Wright Medical Group, Inc.
) succeeded in its efforts to expand its direct sales and
international distribution network in France by completing the
acquisition of French orthopedic extremities company Biotech
International. The acquisition will also add Biotech's extremity
product portfolio that will boost WMGI's global Extremities
business growth. Following the announcement, WMGI's stock rose
1.3% to $28.25.
The acquisition was initially announced on Oct 16, 2013 and
involved an upfront payment of roughly $75 million in cash and
stock. It also includes additional payments of up to $5 million
in cash, payable upon attaining certain revenue milestones in
2014 and 2015. Upon closing of the transaction, the upfront
payment will include $55 million in cash and about 742,115 Wright
Medical shares that will be subjected to a one-year lockup.
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WMGI posted a broader loss of $8.2 million or 18 cents per share
for the third quarter of the year compared with $1.6 million or 4
cents in the same quarter of 2012. With this, earnings meet the
Zacks Consensus Estimate.
Reported net loss was $124.5 million or $2.68 per share, compared
with $4.1 million or 11 cents in the third quarter of 2012. Net
revenues increased 13.3% (14% in constant currency) to $57.6
million during the quarter, exceeding the Zacks Consensus
Estimate of $56.0 million.
Gross profit rose 11.3% to $43.6 million from $39.2 million a
year ago but gross margin decreased 200 basis points (bps) to
75.6% from 77.0% a year ago. Adjusted operating loss
significantly increased to $11.5 million from $1.0 million a year
ago. Adjusted operating (loss) margin rose to 19.9% from 2.0% a
While announcing the quarterly results, Wright Medical narrowed
its revenue guidance for 2013 to $237-$240 million from $235-$240
million, which has incorporated short-term dis-synergies due to
the previously announced transaction with MicroPort. However,
WMGI reiterated its adjusted earnings per share guidance of a
loss of 55 to 59 cents, based on approximately 45.3 million
Due to the acquisition of Biotech, Wright Medical now expects
full year revenues towards the high-end of the guided range.
However, the company kept its adjusted earnings per share
Arlington, TN-based Wright Medical Group is a global orthopaedic
device company specializing in the design, manufacture and
marketing of reconstructive joint devices and bio-orthopaedic
materials. Currently, WMGI retains a Zacks Rank #4 (Sell).
Other medical product stocks that are performing well include
Hill-Rom Holdings, Inc.
INSYS Therapeutics, Inc.
), both with a Zacks Rank #1 (Strong Buy), and
) with a Zacks Rank #2 (Buy).