With an aging U.S. population, the medical appliances industry will witness a rise in demand for medical devices in the future. Also, the increasing automation after the invention of computers and mobile phones has led to an increase in obesity and obesity related diseases, as it drastically reduced the physical activity of the human body. This change in the lifestyle gave rise to a new set of diseases.
RTI Surgical Inc (NASDAQ:RTIX) operates in the medical appliances industry and produces orthopaedic and other surgical implants that repair and promote the natural healing of human bone and other human tissues. Recently, RTI Biologics took over Pioneer Surgical Technology to widen the range of its current product portfolio.
Effect of the acquisition of Pioneer on RTI Biologics
The acquisition of Pioneer enhances RTI Surgical Inc (NASDAQ:RTIX)’s existing implant product portfolio by adding metals and synthetics to its current portfolio of allograft and xenograft biologics. On an integrated basis, metals and synthetics make up 32% of total revenues while allograft and xenograft represent 68% of total revenues. The cardiothoracic segment of Pioneer is an addition to the RTI Surgical Inc (NASDAQ:RTIX)’s current product range. After the acquisition, RTI Surgical Inc (NASDAQ:RTIX) is now well equipped to provide global surgical implant solutions on a worldwide basis in the field of orthopaedics and biologics.
This acquisition will result in expanded direct distribution, with direct revenues as a percentage of total revenue rising from 39% to 47%. It also enables RTI Surgical Inc (NASDAQ:RTIX) to take advantage of the cross distribution opportunities. The enhanced distribution network will facilitate the upcoming launch of map3TM cellular allogeneic bone graft in terms of providing extra distribution capacity.
Pioneer will assist in increasing the international presence of RTI Surgical Inc (NASDAQ:RTIX) by providing a platform for new growth opportunities. Together, the two companies will now be able to offer implants in 47 countries. RTI will be able to benefit from Pioneer’s European distribution platforms in Germany and Netherlands.
Moreover, it will elevate RTI’s organic growth rate and offer revenue growth opportunities across various channels. The superior margins of Pioneer have resulted in an improved margin profile for the new company, RTI Surgical. The combined gross profit and EBITDA margins stood at 56% and 12%, respectively, as compared to 48% and 11% for RTI Biologics alone for the most recent quarter reported.
Integra Lifesciences Holdings Corp (NASDAQ:IART) is a direct competitor of RTI Biologics. The company develops, manufactures, and markets surgical implants and medical instruments for neurosurgery, extremity reconstruction, orthopaedics, and general surgery.
Recently, Integra Lifesciences Holdings Corp (NASDAQ:IART) has been granted the European CE Mark for its Integra Smart Cervical Solution, a device for treating degenerative diseases of the cervical spine that requires stabilization and fusion of two or more cervical vertebrae. This new appliance provides a 100% synthetic bone replacement. The implant enables a no touch surgical procedure. The disposable inserter provides a safer way to execute the surgery. Entrance into the huge European market is a positive signal for Integra, which will work as a catalyst to boost the company’s revenues in the coming months.