Wright Medical Inks Deals for Two Extremities Firms

With its large-joint business jettisoned, Wright Medical Group Inc. has wasted no time in building up its core extremities business.

The company is looking for growth with the help of two new acquisitions.

Wright Medical acquired Solana Surgical LLC—both based in Memphis, Tenn.—and agreed to acquire OrthoPro LLC. Wright officials call their latest buys “high growth.”

Privately held Solana Surgical, based in Memphis, Tenn. (as is Wright Medical) launched its first product in 2011 and is focused on the foot, ankle and hand markets. OrthoPro, also privately held, is based in Salt Lake City, Utah. Since 2003, OrthoPro has launched several innovative products for the foot and ankle market, including the Phalinx Cannulated Hammertoe Fixation System, Total Compression Plate System, and Hemiarthroplasty Implant.

The transaction with OrthoPro is expected to close in February. In addition, voting agreements have been executed with members of OrthoPro holding greater than the required number of membership interests

Under the terms of the agreement with Solana, Wright acquired 100 percent of Solana’s outstanding equity on a fully diluted basis for total consideration, net of acquired cash, of $90 million, consisting of approximately $47.6 million in cash and approximately $42.4 million of Wright common stock.
For the OrthoPro deal, Wright will acquire 100 percent of OrthoPro’s outstanding equity on a fully diluted basis at a total price of up to $36 million in cash, made up of $32.5 million paid at closing and up to an additional $3.5 million in cash contingent upon achievement of certain revenue-based milestones.

Richard Newitter, market analyst for Leerink characterized the purchases as “overall positive moves that will help replenish recently divested ortho recon assets with faster growing extremities products/distribution capabilities,” and that the move is in line with the company’s expansion goal of targeted extremities investments that help the company better capitalize on sales and profit growth acceleration opportunities within the “attractively growing” foot and ankle segment.

“The acquisitions of Solana and OrthoPro are excellent fits for our extremities business, enabling us to add a base of fast-growing extremity revenue that we can effectively grow on a go-forward basis,” said Robert Palmisano, president and CEO of Wright. “Both of these transactions meet our criteria of being accretive to revenue growth and adjusted EBITDA. In addition, products from both companies will complement our existing foot and ankle portfolio and include several specialized products that expand our extremities product offering. Both companies have a reputation for leading innovation, and we anticipate that their products will help expand Wright’s position as the definitive technology leader in the foot and ankle market.”

Alan Taylor, CEO of Solana was equally bullish.

“We are delighted to partner with a company that shares Solana’s commitment to building a high-growth extremities business,” Taylor said. “We believe that Wright Medical, with its global leadership position in the foot and ankle market and expertise in medical education and product development, is the ideal partner to accelerate our growth and realize the full potential of Solana’s products around the world.”

Dustin Leavitt, CEO of OrthoPro, said: “This combination will provide the opportunity for further expansion of OrthoPro’s innovative products to support market growth and procedure penetration worldwide. We look forward to advancing our foot and ankle business with the recognized leader in the foot and ankle market.”

Earlier this year, Wright Medical finalized the sale of its orthopedic reconstruction (hips and knees) business to China-based MicroPort Scientific for $290 million, forming the new MicroPort Orthopedics.