Zacks_Analysts' Blog : Wright Launches New Products - Analyst Blog

International orthopedic devices company  Wright Medical Group (WMGI) revealed the release of its Quickdraw Knotless Soft Tissue Fixation System and the Ortholoc 3Di Ankle Fracture System. The two offerings will be sold in certain ex-U.S. countries via Wright Medical Group’s distributor-based as well as direct sales force. These offerings will be immediately available in the domestic market thanks to the company’s dedicated foot and ankle sales team.   

Quickdraw Soft Tissue Fixation System, which is based on Arthocare’s prominent Opus knotless suturing know-how, is a solution for a number of soft tissue re-joining procedures pertaining to the foot and ankle. Such procedures number more than a quarter of a million every year in the U.S. The system is comprised of the Mini-Belay and Belay knotless suture anchors and Rappel-line surgical suture and instrumentation, which is intended to safely and rapidly fixate broken or reattach tendons in the ankle and foot, including the restoration of the Achilles tendon.  

The Ortholoc 3Di Ankle Fracture System is a complete solitary-tray ankle fracture offering intended to tackle a wide array of fractures. It utilizes the Ortholoc 3Di polyaxial locking know-how, which has features that allow the surgeon to match the ideal implant with the type of fracture. This ability can cut down on complications in the operation theater. Fractured ankles are a common foot injury and about 170,000 such injuries are surgically treated each year.   

In a major move, Wright Medical recently announced that it is exercising a cost restructuring initiative to improve profitability, promote growth and strengthen cash flow, leading to enhanced shareholder value. The restructuring initiative will lead to a more cost efficient enterprise, which will boost earnings in 2012.

As per the plan, Wright Medical has launched several measures to curtail expenditure, including cutting down the range of its overseas product offerings, streamlining its R&D efforts, fine tuning factory operations and reducing headcount.

Wright Medical’s restructuring initiative is expected to create annual operational efficiency, which will strengthen its fiscal performance starting 2012 while generating investments for long-term growth. Moreover, with a robust balance sheet, the company is well positioned to engage in further acquisitions.

However, our views are moderated by lingering compliance issues and intense competition from larger orthopedic players. Wright Medical competes with much larger players such as Zimmer Holdings (ZMH), Stryker (SYK), Johnson & Johnson’s (JNJ) De Puy and Smith & Nephew (SNN).

Wright Medical also remains exposed to pricing/procedure volume headwinds. Costs associated with restructuring will also continue to be a drag on the company’s bottom line. Our view on the stock is supported by a short-term Zacks #3 Rank (Hold).