WishBone Acquisitions a Nod to Deeter’s Award-winning Leadership
WishBone Medical is Nick Deeter’s 12th company, and he’s already musing—after another successful exit likely only two years down the road—that “I’ll probably start another one.” The Warsaw-based company makes orthopedic implants for children and is growing at a furious rate, recently acquiring two niche orthopedic companies. His business acumen and execution in a market hungry for innovation is garnering national attention; Ernst & Young LLP recently named Deeter a finalist for the Entrepreneur Of The Year 2020 Midwest Award.
Deeter has found a sweet a spot in the Orthopedic Capital of the World tucked away in northern Indiana. Deeter says orthopedic surgeons typically “sort of MacGyver their way through surgeries and piece kids back together” by cutting or bending adult implants to their smaller frames.
“In orthopedics, there are about 70 companies that make total hips for adults, four companies that make total hips for dogs, and nobody makes a total hip for a child; they still mostly put dog hips in children, mostly because they fit better, and they’re a lot cheaper than the adult version,” says Deeter, who is the founder, chief executive officer and chairman of the board for WishBone. “It bothers me something awful that you take an adult product in this day and age, bend it, cut it and tweak it, then put it into a child and hope it works. That’s just a bad way to do medicine.”
Deeter says children with cerebral palsy often need a total hip replacement to reduce pain and gain range of motion. WishBone is partnering with Stanford University and the Hospital for Special Surgery in New York City to develop the first total hip device for children. If successful, it would be added to WishBone’s 42 other product systems cleared for sale in the U.S.
Deeter also founded Warsaw-based OrthoPediatrics Corp., which makes implants for children, in 2006. He says, “the big difference [for WishBone] is we take all of our implants and instruments and put those into sterile-packed, single-use disposable kits.” In the traditional model, explains Deeter, surgeons rely on a reusable case and tray, which he describes as a giant tool box that can contain 200 implants, and the surgeon will select only one; the entire case must be re-sterilized before it’s ready for another surgery—a “very capital-intensive model and very labor-intensive” process.
“I thought it would be two to three years [for the industry] to switch to the disposable sterile-packed kits, but it’s now,” says Deeter. “That packaging and distribution model seems to be the one that’s the model of choice right now. I thought it would take a few years to really catch up to where Europe is; Europe is about 50% of all orthopedic products are in sterile-packed kits. The U.S. is probably less than 5%.”
The young company recently acquired Ohio-based Back 2 Basics Direct and Orbbö Surgical in California, both of which specialize in the spinal area. Deeter says the two companies were among the first to put their implant systems into sterile-packed kits, which he likens to getting 510K clearance from the FDA on an implant. The acquisitions add nine FDA-cleared spinal fusion product lines to the company’s portfolio, which have year-one revenue projections surpassing $12 million. Deeter believes the acquisitions—WishBone’s fifth and sixth in just 18 months—eliminate several financially-costly years of R&D and regulatory hurdles.
“I never start [a company] unless I know what my exit strategy is. In the orthopedic world, the average that larger orthopedic companies pay for little innovative companies like WishBone is eight times sales; niche companies like ours will get at least 10 to 12 times sales. So, if you know the way the model works, and you know the end game, the only variable we need to work on is the sales number,” says Deeter. “It’s almost too easy to get to $50 million to $100 million in sales with our model in a short amount of time. You get 10 times that number as a selling price, so we’ll sell the company to a large strategic within the next two years, or we also have the option to take the company public.”
That perspective, know-how and vision are likely the result of launching 12 companies—but business savvy is also in his blood.
“I was trained by the best, which was my grandfather, who was a great entrepreneur, and his father was an entrepreneur; I knew my great grandparents as a young child and watched all the businesses my great grandfather had, all in the Warsaw area,” says Deeter. “When I was a kid, my grandfather would take me around to his four brothers’ [companies] all summer long, and I’d work at their businesses. I just kind of got bit by that entrepreneurial bug; I like the [concept] of the more productive you are, and the harder you work, the more successes you get.”
The dirty job of bagging seed at his grandfather’s feed mill made him realize he wanted to be in the office like him, “not bagging the seed.” Deeter’s done well in that office, and Ernst & Young took note of it, naming him one of five finalists in Indiana for Midwest Entrepreneur of the Year.
“I think it was more the cause and mission of WishBone that drew the [judging panel] to [me]. We’ve just been extremely successful too in putting together—in a short amount of time—a wonderful company,” says Deeter. “Fixing children is a wonderful cause. There’s nothing more gratifying than that. I’ve been in close to 1,000 surgeries with surgeons and children; getting to go into the recovery room, talk to the parents and tell them about the product and how it’s helping their child—it’s just so gratifying.”
Deeter says, despite being in business only a few years, WishBone is well established with 42 product systems cleared for sale in the U.S.
Rather than relying on a traditional case and tray that can have 200 implants inside, Deeter explains how WishBone is able to send just one implant into the operating room in a disposable kit.
Deeter says much of WishBone’s future implants will be made of the carbon composite biomaterials technology that Back 2 Basics Direct developed.