Wright Medical (WMGI) Acquires IMASCAP SAS For $88.8 Million

Wright Medical Group N.V. (NASDAQ:WMGI) recently completed the buyout of IMASCAP SAS. The transaction is expected to diversify the company’s product portfolio and boost growth in global Extremities business. Notably, IMASCAP SAS develops software for preoperative planning of shoulder replacement surgery.

With this acquisition, Wright holds 100% of IMASCAP’s outstanding equity for approximately $88.8 million in cash, stock and earnouts.

IMASCAP’s Glenosys technology has been utilized in Wright Medical’s BLUEPRINT 3D planning software. The system will enable surgeons simulate the position of a shoulder prosthesis using CT image data and project the image of the shoulder in 3D. The system will provide the best and the most suitable implant for patients. This virtual surgical plan leads to reduced time, better results and lesser inventories, courtesy of simple and intuitive interface.

Wright Medical’s has reiterated previous full-year 2017 annual net sales guidance (ranging between $740 million to $745 million). However, due to closing time, the company expects a small increase in expenses in 2017.

The company has been consistent with efforts to strengthen Upper Extremities business. In third-quarter 2017, U.S. Upper Extremities business increased 19% on the back of ongoing launch of PERFORM Reversed Glenoid. The company is banking on the benefits of BLUEPRINT planning software for its shoulder business in the upcoming years.

Market Prospects

According to a report by Persistence Market Research, the global shoulder replacement market is estimated to reach $2.9 billion by the end of 2025 from about $1.5 billion in 2017, at a CAGR of 7.8%. The company clearly has bountiful opportunities in this niche.

Share Price & Estimate Revision Trend

Over the last year, Wright Medical has underperformed the industry with respect to price performance. The company has lost 12.3% against the industry’s decline of almost 0.7%.The company’s recent earnings estimate revision has been encouraging. The current quarter has seen 12 estimates going up in the last 60 days compared with one revision in the opposite direction.

The consensus estimate for current-quarter earnings rose to 5 cents from 2 cents over the same time frame.

Zacks Rank & Other Key Picks

Wright Medical carries a Zacks Rank #3 (Hold).

A few better-ranked medical stocks are PetMed Express, Inc. (NASDAQ:PETS) , Align Technology, Inc. (NASDAQ:ALGN) and Luminex Corporation (NASDAQ:LMNX) . Notably, PetMed and Align Technology sport a Zacks Rank #1 (Strong Buy), while Luminex carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 94.5% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 131.2% in a year.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock has gained 2.8% over the past three months.

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