MicroPort to Acquire Wright s OrthoRecon Business June 19, 2013
Forward-Looking Statements This presentation may contain forward-looking statements as defined under U.S. federal securities laws. 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. As with all transactions, there is a risk that failure to obtain necessary approvals, or other intervening events, could prevent the transaction described in this presentation from closing, or could delay the closing. In addition, risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements 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, 2012, 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: failure to realize the anticipated financial and other benefits from the acquisition of BioMimetic Therapeutics, Inc. or a delay in realization thereof; failure to obtain, or a delay in obtaining, FDA approval of Augment Bone Graft, or a material limitation on the scope of such approval; lower than anticipated market acceptance of, or annual market demand for, Augment Bone Graft; future actions of 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; failure to obtain the FDA or other regulatory clearances needed to market and sell 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; adverse outcomes in existing product liability litigation; new product liability claims; inadequate insurance coverage; the possibility of private securities litigation or shareholder derivative suits; demand for and market acceptance of our new and existing products; potentially burdensome tax measures; recently enacted healthcare laws and changes in product reimbursement which could generate downward pressure on our product pricing; lack of suitable business development opportunities; inability to capitalize on business development opportunities; product quality or patient safety issues; challenges to our intellectual property rights; geographic and product mix impact on our sales; our 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; inability to realize the anticipated benefits of restructuring initiatives; negative impact of the commercial and credit environment on us, our customers and our suppliers; and the potentially negative effect of our ongoing compliance enhancements on our relationships with customers and our ability to deliver timely and effective medical education, clinical studies, and new products. 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. 3
Today s Announcement Wright Medical Group, Inc. and MicroPort Scientific Corporation Enter Into Definitive Agreement Under Which MicroPort Will Acquire Wright s OrthoRecon Business Purchase price of $290 million in cash, subject to a net working capital adjustment Creates two distinct, separate, and focused businesses that are wellpositioned for growth OrthoRecon business will remain in Arlington and campus will become headquarters for MicroPort s global Orthopedic business Extremities-Biologics business including BioMimetic will continue as Wright Medical Expect to close by end of Q3 or early Q4 of 2013 4
Rationale Transaction Transforms Wright Medical into High Growth Extremities and Biologics Pure Play and Expands Growth Opportunities for OrthoRecon Business OrthoRecon and Extremities - Biologics are two different businesses with distinctive and solid value propositions and unique paths for future growth Separation will enable both to be focused and strong in their respective markets and provide enhanced opportunities to accelerate their growth trajectory Each business will be better positioned to grow and help customers meet their needs though more focused attention and investment 5
Key Deal Terms Purchase price is $290 million, subject to a net working capital adjustment, payable in cash at closing Net after-tax proceeds, including transaction costs, are estimated to be ~$260 million Intend to use net proceeds to fund transition costs of $25 million to $35 million Remainder used to fund growth opportunities for the Extremities and Biologics business and pay certain retained liabilities of OrthoRecon business Transaction subject to customary closing conditions, including MicroPort shareholder approval and receipt of regulatory clearances Closing expected by end of 3Q or early 4Q of 2013 6
MicroPort at A Glance MicroPort is a fast-growing, leading developer of interventional medical devices headquartered in Shanghai, China Relevant facts: 1,700 employees in 10 subsidiaries Traded on Hong Kong Exchange (HK: 0853), $1.1B market cap First China-based manufacturer of interventional cardiology products first developer and #1 market share leader in China for drug-eluting stents To learn more, visit www.microport.com 7
Why this buyer for Wright s OrthoRecon business? Product Portfolio Geographic Footprint Hip/Knee Hip/Knee Interventional Cardiology, Spine, Electrophysiology Orthopedic reconstruction Primarily China U.S., Europe, Japan, China, Brazil, India & Argentina No product portfolio overlap Small geographic footprint overlap 8
Key benefits for OrthoRecon business After the transition is complete, OrthoRecon will: Expand its customer base as MicroPort intends to leverage manufacturing and shipping facilities in Arlington to serve the needs of a large and rapidly growing Asian market Use European infrastructure to help grow MicroPort s Cardiovascular business in that geography Become headquarters for MicroPort s global Orthopedic business and continue to operate within its current, core markets Benefit from MicroPort s deep commitment to continued success of talented employee base, strong product portfolio, R&D expertise, global footprint 9
Key benefits for Extremities-Biologics As a smaller, high-growth Extremities company with breakthrough biologic opportunities, we will now be exclusively focused on: Accelerating growth opportunities in foot and ankle market to expand our current market lead Improving U.S. foot and ankle sales productivity Extending the global reach and penetration of Extremity products in key international markets Gaining U.S. regulatory approval for Augment Bone Graft 10
Following the Transaction Wright Medical expects to be well positioned and committed to accelerating growth in foot and ankle business, increasing U.S. foot and ankle sales productivity to $1 million per rep in 2014 Once Augment fully commercialized, anticipate company would be growing in excess of 20% Expect to be adjusted EBITDA positive in 2014, with opportunity for significant adjusted EBITDA growth in 2015 and beyond Extremity segment revenue guidance for 2013 of approx. $235 million to $240 million, which anticipates some potential minor, short-term dis-synergies as a result of the transaction Beginning in 2Q 13, OrthoRecon segment will be accounted for as discontinued operation in Wright s GAAP and non-gaap income statements Plan to update financial guidance and provide additional details on 2Q 13 conference call, which is currently scheduled for August 1, 2013 11
Bright, exciting future for both businesses! This transaction is expected to create: A Win-Win scenario for both companies, and for each Wright business Two distinct, focused, and successful businesses that are well-positioned for growth Expanded growth opportunities for OrthoRecon business with deeply committed buyer who plans to invest in the business Smaller, high-growth pure play Extremities business focused on accelerating growth trajectory Enhanced ability to help our customers meet their needs though more focused attention from each business Seamless transition and continued success of OrthoRecon as part of MicroPort 12
For additional information, please contact: Julie Tracy Chief Communications Officer julie.tracy@wmt.com (901) 290-5817 www.wmt.com NASDAQ: WMGI 13
MicroPort to Acquire Wright s OrthoRecon Business June 19, 2013