GAINESVILLE, Fla.–(BUSINESS WIRE)–Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today revenue of $56.2 million for the third quarter of 2015, a 3% decrease from $57.9 million in the third quarter of 2014. On a constant currency basis for the quarter, revenue was flat. Net income was down 4% to $2.9 million, or $0.20 per diluted share, compared to $3.0 million, or $0.21 per diluted share, in the same quarter a year ago.
Third Quarter Segment Performance
The third quarter of 2015 continued to be impacted by a weakened Euro and Japanese Yen relative to the U.S. Dollar. The following are company revenue results, as well as adjusted revenue comparisons on a constant currency basis:
- Extremity implant revenue increased 7% to $20.0 million, a 9% constant currency increase
- Knee implant revenue decreased 16% to $15.3 million, a 13% constant currency decrease
- Hip implant revenue decreased 2% to $9.9 million, a 4% constant currency increase
- Biologic and Spine revenue increased 5% to $5.7 million, an 8% constant currency increase
- Other revenue decreased 4% to $5.4 million, a 3% constant currency decrease
Nine Months Highlights and Segment Performance
For the first nine months of 2015, revenue was $179.1 million, a decrease of 3% over $185.1 million for the comparable period last year. On a constant currency basis, revenue for the first nine months of 2015 was flat. Net income for the first nine months of 2015 decreased 6% to $10.7 million, or $0.75 per diluted share compared to $11.4 million, or $0.81 per diluted share for the first nine months of 2014. First nine month product revenues were as follows:
- Extremity implant revenue increased 7% to $61.5 million, a 9% constant currency increase
- Knee implant revenue decreased 12% to $52.7 million, a 7% constant currency decrease
- Hip implant revenue decreased 1% to $31.8 million, a 4% constant currency increase
- Biologic and Spine revenue decreased 6% to $16.7 million, a 2% constant currency decrease
- Other revenue decreased 10% to $16.4 million, a 9% constant currency decrease
Exactech CEO and President David Petty said, “Another solid performance in our largest segment, Extremities, and third quarter improvement in our Biologic and Spine segment and gains in overall U.S. sales were not enough to offset strong international currency headwinds and soft results in European and Latin American markets. Worldwide sales for the first nine months of 2015 decreased 3% to $179.1 million but were flat on a constant currency basis. U.S. sales were relatively flat at $123.3 million compared with $123.8 million in the first nine months a year ago. International sales decreased 9% in the first nine months to $55.8 million and were up 1% on a constant currency basis. For the third quarter of 2015, U.S. sales were up 2% to $40.7 million compared with $40.0 million in the third quarter a year ago. International sales decreased 13% to $15.5 million. On a constant currency basis, international sales were down 4% and worldwide sales were flat for the third quarter. U.S. sales represented 72% of total sales and international sales were 28% of the total,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins decreased to 70.5% for the third quarter of 2015 vs. 70.7% in the third quarter of 2014 due to pricing and currency impacts. Total operating expenses for the quarter decreased 1% to $35.1 million and as a percentage of sales were 62%, compared to $35.4 million and 61% for the same quarter of 2014. General and administrative expenses decreased 4% in the third quarter to $5.2 million and sales and marketing expenses decreased 3% to $20.6 million primarily due to currency impacts. We experienced an 18% increase in R&D spending to $5.3 million related to development and launch costs associated with our new revision products. We continued to produce positive cash flows, which resulted in a $2.9 million improvement in our cash and net debt position during the third quarter.”
Looking forward, Exactech confirmed its updated 2015 revenue guidance to $239-$241 million and updated its diluted EPS target to $1.02–$1.04. The resulting revenue guidance for the fourth quarter of 2015 is for revenues of $60-$62 million and a diluted EPS target of $0.27-$0.29. The foregoing statements regarding targets for the full year are forward-looking and actual results may differ materially. These are the company’s targets, not predictions of actual performance.
The financial statements are below.
The company will hold a conference call with CEO David Petty and key members of the management team on Wednesday, October 28th at 10:00 a.m. Eastern Time. The call will cover Exactech’s third quarter 2015 results. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-417-8533 any time after 9:50 a.m. Eastern on October 28th. International and local callers should dial 1-719-457-2645. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=116694.
This call will be archived for approximately 90 days.
Based in Gainesville, Fla., Exactech develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians. The company manufactures many of its orthopaedic devices at its Gainesville facility. Exactech’s orthopaedic products are used in the restoration of bones and joints that have deteriorated as a result of injury or diseases such as arthritis. Exactech markets its products in the United States, in addition to more than 30 markets in Europe, Latin America, Asia and the Pacific. Additional information about Exactech, Inc. can be found at http://www.exac.com. Copies of Exactech’s press releases, SEC filings, current price quotes and other valuable information for investors may be found at http://www.exac.com and http://www.hawkassociates.com.