By Mary Vanac
OrthoHelix Surgical Designs Inc. added a $4.6 million cherry to its third fundraising round, for a total of $14 million raised since early 2008.
The company, which recently relocated to Medina from Akron, Ohio, develops and makes implants and instruments for foot, ankle, hand and wrist surgeries.
The additional money came from an existing investor that had an option to invest more.
“The investor exercised the option, which was a good sign,” CEO Dennis Stripe said. “That allowed the other Series C shareholders to invest more, too.”
Those include Mutual Capital Partners in Cleveland and River Cities Capital Fund of Cincinnati, which led the first leg — $7.3 million — of the Series C raise in May 2008. Since 2005, OrthoHelix has raised more than $28 million, according to Securities & Exchange Commission filings.
For the last two years, the Series C infusion has gone toward “increasing our inventory of implant sets used by hospitals around the country,” Stripe said. “Hospitals don’t purchase the instruments, they just purchase the implants. So we furnish a set of the instruments to go with the implants, and they pay us for the implants as they use them.”
That sounds like the Gillette razor model. Gillette practically gives away razors, but charges a pretty penny for razor blades.
For OrthoHelix, the implant sets also are a marketing tool.
“For us to compete with the Big Boys, we have to have sets in as many hospitals and in as many states as we possibly can,” Stripe said. “It’s expensive to build those sets. But it’s an investment that gets us a return.”
OrthoHelix started out in 2005 with its MaxLock Plate and Screw System — a plate, screws and instruments used to fixate bones in the foot and ankle. Now, the company’s MaxLock Extreme product can also be used for clavicle, hand or wrist fractures.
The company’s other foot products are the MaxTorque Cannulated Screw System, which also comes in a “mini” size, and CalcLock Calcaneal Trauma System. The OrthoLock Tribrid Locking Screw Technology is “coming soon,” according to the company’s Web site.
Stripe said he would wait for Food & Drug Administration approval of the “triple hybrid” system before talking about it.
“We’re EBITDA-positive. Sales have grown very well. Our employees are approaching 50,” Stripe said. OrthoHelix already has grown since its June move to Medina. “We’ve expanded quite a bit. We just took on another 3,000 square feet,” for a total of 15,000 square feet.
“We have a prototype shop now with high-speed machinery,” he added. The move also gave the company room to improve work flow and organization, as well as add a cadaver laboratory.
OrthoHelix designs and prototypes its products in Medina. “And then we use vendors throughout Ohio and the rest of the United States” to make, distribute and sell the products, Stripe said.
OrthoHelix will even loan an additional implant set to a hospital that’s expecting a heavy day of procedures.
“We have a cleaning and shipping facility just for loaner services,” he said.
Stripe said he will remain low-key about OrthoHelix’s growth until it gets big. “It’s not huge like Stryker or Zimmer, but we’re getting there,” Stripe said about two of the nation’s largest orthopedic implant companies.
But in his February CEO Blog entry, Stripe said he no longer refers to his company as a start-up. Coupling continuously “improved products with dependable and knowledgeable field representatives that know ‘how’ to deliver the product message” has made OrthoHelix a player.
The blog entry was “meant to send a message to our customers and our field sales people who are employees that says, ‘Don’t think of us as a start-up. Think of us as a player,’” he said. “It’s all about sustainability. We’ve got a much broader product line, and we’re able now to compete against some of the bigger players.”