A hip turnaround

New CEO Peter Huntley is determined to revive the fortunes of hip and knee transplant company Corin.

‘Our story is about incremental innovation, and we aim to generate double-digit sales growth with margin enhancement,’ says Huntley. ‘We’re getting the best growth from Australia, but we hope to get more growth from the UK and Europe.’

Corin is not held back by debt, having about £5 million on its books and has experienced 6 per cent sales growth in the first four months of 2010, even before the launch of a new hip system, according to Huntley.

It’s been a bumpy road for this small, AIM-listed Cirencester-based manufacturer of orthopaedic devices for hip and ankle replacements. The shares have had some heady days, when they trebled in less than a year to more than 600p on the promise of sales in the giant US market through the medical devices giant Stryker.

But Stryker lost its appetite for Corin’s hip replacement product, Cornmet, after a crackdown by regulatory authorities on dodgy junkets for doctors and worse than expected sales. Cornmet was set to revolutionise hip surgery, catering for ‘baby-boomers’ in their fifties wanting to remain active. In addition to this, the product also encountered resistance because of fears that metal-on-metal products are dangerous, having the potential for cytotoxticity and carcenogicity (poison and cancer in layman’s terms).

Corin, however, is starting to make the right noises to an investor community that is anxious about developments within the company as well as those outside it. In March, Corin reported that it had swung back into profit in 2009 (£900,000) on revenue of £40.6 million (2008: £39.8m), although the results were largely due to an inventory write-down a year earlier.

Huntley, who joined the group in May 2008, says reliance on Cornmet is reducing all the time and that it will be new orthopaedic products that will drive profitability: ‘The new strategy is to broaden out the business, to become a full-line hip and knee implant orthopaedic company.’

Corin’s experiences have taught it that the 5 per cent of the hip market that relates to its Cornmet product will only ever be that. The real money is in the remaining 95 per cent, which Huntley says is the group’s focus, as far as hips are concerned.

Having already introduced new hip stems MiniHip and Metafix, Corin will be rolling out a new hip cup called Trinity in 2010. Huntley says Corin intends also to ‘refurbish’ older hip products in its portfolio and has hired sales staff to sell to orthopaedic surgeons. Only next year will it revamp its knee portfolio, he says.

As one analyst points out, Corin isn’t suddenly going to double its growth next year. But it is starting to get its act together and investors should consider being a part of this British turnaround story.

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...