“..as a smaller, high-growth Extremities company with breakthrough biologic opportunities, we will now be able to devote our full resources and attention on accelerating growth opportunities in this area, including improving sales productivity..”
Wright Medical Group, Inc. has announced a definitive agreement under which MicroPort Medical B.V., a subsidiary of MicroPort Scientific Corporation will acquire Wright’s OrthoRecon business. The purchase price is $290 million, subject to a net working capital adjustment, and is payable in cash at closing, which is expected to occur by the end of the third quarter or early in the fourth quarter of 2013.
It’s no secret that Wright Medical sees itself increasingly as an extremity business, which has fuelled the divestiture of its OrthoRecon arm.
Wright’s OrthoRecon business consists of hip and knee implant products and generated global revenue of approximately $269 million in 2012. The OrthoRecon business has established hip and knee franchise brands including DYNASTY® and CONSERVE® hips, PROFEMUR® modular stems, SUPERPATH™ minimally invasive hip surgical instrumentation, and ADVANCE® and EVOLUTION® medial-pivot knee implants.
Wright’s Extremities segment, which includes foot and ankle, biologics and upper extremity, generated global revenues of approximately $214 million in 2012. Following the divestiture, the company says it expects to be well positioned and committed to accelerating growth in its foot and ankle business and increasing U.S. foot and ankle sales productivity to $1 million per rep in 2014. Additionally, Wright expects to be adjusted EBITDA positive in 2014 with the opportunity for significant adjusted EBITDA growth in 2015 and beyond.
Net after-tax proceeds for Wright Medical, including transaction costs, are estimated to be approximately $260 million. Wright intends to use these net proceeds to fund transition costs of $25 million to $35 million and the remainder to fund growth opportunities for its Extremities and Biologics business and pay certain retained liabilities of the OrthoRecon business.
Robert Palmisano, president and chief executive officer of Wright Medical, stated, “Over the last 18 months, we have made significant progress in transforming our business to dramatically accelerate growth in our foot and ankle business, build a growing, global OrthoRecon business, and significantly improve cash flow. This next step in our transformation should enable both businesses to flourish as separate, global companies focused in their unique market space with strong management teams that will position them for continued success. In addition, as a smaller, high-growth Extremities company with breakthrough biologic opportunities, we will now be able to devote our full resources and attention on accelerating growth opportunities in this area, including improving sales productivity, extending the global reach and penetration of our products in key international markets, and seeking to gain U.S. regulatory approval for Augment® Bone Graft. We believe this will enhance our ability to create significant shareholder value.”
Palmisano continued, “In my experience, companies are bought, not sold, and such was the case in this transaction, as there were several suitors for this very valuable business. We are pleased we have found an excellent strategic buyer in MicroPort, a company that is deeply committed to the success of the OrthoRecon business and will continue to provide the focus and investment to enable it to reach its full potential. Also, very importantly, this will provide our OrthoRecon employees with opportunities for career growth and development. We are grateful to our OrthoRecon employees for their dedication and hard work, and we look forward to working with MicroPort to ensure a seamless transfer and the continued success of the OrthoRecon business as part of MicroPort.”
Source: Wright Medical, Inc., PR Newswire