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8-K - FORM 8-K - WRIGHT MEDICAL GROUP INC | g27112e8vk.htm |
Exhibit 99.1
FOR RELEASE 3:30 P.M. CENTRAL Wednesday, May 4, 2011 Contact: Lance Berry (901) 867-4607 |
Wright
Medical Group, Inc. Announces Preliminary First Quarter Financial Results and Management Changes
Affirms Commitment to Compliance and the Highest Standards of Ethical Conduct
Reports First Quarter Net Sales of $135.4 Million, an Increase of 3% Year-Over-Year,
and As-Adjusted EPS of $0.24, an increase of 14% Year-Over-Year
and As-Adjusted EPS of $0.24, an increase of 14% Year-Over-Year
Reiterates 2011 Net Sales Guidance; Raises 2011 EPS Guidance
ARLINGTON, TN May 4, 2011 Wright Medical Group, Inc. (NASDAQ: WMGI), a global orthopaedic
medical device company and a leading provider of surgical solutions for the foot and ankle market,
today announced certain management changes, effective immediately, following the resignations of
three executives:
| Thomas L. McAllister has been appointed interim General Counsel and Secretary, replacing Raymond C. Kolls, Senior Vice President, General Counsel and Secretary; | ||
| Aurelio Sahagun is serving as Vice President, EMEA Commercial Operations, succeeding Cary P. Hagan, formerly Senior Vice President, EMEA Commercial Operations. Mr. Sahaguns appointment was planned, implemented two weeks ago and was already announced internally; and | ||
| Max K. Mortensen will serve as Vice President, Quality, Clinical & Regulatory Affairs, replacing Alicia M. Napoli, Vice President, Clinical & Regulatory Affairs. |
Mr. Kolls, Mr. Hagan and Ms. Napoli resigned without good reason. Wright Medical noted that
these management changes are not related to the Companys operational performance, financial
condition or financial reporting.
Update on Status of Internal Investigation
The Company also announced that, at the direction of the Wright Medical Board, it conducted an
internal investigation with the assistance of outside counsel. The Board received a report on the
investigation and notified the independent monitor and the U.S. Attorneys Office for the District
of New Jersey (USAO) pursuant to the Deferred Prosecution Agreement (DPA). The same notice was
also provided to the Office of the Inspector General of the U.S. Department of Health and Human
Services (OIG). The Board also took a number of measures to enhance the Companys compliance
environment. The Company and the independent monitor continue their investigative activities
pursuant to the DPA, and communications between the Company, the independent monitor, the USAO and
OIG are ongoing.
David D. Stevens, Chairman of the Board and interim Chief Executive Officer, said, The Board is
committed to maintaining the highest standards of ethical conduct and we remain diligent in
ensuring that Wright Medical complies with all applicable laws and regulations. Wright Medical has
dedicated employees and a deep bench of senior-level talent, and our priority as always is to
support our customers and partners while creating value for our shareholders.
Additional information is available in Wright Medicals Form 8-K filed today with the U.S.
Securities and Exchange Commission and can be found on www.sec.gov or in the Corporate
Investor Information section of the Companys website at www.wmt.com.
Preliminary First Quarter Results and 2011 Guidance
Wright Medical also announced today preliminary results for the first quarter ended March 31, 2011,
reiterated full year sales guidance and raised full year as-adjusted earnings per share (EPS)
guidance. A reconciliation of U.S. GAAP to as adjusted results included herein is included in
the attached financial tables.
For the first quarter of 2011, the Company reported net sales of $135.4 million, a 3% increase over
net sales of $131.2 million during the first quarter of 2010. The Companys first quarter 2011 EPS
was $0.09 per diluted share, compared to a loss of ($0.01) per diluted share in the first quarter
of 2010. Wright Medicals diluted earnings per share for the first quarter of 2011, as adjusted,
was $0.24, an increase of 14% compared to $0.21 in the first quarter of 2010.
The Company is reiterating its previously-communicated 2011 net sales outlook of $517 million to
$535 million. The Company is also upwardly revising its 2011 as-adjusted earnings per share
outlook* to a target range for the full year 2011 of $0.89 to $0.97 per diluted share, from $0.88
to $0.95 per diluted share, which was previously communicated on February 10, 2011. The Company
anticipates full year 2011 as-adjusted earnings per diluted share including stock-based
compensation to be in the range of $0.70 to $0.78, which represents annualized growth expectations
of 0% to 11%.
Lance Berry, Senior Vice President and Chief Financial Officer, added, Wright Medical continues to
perform well, and we remain dedicated to achieving our business objectives and delivering value to
all of our stakeholders through the continued execution of our strategic plan.
The Company will provide further information when it releases its first quarter 2011 results at
3:00 p.m. Central Time on Thursday, May 5, 2011.
Conference Call and Webcast Details
As previously announced, Wright Medical will host a conference call on Thursday, May 5, 2011 at
3:30 p.m. Central Time to discuss the Companys operating results for its first quarter ended March
31, 2011. The live dial-in number for the call is 866-788-0538 (domestic) or 85 7-350-1676
(international). The participant passcode for the call is Wright. To access a simultaneous
webcast of the conference call via the internet, go to the Corporate Investor Information
section of the Companys website located at www.wmt.com.
* The Companys earnings target excludes the transaction costs and non-cash deferred financing fees
associated with the recently completed tender offer for the Companys 2.625% Convertible Senior
Notes due 2014 (Convertible Notes), possible future acquisitions, other material future business
developments, and costs associated with the Companys DPA (including the associated independent
monitor).
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, such as net sales, excluding the impact of foreign
currency; operating income, as adjusted; net income, as adjusted; net income, as adjusted, per
diluted share; effective tax rate, as adjusted; and free cash flow. The Companys management
believes that the presentation of these measures provides useful information to investors. These
measures may assist investors in evaluating the Companys operations, period over period. The
measures exclude such items as costs related to the U.S. governmental inquiries and DPA,
restructuring charges, transaction costs and non-cash deferred financing fees associated with the
Convertible Notes tendered and non-cash stock-based expense, all of which may be highly variable,
difficult to predict and of a size that could have substantial impact on the Companys reported
results of operations for a period. Management uses these measures internally for evaluation of the
performance of the business, including the allocation of resources and the evaluation of results
relative to employee performance compensation targets. Investors should consider these non-GAAP
measures only as a supplement to, not as a substitute for or as superior to, measures of financial
performance prepared in accordance with GAAP.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined under U.S. federal securities
laws, including statements about expected financial results for the quarter ended March 31, 2011.
These statements reflect managements current knowledge, assumptions, beliefs, estimates, and
expectations and express managements current views of future performance, results, and trends and
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 , such as statements regarding potential actions by the USAO,
independent monitor, OIG and other agencies or their potential impact are subject to a number of
risks and uncertainties that could cause our actual results to materially differ from those
described in the forward-looking statements. Risks and uncertainties that could cause our actual
results to materially differ from those described in forward-looking statements include those
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, 2010 filed with the SEC
under the heading Risk Factors), and the following: the impact of our settlement of the federal
investigation into our consulting arrangements with orthopaedic surgeons relating to our hip and
knee products in the United States, including our compliance with the Deferred Prosecution
Agreement through September 2011 (which could, by its terms, be extended for a further six months)
and the Corporate Integrity Agreement through September 2015; and any items identified during the
course of the Companys quarter-end accounting close processes. Readers should not place undue
reliance on forward-looking statements. Such statements are made as of the date of this press
release, and we undertake no obligation to update such statements after this date.
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About Wright Medical Group, Inc.
Wright Medical Group, Inc. is a global orthopaedic medical device company specializing in the
design, manufacture and marketing of devices and biologic products for the extremity, hip and knee
repair and reconstruction. Wright Medical is a leading provider of surgical solutions for the foot
and ankle market. Wright Medical has been in business for more than 60 years and markets its
products in over 60 countries worldwide. For more information about Wright Medical, visit its
website at www.wmt.com.
Table Follows
Wright Medical Group, Inc.
Reconciliation of As Reported Net Income per Diluted Share
to Non-GAAP Net Income, as Adjusted, per Diluted Share
Reconciliation of As Reported Net Income per Diluted Share
to Non-GAAP Net Income, as Adjusted, per Diluted Share
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Net Income per Diluted Share |
||||||||
Net income (loss), as reported, per
diluted share |
$ | 0.09 | $ | (0.01 | ) | |||
Interest expense on convertible notes |
0.02 | 0.02 | ||||||
Dilutive effect of convertible notes |
(0.01 | ) | 0.00 | |||||
U.S. governmental inquiries/DPA related |
0.03 | 0.15 | ||||||
Non-cash, stock-based compensation |
0.05 | 0.05 | ||||||
Restructuring charges |
| 0.01 | ||||||
Deferred financing fees and transaction
costs associated with Convertible Notes
Tender Offer |
0.06 | | ||||||
Net income, as adjusted, per diluted share |
$ | 0.24 | $ | 0.21 | ||||
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