Dive Brief:
- Medical device manufacturer Wright Medical Group announced Monday preliminary net sales of $238.1 million for the 2018 fourth quarter, with full year totaling $836.2 million. The unaudited numbers represent 9.4% in growth during the fourth quarter and 12.2% for 2018.
- CEO Robert Palmisano attributed the growth to Wright's shoulder business, ankle and core products, as well as to its buy of medical device company Cartiva for $435 million in cash last year. The acquisition gave Wright ownership of a synthetic cartilage implant experiencing rapid revenue growth to treat arthritis.
- The company announced new goals for the upcoming three years, saying it hopes to deliver double-digit sales growth and maintain gross margins in the high 70% range 2019 through 2021. It also targets an expansion of its adjusted EBITDA margin to the mid-20% range by the end of 2021.
Dive Insight:
The preliminary earnings come the same day Wright announced President Kevin Cordell will take the position of chief global commercial officer and CFO Lance Berry will become its chief financial and operations officer.
"With significant opportunities ahead, these organizational changes will allow for further alignment of our cross functional organizations with a stronger and sharper focus on long-term growth and profitability, including a greater emphasis on the emerging market opportunity," Palmisano said in a statement.
The full year $836.2 million net sales come in slightly above Wright's fiscal 2018 guidance of $832-835 million in sales announced during its third quarter earnings. The company said Cartiva was expected to provide about $7 million in net sales during 2018, but it appears it has exceeded that mark.
"In our U.S. lower extremities business, we got off to a very strong start with Cartiva revenue of approximately $9.5 million, which exceeded our expectations in the fourth quarter," Palmisano said.
Still, the lower extremities business excluding Cartiva underperformed, according to Leerink analysts.
The CEO said the Cartiva implant meant to treat big toe arthritis has now fully launched and Wright has integrated the former distributors "we have chosen to retain."
"Cartiva is experiencing rapid commercial adoption and is well positioned for future growth, as it addresses large markets with significant unmet needs and strong patient demand. We expect this acquisition to support our growth prospects in our core lower extremities businesses throughout 2019 and beyond," Palmisano said during Wright's third quarter earnings call.
Jefferies analysts in November predicted Wright is well positioned for strong growth in 2019 and 2020, pointing to the company's "steady cadence of new products."
Wright Medical is set to present Monday at 4:30 EST at the J.P. Morgan Healthcare Conference.
