launch of the unicompartmental knee system along with the instrumentation systems (for smaller incision knee procedures) will be launched later in the year.
The Optecure product line and the platelet rich plasma system will launch within the next year.
The Reverse Shoulder will be launched by Q2, Q3 next year.
Currently, Exactech has 49 agents and 212 sales reps selling their product lines.
