Wright Medical — Merger or Acquisition (February 2015)
31 slides from Wright Medical's merger presentation, Feb 27, 2015
Slide 1: Investor Presentation
Investor Presentation February 25, 2015 Filed by Wright Medical Group, Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Wright Medical Group, Inc. Commission File No.: 001-35823
Slide 2: Forward-looking statements
This presentation includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. Forward-lo
Slide 3: Note on Non-GAAP Financial Measures
Wright and Tornier use non-GAAP financial measures, including EBITDA, as adjusted. Their respective management teams believe that the presentation of these measures provides useful information to investors and that these measures may assist investors in evaluating their respective company’s operatio
Slide 4: Additional information about the proposed merger
In connection with the proposed merger, Tornier has filed with the U.S. Securities and Exchange Commission (SEC) a registration statement on Form S-4 that includes a preliminary joint proxy statement of Wright and Tornier that also constitutes a preliminary prospectus of Tornier. The registration st
Slide 5: Recent Updates
Recent Updates • Completed successful $632.5 million convertible debt offering: – Maturity: February 15, 2020 – Coupon: 2.00% – Effective conversion price: $40.00 – Added ~$275 million in cash to balance sheet • Received Second Request from FTC in connection with proposed merger with Tornier: – All
Slide 6: The New Wright Medical: Global Leader in Extremities-Biologics
Global Extremities- Biologics market ~$8B Wright Medical position in Extremities market post Tornier merger Wright Medical growth rate vs. the market #1 ~2X The New Wright Medical: Global Leader in Extremities-Biologics
Slide 7: Agenda
Agenda Strong Performance Record Augment ® Approval: A Game Changer Pending Transaction Creates Premier High-Growth Extremities-Biologics Company The Future: Outperforming in Growth Markets
Slide 8: Entering a New Growth Era
Multiple markets, slow growth Repositioned as high growth, pure play in Extremities Transformational merger, global powerhouse in Extremities-Biologics Entering a New Growth Era Future
Slide 9: Strategic Priorities
Global leader in Extremities 1. Accelerate Global Revenue Growth 2. Improve Gross Margin and Inventory 3. Improve EBITDA Execute an effective compliance program and continue to successfully execute CIA Strategic Priorities Improve sales force productivity Customer conversion process International ex
Slide 10: Focused on Higher Growth Segments of the Orthopedics Market
Focused on Higher Growth Segments of the Orthopedics Market Source: 2014 iData Research Inc., 2013 Millennium Research Group, 2012 Life Science Intelligence, Management Estimates Wright Medical focus Tornier 10% 7-8% 7% 8-9% 6% 3-4% 3% 2-3% Foot & Ankle Sports Medicine Biologics Upper Extremities Tr
Slide 11: Created Extremities Pure Play with Strong Momentum
66% 9% 22% 3% Growth in line with goals ~20% CAGR RESULTS: Created Extremities Pure Play with Strong Momentum Primary Focus: Foot & Ankle (Breakdown of 2014 Sales) Foot & Ankle Upper Extremity Biologics Other Strong Sales Momentum (Continuing Operations) $214M $242M $298M
Slide 12: Agenda
Agenda Strong Performance Record Augment ® Approval: A Game Changer Pending Transaction Creates Premier High-Growth Extremities-Biologics Company The Future: Outperforming in Growth Markets
Slide 13: Breakthrough Biologic Platform for Future Growth
Unique Solution Breakthrough Biologic Platform for Future Growth Augment ® Bone Graft – A Breakthrough Product • First clinically proven, cost-effective alternative to autograft for ankle and/or hindfoot fusion indications • Demonstrates equivalent safety & efficacy with less pain • Only synthetic g
Slide 14: Augment: A High Potential Platform Technology
Bone Soft Tissue Augment ® – A High Potential Platform Technology Market potential (US) $300M Market potential (US) $1B+ • Ankle Fusion • Hindfoot Fusion • Chronic Tendinopathy (Tennis Elbow) • Rotator Cuff Repair st Target Market • Approval anticipated 1H of 2015 • Company’s guidance includes U.S.
Slide 15: Agenda
Agenda Strong Performance Record Augment ® Approval: A Game Changer Pending Transaction Creates Premier High-Growth Extremities-Biologics Company The Future: Outperforming in Growth Markets
Slide 16: Transaction Overview
Transaction Overview • All stock – combined equity value of ~$3.3B at announcement – combined entity will be incorporated in the Netherlands – combined company ownership: 52% Wright / 48% Tornier • Transaction is subject to customary closing conditions, including: – Hart-Scott-Rodino Antitrust Impro
Slide 17: Tornier at a Glance
62% 17% 17% Tornier at A Glance • Extremities company with leadership position in Upper Extremities • NASDAQ: TRNX • HQ in Netherlands; operations run out of U.S., France and Ireland • 2014 revenue: $345M • Products sold in 45 countries – ~42% of revenue outside U.S. • 1,076 employees globally Aequa
Slide 18: Combination Creates Most Comprehensive Upper and Lower Extremity Portfolio
Upper Extremities Lower Extremities Market leading positions in high-growth markets A D V A N T A G E # Combination Creates Most Comprehensive Upper and Lower Extremity Product Portfolio Upper Extremities Lower Extremities 9% of revenue 62% of revenue 66% of revenue 17% of revenue Complementary Prod
Slide 19: Combining Two Innovative Companies Enhances Future Growth Prospects
Recent Product Launches Recent Product Launches Dedicated R&D will power innovation across combined portfolio A D V A N T A G E # Combining Two Innovative Companies Enhances Future Growth Prospects INFINITY ® Total Ankle Replacement System PRO-TOE ® offering for Hammertoe correction Aequalis Ascend
Slide 20: Accelerates Growth Opportunities in Three Large, Fast Growing Markets
Leverage scale across geographies and categories Wright Medical enters Upper Extremities market with leadership position in shoulder 8-9% 8-10% A D V A N T A G E # Accelerates Growth Opportunities in Three Large, Fast Growing Markets Market Growth (2014-2018 CAGR) Upper Extremity Lower Extremity Bio
Slide 21: Creates Mid-Size Growth Company with Stronger Financial Profile
Scale and scope to accelerate path to profitability 37% Upper Extremity 40% Lower Extremity 11% Lg Joints A D V A N T A G E #4 Creates Mid-Size Growth Company with Stronger Financial Profile Upper Extremity Lower Extremity Biologics & Sports Med Large Joints & Other ~$298M ~$345M Combined Sales $600
Slide 22: Unique Positioning Will Continue to Set Us Apart
SPECIALIZED SALESFORCES TECHNOLOGY LEADER GLOBAL FOOTPRINT Dedicated to serving the needs of specialty surgeons Unique Positioning Will Continue to Set Us Apart V I S I O N Premier High-Growth Extremities-Biologics Company
Slide 23: Agenda
Agenda Strong Performance Record Augment ® Approval: A Game Changer Pending Transaction Creates Premier High-Growth Extremities-Biologics Company The Future: Outperforming in Growth Markets
Slide 24: Continue to Execute Proven Strategy
Sustainable, high-growth Extremities market growing in 8-10% range Longer Term – Continue to Execute Proven Strategy Completely focused: Extremities-Biologics technology leader Specialized sales forces: Drive productivity International expansion: Key market focus, drive adoption New product launches
Slide 25: Priorities Next 1-2 Years
Priorities Next 1-2 years Ensure smooth integration - integration planning is underway Continue to execute our operating initiatives - including sales productivity, new product launches, medical education Launch Augment ® Bone Graft in U.S. - Subject to FDA approval Close merger with Tornier - 2Q 20
Slide 26: Strong Pipeline of New Product Introductions
A C L O S E R L O O K A T K E Y I N I T I A T I V E S Strong Pipeline of New Product Introductions AUGMENT ® Bone Graft • Proven therapeutic option • $300M U.S. market opportunity • Pending FDA approval INFINITY ® Total Ankle System • Third generation design • Further penetrate end-stage ankle arthr
Slide 27: Clear Line of Sight to Deliver Cost Synergies from Merger
Year 3 Annual Cost Synergies: $40M-$45M A CLOSER LOOK AT MERGER: Clear Line of Sight to Deliver Cost Synergies from Merger • Public company expenses • Overlapping support functions • Overlapping systems • Vendor consolidation • Process improvement Key Synergy Areas
Slide 28: Goals Once Integrated With Tornier
Goals Once Integrated With Tornier Advancing Toward Our Goals Sales growth Mid teens Gross Margin High 70s% range Adj. EBITDA margin Adj. EBITDA margins approaching 20% in 3 to 4 years
Slide 29: 2015 Guidance for Wright Standalone Company
Revenue (1, 2) Adj. EBITDA (1) $325M to $335M $(27M) to $(22M) 2015 Guidance for Wright Standalone Company Guidance range communicated on 2/25/2015. The fact that we include these projections in this presentation should not be taken to mean that these amounts continue to be our projections as of any
Slide 30: In Summary: The New Wright Medical
Solid Performance Record Augment ® Approval: A Game Changer Pending Transaction Creates Premier Extremities- Biologics Company The Future: Outperforming in Growth Markets I N S U M M A R Y The New Wright Medical: Global Leader in Extremities • Unmatched capabilities, unique mid-cap growth asset • Bu
Slide 31: Investor Presentation
Investor Presentation February 25, 2015
Wright Medical Group — Merger or Acquisition (February 2015) on 6ix