Edgar Filing: ORTHOFIX INTERNATIONAL N V

formdefa14a.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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Orthofix International N.V.

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The following slides were used in a presentation given by Alan W. Milinazzo, Director, President and Chief Executive Officer of Orthofix International N.V., at the 27th Annual JP Morgan Healthcare Conference in San Francisco, California on January 14, 2009.

27th Annual JP Morgan Healthcare Conference
Westin St. Francis, San Francisco CA
January 14, 2009

Orthofix International

Alan Milinazzo
President & CEO

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.

Orthofix Overview

• Global medical device company with an emerging
focus on the spine sector, including minimally
invasive surgical and non-surgical devices and
biologic products.

• Total expected 2008 revenue of $130-$135 million;
73% of total revenue up 16% YTD through Q308

• Strategy for long term growth includes new product
introductions and market expansion

• Focus on improved cash flow and deleveraging the
balance sheet

• Spine: Market-leading spinal bone growth stimulators, including only
FDA-approved cervical spine stimulator; spine implants & biologics

• Orthopedics: Internal and external fixation, deformity correction and
long bone stimulation

• Sports Medicine: BREG subsidiary, focus on knee bracing and cold
therapy with recent expansion into soft goods, back bracing, etc.

• Vascular: A-V Impulse System® for prevention of DVT

• Other Distributed Products

Diversified Portfolio

Revenue growth in 3 core business segments = 8.7% YTD through Q308

Spine

Sports Medicine

Orthopedics

YTD revenue through

Q308 = $187 million

Gross margin of

mid to high 70%

YTD revenue through

Q308 = $97 million

Gross margin of
~70%

YTD revenue through

Q308 = $70 million

Gross margin of
mid-60%

Vascular and Other revenue YTD through Q308 = $34 million

Core Business Segments

48%

25%

18%

Sports
Medicine

Vascular
3%

Other

73% of total YTD revenue grew an average of 16% through Q308

Revenue up 18%

YTD through

Q308

Stimulation

revenue up 13%

YTD through

Q308

Revenue mix YTD through Q308

Implant & biologic

revenue down 5%

YTD through

Q308

Total Revenue Mix

q New product introductions

q Focus on internal fixation/deformity correction devices

• Including geographic expansion in LA, Europe & Asia

q Long bone stimulation & biologics

• Revenue up 11% YTD through Q308; market growing 10%

• Biologic revenue ~$900K YTD through Q308

q Profitability improvement

• SG&A reductions

• Optimization of geographic markets

• Focus on higher gross margin product platforms

Growth Strategy- Orthopedics

q Leverage strong distribution channels

• Well-established distributor partners

• Targeted migration to hybrid sales force

q Leverage strong market share in high growth areas

• Osteoarthritis knee bracing- 16% market share; OFIX
revenue growing 14%

• Cold therapy- 37% motorized market share; OFIX
revenue growing 15%

q Product launches into new market segments

Growth Strategy- Sports Medicine

Product launches in new market segments
($ in millions)

$83

$174

$47

$60

$101

$270

$467

$150

$86

Post-Op
Bracing

Ligament
Bracing

Shoulder Bracing

OA Bracing

Cold Therapy

Foot & Ankle

Soft Bracing

Back Bracing

Upper
Extremity

l Total available markets pre ‘08 = $462 million

l Total available markets by ‘09 = $1.3 billion

Growth Strategy- Sports Medicine

Biologics

Distribution

New
Modalities

e.g., Motion

Preservation

Spinal
Stimulation

Fixation

Spine Portfolio Strategy

Growth Strategy- Spine Stimulation

q Optimization of distribution network

• Stabilization of distributor base

• Focus on exclusivity and experience

q Normalization of operating results

q New product introductions

Growth Strategy- Spine Implants &
Biologics

l Firebird Pedicle Screw System- (Q109)

l Pillar™SA Interbody Device (Q109)

l Ascent® LE POCT System (Q109)

l Advent™ Cervical Disc (Q209 OUS)

l InSWing™ Interspinous Spacer (Q109 OUS)

l Trinity® Evolution stem cell-based allograft (1H09)

Planned new product introductions:

Growth Strategy- Spine Implants &
Biologics

Orthofix and MTF announced an agreement to collaborate on the final development and
commercialization of Trinity® Evolution a new stem-cell based allograft

• Provide all three critical bone growth characteristics: osteogenic, osteoinductive,
and osteoconductive

• Comparative to gold standard (autograft), but without the pain, risks and
morbidities

Tissue

Commercialization
Roles

§ MTF is responsible for

§ donor tissue procurement

§ tissue processing and

§ order fulfillment

• Orthofix: has exclusive global marketing rights for allograft

Key Partnership
Benefits

• MTF is the preferred partner- MTF is the largest tissue bank in the Country and
has the best technical and R&D competence in the tissue field

• Ability for both parties to focus on core competencies

• Long-term agreement for all fields of use

• Attractive financials

Growth Strategy- Trinity®Evolution

q Blackstone reorganization/facility consolidation
plan designed to:

• Facilitate integration/improve efficiency

• Create new physician training center/lab

• Result in net cost reductions beginning in 2010

q Orthofix and MTF complete pivotal milestone
in development of stem cell-based allograft

• Planned launch date accelerated to 1H09

Recent News

$ millions

$517-$520

Compound Annual
Growth Rate 17%

BREG
acquisition

Blackstone
acquisition

Orthofix Sales Growth

q Q308 Leverage ratio = 3.61 vs. 4.00 requirement

• Q408 debt prepayment provides additional cushion

q Normalized Orthofix cash flow (YTD through Q308)
excludes:

• $5M related to exploration of fixation asset divestiture

• $7M in Trinity inventory purchases

• $8.5M in strategic acquisition payments (MTF/IIS)

Cash Flow/Operating Results

Normalized Blackstone Q308 operating
results exclude:

• $301M non-cash impairment charge & inventory reserve

• $3.3M amortization expense

• $1.4M management transition expenses

Cash Flow/Operating Results

q Orthofix’s regular Annual General Meeting of shareholders is
typically held in June; Ramius has requested a second
meeting that would be held in addition to the regular meeting.

q The second shareholder meeting will be duplicative, entailing
an unnecessary expense and distraction.

q Orthofix’s historical focus on strong corporate governance
will continue.

Ramius

Where You Can Find Additional Information

Ramius Capital and certain of its affiliates have filed a definitive proxy statement with the SEC to solicit written consents
from shareholders of Orthofix to call a special general meeting of shareholders for the purpose of making changes to the
composition of Orthofix’s board of directors.  Orthofix has filed with the SEC a definitive proxy statement in connection
with its intent to solicit written consent revocations from shareholders in opposition to Ramius’ solicitation.  If Orthofix
holds a special general meeting at Ramius’ and other shareholders’ request, Orthofix intends to file with the SEC, and
distribute to shareholders, a proxy statement opposing proposals made by Ramius.  SHAREHOLDERS ARE URGED
TO READ ORTHOFIX’S DEFINITIVE PROXY MATERIALS AND ANY OTHER RELEVANT SOLICITATION
MATERIALS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION.  Investors and
shareholders may obtain a free copy of proxy statements filed with the SEC by Orthofix at the SEC’s website at
www.sec.gov or by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY 10038 or by calling (212) 440-
9800 (bankers and brokers) or toll-free (800) 323-4133 (all others).

Orthofix International N.V. and its directors and certain executive officers are participants in the solicitation of written
consent revocations from shareholders of Orthofix, as well as the solicitation of proxies in connection with a special
general meeting of shareholders, if such a meeting is called. The names of such persons are: James F. Gero, Peter J.
Hewett, Jerry C. Benjamin, Charles W. Federico, Dr. Guy J. Jordan, Ph.D., Thomas J. Kester, CPA, Alan W. Milinazzo,
Maria Sainz, Dr. Walter P. von Wartburg, Kenneth R. Weisshaar, Robert S. Vaters, Michael Simpson, Bradley R. Mason,
Raymond C. Kolls, J.D. and Michael M. Finegan. Information regarding such participants, as well as each such person’s
respective interests in Orthofix by security holdings or otherwise, is set forth in Orthofix’s definitive proxy statement
relating to its intent to solicit written consent revocations from shareholders in opposition to Ramius’ solicitation, which
may be obtained free of charge at the SEC’s website at www.sec.gov and Orthofix’s website at www.orthofix.com.

Notification of Proxy Statement Filing

q Spine stimulation, orthopedic and sports medicine
businesses performing well

§ 73% of revenue up 16% YTD through Q308

q Several initiatives implemented/announced at Blackstone to:

• Strengthen leadership

• Stabilize distribution

• Introduce new products

• Increase revenue

• Reduce costs

q Increased focus on EBITDA and deleveraging balance sheet

Summary