Orthofix Medical Inc. · NASDAQ:OFIX
Orthofix Medical — Orthofix International — 27th Annual JP Morgan Healthcare Conference (January 2009)
24 slides from Orthofix Medical's conference presentation, Jan 14, 2009
Slide 1: 27th Annual JP Morgan Healthcare Conference
27 th Annual JP Morgan Healthcare Conference Westin St. Francis, San Francisco CA January 14, 2009 Orthofix International Alan Milinazzo President & CEO
Slide 2: Safe Harbor Statement
Safe Harbor Statement Except for historical information contained herein, the statements made in this presentation constitute ‘forward looking statements’ that involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward l
Slide 3: Orthofix Overview
Orthofix Overview • Global medical device company with an emerging focus on the spine sector, including minimally invasive surgical and non-surgical devices and biologic products. • Total expected 2008 revenue of $130-$135 million; 73% of total revenue up 16% YTD through Q308 • Strategy for long ter
Slide 4: Diversified Portfolio
Diversified Portfolio • Spine: Market-leading spinal bone growth stimulators, including only FDA-approved cervical spine stimulator; spine implants & biologics • Orthopedics: Internal and external fixation, deformity correction and long bone stimulation • Sports Medicine : BREG subsidiary, focus on
Slide 5: Core Business Segments
Spine Sports Medicine Orthopedics YTD revenue through Q308 = $187 million Gross margin of mid to high 70% YTD revenue through Q308 = $97 million Gross margin of ~70% YTD revenue through Q308 = $70 million Gross margin of mid-60% Core Business Segments Revenue growth in 3 core business segments = 8.7
Slide 6: Total Revenue Mix
48% 25% 18% 5% Revenue mix YTD through Q308 Total Revenue Mix 48% 25% 18% 5% Sports Medicine Vascular 3% Other 73% of total YTD revenue grew an average of 16% through Q308 Revenue up 18% YTD through Q308 Stimulation revenue up 13% YTD through Q308 Implant & biologic revenue down 5% YTD through Q308
Slide 7: Growth Strategy- Orthopedics
Growth Strategy- Orthopedics q New product introductions q Focus on internal fixation/deformity correction devices • Including geographic expansion in LA, Europe & Asia q Long bone stimulation & biologics • Revenue up 11% YTD through Q308; market growing 10% • Biologic revenue ~$900K YTD through Q30
Slide 8: Growth Strategy- Sports Medicine
Growth Strategy- Sports Medicine q Leverage strong distribution channels • Well-established distributor partners • Targeted migration to hybrid sales force q Leverage strong market share in high growth areas • Osteoarthritis knee bracing- 16% market share; OFIX revenue growing 14% • Cold therapy- 37
Slide 9: Growth Strategy- Sports Medicine: Product launches in new market segments
$83 $174 $47 $60 $101 $270 $467 $150 $86 Total available markets pre ‘08 = $462 million Total available markets by ‘09 = $1.3 billion Growth Strategy- Sports Medicine Product launches in new market segments ($ in millions) $83 $174 $47 $60 $101 $270 $467 $150 $86 Post-Op Bracing Ligament Bracing Sho
Slide 10: Spine Portfolio Strategy
Biologics New Modalities e.g., Motion Preservation Spinal Stimulation Fixation Spine Portfolio Strategy Biologics Distribution Distribution New Modalities e.g., Motion Preservation Spinal Stimulation Fixation
Slide 11: Growth Strategy- Spine Stimulation
Growth Strategy- Spine Stimulation
Slide 12: Growth Strategy- Spine Implants & Biologics
Growth Strategy- Spine Implants & Biologics q Optimization of distribution network • Stabilization of distributor base • Focus on exclusivity and experience q Normalization of operating results q New product introductions
Slide 13: Growth Strategy- Spine Implants & Biologics: planned product introductions
Growth Strategy- Spine Implants & Biologics l Firebird Pedicle Screw System- (Q109) l Pillar™SA Interbody Device (Q109) l Ascent® LE POCT System (Q109) l Advent™ Cervical Disc (Q209 OUS) l InSWing™ Interspinous Spacer (Q109 OUS) l Trinity® Evolution stem cell-based allograft (1H09) Planned new produ
Slide 14: Growth Strategy- Trinity Evolution
Growth Strategy- Trinity ® Evolution Orthofix and MTF announced an agreement to collaborate on the final development and commercialization of Trinity® Evolution a new stem-cell based allograft • Provide all three critical bone growth characteristics: osteogenic, osteoinductive, and osteoconductive •
Slide 15: Recent News
Recent News q Blackstone reorganization/facility consolidation plan designed to: • Facilitate integration/improve efficiency • Create new physician training center/lab • Result in net cost reductions beginning in 2010 q Orthofix and MTF complete pivotal milestone in development of stem cell-based al
Slide 16: Recent News
Recent News q Management team strengthened • Brad Mason was named Group President, North America and President of Blackstone Medical, Inc. • Founder of BREG brings proven leadership skills, extensive product development and distribution experience. • Bob Vaters was named Executive Vice President and
Slide 17: Recent News
Recent News q Orthofix made partial debt repayment ahead of schedule • $10 million prepayment partially due to normalization of cash flow q Orthofix reiterated Q408 revenue guidance of $130- $135 million • Results include negative foreign currency impact of $3-$4 million • Blackstone Q408 revenue do
Slide 18: Orthofix Sales Growth
Orthofix Sales Growth $ millions $517-$520 Compound Annual Growth Rate 17% Compound Annual Growth Rate 17% BREG acquisition Blackstone acquisition
Slide 19: Cash Flow/Operating Results
Cash Flow/Operating Results q Q308 Leverage ratio = 3.61 vs. 4.00 requirement • Q408 debt prepayment provides additional cushion q Normalized Orthofix cash flow (YTD through Q308) excludes: • $5M related to exploration of fixation asset divestiture • $7M in Trinity inventory purchases • $8.5M in str
Slide 20: Cash Flow/Operating Results
Cash Flow/Operating Results Normalized Blackstone Q308 operating results exclude: • $301M non-cash impairment charge & inventory reserve • $3.3M amortization expense • $1.4M management transition expenses
Slide 21: Ramius
Ramius q Orthofix’s regular Annual General Meeting of shareholders is typically held in June; Ramius has requested a second meeting that would be held in addition to the regular meeting. q The second shareholder meeting will be duplicative, entailing an unnecessary expense and distraction. q Orthofi
Slide 22: Notification of Proxy Statement Filing
Notification of Proxy Statement Filing Where You Can Find Additional Information Ramius Capital and certain of its affiliates have filed a definitive proxy statement with the SEC to solicit written consents from shareholders of Orthofix to call a special general meeting of shareholders for the purpo
Slide 23: Summary
Summary q Spine stimulation, orthopedic and sports medicine businesses performing well § 73% of revenue up 16% YTD through Q308 q Several initiatives implemented/announced at Blackstone to: • Strengthen leadership • Stabilize distribution • Introduce new products • Increase revenue • Reduce costs q
Slide 24: One Company | One Direction
o onto IX ne Com pany | One Direction
Orthofix International — 27th Annual JP Morgan Healthcare Conference (January 2009) on 6ix