Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RTI SURGICAL, INC. | d555411d8k.htm |
| EX-99.2 - PRESS RELEASE - RTI SURGICAL, INC. | d555411dex992.htm |
| EX-99.1 - TRANSCRIPT OF CONFERENCE CALL - RTI SURGICAL, INC. | d555411dex991.htm |
 Investor Presentation
June 12, 2013
Acquisition of Pioneer
®
Surgical
Technology
Exhibit 99.3 |
 2
Forward Looking Statement
This communication contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are based on
management’s current expectations, estimates and projections about our industry, our
management’s beliefs and certain assumptions made by our management. Words such as
“anticipates,” “expects,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” variations of such words and similar
expressions are intended to identify such forward-looking statements. In addition, except
for historical information, any statements made in this communication about growth rates, new
product introductions, future operational improvements and results or regulatory actions or
approvals or changes to agreements with distributors also are forward-looking statements.
These statements are not guarantees of future performance and are subject to risks and
uncertainties, including the risks described in public filings with the U.S. Securities and Exchange
Commission (SEC). In addition, these statements are subject to risks associated with the
Pioneer’s financial condition, business and operations and the integration of
Pioneer’s business with ours. Our actual results may differ materially from the
anticipated results reflected in these forward-looking statements. Copies of the
company’s SEC filings may be obtained by contacting the company or the SEC or by visiting
RTI’s website This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of, these securities in any state or other jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or qualification under
the securities laws of any such state or jurisdiction.
at
www.rtix.com
or
the
SEC’s
website
at
www.sec.gov. |
 Transaction Summary
Acquisition
RTI
is
acquiring
Pioneer
®
Surgical
Technology,
a
leading
medical
technology
company
that
manufactures
and
distributes
synthetic
and
metal
products
in
the
orthopedics,
biologics,
spine,
trauma and cardiothoracic markets
Purchase
Price
$130 million, all cash
Financial
Impact
Accretive
to
cash
earnings
per
share
(1)
and
free
cash
flow,
excluding
one-time,
transaction-
Financing
Existing cash
Fully committed senior debt financing
Less than 1.5x net leverage at close
Convertible preferred equity
Additional
Information
Brian Hutchison, RTI’s President & CEO and Rob Jordheim, RTI’s EVP
& CFO, will continue to serve in their respective roles
Approved by both Boards of Directors
Hart-Scott-Rodino approval in process
Expect to close in 3Q13
(1) Cash earnings per share excludes one-time transaction expenses and
integration costs, GAAP inventory write-up, amortization of acquired intangibles and amortization of financing fees.
related items in 2014
3 |
 4
Debt & Equity Financing
Debt
TD Bank, N.A. and Regions Bank
5 year, $80 million senior secured credit facility
–
$20 million revolver
–
$60 million Term Loan A
–
Cost of credit facility equal to LIBOR plus 100 –
175 bps, based on senior debt to
EBITDA ratio
Preferred
Equity
Water Street Healthcare Partners
$50 million convertible preferred equity
–
6.0% dividend
–
Converts to RTI common stock at a conversion price of $4.39
–
16.8% ownership (as converted)
–
2 new board seats |
 5
Water Street Healthcare Partners
Strategic private equity firm focused exclusively on healthcare industry
Strong track record of leading transformational acquisitions that have created
market-leading healthcare companies of greater long-term value
Expertise in integrating businesses to achieve synergies and maximize combined
companies’
products and capabilities to drive results
Extensive operating experience, industry knowledge and network of executive
relationships in medical products sector
History of successful partnerships with world’s leading healthcare
corporations to invest in and grow their businesses
Proven record of engaging team’s healthcare expertise, experience and network
of relationships to accelerate companies’
growth and increase value |
 6
Strategic Rationale
Diversification of Implant Portfolio
–
Expands
current
allograft
and
xenograft
biologics
portfolio
with
metal
and
synthetic
implants
–
Adds
attractive
next
generation
synthetic
biologics
platform
Expansion of Direct Distribution
–
Meaningful addition to existing distribution network with opportunities for cross
distribution –
Additional
distribution
capability
for
upcoming
launch
of
map3
cellular
allogeneic
bone
graft
Enhances Current International Business
–
Provides a platform for new growth opportunities
Improved Margin Profile and Revenue Growth Opportunities
–
Raises RTI’s organic growth rate and provides revenue growth opportunities
for distribution of the combined portfolio across multiple channels
–
Addition of Pioneer’s medical devices will improve RTI’s current gross
margin profile RTI’S ACQUISITION OF PIONEER
®
CREATES A DIVERSIFIED GLOBAL SURGICAL IMPLANT
COMPANY POSITIONED FOR GROWTH IN ORTHOPEDICS AND BIOLOGICS
TM |
 Pioneer
®
Surgical Technology Overview
Leading manufacturer of synthetic and metal products in the Orthopedics,
Biologics, Spine, Trauma and Cardiothoracic markets
Founded in 1992
Headquartered in Marquette, MI with international headquarters in Houten, The
Netherlands
Two
manufacturing
facilities
–
Marquette,
MI
and
Greenville,
NC
Approximately 300 employees in the U.S. and Europe
7 |
 Pioneer
®
Surgical Technology Revenue
2012
HISTORICAL
(Dollars in Millions)
Cardiothoracic
Spine
50%
Trauma
30%
Biologics
15%
5%
$70
$77
$88
$40
$60
$80
$100
2010
2011
2012
8 |
 SPINE
TRAUMA
BIOLOGICS
CARDIOTHORACIC
Pioneer
®
Business Segments
9
Broad product portfolio
Cervical
Thoracolumbar
Lateral
Minimally Invasive Surgery
Cable system
Cannulated screws
Diversified implant offering
Leading sternal cable system
Plating system
o
Plate systems
o
PEEK interbody fusion
o
PEEK interbody fusion
o
Pedicle screws & rods
o
Spinal cable system
o
2nd generation bioactive
synthetic
o
DBM
o
Allograft |
 10
Combined Company Overview |
 11
$147
$166
$175
$263
$-
$50
$100
$150
$200
$250
$300
RTI 2008
RTI 2010
RTI LTM 3/31/13
Pro Forma LTM
3/31/13
Allograft & Xenograft
Synthetic / Metal
Addition of Synthetics & Metals
(Dollars in Millions)
32%
68% |
 12
Expanding Direct Distribution
33%
37%
39%
47%
0%
10%
20%
30%
40%
50%
RTI 2008
RTI 2010
RTI LTM 3/31/13
Pro Forma LTM 3/31/13
(Direct Revenue as a percentage of Total Revenue) |
 Enhance International Platform
Combined companies
will offer products in 47
countries
Combined European
distribution platform:
–
Neunkirchen, Germany
–
Houten, The Netherlands
Growing China
distribution footprint
13 |
 14
Combined Operations
Provides immediate scale
Strong growth profile
Enhances RTI’s margin profile
LTM March 31, 2013
RTI
PIONEER
COMBINED
Revenue
175
$
88
$
263
$
Gross Profit
84
$
62
$
146
$
Margin
48%
70%
56%
EBITDA
19
$
13
$
32
$
Margin
11%
15%
12%
(Dollars in Millions) |
 15
Summary
ADVANCES RTI’S STRATEGIC GOALS
DIVERSIFIES PORTFOLIO/ REVENUE / CUSTOMER BASE
BRINGS STRONG GROWTH OPPORTUNITIES
LEVERAGES EXPERTISE OF PREMIER HEALTHCARE-
FOCUSED EQUITY INVESTOR |
 RTI
Biologics Inc. NASDAQ: RTIX
www.rtix.com |