By Dietrich Knauth
New York: Medical implant manufacturer Exactech filed for bankruptcy on Tuesday in Delaware, seeking to sell its assets and resolve about 2,600 lawsuits over recalled knee, hip and shoulder implants.
Exactech, which is owned by private equity firm TPG, entered bankruptcy with $352 million in debt and a sale agreement that would turn over the company’s assets to its lenders. The sale agreement is subject to higher offers, and it is supported by 95% of the company’s lenders, according to court filings.
Exactech said that high interest payments and litigation expenses began cutting into the company’s cash flow in mid-2023, threatening to derail an otherwise-strong business. Exactech spent $20 million on recalls and litigation expenses in the past 12 months.
The Gainesville, Florida-based company makes shoulder, hip, knee and ankle implants, as well as surgical imaging devices. Exactech operates four manufacturing facilities in Gainesville and Sarasota, Florida, and Gieres, France, and it has 900 employees worldwide.
Most of Exactech’s legal troubles stemmed from a 2021 voluntary recall of implant devices due to “non-conforming packaging” which did not fully protect the devices from exposure to oxygen.
The company said that the defective packaging did not meaningfully impact the safety of its implants, but the recall spurred about 2,600 lawsuits alleging that the defective packaging had caused oxidation in some devices, shortening their lifespan and requiring patients to undergo “revision surgeries” to address flawed or failing implants.
Over 1,840 lawsuits were centralized in a federal court in Brooklyn, New York, and more than 740 lawsuits were consolidated in Florida state court. In the federal litigation, four cases have been selected for bellwether trials, with jury selection scheduled to begin in 2025.
Exactech has disputed those allegations and said that its efforts to settle the cases have not resulted in a deal.
The company is also facing a 2018 whistleblower lawsuit in Alabama federal court alleging that the company defrauded the federal government by seeking reimbursement for misbranded and defective knee devices and for knee implants that were not medically reasonable and necessary. The company disputes the allegations and said it has tried to reach a settlement with the U.S. Department of Justice and the whistleblowers.
Exactech’s lenders have agreed to provide $85 million in new financing to see the company through its bankruptcy restructuring, according to court documents. The case is In re: Exactech Inc., U.S. Bankruptcy Court for the District of Delaware, No. 24-12441
For Exactech: Ryan Dahl and Benjamin Rhode of Ropes & Gray LLP, among others.
Read more:
Exactech orthopedic implant lawsuits sent to federal judge in Brooklyn (Reporting by Dietrich Knauth)
