Wright Medical Posts Revenue Gains, Income Slips

Wright Medical Group Inc. reported financial results for its fourth quarter and full-year 2013 (ended Dec. 31).

Net sales from continuing operations totaled $67.8 million during the fourth quarter, representing a 16 percent increase as reported and 17 percent increase on a constant currency basis compared to the fourth quarter of 2012.

“Our performance in the fourth quarter reflects continued strong implementation of the transformational changes to our business with constant currency sales from continuing operations and global foot and ankle increasing 17 percent and 22 percent, respectively,” said Robert Palmisano, president and CEO. “In particular, our total ankle sales had another outstanding quarter, with growth of 44 percent, which we believe demonstrates the substantial potential of this product and the long runway for growth. Notably, the eight consecutive quarters of strong, double-digit, global foot and ankle growth underscores the significant positive progress that we continue to make in our foot and ankle business by driving productivity gains in our large, direct U.S. sales organization, introducing new products, and increasing medical education programs.”

In November, the company completed the acquisition of French orthopedics extremities firm Biotech International for $75 million in cash, which expands its direct sales channel in France and the company’s international distribution network.

Net loss from continuing operations for the fourth quarter of 2013 totaled $135.2 million or ($2.88) per diluted share, compared to net income of $1.6 million or $0.04 per diluted share in the fourth quarter of 2012.

As a result of the completed sale of Wright’s hip and knee OrthoRecon division to China-based MicroPort Scientific Corp. for $290 million, this business is reported as part of discontinued operations.

The company’s fourth quarter 2013 net loss from continuing operations, adjusted for one-time chargers was $7.9 million in 2013, a decline from a net loss of $1.9 million in 2012, while diluted loss per share, as adjusted, decreased to (17 cents) in the fourth quarter of 2013 from (5 cents) in the fourth quarter of 2012. The attached financial tables include a reconciliation of U.S. GAAP to as adjusted results.

“With the close of the MicroPort transaction, Wright is now a completely transformed business,” Palmisano said. “During 2014, we look forward to continuing to make investments to accelerate foot and ankle growth and sales productivity, improving our gross margins and exiting the year with positive adjusted EBITDA. I am confident that our Vital Few strategic programs will position us for future success and drive growth and shareholder value.”

For 2014, the company reported net sales of $242.3 million, up from $214.1 million in 2013. For 2013, the loss of income due to discontinued sales was a little more than $230 million. On a brighter note, international sales grew nearly 35 percent to $64.7 million. Notably, for the year, foot and ankle sales were up 23 percent overall and comprised 62 percent of total sales. The loss in 2013 (adjusted for one-time charges and discontinued revenue) was $34.7 million, compared with adjusted income of $2.18 million in 2012.

The company anticipates full-year 2014 net sales from continuing operations, or Extremity and Biologics revenue, to be in the range of $305 million to $312 million. This represents a growth rate of 26 percent to 29 percent (including recent acquisitions) and an organic growth rate of 13-15 percent compared to last year.