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Investor Presentation November 26, 2013

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Page 1: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Investor Presentation

November 26, 2013

Page 2: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

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.

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 benefits of the Biotech International acquisition in whole or in part, and unexpected

liabilities and/or erroneous financial estimates and projections for the acquired business; 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; failure to obtain necessary approvals, or other intervening events, which could delay or prevent the previously announced

sale of our hip/knee business from closing; 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.

Forward-Looking Statements

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Page 3: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

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 or as superior to 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.

Use of Non-GAAP Financial Measures

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Page 4: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Wright Medical: A Leader in Our Space

Orthopaedic medical device company Global

Sales from continuing operations 2013E ~$238M(1)

Market cap (as of 11/26/13) ~$1.4B

Countries >60

1 Midpoint of guidance range communicated on 11/4/2013. 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 subsequent date.

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Page 5: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

W R I G H T M E D I C A L

Historically Positioned in Two Large Markets

• Recognized leader in Foot & Ankle

• Primarily US

• Focus: growth

~45% of sales

Ortho-Recon (Hips and Knees)

Size: ~$13B(2)

Market Growth: ~0-3%

• Mid-sized player

• Primarily International

• Focus: efficiency, cash generation

~55% of sales

Business Market Size / Growth Our Position / Strategic Focus

1 US Market – 2012 Millennium Research Group, Management Estimates 2 Worldwide Market – 2011 Millennium Research Group, Management Estimates

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Market Growth: ~8-10%

Size: ~$3.5B(1)

Extremities (incl. Biologics)

Page 6: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Entered Into Agreement to Divest OrthoRecon Business

June 19, 2013: Wright and MicroPort Scientific Corporation

Enter Into Definitive Agreement Under Which MicroPort

Will Acquire Wright’s OrthoRecon Business

• Transaction transforms Wright Medical into high-growth Extremities and Biologics pure play

• Purchase price of $290 million in cash, subject to a net working capital adjustment

• Expect to close by end of Q4 of 2013

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Page 7: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

L A S T T W O Y E A R S

A Transformed Business

Growth

Profile

High

Low Low High

Business Focus

Wright Medical

• Focus on strengthening

Extremities

• Divest slower growth

OrthoRecon segment

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Page 8: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Focused On Higher Growth Segments of the Orthopedics Market

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2011-2016 CAGR

10%

7-8% 7% 7%

6%

3-4% 3%

2-3%

Foot & Ankle SportsMedicine

Biologics Extremities Trauma Knee Spine Hip

Source: 2011 & 2012 Millennium Research Group, 2012 Life Science Intelligence, Management Estimates

Page 9: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

T R A N S F O R M I N G T H E C O M P A N Y

Results Indicate Execution is On Track

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A Few Key Numbers

Increase US Foot and Ankle

Sales Productivity Q3, 2013

$780K vs. $700K in 2012 and $600K in 2011

Continued Investment in

Physician Training 2013

~2,100 trained vs. 2,000 in

2012 and 600 in 2011

Accelerate Growth in Global

Foot & Ankle Q3, 2013

+22%

vs. 14% in Q3, 2012

Sales from Continuing

Operations Q3, 2013

+14%

vs. 2% in Q3, 2012

Page 10: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Accelerating Foot & Ankle Growth

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Foot & Ankle Growth (Global Constant Currency)

9%

15%

23%

2011 2012 YTD 3Q 2013

Page 11: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

T H E M A R K E T

Focused on Most Attractive Segment of Extremities Market

Upper Extremity

$2.4B

27,000 surgeons

Foot & Ankle $1.1B

7,500 surgeons and

podiatrists

Breakdown of $3.5B US Extremities Market

More concentrated call point

Complex treatment issues, less mature products – need innovative solutions

– significant mix opportunity

Strong growth drivers – trauma – osteoarthritis

– diabetes – obesity

High margin

Underpenetrated market – significant opportunity for

international expansion

Foot & Ankle: An Attractive Segment

Source: Millennium Research Group, Management Estimates

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Page 12: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

S T R E N G T H S :

Recognized Leader in Foot and Ankle

CHARLOTTE® CLAW® 3.5mm Implant

BIOFOAM® Wedge

LIS FRANC Plate

ORTHOSPHERE® Implant

SWANSON Hammer Toe Implant

CHARLOTTE® Snap-Off Screw

GRAFTJACKET® Regenerative Tissue Matrix

LPT® Toe Implant

MTP Plate

DARCO® BOW® Plate

BIOARCH® Implant

ENDO-FUSE® Rods and Beams

CHARLOTTE® Compression

CHARLOTTE® CLAW® 2.7mm Implant

CHARLOTTE® Jones Fracture Screw

DART-FIRE® Screws

CHARLOTTE® 3.0 MUC Screw

DARCO® Screws

SWANSON Great Toe

DARCO® RPS Plate

DARCO® MPJ Plate

DARCO® LPS Plate

DARCO® PIA Plate

DARCO® DPS Plate

ORTHOLOC® Plate

CHARLOTTE® 7.0 MUC Screw

AM™ Surgical Endoscopic Blade

SIDEKICK® Stealth Fixation

CORETRAK® Tube Fixator

ORTHOLOC® Plate

SIDEKICK® Fixation

VALOR® NAIL Fixation

PRO-TOE® Hammer Toe Fixation

INBONE® Total Ankle

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• Direct US foot & ankle sales organization

• Most comprehensive foot & ankle product portfolio

• Continued investment in R&D

Page 13: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

S T R A T E G I C F O C U S : G R O W T H

Maximize the Foot & Ankle Opportunity

• Grow base business – next generation products

– INBONE® II and PROPHECY® Total Ankle Replacement System

– PRO-TOE®

Hammertoe Fixation System

– ORTHOLOC® 3Di Foot Reconstruction Plating System

– CLAW® II Polyaxial Compression Plating System

• Planned 2014 launches

– INFINITY™ Total Ankle Replacement System, New PRO-TOE® offering

• Continued investment in medical education

• Targeting >50% increase in US sales force productivity to $1M in 2014

• International market development

Our Goal

Accelerate Growth in Foot & Ankle Market

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Page 15: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

I N T E R N A T I O N A L E X P A N S I O N : Acquisition of Biotech International

November 15, 2013: Wright Completes Acquisition of Biotech

International

• Significantly expands Wright’s direct sales channel in France and international distribution network

• Adds complementary extremity product portfolio to further accelerate growth opportunities in global Extremities business

• Total consideration up to $80 million:

– $75M paid at closing (~$55M cash and ~$20M in stock); plus contingent payments of up to $5M cash upon achievement of revenue milestones in 2014 and 2015

– All Wright common stock subject to one-year lockup

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Page 16: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

• Received Not Approvable Letter for Augment® Bone Graft from FDA dated August 6, 2013:

– FDA stated the following:

• “concerned that the population enrolled was predominantly low risk and, therefore, may not have warranted the use of either autograft or Augment Bone Graft.”

• “it will be necessary to perform a new clinical study that evaluates the use of Augment Bone Graft as a substitute for autograft in hindfoot and ankle fusion procedures in a well-defined high-risk target population, where the use of autograft would be clinically warranted.”

• “the patient population studied in the clinical study, the amount of graft material implanted, and the uncertainty as to whether any graft material would be needed or if the use of no graft material in a fusion procedure of the hindfoot and ankle in the population studied would have achieved similar results.”

– FDA provided a number of additional observations on clinical study design and results.

• Wright submitted formal appeal to FDA on Sept 5, 2013

• On October 31, 2013, Wright was notified by the FDA that the agency has elected to convene a Dispute Resolution Panel to consider the scientific issues in dispute before making a decision on the Company’s request that FDA withdraw its August 6, 2013 not approvable letter for Augment® Bone Graft.

• At this time, no date for when Dispute Resolution Panel will be convened

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A U G M E N T ® B O N E G R A F T :

Status of FDA Appeal of Not Approvable Letter

Page 17: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

2013 Guidance for Continuing Operations

• $237M - $240M Revenue(1)

• $(0.55) - $(0.59) Adj. EPS(1,2)

1 Guidance range communicated on 11/4/2013. 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 subsequent date.

2 Includes stock-based compensation and impact of acquisition of BioMimetic Therapeutics, Inc.

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Page 18: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

W H Y I N V E S T I N W R I G H T M E D I C A L

Repositioning for Improved Growth and Performance

Focused on areas where we can win

The Strategy

Building high-growth, pure play Extremities-

Biologics business

The Platform

Clear goal – improved performance

The Future

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Accelerated

growth,

improved

profitability,

strong cash

flow

Page 19: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

For additional information, please contact:

Julie Tracy Chief Communications Officer

[email protected] (901) 290-5817

www.wmt.com

NASDAQ: WMGI

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Page 20: Wright Medical Investor Presentation · 2015-09-16 · Wright Medical: A Leader in Our Space Orthopaedic medical device company Global Sales from continuing operations 2013E ~$238M(1)

Investor Presentation

November 26, 2013