First Albany Orthopedics Conference Marina Village, San Diego February 13, 2007 Orthofix International

Transcription

1 First Albany Orthopedics Conference Marina Village, San Diego February 13, 2007 Orthofix International Tom Hein, CFO

2 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 looking statements, including those risks detailed from time to time in the Company s reports on file at the Securities and Exchange Commission.

3 Regulation G Statement This presentation contains financial measures determined by methods other than Generally Accepted Accounting Principles (GAAP). Orthofix management believes it is important to provide investors with the same adjusted earnings metrics which it uses to supplement information regarding the performance and underlying trends of the company s business operations, facilitate historical comparisons and internally evaluate the effectiveness of its operating strategies. A reconciliation of non-gaap measures to their closest GAAP measures is included at the end of this presentation, and has also been posted on the Investor Relations section of the company s website at Client, 00/00/00 2 FLETCHER SPAGHT, INC.

4 Orthofix Overview Diversified, global orthopedic company focusing on minimally invasive surgical and non-surgical products 60% of legacy Orthofix revenues generated from businesses with #1 or #2 market share Recently entered $5 billion global spine implant market with acquisition of Blackstone Medicalcreates one of the largest spine businesses in the world More than 700 direct sales and distributor representatives worldwide

5 Orthofix Sales Growth ($ millions) $400 $365 $350 $300 Compound Annual Growth Rate 19% $287 $313 $250 $200 $162 $178 $204 $150 $100 $52 $77 $90 $104 $121 $132 $50 $ '05 '06E

6 Preliminary Revenues- Q4 & Full-Year 06 Q406 total revenues = $116.1M Up 45% year-over-year Includes Q4 Blackstone revenue of $28.1M Increase of 76% from Q405 Each of OFIX s core market sectors rose from Q405 Spine = 9% (ex Blackstone) Orthopedics = 9% Sports Medicine = 11% Full-year 2006 revenues = $365.4M Up 17% year-over-year Blackstone full-year 2006 = $90.3M; up 51% y-o-y

7 Core Business Segments Spine Orthopedics Sports Medicine Market-leading spinal bone growth stimulators, and Blackstone spine implant & biologic subsidiary Internal and external fixation, deformity correction and long bone stimulation BREG subsidiary, including bracing and cold therapy

8 Spine Business Orthofix is #1 in sales in the spinal stimulation market ~50% share of $235 million market up 10% in 06 OFIX 2005 sales grew 25% over 2004 The only FDA approved stimulator for cervical spine fusion Less than 20% penetration of addressable market

9 Spine Business- Blackstone Subsidiary Broad portfolio of fusion devices & biologic products Unique array of cervical & lumbar plates Wide variety of allograft & PEEK IBDs Adult stem cell based bone growth matrix Focus on MIS & motion preservation

10 Orthopedic Business- Fracture Repair XCaliber External Fixator Pre-assembled, sterile packaging Contours VPS Internal Fixation Plate Unique design aligns with contour of wrist and facilitates placement of bone substitute Physio-Stim Bone Growth Stimulator Non-invasive bone growth for non-union long bone fractures PC.C.P Innovative, minimally invasive plating system for hip fractures

11 Orthopedic Business- Deformity Correction ISKD TM Only FDA approved internal lengthener Gradual Osteogenesis for Tibial and Femoral Limb Lengthening eight- Plate Corrrects pediatric angular deformities Minimally-invasive Allows immediate weight-bearing, resulting in faster recovery

12 Sports Medicine- Breg Subsidiary Breg Bracing #2 market position Functional, Post Operative, Preventive and Osteoarthritis lines Breg Cold Therapy #2 market position Market leader in continuous flow products Cold therapy for post-op, post-trauma, physical therapy and athletic needs

13 New products introductions at AAOS VeroNail Trochanteric System Minimally-invasive design for reduced patient trauma Important rotational control of femoral neck & head fragment Centronail System New family of nails for treatment of long bone fractures Designed to reduce OR time & increase surgeon flexibility FUSION OA Brace New Thumbwheel Dial Hinge eases adjustment of level of off-loading

14 Acquisition of Blackstone Medical

15 Acquisition of Blackstone Medical- Criteria Reasonable valuation Critical mass Innovative portfolio and pipeline Financially Viable/Profitable

16 Advantages of Combination Creates a global spine franchise with a unique value proposition growing >25%, expected to generate revenues of $250-$260 million in 2007 Unique & broad portfolio of products OFIX s diversified global distribution channels provide significantly expanded distribution for Blackstone products BMI s advanced R&D capabilities establish a platform for future organic growth, including minimally- and noninvasive devices & biologics

17 Blackstone Medical- Financials 120 Revenue Range Revenue 7 Revenue ($ milliions Revenue CAGR = 47% $48 $36 Ne t Incom e $60 $ Earnings ($ millions 20 $ E 0

18 Blackstone Medical- Revenue Mix 16% Up from <5% in % Fusion Biologics

19 Orthofix/Blackstone Value Proposition Efficacy: Clinically superior outcomes Economics: Superior clinical outcomes drive fewer revisions

20 Unique Spine Product Portfolio- Combined Companies that offer traditional lumbar fusion and cervical plating devices alphatec NuVasive PIONEER Biomet DePuySpine Globus SCIENT X Client, 00/00/00 19 FLETCHER SPAGHT, INC.

21 Unique Spine Product Portfolio- Combined Companies whose lumbar portfolio also includes an array of PEEK IBDs alphatec NuVasive PIONEER Biomet DePuySpine Globus SCIENT X Client, 00/00/00 20 FLETCHER SPAGHT, INC.

22 Unique Spine Product Portfolio- Combined Companies whose cervical portfolio includes a dynamic stabilization plate or an arthroplasty product in addition to traditional plates PIONEER Biomet DePuySpine Client, 00/00/00 21 FLETCHER SPAGHT, INC.

23 Unique Spine Product Portfolio- Combined Companies that also offer a bone growth stimulator Biomet DePuySpine Client, 00/00/00 22 FLETCHER SPAGHT, INC.

24 Expanded Global Distribution BMI 400 surgeon relationships >65 independent distributors Client, 00/00/00 OFIX 1,200 surgeon relationships 170 direct sales force Group Purchasing Contracts 100 independent distributors Wholly-owned international distributors 23 FLETCHER SPAGHT, INC.

25 Geographic Mix International 30% 70% Orthofix U.S. International 10% 90% Blackstone U.S.

26 Estimated Financial Impact Accretive to cash earnings in GAAP earnings reduced by 10%-15% Accretive to GAAP & cash earnings in 2008

27 Guidance Q406 EPS GAAP = $0.39-$0.43 Blackstone amortization = $0.12 Cash EPS from Operations* = $0.65-$0.69; up 27%-35% from $0.51 in Q405 *Defined as GAAP EPS excluding: 1) non-operating items, 2) all amortization expense and 3) FAS 123 Client, 00/00/00 26 FLETCHER SPAGHT, INC.

28 Orthofix Summary Highly attractive, expanding markets Revenue growth through organic and M&A activities Strong financial fundamentals

29 Regulation G Reconciliation The table below shows the impact of certain items on EPS for the fourth quarters of 2005 and Reconciliation of non-gaap performance measure to nearest GAAP measure Q405A Q406E GAAP EPS $0.44 $0.39-$0.43 Ex non-op items N/A N/A Ex FAS 123 $0.00 $0.07 Ex All Amortization $0.07 $0.19 Cash EPS from Ops $0.51 $0.65-$0.69 Client, 00/00/00 28 FLETCHER SPAGHT, INC.

30 First Albany Orthopedics Conference Marina Village, San Diego February 13, 2007 Orthofix International Tom Hein, CFO