Acquisitions Help Boost Q2 Sales at DJO Finance

Net sales at DJO Finance LLC jumped 14.5 percent in the second quarter of fiscal 2011, thanks partly to a string of acquisitions made earlier this year.

The purchase of Elastic Therapy Inc. in January, Circle City Medical in March and Dr. Comfort in April most likely helped push sales to $277.8 million, an 11.6 percent increase (when the impact of foreign exchange rates are taken into consideration). A net loss of $19.3 million was recorded in the quarter, compared with a net income of $0.2 million in the second quarter of 2010.

The Dr. Comfort and Elastic Therapy acquisitions brought new medical compression therapy and diabetic foot care products into DJO’s product line. The Circle City acquisition improved access to the professional retail and e-commerce markets for existing bracing and supports.

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the quarter, ended July 2, was $69.9 million, or 25.1 percent of net sales, increasing 3.7 percent from last year, according to the company.

The Bracing and Vascular segment posted the greatest increase—29 percent compared with Q2 in fiscal 2010. Sales continue to benefit from recent product launches, including the VenaFlow Elite and new products for knee and upper extremities, executives said. Sales to group purchasing organizations also have contributed to growth in this segment.

DJO’s bone growth stimulation products were the most profitable for the company’s Recovery Sciences segment, achieving a growth of more than 13 percent, due mainly to spinal stimulation devices. According to DJO, growth in this area significantly is faster than that of the underlying market. However, performance in this segment was offset by weaker sales of the Empi division of Recovery Sciences, which decreased by 1.2 percent compared with the second quarter of 2010, but increased sequentially by 1.2 percent compared with the previous quarter. Empi is a distributor of electrical stimulation and other orthopedic products used for pain management, orthopedic rehabilitation, physical therapy, fitness and sports performance enhancement.

International sales brought in $73.1 million, a 19.6 percent increase compared with the same period last year. The total included the international components of the Elastic Therapy and Dr. Comfort acquisitions, as well as approximately $7.2 million of favorable foreign exchange benefit.

Surgical Implant segment sales totaled $16.4 million, an 8 percent rise compared with Q2 in fiscal 2010. Sales in this segment were driven primarily by the Reverse Shoulder Prosthesis, but also were enhanced by the roll-out of the company’s Turon shoulder product.

So far this fiscal year, DJO Finance, an operating subsidiary of DJO Global, has achieved net sales of $527.5 million, a 9.3 percent increase compared with the first six months of fiscal 2010.