Biomet posted fiscal 2nd-quarter profits today, reporting sales growth for its core hip and knee replacement products and gains across the board for its other medical device lines.
The news augurs well for other orthopedic device makers, as Biomet’s early quarterly reports are seen on Wall Street as bellwethers for the rest of the industry.
Warsaw, Ind.-based Biomet reported profits of $4.9 million on sales of $825.7 million for the 3 months ended Nov. 30, 2013, for top-line growth of 4.5% and a reversal of the $66.2 million loss during the same period in 2012.
Adjusted to exclude 1-time items, profits were $126.8 million, up 22.3% compared with adjusted profits of $103.7 million during Q2 2012.
"We were very pleased with our broad and balanced 6% organic sales growth in the quarter on a constant-currency basis, with strong performance across multiple product segments and geographic regions. We’re also delivering excellent growth in adjusted net income (ex-specials and amortization), with an increase of 27% to approximately $208 million through the first half of our fiscal year," president & CEO Jeffrey Binder said in prepared remarks.
Sales of Biomet’s knee implants were up 6.6% to $264.0 million during the quarter, with hip implant revenues rising 2.3% to $167.7 million. That could be good news for other players in the ortho market, including Wright Medical (NSDQ:WMGI), Stryker (NYSE:SYK), Smith & Nephew (FTSE:SN, NYSE:SNN), Zimmer (NYSE:ZMH) and Johnson & Johnson (NYSE:JNJ).
"Biomet’s (privately-held) F2Q hip/knee results highlight stable to potentially improving ortho market trends. Knee growth was particular strong and accelerated vs. last quarter, which bodes well for CY4Q ortho recon trends and in our view offers a positive read-through for other knee players," Leerink Swann analyst Richard Newitter wrote in a note to investors this morning. "Even in the event of an industry-wide growth acceleration pick-up this quarter – to which Biomet’s results may point (at least in knees) – there will no doubt be questions on whether the pick-up may be due to: (1) more pronounced seasonality as patients shift towards higher deductible plans (trying to meet payments before year-end); and/or (2) if uncertainty re: the [Affordable Care Act] may be prompting surgery bookings (i.e., people unsure of what their insurance situation will be in 2014) and pulling some surgeries forward into 2013 from 2014. Anecdotally, our recent MEDACorp checks indicate that rebounding 2H13 hip/knee volume trends could be set to extend beyond typical yr-end seasonality. Some docs have said to us that they are booked out through May 2014, possibly suggesting more than a 1 qtr ‘blip’ in rising surgery demand."