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Wright Medical (WMGI) Takes Over Cartiva for $435M in Cash

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In a bid to boost its Lower Extremities business,Wright Medical Group N.V. recently completed the acquisition of Cartiva, Inc for $435 million in cash.The impact of the acquisition will be disclosed by the company when it releases third-quarter results in November.

In August, Wright Medical announced for the first time that it has entered into a definitive agreement with Cartiva.

Notably, the transaction will add Cartiva’s flagship product, Synthetic Cartilage Implant (SCI), to Wright Medical’s portfolio. The company has a Zacks Rank #2 (Buy).

What is SCI?

Georgia-based Cartiva is a private, orthopedic medical device company focused on the treatment of osteoarthritis of the extremities.SCI is the first of its kind, used for treating arthritis at the base of the great toe.

Notably, the product received U.S. Premarket Approval (PMA) in 2016.

Since the approval, the implant has been used in more than10,000 procedures in the United States. Additional regulatory approvals have been obtained in Canada, EU, Brazil, Chile and Australia.

Lower Extremities Business at a Glance

Wright Medical’s Lower Extremities business mainly covers the foot, ankle and the biologics market. In the second quarter, Wright Medical’s U.S. lower extremities business saw year-over-year upside of 9% on approximately 15% growth in Total Ankle.

Market Prospects

Per an article by Grand View Research, the global orthopedic devices market is expected to reach $43.1 billion by 2024, at a CAGR of 4.4%.

Hence, Wright Medical’s move has been a well-timed one.

Price Performance

Shares of Wright Medical have outperformed the industry in the past six months. Notably, the company’s shares have surged 33.7% compared with the industry's rise of 6.5%%. The current level is also higher than the S&P 500 index's gain of 8.7%.

 

Other Key Picks

A few other top-ranked stocks in the broader medical space are Surmodics, Inc (SRDX - Free Report) , Masimo Corporation (MASI - Free Report) and Veeva Systems (VEEV - Free Report) .

Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term earnings growth rate is projected at 14.8%. The stock carries a Zacks Rank #2.

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock sports a Zacks Rank #1.

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