ArthroCare Sews Up an Advantage in Sports Medicine

In a rapidly growing market like the sports medicine segment of orthopedics, it pays for companies to strike early. The introduction of new technologies and a population that alternates between sedentary work weeks and extreme sports on the weekends are fueling market growth rates of 30% annually. The American Association of Orthopedic Surgeons estimates that approximately 11% of all injuries—things like fractures, dislocations, and tears to the knees and shoulders--are related to sports, to the tune of 6.6 million such injuries each year. Three-quarters of these patients are under the age of 65. An increase in the number of aging and active people is bound to contribute to the growing number of injuries. Thus, ArthroCare Corp. didn't hesitate to snap up five-year-old Opus Medical Inc. for $130 million in a combination of cash and stock, plus earn-outs based on sales thresholds. [See Deal] Indeed, says ArthroCare president Michael Baker, the company has been in discussions with Opus for a year.

Opus was founded in 1999 by venture firms Three Arch Partners and Prospect Venture Partners to develop AutoCuff, a system for the knotless suturing and anchoring of soft tissue. The...