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Wright's Sales Growth Driven By Hip & Extremities Sectors
BY HUYEN NGUYEN, JULY 31, 2006
Wright Medical Group reported 2Q:06 net sales of $87.5 million, a 6% increase over 2Q:05 (foreign currency had no material impact on sales). Net income for the quarter was $2.8 million, or a diluted EPS of $0.08, beating analysts' estimates by $0.04. Excluding non-GAAP related expenses, Wright's net income would have been $0.15 diluted EPS. Sales growth was driven by the hip and extremity division, which grew 14.0% and 8%, respectively.
Highlights in Q2:
The Company plans to continue broadening both MIS total hip and its extremity portfolio (with investments in both foot and ankle and the upper extremity markets).
Biologics is achieving a relatively constant level of sales.
Domestic total reconstructive joints grew 10% (5% knees, 15% hip, 7% extremity, and ~3% biologics).
International sales continue to show low-single digit growth. This growth is suffering from declining knee sales in France.
Since transitioning management and distribution personnel in Southern Europe, the French operation continues to struggle. Management believes it will rebound in the second half of 2006.
Wright's Q2 growth was driven by higher demand of its hip products. Hip sales were reported at $32.6 million, an increase of 14% over the same quarter last year. During the conference call, management stated that they have outgrown the rest of their hip sector competitors in this quarter and year-to-date. While waiting for results from Encore and Exactech, so far we have seen Stryker's hip sales were flat, Smith & Nephew was up by 2% and Zimmer increased by 2%. Wright's 14% increase in hip sales was primarily attributed to its large diameter metal-on-metal Conserve hip system and Profemur line of modular neck primary stems. The Company stated that it is continuing talks with the FDA and has made significant progress regarding the introduction of its Conserve resurfacing system to U.S. markets.
Wright's extremities division saw sales grow during the quarter by 8.2% to $11 million. This growth was driven by the continued roll-out of Micronail Wrist Fracture Fixation System and the Charlotte line of foot and ankle products. Management expects more than upper single-digit growth from this division over the long term and they also anticipate four new product launches. Next quater they expect to launch the second-generation of the Evolve and the Claw.
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