Medical implant maker Exactech files for bankruptcy after recall lawsuit, ET HealthWorld

By Dietrich Knauth

New York: Medical implant maker Exactech filed for bankruptcy in Delaware on Tuesday, seeking to sell its assets and resolve nearly 2,600 lawsuits related to recalled knee, hip and shoulder implants.

Exactech, owned by private equity firm TPG, entered bankruptcy with $352 million in debt and a sale agreement that would transfer the company’s assets to lenders. The sale deal is subject to higher bids and is supported by 95% of the company’s lenders, court records show.

Exactech said high interest payments and litigation expenses began disrupting the company’s cash flow in mid-2023, threatening to derail the otherwise strong business. Exactech has spent $20 million on recalls and litigation costs in the past 12 months.

The Gainesville, Florida-based company produces 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 employs 900 people worldwide.

Most of Exactech’s legal troubles stemmed from a 2021 voluntary recall of its implant devices due to “improper packaging” that did not fully protect the devices from oxygen exposure.

The company said the defective packaging did not meaningfully affect the safety of the implants, but the recall spurred nearly 2,600 lawsuits alleging that the defective packaging caused oxidation in some devices, shortening their lifespan and requiring patients to undergo “revision surgeries” to correct the condition. defective or failed implants.

More than 1,840 cases were consolidated in a federal court in Brooklyn, New York, and more than 740 cases were consolidated in a Florida state court. In the federal case, four cases have been selected for preliminary hearings, and jury selection is scheduled to begin in 2025.

Exactech disputed those claims and said its efforts to resolve the cases did not result in a settlement.

The company also faces a whistleblower lawsuit filed in Alabama federal court in 2018 alleging the company defrauded the federal government by seeking compensation for misbranded and defective knee devices and knee implants that were not medically reasonable or necessary. The company disputes the allegations and said it is trying to reach a settlement with the U.S. Department of Justice and whistleblowers.

Exactech’s lenders agreed to provide $85 million in new financing to carry out the company’s bankruptcy restructuring, according to court documents. The case is 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, et al.

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Exactech orthopedic implant lawsuits sent to federal judge in Brooklyn (Reporting by Dietrich Knauth)