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In a release on July 28, the company noted that diluted earnings per share for the quarter was $0.20 based on net income of $2.6 million. This compares with net income of $3.0 million or $0.24 diluted EPS a year ago. Net income for the quarter, excluding pre-tax legal expenses and costs of $1.2 million related to the ongoing Department of Justice (DOJ) inquiry, was $3.4 million or $0.26 EPS.
Six Months Highlights and Segment Performance
For the first six months of 2009 revenue was $86.6 million, an increase of 4 percent over $83.5 million for the comparable period last year. Net income for the first six months of 2009 declined to $5.1 million compared to $5.8 million for the first six months of 2008. Net income for the six months, excluding pre-tax legal expenses and costs of $2.6 million related to the ongoing Department of Justice (DOJ) inquiry, was $6.7 million or $0.52 EPS.
First six month product revenues were as follows:
- Knee implant revenue decreased 4 percent to $37.4 million from $39.0 million
- Hip implant revenue increased 10 percent to $13.2 million from $12.0 million
- Biologic and spine revenue increased 5 percent to $13.9 million from $13.3 million
- Extremity implant revenue increased 42 percent to $10.9 million from $7.6 million
- Other products revenue decreased 3 percent to $11.1 million from $11.5 million
Exactech Chairman and CEO Bill Petty said, "Knee implant product sales lagged this quarter, as economic conditions are widely believed to have caused orthopaedic patients to delay elective knee surgeries. Unfortunately because knees are our largest business segment at 44 percent of total revenue, this reduced our company's total revenue for the quarter and slowed our projected growth rate. Knee implant revenue decreased 7 percent to $18.9 million from $20.5 million during the second quarter of 2008. One of the bright spots for Exactech this quarter was our hip implant sales, which benefited from continued success of our Novation hip product line. Hip sales revenue increased 18 percent to $6.7 million from $5.7 million in the second quarter of 2008. We continue to see market-leading growth in our shoulder segment, achieving 29 percent growth to $5.1 million from $3.9 million a year ago. Biologic and spine revenue increased 4 percent to $6.9 million from $6.6 million in the same quarter last year. We experienced lower instrumentation sales during the second quarter, causing our other products segment sales to decrease 18 percent to $5.7 million from $7.0 million a year ago."
Exactech President David Petty added, "U.S. sales increased 1 percent to $29.2 million in the quarter compared to $28.8 million in the second quarter of 2008. International sales for the second quarter decreased 5 percent to $14.1 million compared to $14.9 a year ago. The international sales decrease was largely due to lower European stocking orders as compared to the second quarter of 2008 and the impact of currency exchange rates. International sales represented 33 percent of total sales compared with 34 percent in the same quarter last year. For the second quarter of 2009, total international revenue included an unfavorable foreign currency impact of approximately $0.8 million. On a constant currency basis, international revenue increased 1 percent."
Chief Financial Officer Jody Phillips said, "Gross margin percentage for the quarter was 62.3 percent compared to 62.6 percent for the comparable quarter last year. Total operating expenses in the quarter were $22.6 million, up 4 percent from $21.8 million in the comparable quarter last year. Exclusive of DOJ inquiry-related legal expenses of $1.2 million we were successful in effective expense management during the quarter. General and administrative expenses increased 4 percent, sales and marketing expenses decreased 1 percent and research and development expenses increased 13 percent compared to the second quarter of 2008."
Looking forward, Exactech confirmed its revenue targets for 2009 in the range of $167 million to $173 million and now targets diluted earnings per share for the year 2009 in the range of $0.92 to $0.96. For the third quarter ending September 30, the company targets revenue in the range of $38 million to $41 million and diluted earnings per share in the range of $0.20 to $0.22. These EPS target ranges exclude the impact of DOJ inquiry costs. The foregoing statements regarding targets for the quarter and full year are forward-looking and actual results may differ materially. These are the company's targets, not predictions of actual performance.
((Comments on this story may be sent to health@closeupmedia.com))
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