Exactech, founded in 1985 by orthopedic surgeon Dr. Bill Petty, Betty Petty, and biomedical engineer Gary Miller, began with a mission: to improve the lives of patients suffering from joint-related conditions. With its roots in Gainesville, Florida, the company initially focused on developing innovative solutions for joint replacement, emphasizing patient-centric designs that catered specifically to knee, hip, and shoulder implants. Over the years, Exactech gained a reputation for its high-quality implants and cutting-edge technology, allowing it to grow steadily into one of the leading total joint companies in the United States.
By the 2000s, Exactech had established a strong foothold in the orthopedic market, expanding its product lines to cover a wide array of joint replacement solutions and moving into international markets. Their signature products, such as the Optetrak knee replacement system, became widely used and respected by orthopedic surgeons. As technology in the medical field advanced, Exactech kept pace, integrating computer-assisted surgery and precision instrumentation into their offerings. The company’s commitment to innovation and rigorous testing helped them build a loyal customer base among surgeons and patients alike, further solidifying their position as a leader in joint replacements.
However, the company’s reputation faced challenges in the 2020s. Concerns regarding the durability of some of Exactech’s polyethylene components in knee and ankle replacements surfaced, leading to a recall of various implants in 2023. These polyethylene components, essential for joint function and longevity, had been found to have a defect that could lead to early wear, causing implant failure and necessitating revision surgeries for affected patients. This recall was not a minor issue; it involved a significant number of devices and raised serious safety concerns, attracting the attention of the U.S. Food and Drug Administration (FDA) and prompting further scrutiny of Exactech’s manufacturing processes.
The recall had a profound impact on the company’s finances and reputation. Patients affected by the faulty devices filed lawsuits, alleging that Exactech had failed to ensure the durability and safety of their implants. These legal battles, combined with the costs of managing the recall and replacing defective products, placed immense financial pressure on the company. In a bid to manage these challenges and restructure its obligations, Exactech filed for Chapter 11 bankruptcy in 2024. This move allowed the company to reorganize its debts and business structure while continuing to support its operations and handle ongoing recall-related expenses.
Exactech’s journey—from a respected pioneer in joint replacement technology to a company facing intense legal and financial struggles—highlights the complexities of the medical device industry, where innovation and rigorous safety standards must go hand in hand. While Exactech’s story includes notable achievements in orthopedic medicine, it also serves as a cautionary tale about the importance of quality control, patient safety, and transparency in the healthcare industry.
So, how does a successful 40-year orthopedic company get into so much trouble?
Simple answer: Packaging recall + aggressive US attorneys = financial struggles = bankruptcy.
BTW, this is why many EU companies avoid the US market altogether. Litigation risk can drain $1B of valuation quickly.
This is what can happen to valuation quickly. As a public company EXAC traded at a market cap of $300-500M in the 2010’s. In 2017, private equity firm TPG Capital acquired Exactech for $737M. Today, inside investors (the stalking horse bidder) are trying to buy the company for $85M (that’s a 89% loss in value).
Bonus video – BoneChat members discuss the Exactech disaster…
- Exactech has filed for Chapter 11 bankruptcy protection and agreed to sell its assets to existing investors, the company said Tuesday.
- The bankruptcy filing follows Exactech’s failure to reach an out-of-court settlement for product liability claims brought by around 2,600 patients in response to recalls of orthopedic devices, according to a court document.
- With no legal resolution and loan repayments coming up, Exactech has struck a deal with investors to secure $85 million to fund operations and a “stalking horse” bidder for its assets. The Chapter 11 plan was filed in the U.S. Bankruptcy Court for the District of Delaware.
- Exactech recalled its Connexion GXL Hip Liners in 2021. The company later expanded the recall to all hip liners, knee and ankle implants. Early in 2024, Exactech recalled shoulder replacement devices and knee components, having initially declined to act. The recalls were triggered by defective packaging bags, which lacked an oxygen barrier layer to protect the devices from oxidation.
- Some patients affected by the recalls filed lawsuits against the Florida-based company. The lawsuits created a second set of legal challenges for Exactech, which was already defending itself against allegations that the sale of certain knee devices violated the federal False Claims Act.
- Jesse York, Exactech’s chief restructuring officer, discussed the impact of the lawsuits in the bankruptcy filing, explaining that “the costs of litigation became an overwhelming burden for the business, resulting in liquidity constraints in mid- to late-2023.” Over the last 12 months, the recalls and related litigation cost Exactech approximately $20 million, York said.
- Uncertainty about what the lawsuits could cost Exactech has deterred investors, York added, and led the company to prioritize the resolution of the legal cases. However, York said it became clear the product liability lawsuits could not be solved on an out-of-court basis, prompting Exactech to pause talks with the Department of Justice and pivot to trying to raise money and prepare for an in-court restructuring.
- That pivot led to an agreement with investors to provide $85 million to fund Exactech through the restructuring process and act as the “stalking horse” bidder. Unless another offer emerges, the investors will buy “substantially all” of the company’s assets as a going concern.
- Exactech said it will continue to operate as normal throughout the bankruptcy process. The company stated in the announcement that the sale “is subject to higher and better bids, court approval and other customary closing conditions.”
Risks with Exactech Joint Replacement Devices with Defective Packaging – FDA Safety Communication (FDA)
A Timeline of the Exactech Recall: How it Unfolded (Law firm)
While the recalls involving Exactech’s defective ankle, knee, hip and shoulder implant devices did not begin until 2021, the issues with these devices date all the way back to 2004. This is when, as the U.S. Food and Drug Administration (FDA) discovered, Exactech began using packaging that allowed its devices to become compromised before being implanted in patients’ bodies. As the FDA explains:
“Many Exactech joint replacement devices (including knees, ankles, and hips) were packaged in defective packaging bags . . . missing one of the oxygen barrier layers that protect devices from oxidation, a chemical reaction with oxygen that can degrade plastics over time. Oxidation can lead to accelerated device wear/failure, and component cracking or fracture, all leading to corrective revision surgery. Some of the recalled devices are associated with increased risk of revision surgeries and bone loss related to excessive device wear/failure.”
While this information from the FDA is specific to Exactech’s ankle, knee and hip implants, the FDA has raised similar concerns with the packaging used to ship the company’s Equinoxe Shoulder System joint replacement devices to hospitals around the country. As a result, if you or a loved one has received any type of medical implant manufactured by Exactech, you will want to consult with your (or your loved one’s) healthcare provider to determine if the implant poses a health risk.
Here is a timeline of the Exactech recalls initiated to date:
June 2021
Exactech issued a recall for its Novation, Acumatch, and MCS hip replacement devices in June 2021. The recall related specifically to the “GXL” liners used in these devices, which presented a risk for “Excessive and premature wear.” The FDA classified this as a Class II recall, which means the FDA has determined that “use of, or exposure to, [these devices] may cause temporary or medically reversible adverse health consequences or . . . the probability of serious adverse health consequences is remote.”
October 2021
Exactech issued a recall for its Optetrak, Logic, and Truliant knee replacement and Vantage total ankle replacement devices in October 2021. The FDA also classified this as a Class II recall.
February 2022
On February 7, 2022, Exactech issued an expanded recall for its Optetrak, Logic, and Truliant knee replacement and Vantage total ankle replacement devices. This recall related specifically to devices shipped in the company’s defective packaging. According to the FDA, “around 80% of the knee and ankle replacement devices manufactured since 2004 were packaged in defective bags.”
April 2022
On April 7, 2022, Exactech issued an updated Urgent Medical Device Correction notice advising healthcare providers to avoid implanting the company’s knee and ankle replacement devices shipped in defective packaging. The notice covered devices manufactured between January 2004 and August 2021.
August 2022
Exactech expanded its hip replacement device recall in August 2022 to include all devices with polyethylene components shipped in defective packaging. The FDA also classified this as a Class II recall on September 9, 2022.
June 2023
On June 30, 2023, Exactech issued a recall for its shoulder replacement device systems. Unlike the previous ankle, knee and hip recalls, this recall related not to the devices’ packaging but rather to issues with the devices themselves and the tools used to implant them during surgery. This was also a Class II recall.
January 2024
On January 16, 2024, the FDA announced that Exactech has refused to issue a recall related to the packaging used to ship its shoulder implant devices. This is despite the fact that, “[s]ome Equinoxe Shoulder Systems were packaged in defective bags that were missing one of the oxygen barrier layers that protect the devices from oxidation,” similar to the company’s ankle, knee and hip implants. Even though Exactech has not issued a recall specific to this issue, the FDA still recommends against implanting Exactech Shoulder Systems that may have been shipped in defective packaging.
Ongoing Concerns Related to Exactech’s Defective Medical Devices
Unfortunately, for many patients, the Exactech recalls came too late. According to the FDA, Exactech has been shipping implant devices to healthcare providers in defective packaging since at least 2004. Additionally, despite the FDA’s recommendations against implanting Exactech’s potentially dangerous devices, many healthcare providers continued to implant Exactech devices after the recalls were issued.
With this in mind, anyone who received an Exactech implant in 2004 or later should consult with their doctor about the risks they may be facing. As outlined by the FDA, these risks include:
- Bone loss
- Component fracture
- Device failure
- Early and excessive device wear
- Pain
- Swelling
In some cases, patients may simply need to monitor for signs of these risks. However, in other cases, revision surgery to remove and replace a defective Exactech device may be necessary.
What Knee and Hip Replacements are Part of the Exactech Recall?
The defective components affected by the Exactech recall include the following:
- OPTETRAK® All-polyethylene Tibial Components
- OPTETRAK® Tibial Inserts
- OPTETRAK Logic® Tibial Inserts
- TRULIANT® Tibial Inserts
- VANTAGE® Fixed-Bearing Liner Component
- Acumatch GXL
- MCS GXL
- Novation GXL
- Exactech All Polyethylene Cemented Cup Acumatch Conventional UHMWPE
- MCS Conventional UHMWPE NOVATION Conventional UHMWPE