Trendlines Group's co-Chairmen Steve Rhodes (centre)  and Todd Dollinger (right) held a virtual "fireside chat" from their office in Israel with investors in Singapore recently, moderated by Shira Zimmerman of Trendlines' investor relations department. Trendlines is an Israeli investment company traded on the Singapore Stock Exchange, investing in medtech and agrifood companies directly and through its venture funds.

Fireside3.21

A key highlight of 2020 for Trendlines was its largest exit from a portfolio company since Trendlines' listing on the Singapore Exchange in 2015.

The exit deal was signed 1 April 2020 and came with a variable component payable in 2024 to Trendlines and other investors who were shareholders of ApiFix at the exit

ApiFix system1.16Minimally invasive and costing significantly lower than conventional treatment, the ApiFix system corrects deformity in patients with adolescent idiopathic scoliosis. NextInsight file photo.That amount is now projected by the acquirer, Nasdaq-listed OrthoPediatrics, to be substantial, as Trendlines management pointed out, referring to OrthoPediatrics' recently released 2020 annual report

This is the potential earnout payable by Orthopediatrics in Year 4 following its acquisition of ApiFix.

OrthoPediatrics estimated it will pay US$41.7 million as the earnout

This was calculated based on a formula involving the projected sale of the ApiFix system during the 12 months ended June 30, 2024.

Trendlines' share of the potential earnout is US$7.8 million, or 18.62%, which was its stake in ApiFix at the time of its exit.

KIDS earnoutThis table gives a breakdown of the consideration (USD '000) from OrthoPediatrics to acquire ApiFix. The outstandings are "anniversary payments" and "system sales payment" (ie earnout).
Source: OrthoPediatrics 2020 annual report (page 105)


Upon its exit from ApiFix, Trendlines had received US$150,000 cash and OrthoPediatrics shares valued at US$7.1 million.

Trendlines said it had disposed the shares in October-November 2020 in the open market at markedly higher prices than US$37.63 per share that the shares were issued at. That brought in an additional US$2 million of profit. 

Aside from the Year 4 earnout, Trendlines will be receiving  anniversary payments in Year 2, ie 2022 (US$2.4 million), Year 3 (US$1.5 million) and Year 4 (US$1.7 million).

Thus, in total, Trendlines reaps about US$23 million, including the assumed Year 4 earnout, from the exit.

Compare that with the US$3.5 million that was Trendlines’ last valuation (by external party) of ApiFix prior to the exit, as represented in Trendlines' unaudited financial statements as at 30 September 2019.

As Trendlines management has communicated many a time, its portfolio companies are valued conservatively on its books, and past exits have been at several multiples of those valuations.

Beyond the financial reward of the exit, the ApiFix business "speaks to the mission of Trendlines 
of creating and developing companies to improve the human condition," said Mr Dollinger.

"This is such a powerful help to kids who need that surgery and to their families. Instead of surgery that could put them in hospital for a week and a year's recovery, we've taken it to being in hospital for two days and being fully recovered within weeks. It really borders on the magical."

Over 500 ApiFix procedures have now been performed on patients at centers in the USA, Canada, Europe, Israel, and Asia with long-term clinical follow-up now exceeding nine years, according to OrthoPediatrics in a recent news release

"On top of that (the ApiFix exit), we had a great year for the rest of our portfolio companies. We had 34 portfolio companies raise capital and follow-on capital, which is an all-time record. It bodes well for the the future of our portfolio," said Co-Chairman Steve Rhodes.

"In fact, two of those raises were in excess of US$4 million which also reflects the fact that our portfolio is beginning to mature and as the companies make progress, they raise more and more capital.

"In that same vein, we had a number of companies that launched sales last year and despite the difficulties of selling during the pandemic they were able to achieve good growth and are looking forward to even better growth this year.

"Finally, our agri fund, our new Singapore-based venture fund, not only completed its first raise but also made its first three investments in some very exciting companies and so we think we're extremely well poised for a great 2021 and beyond."


Watch the full "fireside chat": 


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