Stryker, Zimmer Biomet & more: How 12 device companies are controlling costs during COVID-19

Spinal Tech

Spine and orthopedic device companies are implementing cost-cutting measures such as cutting salaries, furloughing employees and enacting hiring freezes to maintain liquidity and power through this challenging financial period caused by the coronavirus pandemic.

In the past three weeks, Becker's Spine Review has reported on the financial impact of 12 device companies due to COVID-19:

1. Zimmer Biomet is reducing the compensation of its entire leadership team, including the full salary of CEO Bryan Hanson. The company estimated first-quarter revenues will drop 9.5 percent to 10.5 percent, and plans to announce first-quarter financial results in May.

2. Styker withdrew its first quarter and full-year 2020 financial projections. Demand for orthopedic implants fell significantly after several states suspended elective surgical procedures, which has had "a significant negative impact on Stryker's operations and financial results," according to a company statement.

3. Smith+Nephew withdrew its full year 2020 guidance, but said it's too early to determine the full impact of the pandemic on the company. Smith+Nephew realized savings from travel, events, advertising, promotions and consultancy. It also enacted a freeze on several new hires and planned capital expenditures.

4. SeaSpine implemented cost saving measures in areas such as areas such as travel, consulting, events and clinical trials. The company hopes that its cash position of about $105 million will help maintain operations during the pandemic. 

5. Exactech laid off 63 employees because of a rash of surgery cancellations due to COVID-19. The company is canceling travel, enacting a hiring freeze and halting overtime work. Exactech's remaining employees face tiered salary cuts, but most will maintain 90 percent of their original salaries.

6. OrthoPeditriacs withdrew its 2020 revenue projections that estimated growth within the range of 22 percent to 24 percent. The company expects its deformity correction and scoliosis businesses to be significantly impacted due to COVID-19, but does not anticipate its orthopedic trauma business to suffer a similar hit.

7. Medacta's board of directors proposed not distributing dividends for the 2019 financial year to protect cash flow amid the pandemic. The company's spine product line revenue was up 23.4 percent year over year in the first quarter, but Medacta declines to release a 2020 outlook due to the COVID-19 pandemic.

8. Amplitude Surgical significantly reduced production to control costs and push through this challenging financial period. The company is preparing to increase productivity once operating rooms reopen.

9. Orthofix is temporarily reducing the salaries of its U.S. employees, with the largest cuts being implemented at the executive and board level. The company also plans to borrow $100 million from its existing credit facility in April to maintain liquidity and has applied for accelerated payments from the Medicare program through the CARES Act.

10. Alphatec enacted a voluntary salary-to-equity conversion program, which allowed leadership to preserve $750,000 in cash compensation for the second quarter to support payroll protection for hourly and underemployed salaried team members. The company also completed a draw of $20 million under its credit facility with Squadron Medical Finance Solutions.

11. Medicrea capitalized on a European tax credit, collected 40 percent of the trade receivables on its balance sheet, placed its U.S.-based employees on furlough and sought financial relief from its main creditor. The company also applied for a $1 million loan through the Paycheck Protection Program.

12. NuVasive reduced executive and board member compensation as its first-quarter revenue is estimated to fall in the range of $259 million to $261 million, representing a year-over-year decline of 5 to 5.7 percent. The company is also controlling discretionary spending and adjusting manufacturing capacity based on demand and government directives.

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