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Medical Devices
October 26, 2009
Arthrocare names permanent CEO
Austin-based Arthrocare Inc., which makes medical devices, named David Fitzgerald as president and CEO.
Fitzgerald had been holding those jobs on an interim basis since Feb. 19, following the resignation of then-CEO Mike Baker and two other senior executives.
An internal audit found problems with the company’s insurance billing practices.
Fitzgerald, 75, has been an Arthrocare director since 2003. He had a 25-year career at Pfizer Inc., retiring in 1996.
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January 16, 2009
ArthroCare is delisted
It’s official: Austin-based ArthroCare Corp. was delisted from the Nasdaq stock exchange today.
The troubled company is in the process of restating eight years worth of financial data and a number of top executives have left the company.
ArthroCare hasn’t reported its earnings since April of last year. The company makes minimally invasive surgical products.
ArthroCare shares now trade on the over the counter market, under the symbol ARTC.PK.
Michael Baker, ArthroCare’s CEO, said in a statement: “While we are disappointed by the delisting, we are pleased to see such a large number of market makers continue to trade our common stock. This provides liquidity for our shareholders as we complete the restatement process required to bring our SEC filings up to date.”
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December 19, 2008
ArthroCare executives resign; subpoenas issued
Troubled Austin medical device company ArthroCare said Friday that several of its top executive officers have resigned, including the chief financial officer.
ArthroCare has been under fire since last December, when a Web site run by a short-seller raised questions about a Florida subsidiary named DiscoCare.
ArthroCare had rejected the accusations, but opened an internal review that caused the restate several years worth of financial data.
Now, ArthroCare said it is expanding the number of years for which it is restating its results, and said it has received two grand jury subpoenas from the U.S. Attorney for the Southern District of Florida for “the production of documents related to DiscoCare Inc.”
“While the review is not complete, the audit committee has identified facts indicating that there were accounting errors and possible irregularities, which are now being considered part of the restatement,” the company said in a SEC filing.
ArthroCare’s stock was down more than 65 percent Friday morning to $5.65.
ArthroCare makes minimally invasive surgical devices.
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August 21, 2008
ArthroCare's stock rises after upgrade
ArthroCare Corp.’s stock has risen more than 5 percent today after a Lazarus Capital Markets analyst upgraded the stock to a buy.
The upgrade is good news for ArthroCare, which has been struggling since short-sellers raised questions about its business practices. It is in the process of restating more than two years of financial quarters and is undergoing a strategic review.
Its stock is down about 60 percent since the same time last year.
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August 20, 2008
ArthroCare receives delisting notice
Austin-based medical device company ArthroCare Corp. has received a notice from NASDAQ that the company is subject to delisting.
A NASDAQ Staff Determination Letter, dated August 13, said that the company is not in compliance with exchange rules. NASDAQ said the company did not timely file its Quarterly Report on Form 10-Q for the quarter that ended June 30.
ArthroCare intends to appeal the notice and request a hearing.
ArthroCare has come under scrutiny after short-sellers brought up concerns about its business practices. It is now under an informal U.S. Securities and Exchange Commission inquiry and is undergoing a strategic review.
ArthroCare’s stock, which trades under ARTC, closed Tuesday at $25.54.
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July 22, 2008
ArthroCare analysts say accounting mistakes indicate more bad news ahead
A day after ArthroCare said Monday it will be restating more than two years of financial data, financial analysts say they suspect this is just the first in a string in a series of setbacks for the Austin company.
The company is reducing its revenue for nine quarters, starting in the first quarter of 2006, by $26 million to $37 million.
ArthroCare makes minimally invasive surgical devices. It was founded in 1993 and moved its headquarters to Austin in 2004.
But the company has encountered hard times since short-sellers targeted ArthroCare in December, alleging that there were improprieties with ArthroCare’s relationship with a Florida company called DiscoCoare. In January, ArthroCare bought DiscoCare for $25 million, saying the company helped ArthroCare with billing and reimbursement.
ArthroCare attempted to combat the negative publicity that was driving down its stock price through two separate stock buybacks of $75 million and in March announced it was open to selling itself or one of its assets.
Prior to the short-selling campaign, ArthroCare was doing well, consistently beating analyst expectations on its revenue and profit and growing at a fast clip.
Now, ArthroCare has revealed there were accounting mistakes in how it dealt the sales of its devices and that it hadn’t classified the buyout of DiscoCare correctly. It’s a “sales agent” of ArthroCare, not a “distributor” and therefore it should be considered a business combination and not an outright buyout.
Analysts have lowered their price targets for ArthroCare stock considerably. Yesterday the stock sank 46 percent. Earlier today the stock was down 6 percent but it rallied to close up over 3 percent to $24.09.
“We believe there were some strange reimbursement practices going on at the company, particularly within its DiscoCare and DRS (Device Reimbursement Services) divisions,” wrote Susquehanna Financial Group analyst David Turkaly in a note to clients. “We note that management has adamantly denied that anything unusual has been going on - but with today’s news we have confirmation that they had difficulties properly accounting for these entities.”
Turkaly notes this news could call into question the credibility of ArthroCare’s management. Chief Executive Mike Baker has not been available for comment.
Another analyst, Joanne Wuensch with BMO Capital Markets, said in a note to clients that she finds it “odd the company has not provided the bottom-line impact, and believe that today’s news is likely just the first shoe to drop.”
“While the company has moved away from the facade that they can grow 20 percent plus, it has not entirely opened the kimono regarding its business practices,” Wuensch said.
Read my article in yesterday’s paper about ArthroCare’s announcement.
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July 21, 2008
ArthroCare restates two years of financial data
The short-sellers of AthroCare stock were probably feeling vindicated Monday morning.
Austin medical device company ArthroCare released a statement saying it plans to restate more than two years of revenue because it incorrectly recognized revenue from one of its subsidiaries, DiscoCare Inc.
The existence of DiscoCare was the subject of Web reports by Andrew Left, a short-seller who writes about companies on his CitronResearch site, which accused ArthroCare of running DiscoCare improperly, allegedly encouraging lawyers and physicians to push patients into unneeded back surgeries. That allegation is not addressed in the financial restatements.
What is addressed is how AthroCare chose to recognize revenue from the sales of its minimally invasive surgical devices. According to the ArthroCare press release, the company’s revenue will be reduced between the January 2006 and March 31, 2008 after it changes how it accounted for the sale of its products.
It’s still unclear what all this means. But based on a quick read of an early-morning press release, it appears that ArthroCare’s restatement may involve the recording of marketing fees and commissions for sales of its devices. Also, it appears that DiscoCare was determined to be officially part of ArthroCare, and so when ArthroCare purchased DiscoCare back in December, that should have been called a “business combination” instead of an outright buyout.
ArthroCare said revenue for 2006 would be reduced by $4 million to $7 million, and that in 2007, revenue would be reduced by $20 million to $25 million. In the first quarter of 2008, revenue would be reduced by $2 million to $5 million.
If you’re confused, don’t worry, you’re not the only one. You can read one of my previous blogs about ArthroCare here and here and here are two stories I previously wrote on ArthroCare’s troubles.
UPDATE: ArthroCare’s stock has plunged this morning. It’s down 15 percent in morning trading to $24.69. Looks like shareholders aren’t happy.
UPDATE (2:00 p.m.): I’ve called or e-mailed every financial analyst that covers ArthroCare and can’t find a single research note on this news, nor is anyone available for an interview. Strange, considering how far the stock has fallen.
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November 8, 2006
Austin medical device company acquires Swedish firm
A news release from Encore Medical Corp./
Encore Medical Corporation announced today that it has acquired Cefar AB, a leading European provider of electrotherapy and rehabilitation devices. Encore plans to merge its European electrotherapy subsidiary, Compex SA, with Cefar, creating the largest electrotherapy company in the world outside of the United States. The transaction became effective on November 7, 2006. Terms were not disclosed.
Ken Davidson, the chief executive officer of Encore Medical said, “Cefar is an excellent strategic addition to our electrotherapy business. They bring a great capacity for medical innovation and market expansion, and an outstanding European management team. We are delighted to be joining forces with Cefar in Europe, and look forward to what we can do with the combination of Cefar and Compex SA.”
Encore is a diversified medical-device company, focused on rehabilitation, pain management, physical therapy and orthopedics. Encore manufactures and sells market-leading rehabilitation and orthopedic implant products under the Chattanooga(R), Empi(R), Encore(R) Surgical Implant, Ormed and Compex(R) brands. Encore’s European electrotherapy subsidiary, Compex SA, is a leading European competitor in electrotherapy for medical and consumer (sports and fitness) applications, and is headquartered in Lausanne, Switzerland. Encore itself was recently acquired by The Blackstone Group, a leading private-equity firm.
Cefar AB, based in Malmo, Sweden, is a leading competitor and innovator in medical electrotherapy. Cefar markets electrotherapy devices indicated for chronic pain, for women’s health (labor pain, incontinence, dysmenorrhea), for electroacupuncture, and for other rehabilitation activities.
Mats Dorring, the Deputy Chairman and principal shareholder of Cefar said, “Merging these two companies gives us excellent position in both the medical and consumer electrotherapy markets across Europe. We are particularly looking forward to working with the other companies in the Encore group, to sharing technologies and market opportunities, and to driving the rapid clinical development of this therapeutic class.”
The combined company will be led by Bjorn Lenander, who is currently the chief executive officer of Cefar AB. Mr. Lenander commented, “By joining Cefar and Compex together, we are convinced that we can develop the electro stimulation market faster and better than ever before.”
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August 23, 2006
Arthrocare gets SEC inquiry on stock options
A news release from Austin-based ArthroCare Corp.
ArthroCare Corp. (Nasdaq:ARTC), a multi-business medical device company that develops minimally invasive surgical products, announced today that it has received correspondence from the Securities and Exchange Commission requesting certain documents and information related to the company’s stock option grant practices.
Earlier this year and prior to receiving this request, the Company undertook an internal review of all of its equity compensation activities from the time of its initial public offering in February 1996 to the present. Based on the results of this review, the Company believes that there have been no unusual patterns in the timing or pricing of its equity awards and that there is specifically no evidence of backdating of option awards. ArthroCare intends to cooperate fully with all matters related to this request.
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Medical device operations merge, will be based in Austin
AA news release from LDR Spine
LDR has combined two separate organizations: LDR Medical, a French-based organization, and LDR Spine, a U.S.-based organization, to create LDR Holding Corporation. LDR, a privately held company, is an innovator in both non-fusion and fusion spinal implants. The new entity will be headquartered in Austin and led by Christophe Lavigne. Mr. Lavigne is an original founder of LDR Medical and has relocated to Austin to lead the newly merged organization.
The new structure was created to better align company strategies and to heighten LDR’s visibility as a global, integrated company within the spine industry. LDR was founded in 2000 by seasoned spine executives based in Troyes, France and now has sales in over 26 countries worldwide.
Recently, the company has focused efforts in the U.S. market by launching an investigational device exemption study for its second generation Mobi-C(R) cervical artificial disc. They are also creating a sales force to introduce its innovative line of spinal fusion products into the highly competitive U.S. market.
Mr. Lavigne comments, “Our company has grown by helping European surgeons create new, innovative spine implants that address unmet or underserved needs. We are excited about creating these same types of relationships with U.S. surgeons. Our founders and investors thought it was important to have the new headquarters in the U.S. I agreed and have relocated to lead the critical steps towards our continued growth.”
Caution: The Mobi-C(R) Cervical Disc Prosthesis is an investigational device and is limited by federal law to investigational use only.
LDR supplies surgeons worldwide with innovative spinal solutions for fusion and non-fusion needs. The company works closely with surgeons to develop implantable systems and instrumentation that restore optimum stability and mobility to patients, and make spine surgery more reproducible and easier to perform. More information is located at www.ldrspine.com.
Permalink | | Categories: Medical Devices
Medical device operations merge, will be based in Austin
AA news release from LDR Spine
LDR has combined two separate organizations: LDR Medical, a French-based organization, and LDR Spine, a U.S.-based organization, to create LDR Holding Corporation. LDR, a privately held company, is an innovator in both non-fusion and fusion spinal implants. The new entity will be headquartered in Austin and led by Christophe Lavigne. Mr. Lavigne is an original founder of LDR Medical and has relocated to Austin to lead the newly merged organization.
The new structure was created to better align company strategies and to heighten LDR’s visibility as a global, integrated company within the spine industry. LDR was founded in 2000 by seasoned spine executives based in Troyes, France and now has sales in over 26 countries worldwide.
Recently, the company has focused efforts in the U.S. market by launching an investigational device exemption study for its second generation Mobi-C(R) cervical artificial disc. They are also creating a sales force to introduce its innovative line of spinal fusion products into the highly competitive U.S. market.
Mr. Lavigne comments, “Our company has grown by helping European surgeons create new, innovative spine implants that address unmet or underserved needs. We are excited about creating these same types of relationships with U.S. surgeons. Our founders and investors thought it was important to have the new headquarters in the U.S. I agreed and have relocated to lead the critical steps towards our continued growth.”
Caution: The Mobi-C(R) Cervical Disc Prosthesis is an investigational device and is limited by federal law to investigational use only.
LDR supplies surgeons worldwide with innovative spinal solutions for fusion and non-fusion needs. The company works closely with surgeons to develop implantable systems and instrumentation that restore optimum stability and mobility to patients, and make spine surgery more reproducible and easier to perform. More information is located at www.ldrspine.com.
Permalink | | Categories: Medical Devices
Medical device operations merge, will be based in Austin
AA news release from LDR Spine
LDR has combined two separate organizations: LDR Medical, a French-based organization, and LDR Spine, a U.S.-based organization, to create LDR Holding Corporation. LDR, a privately held company, is an innovator in both non-fusion and fusion spinal implants. The new entity will be headquartered in Austin and led by Christophe Lavigne. Mr. Lavigne is an original founder of LDR Medical and has relocated to Austin to lead the newly merged organization.
The new structure was created to better align company strategies and to heighten LDR’s visibility as a global, integrated company within the spine industry. LDR was founded in 2000 by seasoned spine executives based in Troyes, France and now has sales in over 26 countries worldwide.
Recently, the company has focused efforts in the U.S. market by launching an investigational device exemption study for its second generation Mobi-C(R) cervical artificial disc. They are also creating a sales force to introduce its innovative line of spinal fusion products into the highly competitive U.S. market.
Mr. Lavigne comments, “Our company has grown by helping European surgeons create new, innovative spine implants that address unmet or underserved needs. We are excited about creating these same types of relationships with U.S. surgeons. Our founders and investors thought it was important to have the new headquarters in the U.S. I agreed and have relocated to lead the critical steps towards our continued growth.”
Caution: The Mobi-C(R) Cervical Disc Prosthesis is an investigational device and is limited by federal law to investigational use only.
LDR supplies surgeons worldwide with innovative spinal solutions for fusion and non-fusion needs. The company works closely with surgeons to develop implantable systems and instrumentation that restore optimum stability and mobility to patients, and make spine surgery more reproducible and easier to perform. More information is located at www.ldrspine.com.
Permalink | | Categories: Medical Devices
