Orthofix International announces sale of vascular business assets to Covidien

Orthofix International N.V. (NASDAQ: OFIX) (the Company) announced today it has sold the assets of its vascular business, including its AV-Impulse^® mechanical compression technology, to Covidien.

“This transaction represents another important step towards focusing Orthofix on strategic market segments that represent long term growth potential for the Company”

“This transaction represents another important step towards focusing Orthofix on strategic market segments that represent long term growth potential for the Company,” said Orthofix’s CEO Alan Milinazzo. “Additionally, the proceeds from the sale of this business will allow us to further deleverage our balance sheet.”

As part of the sale, Orthofix has agreed to provide transitional services to Covidien for a period of up to five months. Additionally, under the terms of two Supply Agreements, Orthofix will provide Covidien with 2-years’ worth of Impads used in conjunction with the compression therapy devices being sold, as well as with additional products relating to this business for a 90 day period.

Impact on 2010 Financial Results

Orthofix expects the following financial impact as a result of the sale:

• 2010 GAAP EPS guidance increased to $2.24-$2.28
• Revised 2010 revenue guidance = $568-576 million
  • Q1 lower by $2-$3 million
• Net cash proceeds of up to $19 million will be used to reduce outstanding long term debt by approximately 7%; expected reduction in debt/EBITDA ratio of 13%
• Revised 2010 interest expense = $22-$24 million
• Additional expected impact to GAAP EPS:
  • Q1 GAAP EPS = $0.80-$0.83
    • Includes net gain on sale of up to $0.42
  • Q2-Q4 impact to earnings from the sale of the business and the repayment of debt is expected to be a total net reduction of $0.14-$0.18