 |
| Wright's Infinity system--Courtesy of Wright Medical |
Orthopedics player Wright Medical ($WMGI) had a tough second quarter that it chalked up to acquisition expenses. Still, the company expects to end the year with positive adjusted EBITDA on the back of its mid-June launch of the Infinity total ankle replacement system.
But investors weren't convinced out of the gate, driving Wright down about 5% in early trading. That completely erases any stock market gains this year for the ankle and foot specialist. But the company remains confident in its ability to ramp up revenue while it tamps down expenses.
"We expect Infinity to be a game changer and a catalyst for significant growth in the second half of this year and beyond. It is still early days, but we are off to a great start with strong demand and a full pipeline of surgeons to be trained," Wright President and CEO Robert Palmisano said on the second-quarter conference call.
He said same-day sales for the total ankle system grew 30% in the U.S. with the introduction of Infinity ankle and that Infinity, along with the existing ankle product Inbone, provide "best-in-class total ankle replacement systems that address the continuum of care for end-stage ankle arthritis."
Revenues in the second quarter were $72.4 million, below the consensus of $74 million. These were up 19.5% from the same quarter a year prior, driven by strong ankle and foot product sales. Loss per share was -$0.48, worse than the anticipated -$0.45.
Wright expects to exit 2014 with positive, adjusted EBITDA. Still, for the full year it's guided to a loss of $15 million to $20 million. For 2014, it reiterated its guidance of $308 million to $312 million in revenues; this represents a 27% to 29% growth rate--including the Solana, OrthoPro and Biotech acquisitions. The company said that, like during the second quarter, the company would continue to experience some "dis-synergies" from these acquisitions through the rest of the year.
In addition to the Infinity ankle launch, Wright also said it has amended a PMA for Augment Bone Graft; it expects FDA to issue an approvability determination by Oct. 26. Next up will be a 2015 launch for a new revision system tentatively dubbed Invision, which will enable surgeons to convert ankle fusion cases into total ankle replacements.
"The launch of leading technologies such as the Infinity ankle and the Invision system in 2015, combined with our recent acquisitions, give me confidence that we'll be able to continue to see accelerating revenue growth and improving EBITDA in our business throughout the year," summed up Palmisano.
- here is the release and the transcript