Wright Medical surges on Street-beating Q2

Wright Medical (NSDQ:WMGI) saw shares surge over 10% after releasing 2nd quarter earnings that topped the Street in earnings per share but were off on revenue.

The Memphis, Tenn.-based company reported losses of $229.4 million, or $2.23 per share, on sales of $170.7 million for the 3 months ended June 26.

That amounts to an over 400% increase in losses while sales grew over 100% compared with the same period in 2015.

After adjusting to exclude 1-time items, losses per share were 11¢, half of the 22¢ losses per share The Street expected to see for the quarter. The Street’s revenue expectations of $219.7 million were missed by more than $40 million.

“For the 3rd consecutive quarter, all of our most important financial results exceeded our expectations.  Global extremities and biologics pro forma constant currency net sales growth of 14%, adjusted EBITDA from continuing operations of $12.2 million and adjusted gross margins from continuing operations of 78.5% reflect the strength of our markets and our unique position in them.  We continued to successfully execute our merger integration plans and with this continued success, we believe we are well positioned to continue our strong business momentum and to deliver on our synergy commitments as we progress through the remainder of 2016. Highlights in the quarter included strong contributions from the ongoing rollout of our Simpliciti and Aequalis Ascend Flex shoulder systems, which drove 20% sales growth in U.S. shoulders, and the ongoing launch of the Infinity total ankle replacement system, which drove 33% sales growth in U.S. total ankle replacement.  In addition, net sales of our U.S. biologics business grew 52% in the quarter, driven by the ongoing commercial activities for Augment Bone Graft.  Biologics is now the fastest growing part of our business.  We expect all of these products, which are still early in commercial rollout, will continue to be growth engines during the remainder of 2016 and beyond,” CEO Robert Palmisano said in prepared remarks.

The company lifted its full year 2016 guidance, now expecting to see $675 million to $685 million, up from the previous range of $668 million to $678 million.

Wright lifted its FY2016 EBITDA expectations from $30 million to $35 million to between $40 million and $45 million, with adjusted losses per share expected to be between 54¢ and 47¢.

Last month, Wright Medical said it agreed to deal its large joints business to Corin Orthopaedics Holdings for about $33 million in cash.

The €29.7 million transaction, which is expected to close by the end of the 3rd quarter or early in the 4th quarter, involves legacy hip and knee implants from Tornier; Wright and Tornier merged in a $3.3 billion deal in October 2015.

Wright itself got out of the hip and knee space in June 2013 with the $290 million sale of its OrthoRecon business to Hong Kong-based MicroPort Scientific (HK:0853).

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