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Smith & Nephew Plus: $889 Million Buy Expands European Reconstruction Biz

This article was originally published in The Gray Sheet

Executive Summary

Smith & Nephew will double its share of the European orthopedic reconstructive implant market with its $889 million acquisition of Plus Orthopedic Holding

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Earnings In Brief

Smith & Nephew finds substandard sales practices at Plus Orthopedics: Unethical sales practices uncovered at Plus Orthopedics, which was recently acquired by orthopedic device maker Smith & Nephew, will reduce revenues by roughly $100 million in 2008, Smith & Nephew announces in conjunction with first-quarter financial results May 1. While integrating Plus, purchased for $889 million last June, S&N discovered sales practices in Europe that ran counter to its "ethics and policies," primarily in Greece, CEO David Illingworth disclosed during the firm's earnings call. "We're sensitive about discussing these in any detail, as we're still investigating some of the issues," Illingworth noted. The resulting revenue loss for S&N, totaling $16 million-$20 million in the first quarter, primarily relates to reconstruction and trauma products. Despite the "challenging" quarter, S&N still expects "significant benefits to come" from its purchase of Swiss-based Plus (1"The Gray Sheet" March 19, 2007, p. 17). Overall, S&N reported revenue of $911 million for the quarter, representing reported growth of 22% from a year ago and underlying growth of 2% after accounting for the effect of acquisitions and currency exchange rates. Excluding Plus, underlying S&N growth was 5%, S&N notes. The London-based company reported profits of $83 million for the quarter, down 8.8% from a year ago

Earnings In Brief

Smith & Nephew finds substandard sales practices at Plus Orthopedics: Unethical sales practices uncovered at Plus Orthopedics, which was recently acquired by orthopedic device maker Smith & Nephew, will reduce revenues by roughly $100 million in 2008, Smith & Nephew announces in conjunction with first-quarter financial results May 1. While integrating Plus, purchased for $889 million last June, S&N discovered sales practices in Europe that ran counter to its "ethics and policies," primarily in Greece, CEO David Illingworth disclosed during the firm's earnings call. "We're sensitive about discussing these in any detail, as we're still investigating some of the issues," Illingworth noted. The resulting revenue loss for S&N, totaling $16 million-$20 million in the first quarter, primarily relates to reconstruction and trauma products. Despite the "challenging" quarter, S&N still expects "significant benefits to come" from its purchase of Swiss-based Plus (1"The Gray Sheet" March 19, 2007, p. 17). Overall, S&N reported revenue of $911 million for the quarter, representing reported growth of 22% from a year ago and underlying growth of 2% after accounting for the effect of acquisitions and currency exchange rates. Excluding Plus, underlying S&N growth was 5%, S&N notes. The London-based company reported profits of $83 million for the quarter, down 8.8% from a year ago

Plus Orthopedics No Longer Facing FDA “Application Integrity” Restrictions

Smith & Nephew's new subsidiary Plus Orthopedics was removed from FDA's Application Integrity Policy (AIP) list Sept. 14 after three years of working with the agency to resolve its clinical trial issues

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