Wright Medical

$465 Million

KEY EXECUTIVES:

Gary D. Henley, President and CEO

Frank S. Bono, Sr. VP, Research and Development

Timothy E. Davis, Jr., VP, Business Development

Cary P. Hagan, VP, Orthopedic Reconstruction Marketing

John T. Treace, VP, Biologics and Extremity Marketing

Kyle M. Joines, VP, Manufacturing

NO. OF EMPLOYEES:1,000

HEADQUARTERS:Arlington, Tenn.

Double-digit growth is enviable in any market. But given recent economic challenges, double-digit gains are particularly noteworthy. Wright Medical, based in Arlington, Tenn., not only showed overall company sales growth, but also significant upticks in individual sector sales.

Net sales for fiscal 2008 grew 20 percent, totaling $465.5 million, compared with $386.9 million in 2007. The company reported that its knee, hip, biologics and extremity product lines achieved 17 percent, 20 percent, 8 percent and 43 percent growth rates, respectively. Net income increased to $3.2 million in 2008 from $1 million in 2007, as increased profitability from higher levels of sales and decreased restructuring charges were mostly offset by $7.6 million ($4.7 million net of taxes) of costs associated with ongoing U.S. governmental inquiries, the write-off of $2.5 million of acquired in-process research and development charges and a tax provision of $12.8 million to adjust valuation allowance, primarily for deferred tax assets associated with net operating losses in France (in 2007, the company closed a facility in the French city of Toulon).

The company reported strong sales performance of its Advance Medial-Pivot knee system, the Advance Stature knee implants and the Biofoam tibial base, which is a cement-less knee system.

During the year, a number of new hip-related products also were introduced, including the Dynasty Acetabular Cup System and the Gladiator Bipolar Hip System. Wright Medical also expanded its Profemur hip stem line with the addition of the Profemur-HA, Profemur-TL, Profemur-Z and Profemur-LX revision stems. In addition to internally developed product launches, in September 2008, the company licensed the rights to distribute the Link MP revision hip system in North America.

In late 2008, expanding its biologic product offering, the company introduced the Biotape XM xenograft soft tissue patch for tendon and ligament reinforcement.

Revenue and product growth also came in the form of acquisitions—particularly in its foot and ankle division.

In April last year, Wright completed the buyout of Inbone Technologies, Inc. for an initial cash payment of $24 million, guaranteed minimum future payments of $3.7 million and potential additional cash payments based on future operational and financial performance. The Inbone acquisition marked the seventh business development initiative targeted for the foot and ankle surgery market by Wright in the past year and a half. Key products for Wright Medical will be the Inbone Total Ankle System and the Inbone Intra-osseous Fusion Rod and Plate System.

In June last year, the company acquired certain assets of A.M. Surgical, Inc., a Smithtown, N.Y.-based firm that develops endoscopic soft-tissue release products for foot and ankle surgeons. Wright has marketed A.M. Surgical’s foot and ankle products since October 2007.

The purchase consisted of an initial cash payment of $2.1 million and potential additional cash payments, not to exceed $700,000, based on future financial performance of the acquired assets.

Wright’s big push in the foot and ankle business has paid off significantly. In 2008, this franchise grew 44 percent internationally, 82 percent domestically, and 74 percent globally, following an outstanding 2007 annual sales growth of 96 percent. In 2008, the company launched two new, internally developed products for foot and ankle, including the Charlotte Claw Plates and the Sidekick Coretrak Mini Fixator.

To keep up with the continued expansion of the company’s product offering, expansion of manufacturing facilities also was required. During fiscal 2008, Wright Medical completed the first phase of its facility expansion at its Arlington headquarters. The company now occupies a new 50,000-square-foot manufacturing building and the 17,500-square foot office tower and campus cafeteria.

The second phase of the project includes renovation of some existing facilities. An additional 29,000-square-foot manufacturing facility less than a half-mile from the company’s main campus was acquired in late 2008. Both of these are slated to be up and running this year.

Wright Medical’s product innovation hasn't slowed down in 2009. In February, at the most recent annual meeting of the American Academy of Orthopaedic Surgeons, the company introduced its Prophecy preoperative navigation guide technology.

Alex Winber, Wright’s U.S. director for knee marketing, recently told Orthopedic Design & Technology that Prophecy has “incredible potential to “revolutionize the way total knee arthroplasty is done.” The Prophecy program uses basic CT or MRI scan technology to map precise implant placement and alignment. The imaging data is used to develop patient-specific guides that snap into place on the bone, following the unique curvature of the patient's bone anatomy. The images are taken a few weeks prior to surgery, and the special guides are created using rapid-prototyping technology. Previously, orthopedic surgeons would use visually guided instruments such as an intramedullary rod to align the knee. With this process, there is no more drilling into bone canals.

“Computer navigation’s big claim was that it could increase accuracy and decrease the outliers—the number of patients a surgeon would do that would be out of alignment,” Winber said. “Computer navigation turned out to be very time consuming. Preoperative navigation fulfills the promise of inter-operative navigation, with greater accuracy, reproducible results and without all the time constraints. Every knee is as unique as a fingerprint. Prophecy also allows us to really fine tune the kind of implant that’s needed. It’s such a big advantage. All this results in better wear and long-term function.”

Winber said he expects the technology to expand beyond knee replacement and that physician adoption of the technology has been positive.