Wright Medical (WMGI:NASDAQ) Reports 28% biologics growth and 23% Hip growth in 3Q:04
BY JOHN CHOPACK, NOVEMBER 3, 2004
Wright Medical reported a blistering 28% rate of growth for its biologics products as well as a solid 23% rate of revenue growth for its hip products. Clearly, this is a company that is gaining market share from biomaterials. Hip growth was directly attributable to its ceramic on ceramic hip systems. Overall revenue growth came in at a still respectable 17% and drove overall sales to a $69 million.
On Tuesday, Wright reported its 3Q:04 financial results. Remember that on September 20/2004, Wright revised its earnings guidance to an anticipated $0.09 - $0.11 in earnings per diluted share from $0.13 - $0.15. Revenues were expected to range between $68 -$70 million which remained unchanged from the guidance provided during the 2Q:04 conference call. Well, Wright should have just maintained its original guidance because 3Q:04 revenues totaled $69 million and earnings per diluted share totaled $0.14 per share excluding charges associated with the CONSERVE acetabular cup recall and $0.13 as reported.
When questioned what changed between September 20 and the end of the financial quarter, management stated that it anticipated a much more significant slow down in revenues during the month of July which it didn't have collected yet. Additionally, it expected to spend more on research and development than it actually did. Finally, Wright's tax rate was lower than they originally anticipated.
Revenues totaled $69 million during the 3Q:04 which was a 17% increase as reported and 14% on a constant currency basis. The as reported growth rate of 17% was almost 5% slower than the as reported revenue growth rate of 21.7% recorded during the 2Q:04. Actually, every product segment, except 'Other' product sales, slowed in growth during the 3Q:04 compared with the 2Q:04.
Hips. Revenues from hip revenues totaled $22.2 million, a 23% increase over the 2Q:04 on an as reported basis and a 19% increase excluding foreign currency. Hard-on-hard bearings, including both ceramic and metal articulations, remain significant drivers of revenue growth and now represent 65% of all total hip systems sold at Wright. This is in line with hard bearings penetration during the 2Q:04.
Knees. Knee revenues totaled $19.6 million during the 3Q:04 which was a 9% increase on a reported basis and 6% excluding foreign currency. Management indicated that it believed knee product sales have been hurt by the introduction of MIS knee instrumentation by their competitors. Wright has some prototype MIS instruments in key accounts now and expects a broader introduction during 2005.
Biologics. Revenues from biologics continue to grow faster than any other segment of Wright Medical. Biologic revenues totaled $15.9 million which was 28% higher than the 3Q:03 on a reported basis and 27% excluding foreign currency effects. Graft jacket products and the MIIG product line continue to lead the growth within the segment.
Extremity. Extremity sales totaled $8.7 million during the 3Q:04 which was flat with the 3Q:03 on a constant currency basis and 7% higher on a reported basis. Management indicated that it anticipated that extremity revenues should rebound from the introduction of the Micronail and other distal radius plates.
Wright management revised its guidance upward for the year-end 2004 and is now anticipating revenues to total $296 - $298 million which is a 19-20% increase over 2003 revenues. It also increased its guidance for earnings per diluted share to $0.72-$0.73 excluding any charges related to the CONSERVE acetabular recall.
