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Biotech / Medical : Exactech (EXAC)

EXAC 49.25

0.0%

Feb 14 4:00 PM EST

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To: VIXandMore who wrote (97)	4/29/1999 8:20:00 PM
From: Robert G. Harrell	Read Replies (1) of 118

I think someone must have spread the rumor that they would beat the estimates by more than a penny and hence the run up yesterday and subsequent sell off today. Here are the important points I gleaned from the Conf. Call: Their sales force is getting much stronger. They added 5 agencies and 15 reps this quarter for a total of 45 agencies and 113 reps. They are apparently benefiting from the consolidation that is going on in the industry and are able to affiliate with strong sales forces. They have added reps in the west and southeast. Internationally they have a very strong distributor in Japan. They have made 3 visits since fall '98 and are going again in Sept. to do more training. They entered Belgium in late '98 and are in middle stage negotiations in France and late stage negotiations in Denmark. There is also the possibility of another 2 agencies in Europe (I think--dog started barking loudly at this point.) The slight decrease in R & D was an anomaly. The plan is to keep it in the 5-6% range. DSO's are 74, down from 76 in 1Q '98. The Optiform manufacturing process is going very well. Supply is not a current problem. They expect Optiform sales to reach the $1 million/ quarter rate in the near future, perhaps in the 3rd or 4th quarter. They have raised catalog prices about 3.5% on average and the increases are sticking. Cash at end of Q was $1.1mill up from $662,000 in Dec. '98. They plan $2.5mill in Cap. Ex. and can tap a line of credit from Merril Lynch but excellent 1st Q results negate the need to borrow. They will be cash flow positive in 1999!! They will break even in manufacturing in the 2nd Q. They are bringing in sales people with more experience in hip sales. Growth is fastest in the revision side of knees, up 75% vs 1Q '98. Accounting, computer and software expenses were a little above plan. Shareholder relations were also up a little. A question was asked about how many more doctors were using Optiform and the answer was 2-400 which I think must be the total number using it. A question was asked about the average volume of Optiform and revenue per surgery. Answer: substantial use in fracture market, 4cc, $500 and hip revisions, 15cc, $1500. Bob

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