The McKinney, Texas-based orthopedic device manufacturer, which has operations in Springfield and Boston, said it paid down about $15 million in debt, including a $3 million payment it made ahead of schedule.
Orthofix is still astonishingly leveraged, with about $264 million in long-term debt at the end of the first quarter, down from $277 million for the same period last year. The company’s current debt/equity ratio is about 1.7, down slightly from the fourth quarter last year but still rather high when compared to some of its peers (for example, highly leveraged Boston Scientific Corp.‘s D/E ratio was 0.51 last year). Debt/equity ratios determine how much debt a company uses to finance operations.
Orthofix used a substantial amount of cash to pay down its tab. The company finished the three-month period ended March 31 with $6.8 million in cash and equivalents, compared to $26.7 million during the 2008 first quarter.
In its recent proxy fight with Ramius LLC, the New York-based hedge fund accused Orthofix’s board of losing “almost a half billion dollars in market capitalization in the last three years,” by taking on too much debt and missing earnings targets in 2007 and 2008.
The company posted about $129 million in sales for the quarter, relatively flat compared with $128 million during the first quarter last year. The sales uptick didn’t translate to the bottom line, however; Orthofix posted $2.9 million in first-quarter net income, a 20 percent drop-off from $3.6 million for the same period last year.
Sales were paced by a 6 percent jump in the company’s spinal division and a 4 percent jump in sports medicine revenues. But that progress was nullified by a 19 percent decline in vascular product sales and a 1 percent decline in orthopedic product sales.