TPG’s Exactech Goes Bankrupt After Lawsuits Over Recalled Implant Devices
Exactech Inc., a maker of joint-replacement implants owned by TPG Capital, has filed bankruptcy after being accused in more than a thousand lawsuits of making defective hip and knee implants that hurt patients.
The Florida-based company sought court protection Tuesday in Delaware listing assets and liabilities each of between $100 million and $500 million on its Chapter 11 petition.
Exactech, which was taken private by TPG in 2018, signed restructuring and asset purchase agreements with a group of existing lenders backing the Chapter 11 case, according to a statement. The lender group has agreed to serve as a stalking horse bidder, meaning the offer to acquire the business out of bankruptcy is subject to better bids should any materialize in the coming weeks.
Despite strong performance, the company faces “unsustainable liabilities” associated with litigation over knee and hip implant recalls which the business initiated between 2021 and 2022, Darin Johnson, Exactech’s chief executive officer, said in the statement. Exactech has “provided substantial out-of-pocket patient reimbursements and surgeon support for related expenses,” he added.
The device maker has been entangled in lawsuits alleging its devices re defective. Patients have alleged Exactech previously used defective packaging which left implants vulnerable to oxidation and accelerated wear, causing a variety of physical harms, according to court documents.
The recalls cover medical devices that the company began manufacturing in 2004, Exactech Chief Restructuring Officer Jesse York said in a sworn statement. About 2,600 patients have filed lawsuits against Exactech in the US, representing about 1.7% of patients potentially impacted by recalled devices, York said.
Exactech “vigorously disputes” the lawsuits, York said. The company has attempted to settle the litigation but has been unable to make “significant progress” in discussions with plaintiffs lawyers, he said.
Read More: TPG Dismissed From Exactech Defective Implant Injury Litigation
TPG didn’t respond to requests for comment.
The lenders’ stalking horse bid, if consummated, would forgive Exactech senior debt in exchange for the company’s assets, according to bankruptcy court papers filed Tuesday. Exactech said the lender group includes private equity and alternative asset management firms.
The lender group has also agreed to provide $85 million in Chapter 11 financing to fund the business during the bankruptcy.
The bankruptcy comes months after S&P Global Ratings said in May that Exactech was burning through cash and had upcoming debt maturities later in 2024 and 2025. Exactech filed motions Tuesday to continue paying employee wages and other ordinary business expenses while in Chapter 11. The company has about 580 employees, according to court documents.
The case is Exactech Inc., number 24-12441, in the US Bankruptcy Court for the District of Delaware.
Photo: Patients have alleged Exactech previously used defective packaging which left implants vulnerable to oxidation and accelerated wear. Source: BSIP/Universal Images Group/Getty Images