Tornier N.V. (NASDAQ: TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, today reported its financial results for the third quarter ended September 30, 2012 and updated its fiscal 2012 financial outlook.
Sales for the third quarter of 2012 were $58.0 million, representing increases of 0.8% as reported and 5.5% in constant currency. Sales for the nine months ended September 30, 2012 totaled $198.5 million, compared to sales of $192.1 million for the same period of 2011, an increase of 3.3% as reported and 7.0% in constant currency. Third quarter sales of Tornier's extremity product categories increased 3.8% as reported and 6.9% in constant currency year over year and represented 84.0% of reported global sales.
Douglas W. Kohrs, President and Chief Executive Officer of Tornier, commented, "We are pleased with the continued growth of our extremities business, led by sales of our reverse shoulder products, which showed strong growth in both our U.S. and international markets. Despite continuous austerity pressures in our European markets, we believe the combined product portfolio of Tornier and OrthoHelix strongly positions Tornier for leadership in both the shoulder and the foot and ankle markets."
The Company's third quarter 2012 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, totaled $4.8 million, or 8.3% of sales. Increased investments in research and development, which totaled 9.1% of sales in the quarter, resulted in a decline of $0.1 million in adjusted EBITDA versus the third quarter of 2011. For the nine months ended September 30, 2012, adjusted EBITDA increased 8.4% to $22.0 million, or 11.1% of sales, compared to $20.3 million, or 10.5% of sales, in the same period last year.
Mr. Kohrs continued, "During the third quarter of 2012, our gross margins improved for the third consecutive quarter and expanded 180 basis points year over year to 72.9%. This increase funded additional research and development investment associated with the pending launch of our Ascend Flex shoulder and additional investment in our U.S. sales organization. Looking towards the remainder of the year, we remain focused on capitalizing on the OrthoHelix acquisition and building value for our shareholders."
Sales and Product Review
Tornier's third quarter 2012 constant currency sales growth of 5.5% was led by its extremity product categories, which together posted constant currency growth of 6.9% over the third quarter of 2011. Within the extremity products group, the upper extremity joints and trauma category grew 7.9% in constant currency over the same quarter in 2011. This growth was led by the Company's shoulder arthroplasty portfolio, including the Aequalis™ Ascend™ and the Simpliciti™ stemless shoulder system, which continued to be highly accepted by surgeons. Tornier's lower extremity joints and trauma category grew 0.1% in constant currency, with solid growth in its ankle arthroplasty line, including the market-leading Salto® ankle arthroplasty system and the innovative Stabilis™ ankle fusion system, which was offset by a decline in fixation and trauma products. The sports medicine and biologics product category posted constant currency sales growth of 8.3% in the third quarter of 2012 year over year, and was led by the Company's Insite®FT bone anchor and newly launched Duo™ Instability System. Sales of the Company's large joints and other product lines experienced a 1.0% decline on a constant currency basis versus the same quarter last year, primarily as a result of procedure declines in France, Spain and Italy.
On a geographic basis, Tornier's third quarter 2012 international constant currency sales increased 6.2% as compared to the third quarter of 2011 and represented 41% of reported global sales. Sales in the United States increased 4.9% and represented 59% of reported global sales.