Orthopedic products maker
Wright Medical Group Inc.
) recently revealed a definitive agreement to sell its OrthoRecon
unit to MicroPort Medical B.V., a subsidiary of MicroPort
Scientific Corporation. The deal is valued at $290 million
payable in cash, subject to adjustments for working capital. The
sale is expected to close in the third or fourth quarter of
Wright Medical's OrthoRecon unit has knee and hip implant
products. The business had revenues of about $269 million in
2012. The company will classify the OrthoRecon segment as a
discontinued operation starting from the second quarter.
Wright Medical's foot and ankle business is doing well and the
company is in the process of raising productivity. Post sale,
Wright Medical will become a company with higher rate of growth
and focus on Extremities. This segment comprises biologics, foot
and ankle, and upper extremity and generated sales worth $214
million in 2012. WMGI expects to report positive EBITDA in 2014
with the possibility of a major expansion in EBITDA in the
The post tax proceeds, inclusive of transaction charges, for
the company are expected to be approximately $260 million. Wright
Medical plans to utilize the funds largely to pursue growth in
the Biologics and Extremities units. The deal is contingent on
standard closing clauses as well as shareholder approval at
Wright Medical's prior guidance for 2013 is no longer valid.
Consequent to the deal, Wright Medical will update its guidance
at the second-quarter conference call slated on Aug 1, 2013. WMGI
has provided the Extremity segment sales guidance in the range of
$235 million to $240 million for 2013.
Orthopedics is one of the largest medical device market
segments worldwide. Our views on the company are moderated
by intense competition from larger players and pricing
The stock carries a Zacks Rank #3 (Hold). We expect other
stocks in the industry like
Align Technology Inc.
), each carrying a Zacks Rank #2 (Buy), to perform better.
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WRIGHT MEDICAL (WMGI): Free Stock Analysis
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