Wright Medical Group NV has acquired preoperative planning software solutions provider Imascap SAS to bolster its extremities business. The sale amounted to $88.8 million (€75.1 million) made up of $46.9 million (€39.7 million) cash, $15.6 million (€13.2 million) in Wright common shares, and $26.3 million (€22.2 million) in payouts if milestones tied to software modules and a planned implant system are met.

Amsterdam-based Wright reported its full-year 2017 sales guidance of $740 million to $745 million remains unchanged since Imascap has no revenue. Similarly, costs are not expected to impact the 2017 operations guidance of $84 million to $88 million. Financial changes due to the transaction will be shared during the fourth quarter earnings call in February of 2018.

Future investment, technologies

Regarding the spring 2018 call, Larry Biegelsen, senior analyst, Wells Fargo Securities, commented, "It would not surprise us if additional investment associated with this transaction are called out during the call. Management's current outlook is for modest improvements y/y in EBITDA margins for 2018. Our model calls for 15.0 percent in 2018, up 330bps y/y and 19.3 percent in 2019, up 430bps y/y."

Combination of the two firms is expected to add to Wright's role in the extremities sector.

"The transaction ensures exclusive access to breakthrough software-enabling technology and patents to further differentiate Wright's product portfolio and to further accelerate growth opportunities in Wright's global extremities business," Julie Tracy, SVP, chief communications officer, Wright, told BioWorld MedTech. "Wright believes software-enabled surgery is vital to our future, and with the acquisition of Imascap, we have the opportunity to take a significant lead in this area."

"Wright has a global leadership position in the extremities market and expertise in medical education and product development, which will be used to realize the full potential of Imascap's technology and product pipeline," said Tracy. No timeline has been established for products in the pipeline, she added. Wright's business focuses on upper extremities, such as the elbow, hand, shoulder and wrist.

Surgical planning software

France-based Imascap's Glenosys platform for preoperative planning is currently used with Wright's Blueprint 3-D planning software, designed to provide a surgeon simulation of shoulder prosthesis and placement. Using data from a CT scan, surgeons can simulate multiple implants, rotate the implant to test range of motion, and plan the surgical process. Imascap's technology, which enables the Blueprint software, will be provided to health care professionals at no cost when they use Wright's products.

"The rationale behind the acquisition is to gain exclusivity to Imascap's technology and patents given the strong adoption of Blueprint," said Biegelsen in a comment on the transaction. "Wright Medical will offer the enabling technology to physicians implanting Wright's shoulder products at no cost and expects potential applications to enhance its Prophecy planning for ankles. Wright will also gain access to the pipeline that is under development and patent pending. It includes advanced features such as artificial intelligence and augmented reality."

Wright's purchase also follows collaboration between the two firms for some time.

"Wright, and previously Tornier, has been involved with Imascap for many years with our Blueprint case planning software, and we have seen first-hand the innovation, creativity and differentiated solutions that the Imascap team has developed," said Robert Palmisano, president and CEO, Wright. "Software-enhanced solutions are the future, and with the acquisition of Imascap, we have the opportunity to take a significant lead in this area. We believe the future of orthopedic implant surgery will include advanced elements of AI and augmented reality. When fully developed, we believe such software-enabled surgery will leapfrog the current mechanical approaches some orthopedic companies have developed primarily for hip and knee replacement surgery."

Prior sales, competition

Last year, Wright sold its Tornier knee and hip group to Corin Orthopaedics Holdings Ltd. for $33 million (€29.7 million). (See BioWorld MedTech, July 12, 2016.) The division was thought to make up 5 percent of the company's sales, and followed the initial merger between the companies reported in 2014. (See BioWorld MedTech, Oct. 29, 2014.)

Stryker Corp. offers its VSP, or virtual surgical planning tool, which also uses CT scan information on a patent and a 3-D system to map and plan surgical procedures, including cranial, reconstructive, or corrective jaw surgery. Materialise NV, which specializes in 3-D printing and modeling, markets its Proplan CMF that uses CT scan to plan and guide cranio-maxillofacial surgery.