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Wright Medical grew in the low double digits in 2Q19 despite facing a mutiny from legacy Cartiva distributors and challenges from core foot competitors.
- Revenue guidance was lowered to the range of $925MM to $930MM, with the projection of Cartiva revenue coming down to $30MM from the initial $47MM given in 4Q18
- Cartiva sales were $8MM in the quarter, as sales in legacy distributor territories declined by 40%
- The company terminated all legacy Cartiva distributors, and moved the product to their direct lower extremity salesforce
- Leadership described the quarter as a “knife fight” in their core foot business, as they face both product and talent-retention challenges from a group of smaller, private companies
- Shoulder-related sales in the U.S. performed well, with implants growing at 16% and biologics growing at 17%
- The REVIVE shoulder revision line launched at the end of 2Q
- U.S. lower extremity sales underperformed, with a significant drop-off in revenue from Cartiva distributors compounded by weakness in core foot product sales
- Biologics growth in the U.S. was driven by continued adoption of the AUGMENT injectable
“It was clear that as a group, the distributors collectively believed that they would not have access to Cartiva long term. They stopped devoting time and resources to this product and actively tried to move as many customers as they could away from Cartiva. Contractually, our salesforce was not able to sell into those accounts in Q2 to combat the negative impact from the distributors. To address this, we acted quickly and terminated the Cartiva distributors. As of August 1, the U.S. Cartiva business has been transitioned to our direct U.S. lower extremities salesforce.”
— Wright Medical CEO Bob Palmisano on the Cartiva distributor difficulties
Performance by Segment
ORTHOWORLD estimates segment sales and growth on an as-reported basis, as follows ($MM):
| 2Q19 | 2Q18 | $ Chg | % Chg | |
| Joint Reconstruction Extremities | $115.1 | $99.4 | $15.7 | 15.8% |
| Trauma | $80.0 | $75.0 | $5.0 | 6.6% |
| Sports Medicine | $4.7 | $4.1 | $0.6 | 13.7% |
| Orthobiologics | $29.9 | $26.8 | $3.1 | 11.6% |
| Total | $229.7 | $205.4 | $24.3 | 11.8% |
| 1H19 | 1H18 | $ Chg | % Chg | |
| Joint Reconstruction Extremities | $232.0 | $197.7 | $34.3 | 17.3% |
| Trauma | $161.2 | $146.2 | $15.0 | 10.3% |
| Sports Medicine | $9.6 | $9.8 | -$0.2 | -2.5% |
| Orthobiologics | $57.1 | $50.2 | $6.9 | 13.7% |
| Total | $459.9 | $403.9 | $55.9 | 13.8% |
Sales by Geographic Region
ORTHOWORLD estimates geographic sales and growth as follows ($MM):
| 2Q19 | 2Q18 | $ Chg | % Chg | |
| US | $172.5 | $151.6 | $21.0 | 13.8% |
| Ex-US | $57.2 | $53.8 | $3.4 | 6.2% |
| EMEA | $40.0 | $37.4 | $2.6 | 7.0% |
| Asia Pacific | $12.0 | $11.3 | $0.7 | 6.2% |
| Rest of World | $5.1 | $5.1 | $0.0 | 0.7% |
| Total | $229.7 | $205.4 | $24.3 | 11.8% |
Net Earnings Data
Net earnings, inclusive of all revenue, are as follows.
| Amt | % of Sales | |
| Sales | $229.7 | |
| Cost of Sales | -$48.3 | 21.0% |
| General and Admin | -$152.1 | 66.2% |
| R & D | -$18.8 | 8.2% |
| Other | -$28.3 | 12.3% |
| Net Earnings | -$17.8 | -7.8% |
Sources: Wright Medical Group; ORTHOWORLD estimates.
Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.
Wright Medical grew in the low double digits in 2Q19 despite facing a mutiny from legacy Cartiva distributors and challenges from core foot competitors.
Revenue guidance was lowered to the range of $925MM to $930MM, with the projection of Cartiva revenue coming down to $30MM from the initial $47MM given in 4Q18
Cartiva sales...
Wright Medical grew in the low double digits in 2Q19 despite facing a mutiny from legacy Cartiva distributors and challenges from core foot competitors.
- Revenue guidance was lowered to the range of $925MM to $930MM, with the projection of Cartiva revenue coming down to $30MM from the initial $47MM given in 4Q18
- Cartiva sales were $8MM in the quarter, as sales in legacy distributor territories declined by 40%
- The company terminated all legacy Cartiva distributors, and moved the product to their direct lower extremity salesforce
- Leadership described the quarter as a “knife fight” in their core foot business, as they face both product and talent-retention challenges from a group of smaller, private companies
- Shoulder-related sales in the U.S. performed well, with implants growing at 16% and biologics growing at 17%
- The REVIVE shoulder revision line launched at the end of 2Q
- U.S. lower extremity sales underperformed, with a significant drop-off in revenue from Cartiva distributors compounded by weakness in core foot product sales
- Biologics growth in the U.S. was driven by continued adoption of the AUGMENT injectable
“It was clear that as a group, the distributors collectively believed that they would not have access to Cartiva long term. They stopped devoting time and resources to this product and actively tried to move as many customers as they could away from Cartiva. Contractually, our salesforce was not able to sell into those accounts in Q2 to combat the negative impact from the distributors. To address this, we acted quickly and terminated the Cartiva distributors. As of August 1, the U.S. Cartiva business has been transitioned to our direct U.S. lower extremities salesforce.”
— Wright Medical CEO Bob Palmisano on the Cartiva distributor difficulties
Performance by Segment
ORTHOWORLD estimates segment sales and growth on an as-reported basis, as follows ($MM):
| 2Q19 | 2Q18 | $ Chg | % Chg | |
| Joint Reconstruction Extremities | $115.1 | $99.4 | $15.7 | 15.8% |
| Trauma | $80.0 | $75.0 | $5.0 | 6.6% |
| Sports Medicine | $4.7 | $4.1 | $0.6 | 13.7% |
| Orthobiologics | $29.9 | $26.8 | $3.1 | 11.6% |
| Total | $229.7 | $205.4 | $24.3 | 11.8% |
| 1H19 | 1H18 | $ Chg | % Chg | |
| Joint Reconstruction Extremities | $232.0 | $197.7 | $34.3 | 17.3% |
| Trauma | $161.2 | $146.2 | $15.0 | 10.3% |
| Sports Medicine | $9.6 | $9.8 | -$0.2 | -2.5% |
| Orthobiologics | $57.1 | $50.2 | $6.9 | 13.7% |
| Total | $459.9 | $403.9 | $55.9 | 13.8% |
Sales by Geographic Region
ORTHOWORLD estimates geographic sales and growth as follows ($MM):
| 2Q19 | 2Q18 | $ Chg | % Chg | |
| US | $172.5 | $151.6 | $21.0 | 13.8% |
| Ex-US | $57.2 | $53.8 | $3.4 | 6.2% |
| EMEA | $40.0 | $37.4 | $2.6 | 7.0% |
| Asia Pacific | $12.0 | $11.3 | $0.7 | 6.2% |
| Rest of World | $5.1 | $5.1 | $0.0 | 0.7% |
| Total | $229.7 | $205.4 | $24.3 | 11.8% |
Net Earnings Data
Net earnings, inclusive of all revenue, are as follows.
| Amt | % of Sales | |
| Sales | $229.7 | |
| Cost of Sales | -$48.3 | 21.0% |
| General and Admin | -$152.1 | 66.2% |
| R & D | -$18.8 | 8.2% |
| Other | -$28.3 | 12.3% |
| Net Earnings | -$17.8 | -7.8% |
Sources: Wright Medical Group; ORTHOWORLD estimates.
Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
