Wright foots $435m bill to drive growth with Cartiva acquisition

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Any questions about Wright Medical’s slowing growth should be answered with yesterday’s $435m takeover of private US company Cartiva. Not only does Cartiva cement Wright’s position as number one in the rapidly growing foot and ankle orthopaedic repair space, the acquisition is forecast to be earnings accretive by 2019. Wright is shelling out the cash primarily for Cartiva’s lead product, a synthetic cartilage implant (SCI) for treating arthritis at the base of the big toe. The SCI, which received US premarket approval in July 2016, is a durable, organic polymer that has similar functionality to natural cartilage and can be used as an alternative to bone fusion. Analysts at Stifel estimate the annual US market for arthritic toe repair could be $400m.  Wright expects full-year 2018 Cartiva revenues to be roughly $35m, representing approximately 50% growth over 2017, with 2019 sales forecast to climb a further 34%. Cartiva also boasts impressive gross margins of over 90%, making the new business Wright’s most profitable division. This should come in handy as the company’s expansion had been running out of steam as it struggled to integrate Tornier, another orthopaedic business it bought for $3.3bn in 2014. With this latest acquisition Wright looks to have its foot firmly back on the pedal. 

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