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Why Wright Medical Group Shares Are Spiking Higher Today

What happened

Shares of Wright Medical Group (NASDAQ: WMGI) were trading 10% higher earlier today after management reported second-quarter financial results that outpaced industry watchers' forecasts.

So what

Wright Medical is a medical device company that sells products used in shoulder, elbow, wrist, hand, foot, and ankle procedures. It also markets biologics used in orthopedics. Apparently, business is good.

IMAGE SOURCE: GETTY IMAGES.

In the second quarter, net sales were $179.7 million, up 5% from last year. Gross margins clocked in at 78.8%, and the company's adjusted net loss per share was $0.07, which was better than its $0.11 loss in the second quarter of 2016.

The top line benefited from 16% growth in its U.S. shoulders business, driven primarily by the continuing rollout of its Simpliciti shoulder system. The company also saw tailwinds due to the launch of its Perform reversed glenoid, which it estimates will be a big driver of growth throughout the remainder of 2017. 

Wright Medical also saw sales of lower extremities products pick up in the quarter. In the U.S., its most technologically advanced products grew sales by 32%. Augment bone graft, Salvation limb salvage, and total ankle replacement all contributed to the increase. 

Now what

Wright Medical has hired about 100 new sales reps, and that could provide a boost to sales in the back half of 2017. 

Overall, management's forecast is for full-year net sales of about $755 million to $765 million, up 9% to 11% from 2016. That's pretty good, but there's still more work to do on the bottom line. Wright Medical's guidance for adjusted EPS this year is a loss of $0.26 to $0.33 per share. Since the company's plans to curb its losses depend a lot on its strategy of new product launches and more salespeople, risk-averse investors might want to wait until later in the year to see if revenue continues to improve now that these new hires are in place.

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Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.