Medical technology company Greatbatch Inc. (GB - Analyst Report) recently announced the opening of its third orthopedic manufacturing center in Fort Wayne, Indiana. The company invested $17 million to build an 80,000 square foot center to expand its subsidiary Greatbatch Medical.
The facility has been named the “Susan H. Campbell Orthopedic Center,” in honor of the late Susan Campbell, who had served as senior vice president of Greatbatch Medical’s Orthopaedic Business. Among others, the facility will manufacture fraction fixation implants, spine fixation and hip procedure devices. The new center will help to expand Greatbatch’s core orthopedic sales and in turn boost its future growth.
In the recently reported quarter, revenues from the core Greatbatch Medical segment dropped 8% year over year to $117.8 million. Within Greatbatch Medical, Orthopaedic sales plunged roughly 22% to $31 million due to lack of product expansion and development initiatives. Currency exchange swings negatively impacted orthopedic sales by $1 million in the quarter. Greatbatch expects revenues from this business to be lower in first-half 2012 with a recovery expected in the second half.
The opening ceremony was attended by U.S. Congressman Marlin Stutzman, along with other local dignitaries. The senior management as well as employees of Greatbatch were also present at the event. The Allen County-Fort Wayne Economic Development Alliance and the Indiana Economic Development Corporation have lent their support to the project.
Greatbatch is a leading producer and supplier of batteries, capacitors and components used in implantable medical devices. The company’s top customers include Boston Scientific (BSX - Analyst Report), Johnson & Johnson (JNJ - Analyst Report), Medtronic (MDT - Analyst Report) and St. Jude Medical (STJ - Analyst Report).
Greatbatch has been acquiring complementary businesses over the last few years in a bid to expand. Its pipeline is healthy with a number of products currently in development that are expected to support growth in the long run.
However, soft Cardiac Rhythm Management and Orthopaedic markets and pricing pressure remain headwinds. We currently have a Neutral rating on GreatBatch. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold recommendation.