Wright Medical profits increase by 27%

Company excited as medical device sales boom

The Commercial Appeal
April 25, 2008
By Daniel Connolly

First-quarter profits rose 27 percent at Arlington-based medical-device maker Wright Medical Group as sales increased across all product lines in the United States and abroad.

"There is excitement in every corner of this company," president and CEO Gary D. Henley said in a conference call with analysts. "We truly are a company on the move."

Net income was $4.1 million, or 11 cents per share. Total sales were $115.9 million, up 23 percent compared to the year-ago quarter.

Analysts surveyed by Thomson Financial had predicted earnings of $5.2 million, or 9 cents per share, on revenue of $108.15 million.

The firm's sales of surgical products for the foot, ankle and other extremities soared 57 percent to $20.5 million on the strength of acquisitions and a movement to turn some sales representatives into foot and ankle specialists.

The firm's larger artificial hip and knee product lines also posted solid growth.

The company increased its guidance for full-year sales to $455 million-$465 million, compared to an earlier guidance range of $430 million-$440 million.

The firm also reduced its profit outlook for the year from a range of 90-96 cents per share to 87-91 cents per share, citing the costs of its acquisition of Berkeley, Calif-based INBONE Technologies Inc. and declines in returns from its short-term investments.

It was a strong quarter, said analyst Jeff Johnson with R.W. Baird & Co. in Milwaukee.

Johnson said he was impressed to see the firm post a 15percent increase in knee surgical products in the United States.

"(It) suggests that their new surgical procedures and new devices are gaining early traction," he said.

Bear Stearns analyst Raj Denhoy also saw it as a very good quarter.

It appears that Wright is increasing its profits faster than it's growing its overall sales, he said.

Call Daniel Connolly at 529-5296.

Sales figures

Wright Medical sales by product, first quarter 2008 compared to first quarter 2007:

Hip surgery products: $39.9 million, up 16 percent.

Knee surgery products: $30.2 million, up 18 percent.

Biologics (products that promote tissue growth): $20.7 million, up 14 percent.

Extremities products (for the feet, ankles, shoulder, wrist, etc.): $20.5 million, up 57 percent.

Other products: $4.7 million, up 49 percent.