How 8 big spine companies' Q2 compared & what to expect in the future

Spinal Tech

Here are 23 things to know about eight big players in the spine device space based on their most recent financial reports.

Several listing also includes a quote from the company's most recent conference call describing future plans for the spine line.

Note: All but Medtronic are from the second quarter; Medtronic's report is from the fourth quarter of the 2018 fiscal year, the most recent financial report available.

Companies are listed in alphabetical order.

DePuy Synthes, a Johnson & Johnson Company

1. Sales: $2.2 billion (1.4 percent decline)

2. U.S. sales: $1.3 billion (2.6 percent decline)

3. Spine and other sales: $845 million (7.7 percent decline)

Globus Medical

4. Sales: $173.4 million (13.8 percent increase)

5. U.S. sales: 15.1 percent incrase

6. Net income: $45 million (57 percent increase)

"We are starting to see the promise of robotics come to fruition as the technology is being adopted enthusiastically with good early clinical results," said CEO David Demski. "A significant number of procedures using ExcelsiusGPS have been performed by surgeons who have not used Globus implants before and we are seeing exceptional growth in the number of accounts utilizing the technology."


7. Revenue: $73.6 million (12 percent increase)

8. U.S. revenue: $54.3 million (7 percent increase)

9. Net loss: $10.8 million

"We achieved multiple milestone[s] with our Brainlab partnership during the second quarter," said K2M Chairman, President and CEO Eric Major. "First, we completed the engineering work on the compatibility of K2M spinal systems and instrumentation of Brainlab intraoperative, image-guided navigation and imaging platforms. Second, our training of field managers and clinical experts continued at the Chicago Brainlab facility. Third, our commercial teams finished the collaborative development of a targeting strategy so we are ready to launch once regulatory clearances are secured. In fact as early validation of strategy, Brainlab has already been successful in placing units in two new hospital systems."


10. Revenue: $8.1 billion (3 percent increase)

11. U.S. revenue: $4.2 billion (4.9 percent decrease)

12. Spine revenue: $699 million (3.4 percent increase)

"We are highly focused on creating shareholder value, and that starts with technology," said Chairman and CEO Omar Ishrak at the 2018 Medtronic Institutional Investor and Analyst Day in June. "We are leaders in many of the fastest growth markets in our industry, and we continue to invest in the technology of tomorrow that will fuel our long-term growth. We are committed to continuous innovation to stay ahead of our competition, inventing new therapies and markets, and disrupting existing markets."

Long-term financial targets to drive sustainable growth and return include:

• Increasing operating revenue of 4 percent-plus
• Expanding underlying operating margin of 40 to 50 basis points per year through the planning period
• Growing adjusted earnings per share 8 percent over the planning period
• Achieving 80 percent free cash flow conversion over the next two to three years
• Returning a minimum of 50 percent of free cash flow to shareholders

However, during the company's most recent conference call on the 2018 fourth quarter fiscal year financial report, Mr. Ishrak shined light on the softening spine market.

"Regarding the softer market, what we are seeing is that historically, the procedure growth has outpaced the pricing pressure for maybe a net 2 percent to 3 percent global market growth," he said. "But in the last couple quarters, that procedure growth has softened and it has not outpaced price declines, the price pressures. So you are seeing more of a flat to slightly down market. That's why I am pretty excited about our performance."


13. Revenue: $281.6 million (8.5 percent increase)

14. Net income: $11.5 million

15. Gross profit: $204.5 million

"We're doing well with our existing surgeon [relationships]," said NuVasive Chairman and CEO Gregory Lucier. "We've doubled down on retention of those key surgeons, making sure that NuVasive is a powerful partner in their practice. And we want to get even better at that. And then, the other important thing I would say is that we've focused quite successfully on young new surgeons. Fellows, residents, coming out, building their practices, starting minimally invasive practices. We have done quite well with the younger people coming into the industry."


16. Sales: $111.5 million (2.4 percent increase)

17. Spine fixation sales: $23.9 million (11.8 percent increase)

18. Net income from continuing operations: $900,000

"Three months ago, we began a reorganization of international spine sales management in anticipation of the Spinal Kinetics acquisition," said Orthofix President and CEO Brad Mason. "As part of the integration plan, Spinal Kinetics management now have the responsibility for all OUS spinal implant sales, in addition to the Spinal Kinetics M6 disc. Long term, we believe this change will be very beneficial. However, this disruption did have an impact in the period that is expected to continue for the next quarter or two."


19. Net sales: $3.3 billion (10.3 percent increase)

20. Neurotechnology and spine sales: $600 million (20.1 percent increase)

21. Net earnings: $452 million (15.6 percent increase)

"[The spine market] remains a tough market. It has been challenging for the market overall," said Stryker Vice President of Strategy and Investor Relations Katherine Owens. "But it's a market we are overall 100 percent committed to. It is the largest market in orthopedics. There is a tremendous unmet need. And we have the benefit given our size and diversity of our product portfolio that we can weather through when the certain business is challenged as spine has been…We do need to continue and we are with allocating more R&D dollars that continue to refresh our portfolio."

Zimmer Biomet

22. Sales: $2 billion (3 percent increase)

23. U.S. sales: $1.22 billion

24. Spine sales: $198 million (2.5 percent increase)

Zimme rBiomet CEO Bryan Hanson touched on spine surgery robotic technology during the second quarter conference call, saying the company aims to launch the total knee application for the ROSA robotics platform by the end of the year. In 2016, the company acquired Medtech for $132 million, which included the ROSA robotic navigation system for spine and brain surgery. The company aims to re-engage the robotic technology into the spine market over the next several months.

"When we're talking about a robotic system, we want to roll this out in a safe and effective manner. We want to make sure that we have the right training that goes along with it and want to learn as we go," he said. "Are there any mishaps associated with product launch that we have and if so how do we correct those and go forward? That usually takes us five to six months. And that's what we would expect…we're talking about the robotic systems plus about six months post the time that we [do a] limited launch."


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