Symmetry Medical Posts Loss for Q3

Warsaw, Ind. based Symmetry Medical Inc. reported a mixed bag of financial results for the thrid quarter of the year (ended Sept. 28).

Revenue for the third quarter 2013 was $98 million, compared to $100.9 million in the same period last year. The current quarter revenue primarily was impactedby lower sales for the company’s Symmetry Surgical segment as well as a slight reduction in the OEM Solutions division, which primarily provides contract manufacturing services to orthopedic medical device clients.

OEM Solutions segment revenue was $75.8 million in the third quarter 2013, down slightly from $76.1 million in the third quarter 2012. The slight decrease was driven by lower volume in the instruments segment and a fire in the acid shop at the company’s Sheffield, U.K., implant manufacturing facility, which occurred in September.

Those factors were partially offset by higher revenue in the company’s case and implant business. Third-quarter 2013 OEM Solutions segment revenue included a benefit of $300,000, or 0.4 percent, due to the favorable impact of foreign currency exchange rates. On a sequential basis, third quarter 2013 OEM Solutions revenue was down 4.8 percent compared to the second quarter 2013, primarily driven by the above mentioned factors, along with the timing of purchases in the Implants category.

Symmetry Surgical segment revenue decreased 10.4 percent to $22.2 million in the third quarter 2013 from $24.8 million in the third quarter 2012. Symmetry Surgical U.S. revenue declined slightly on a sequential and year over year basis, while international revenue was negatively impacted by a slower than anticipated return to growth following market share disruptions associated with the transition to Symmetry Surgical distributors beginning in late 2012. On a sequential basis, third quarter 2013 Symmetry Surgical total revenue was down 0.4 percent compared to the second quarter 2013.

Gross profit for the third quarter 2013 was $24.5 million, compared to $28.2 million in the third quarter 2012. Gross margin percentage for the third quarter 2013 was 25 percent, compared to 28 percent in the third quarter 2012.

Operating loss for the third quarter 2013 was $46.5 million, compared to operating income of $10.2 million in the same period last year.

Net loss for the third quarter 2013 was $34.5 million, or 95 cents per diluted share, compared to net income of $3.7 million, or 10 cents per diluted share, in the same period last year. Excluding the operating income adjustments noted above, as well as the net reduction in reserves for uncertain tax positions, unrealized foreign currency impact on an intercompany loan and amortization of debt issuance costs, net income for the third quarter 2013 was $3.1 million, or 8 cents per diluted share, compared to $6.5 million, or 18 cents per diluted share in the same period last year.

“We are disappointed with the results and have been working to address the issues,” said Thomas J. Sullivan, president and CEO. “We expect the negative impact on the OEM Solutions segment revenue and gross margin to continue in the fourth quarter, along with continued lower than expected instruments volume. While we are pleased with stabilization in Symmetry Surgical’s U.S. operations, the parallel process in our international business is taking longer than anticipated.”

Sullivan noted, however, “positive signs of improvement” in orthopedic procedure volumes, which described as “a tailwind” the company’s business.