Orthofix slumps on top-line misses

Orthofix (NSDQ:OFIX) missed the consensus for its fourth-quarter and 2018 sales, sending its share price down by double digits today in mid-afternoon trading despite a huge bottom-line gain.

Lewisville, Texas-based Orthofix reported profits were up 465.8% to $8.9 million, or 46¢ per share, on sales growth of 3.6% to $121.1 million compared with Q4 2017. Adjusted to exclude one-time items, earnings per share were 55¢, 7¢ ahead of the consensus on Wall Street; however, analysts there were looking for sales of $121.5 million.

“With the recent FDA approval of the M6-C artificial cervical disc, the primary focus in our spine business is on the launch in the U.S., which we expect will happen late in the second quarter,” said president & CEO Brad Mason, who also announced plans to retire. “This approval is an important milestone in our transition to a top-line growth story beginning in the second half of this year and accelerating in 2020.

“What I’ve always done best and enjoyed the most in my career is starting and fixing companies. I love the challenges associated with these phases in a business’s lifecycle,” Mason added. “Now with the stage set for the company’s next chapter, I’ve finished what I came to do. Because of the tireless efforts of the talented and dedicated Orthofix team, we’ve accomplished everything and more than I ever expected. Therefore, I believe it is the right time for both the company and for me to pass the reins to a new leader who will take Orthofix through the next chapter and capitalize on this enormous potential.”

Orthofix said Mason plans to stay on until a replacement is found and consult thereafter. The company forecast adjusted 2019 EPS of $1.75 to $1.82 on sales of $472.0 million to $477.0 million.

OFIX shares were off +12.5% to $59.25 apiece today in mid-afternoon activity.

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