Jefferies 2014 Global Healthcare Conference. June 4, 2014

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Transcription:

Jefferies 2014 Global Healthcare Conference June 4, 2014 1

Forward-Looking Statements This presentation may contain forward-looking statements as defined under U.S. federal securities laws, including statements about our outlook for 2014. These statements reflect management's current knowledge, assumptions, beliefs, estimates, and expectations and express management's current view of future performance, results, and trends. Forward-looking statements may be identified by their use of terms such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will, and other similar terms. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from those described in the forward-looking statements. The reader should not place undue reliance on forward-looking statements. Such statements are made as of the date of this presentation, and we undertake no obligation to update such statements after this date. Risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements in this presentation are discussed in our filings with the Securities and Exchange Commission (including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013, and as may be supplemented in our Quarterly Reports on Form 10-Q). By way of example and without implied limitation, such risks and uncertainties include: future actions of the SEC, the United States Attorney's office, the FDA, the Department of Health and Human Services or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the Foreign Corrupt Practices Act and similar laws, that could delay, limit or suspend our development, manufacturing, commercialization and sale of products, or result in seizures, injunctions, monetary sanctions or criminal or civil liabilities; continued liability for product liability claims on OrthoRecon products sold prior to divestiture of our OrthoRecon business or for post-market regulatory obligations on such products; disruptions resulting from loss of personnel, systems and infrastructure changes and transition services arrangements in connection with our OrthoRecon divestiture; failure to realize the anticipated benefits from our acquisitions or from divestiture of our OrthoRecon business; adverse outcomes in existing product liability litigation; new product liability claims; inadequate insurance coverage; copycat claims against our modular hip systems resulting from a competitor's recall of its modular hip product; failure or delay in obtaining FDA approval of Augment Bone Graft for commercial sale in the United States; challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others; loss of key suppliers; failures of, interruptions to, or unauthorized tampering with our information technology systems; failure or delay in obtaining FDA or other regulatory approvals for our products; any actual or alleged breach of the Corporate Integrity Agreement to which we are subject through September 2015, which could expose us to significant liability, including exclusion from Medicare, Medicaid and other federal healthcare programs, potential criminal prosecution, and civil and criminal fines or penalties; the potentially negative effect of our ongoing compliance enhancements on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products; the possibility of private securities litigation or shareholder derivative suits; insufficient demand for and market acceptance of our new and existing products; recently enacted healthcare laws and changes in product reimbursements which could generate downward pressure on our product pricing; potentially burdensome tax measures; lack of suitable business development opportunities; inability to capitalize on business development opportunities; product quality or patient safety issues; geographic and product mix impact on our sales; inability to retain key sales representatives, independent distributors and other personnel or to attract new talent; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; and the negative impact of the commercial and credit environment on us, our customers and our suppliers. 2

Use of Non-GAAP Financial Measures Wright Medical uses certain non-gaap financial measures in this presentation. Wright Medical uses non- GAAP financial measures as supplemental measures of performance and believes these measures provide useful information to investors in evaluating our operations, period over period. However, non- GAAP financial measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for Wright Medical s financial results prepared in accordance with GAAP. In addition, investors should note that any non-gaap financial measures Wright Medical uses may not be the same non-gaap financial measures, and may not be calculated in the same manner, as that of other companies. We have posted a reconciliation of our non-gaap financial measures to the most directly comparable GAAP financial measures on our website at www.wmt.com. 3

T H E N EW W R I GH T ME D I C A L AT A G L A N C E High-Growth Extremities Pure Play Innovation R&D and medical education Global Extremities-Biologics company Foot & Ankle strong growth trajectory #1 recognized leader in foot & ankle ~$1.5B market cap (5/30/14) ONLY player with a singular focus on Extremities 4

Strategic Priorities 1. Accelerate Global Revenue Growth Vital Few Improve sales force productivity Optimize customer conversion process International expansion Key Financial Objectives Mid to high teens top-line growth rates over time 2. Improve Gross Margin and Inventory World class supply chain (cost & inventory) Pricing 80+% Gross Margin longer term target 3. Improve EBITDA Targeted M&A Leverage corporate costs Leverage U.S. sales and marketing investments Positive adj. EBITDA exiting 2014; high teens to low 20% adj. EBITDA margins over time Execute an effective compliance program and continue to successfully execute CIA = 2014 Vital Few Initiative 5

Our Differentiated Business Model 1 Unique pure 2 Focused on most play company attractive segments 4 3 Delivering industry-leading growth Leveraging strong competitive advantages 6

1. Unique Pure Play Company Broad Product range Other companies Narrow Diversified Focus on Extremities-Biologics Single-focus 7

2. Focused on Most Attractive, Higher Growth Segments of the Orthopedics Market Wright Medical focus 2011-2016 CAGR 10% Foot & Ankle Market U.S. = $1.1B 7-8% 7% 7% 6% More concentrated call point Complex treatment issues, less mature products need innovative solutions significant mix opportunity 3-4% 3% 2-3% Strong growth drivers trauma osteoarthritis diabetes obesity High margin Underpenetrated market Foot & Ankle Sports Medicine Biologics Upper Trauma Knee Spine Hip Extremities Source: 2012 & 2013 Millennium Research Group, 2012 Life Science Intelligence, Management Estimates 8

3. Key Competitive Advantage: Broadest Product Offering in Foot & Ankle SIDEKICK Fixation DARCO Screws CHARLOTTE CLAW 3.5mm Implant VALOR NAIL Fixation AM Surgical Endoscopic Blade CHARLOTTE CLAW 2.7mm Implant CHARLOTTE Compression INBONE Total Ankle BIOFOAM Wedge SIDEKICK Stealth Fixation CHARLOTTE 7.0 MUC Screw CHARLOTTE Jones Fracture Screw CHARLOTTE 3.0 MUC Screw LIS FRANC Plate ORTHOLOC Plate GRAFTJACKET Regenerative Tissue Matrix DART-FIRE Screws CHARLOTTE Snap-Off Screw ORTHOSPHERE Implant BIOARCH Implant DARCO DPS Plate ORTHOLOC Plate SWANSON Hammer Toe Implant ENDO-FU.S.E Rods and Beams DARCO PIA Plate CORETRAK Tube Fixator DARCO BOW Plate DARCO LPS Plate PRO-TOE Hammer Toe Fixation LPT Toe Implant DARCO RPS Plate DARCO MPJ Plate The recognized leader SWANSON Great Toe MTP Plate 9

C L O S E R L O O K INFINITY Total Ankle System Bone preserving implant design Expands access to less complicated primary cases Physician feedback suggests INFINITY ankle with PROPHECY is faster and easier to implant than INBONE ankle and can be on par with fusion procedure times. INFINITY Total Ankle Full commercial launch late Q2 2014 10

R E S U L T 4. Delivering Industry-Leading Growth Foot & Ankle Market Growing Fast Wright Medical Growing Faster 26% (2) 8-10% (1) Market Wright Medical Wright Medical: Outgrowing a growth market Note 1: Millennium Research Group, Management Estimates Note 2: 1Q 2014 constant currency revenue growth vs. same prior year period, continuing operations 11

Multiple Growth Drivers 1 Increase U.S. sales force productivity 2 Launch new products 3 Best-in-class medical education 4 Expand internationally 5 Targeted M&A Growing ~2X faster than market 12

1. On Track to Meet $1M Sales Productivity Target Increasing Sales Productivity Support Sales Activities Medical Education, Strategic Contracting U.S. Foot & Ankle Sales Productivity/Rep 2014 exit target $1M+ Increase Sales Effectiveness Sales & Sales Management Training Maximize Selling Time Hubs, Technology, CRM, Field Admin Support 2011 $600K 2013 ~$820K Optimize Performance Commission Scheme, Quota Achievement ~80% of U.S. foot and ankle revenue generated from direct employee reps 13

2. Continue to Launch Innovative New Products New and acquired products accounted for ~47% of revenue in 2013 INFINITY Total Ankle Replacement System Products launching in 2014 New PRO-TOE offering for Hammertoe correction ORTHOLOC 3Di Ankle Fusion System INBONE PROPHECY Pre-Operative 2011-2013 Navigation (47%) Alignment Guides Products Introduced since 2011 INBONE II Total Ankle Replacement System ORTHOLOC 3Di Foot Reconstruction Plating System CLAW II Polyaxial Compression Plating System PRO-TOE Hammertoe Fixation System 14

3. Best-in-Class Medical Education Programs U.S. Physicians Trained 2,500 600 2,000 2014 and Beyond Focus on increasing productivity vs. number of physicians trained 2011 2012 2013 Sticky relationships with surgeons a key differentiator 15

4. Significant International Growth Opportunity 2013 Total Sales Breakdown Opportunities Focus on Extremities in key markets International ~30% Acquisitions to add: distribution partners and channel expansion technology International sales fast growing up 63% in 1Q 14 (constant currency) 16

A C L O S E R L O O K 4. Focus on Extremities in Key Int l Markets Focus Regions CANADA EU UK GERMANY FRANCE ITALY CHINA JAPAN BRAZIL AUSTRALIA 17

5. Targeted M&A Recent Acquisitions The Transactions Acquired WG Healthcare (Q1 2013), Biotech International (Q4 2013), Solana Surgical and OrthoPro (Q1 2014) Foot and Ankle focused Meets Our Criteria EBITDA accretive M&A that maintains or improves revenue growth rates Complementary Extremities product portfolio Adds direct sales channel / expands international distribution 18

Path to Profitability Key Initiatives 2014 and Beyond Mid to high teens organic growth of high margin sales Expanding gross margins to 80+% Leverage corporate costs Leverage U.S. sales and marketing investments Positive adj. EBITDA exiting 2014 High teens to low 20% adj. EBITDA margins over time EBITDA accretive M&A that maintains or improves revenue growth rates 19

I N S U M M A R Y The New Wright Medical: Uniquely Positioned A transformed company A differentiated business model Long growth runway Singular focus, industry leader Unmatched capabilities Multiple drivers 20

Jefferies 2014 Global Healthcare Conference June 4, 2014 21