Back to top

Analyst Blog

Wright Medical Group N.V. (WMGI - Free Report) reported adjusted loss of 19 cents per share, way narrower than the loss of 51 cents reported in the year-ago quarter and the Zacks Consensus Estimate of a loss of 20 cents.

Net sales increased 96.3% year over year to $157.3 million but missed the consensus estimate of $158 million.

Quarter Highlights

The company’s newly introduced products – SIMPLICITI and ASCEND FLEX shoulder systems – raked in considerable growth and also hold promise going forward. Notably, the INFINITY total ankle replacement system, AUGMENT Bone Graft and SALVATION limb salvage system boosted Wright Medical’s trajectory in the third quarter.

 

The U.S. biologics business was again the fastest growing segment, which grew 45% in the third quarter.

Coming to mergers and integrations, Wright Medical has completed over 80% of its ‘300 integration milestone’ by the end of the third quarter. In fact, management has already completed the integration of the company’s sales forces globally.

The integration of the U.S. lower extremities sales force was done in the last quarter, and this quarter, Wright Medical closed the acquisition of the U.S. upper extremities sales, ahead of the stipulated schedule.

Quarter in Detail

Wright Medical currently reports revenues under one segment:  Total Extremities & Biologics. Consolidated sales at the segment in the U.S. increased 95.5% from the year-ago quarter to almost $118 million.

Internationally, sales in the extremities and biologics business were up 9% year over year to $39.2 million, driven by strong growth in the Canadian and Australian markets.

Total Extremities & Biologics include four sub-segments, namely, Lower Extremities, Upper Extremities, Biologics and Sports Med & Other. The U.S. lower extremities business sales increased 4% in the third quarter. However, the U.S. lower extremities business was affected by revenue dis-synergies in the range of 5% to 6% in the quarter.

Margin Details

Selling, general and administrative expenses accounted for 78.5% of total revenues in the third quarter, totaling $129.8 million, a contraction of 420 basis points (bps) from the year-ago quarter. This can be attributed to reduced cost structure and other cost synergies. Notably, expenses on Research and Development (R&D) grew 30.4% year over year.

WRIGHT MED GRP Price, Consensus and EPS Surprise

 

WRIGHT MED GRP Price, Consensus and EPS Surprise | WRIGHT MED GRP Quote

Wright Medical recorded adjusted EBITDA of $5.7 million from continuing operations at the end of the third quarter. As a percentage of revenues, adjusted gross margins from continuing operations was a stellar 78.2%. Notably, this reflected the strength of the company’s market position.

Guidance

For the full year, Wright Medical narrowed the guidance for net sales to the range of $677 million to $683 million from the previous $675 million to $685 million. Wright Medical expects dis-synergies for revenues of around $15 million for 2016. The company expects adjusted EBITDA from continuing operations in the band of $43 million to $48 million versus the previous range of $40 million to $45 million. Wright Medical forecasts adjusted loss from continuing operations (including share-based compensation) in the range of 52 cents to 47 cents.

Zacks Rank & Key Picks

Currently, Wright Medical carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical space include Cardiovascular Systems Inc. (CSII - Free Report) , Exelixis, Inc. (EXEL - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .

Notably, Cardiovascular Systems and Exelixis carry a Zacks Rank #2 (Buy) while IDEXX Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardiovascular Systems represents a stellar one-year return of 55.3%. Notably, the company has an expected long-term growth rate of 22.5%.

Exelixis has a stupendous one-year return of almost 102.6%. In the last reported quarter, the company registered an impressive earnings surprise of 40.74%.

IDEXX Laboratories represents a promising one-year return of 50.6%. The company has a long-term expected growth rate of almost 14.8%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

IDEXX LABS INC (IDXX) - free report >>

WRIGHT MED GRP (WMGI) - free report >>

CARDIOVASCLR SY (CSII) - free report >>

EXELIXIS INC (EXEL) - free report >>