Exhibit 99.1
[DJ ORTHO LOGO]
COMPANY INVESTOR/ MEDIA CONTACT:
dj Orthopedics, Inc.
Mark Francois
Director of Investor Relations
(760) 734-4766
mark.francois@djortho.com
FOR IMMEDIATE RELEASE
DJ ORTHOPEDICS TO ACQUIRE BONE GROWTH STIMULATION BUSINESS FROM ORTHOLOGIC
CORPORATION
SAN DIEGO, CA, OCTOBER 9, 2003 - dj Orthopedics, Inc. (NYSE: DJO), a designer,
manufacturer, and marketer of products and services for the orthopedic sports
medicine market, today announced that it has signed a definitive agreement to
purchase the bone growth stimulation (BGS) business from OrthoLogic Corporation
("OrthoLogic") (NASDAQ: OLGC), for $93 million in cash, subject to the approval
of OrthoLogic's stockholders and customary governmental approvals and closing
conditions. The transaction is expected to be completed before the end of the
year. The BGS products to be acquired in the transaction include the OL1000,
approved by the United States Food and Drug Administration (FDA) in 1994, which
utilizes patented Combined Magnetic Field (CMF) technology to deliver a highly
specific, low-energy signal for the non-invasive treatment of an established
nonunion fracture acquired secondary to trauma, excluding vertebrae and all flat
bones, and SpinaLogic(R), a state-of-the-art device used as an adjunct to
primary lumbar spinal fusion surgery, approved by the FDA in late 1999. The BGS
market is one of the fastest growing segments of the nearly $4 billion
orthopedic sports medicine market. Frost and Sullivan estimates that the BGS
market is $369 million for 2003, and could grow to $637 million by 2008, a
compound annual growth rate of approximately 12 percent.
dj Orthopedics said it has received an underwritten commitment for senior debt
financing for the acquisition, and to refinance its current bank debt, from
Wachovia Securities (1).
-more-
Exhibit 99.1
In 2002, OrthoLogic generated $38.0 million in revenue from its BGS products, up
25 percent from $30.5 million in 2001, and in the first six months of 2003,
OrthoLogic reported BGS revenue of $21.7 million, a 21 percent increase over the
first six months of 2002.
"With improved operating metrics and profitability in 2003, our focus is on
long-term revenue growth for dj Orthopedics, and bone growth stimulation is a
strategically important element of that future growth," said Les Cross,
President and CEO of dj Orthopedics. "We have established very strong
relationships among the orthopedic surgeon community, creating the leading
market share in products that rehabilitate soft tissue and bone. The opportunity
to now expand into the regeneration market with OrthoLogic's complementary bone
growth stimulation products will permit us to leverage our existing
relationships in the orthopedic community. The BGS market is a significant
growth opportunity for dj Orthopedics and entering this market with leading
technology, strong relationships, growing market share and a larger, motivated
sales force should enable us to accelerate the growth of the Company."
Commenting on the acquisition, Vickie Capps, Senior Vice President and CFO at dj
Orthopedics said, "From a financial perspective, this acquisition is compelling
and meets our requirements of bringing higher revenue growth and operating
margins to dj Orthopedics. The commitment shown by our lead lender, Wachovia
Securities, is a strong endorsement of our prospects going forward."
dj Orthopedics intends to operate the BGS business as a stand alone division at
its existing location in Tempe, Arizona. Shane Kelly, Senior Vice President,
Sales for OrthoLogic, will be appointed Vice President, General Manager of the
new dj Orthopedics BGS division, reporting to Les Cross.
The OL1000 product line is indicated in the treatment of nonunion fractures, or
fractures that do not show visible signs of progressive healing. These fractures
can be the result of diseased, damaged, degenerated or recently repaired
musculoskeletal tissue. BGS products are physician-prescribed and focus on
improving the clinical outcomes and cost-effectiveness of orthopedic surgical
procedures that are characterized by compromised healing, high-cost, the
potential for complication and long recuperation time. There are approximately
six million fractures in the US each year, with up to 5 percent of these
resulting in nonunion or delayed union. The OL1000, utilizing patented CMF
technology, is comprised of two magnetic field treatment transducers (coils) and
a microprocessor-controlled signal generator to deliver a highly specific, low
energy signal to the injury area for approximately 30 minutes each day. This is
a significantly shorter period of time compared to competitive products on the
market and is a key differential factor that has enabled
-more-
Exhibit 99.1
OrthoLogic to increase its market share. The reduced treatment time increases
patient comfort and therefore improves patient compliance during the treatment
protocol. CMF technology also allows for less specific positioning of the
stimulator since the increased energy delivered can cover a broader treatment
area. SpinaLogic is a state-of-the-art electromagnetic bone growth stimulator
used to enhance the healing process of lumbar spinal fusions. Spinal fusion
surgery is performed on patients who suffer from chronic back or leg pain
associated with the natural degeneration of the spinal disc space. Because
spinal fusion procedures are on the rise, the spinal stimulator market is the
fastest growing segment of the BGS market. SpinaLogic offers benefits similar to
those of the OL1000 in that it is a portable, noninvasive device that is easy to
use and requires only 30 minutes of treatment per day. The patient attaches the
device to the lumbar injury location where it provides localized magnetic field
treatment to the fusion site. Like the OL1000, the SpinaLogic device contains a
micro-controller that tracks the patient's daily treatment compliance and can
easily be checked by the surgeon upon follow-up visits.
dj Orthopedics has scheduled a conference call to discuss this announcement
beginning at 2:00 PM Eastern Time, or 11:00 AM Pacific Time today, Thursday
October 9, 2003. Individuals interested in listening to the conference call may
do so by dialing (706) 634-0177, using the reservation code 3143805. A telephone
replay will be available for 48 hours following the conclusion of the call by
dialing (706) 645-9291 and using the reservation code above. In addition, the
conference call also will be available live, via the Internet at
www.djortho.com, and a recording of the call will be available on the Company's
website.
ABOUT DJ ORTHOPEDICS
dj Orthopedics is a global orthopedic sports medicine company specializing in
the design, manufacture and marketing of products and services that rehabilitate
soft tissue and bone, help protect against injury and treat osteoarthritis of
the knee. Its broad range of over 600 existing products, many of which are based
on proprietary technologies, includes rigid knee braces, soft goods, specialty
and other complementary orthopedic products. These products provide solutions
for patients and orthopedic sports medicine professionals throughout the
patient's continuum of care.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements regarding the Company's
acquisition of OrthoLogic Corporation's bone growth stimulation (BGS) business
and the acquisition's impact on dj Orthopedics' future growth and profitability.
The Company undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise. Forward
looking statements includes
-more-
Exhibit 99.1
references to the expected closing time for the acquisition; the projected size
and growth rate of the BGS market; the Company's belief that it can leverage its
rehabilitation business to increase sales of BGS products and accelerate the
growth rate of the combined company; and the Company's belief that the
acquisition will provide higher revenue growth and operating margins for dj
Orthopedics. These forward-looking statements are based on the Company's current
expectations and are subject to a number of risks, uncertainties and assumptions
that might cause actual results to differ significantly from those expressed in
or implied by such forward-looking statements, including the risk that we may
not be able to implement our business strategy relative to the acquisition; the
risk that the approvals and other conditions to closing are not obtained or
satisfied, or possible antitrust issues with the United States government; the
ability of the Company to secure financing or financing with acceptable terms;
and competitive products or technologies in fracture repair or spinal fusion
surgery and/or competition in the BGS marketplace that can undermine the
Company's sales and profitability goals of the combined businesses. Many other
risk factors are detailed in our recently filed and readily available Annual
Report on Form 10-K for the 2002 calendar year, filed on March 28, 2003 with the
Securities and Exchange Commission.
(1) Wachovia Securities is the trade name for the corporate and investment
banking services of Wachovia Corporation and its subsidiaries, including
Wachovia Capital Markets, LLC, member NYSE, NASD, SIPC.
###