VOL. 126 | NO. 215 | Thursday, November 03, 2011
By Aisling Maki
Updated 2:56PMArlington-based medical device maker Wright Medical Group Inc. has reported a 3 percent decrease in net sales for the third quarter, citing distributor changes and challenges connected to implementing enhancements to the company?s compliance processes.
The company said those challenges resulted in a slowdown in medical education as well as research and development projects, and that net sales results continue to be affected by procedure softness across all product lines.
Wright Medical?s net sales for the period ending Sept. 30 totaled $118.2 million, compared to $121.7 million during Q3 2010. Excluding the impact of foreign currency, net sales decreased 6 percent in Q3 from the same period last year.
Q3 net loss totaled $16 million or 42 cents per diluted share, compared with net income of $4.7 million or 12 cents per diluted share in Q3 2010. Q3 net loss included after-tax effects of $14 million in charges associated with a cost restructuring plan.
That plan included roughly $13.2 million in estimated liability for claims in connection with the company?s titanium Profemur long modular necks in North America; $5 million associated with a deferred prosecution agreement; $2.2 million in non-cash, stock-based compensation; and $2 million related to employment matters and the hiring of a new CEO.
Wright Medical?s net income as adjusted increased 7 percent to $7.7 million in Q3 from $7.3 million for the same period last year.
?We are clearly facing some challenges, which are reflected in our third-quarter results and our outlook for the remainder of the year,? Wright Medical President and CEO Robert Palmisano said in a statement. ?However, Wright Medical is a company with great promise. We have excellent products and technologies across our orthopedic businesses, and we are the recognized leader in the foot and ankle market.
?In addition, we have recently taken many positive steps to better position the company for success, including strengthening our compliance program and implementing a plan to reduce operational costs,? he continued.
Wright Medical updated its 2011 net sales outlook to $505 million from $509 million, representing annualized growth expectations of -3 to -2 percent compared with 2010.
The company in September announced plans to cut its workforce by 6 percent, or about 80 employees, part of a cost restructuring plan to promote growth and profitability and build shareholder value.
The first phase of that plan is expected to be completed over the next nine months, with additional phases of the effort to come in 2012 and beyond.
Also in September, Palmisano took over executive leadership of the company from David D. Stevens, who had been serving as interim president and CEO following the April resignation of Gary D. Henley.
Henley stepped down from the position prior to a board of directors meeting called to discuss management?s oversight of the company?s ongoing compliance program.
The board deemed Henley?s resignation to be without ?good reason? under the terms of his employment agreement, making him ineligible for severance.
Wright Medical at the same time announced the termination of Frank S. Bono, the company?s senior vice president and chief technology officer, for failing to exhibit appropriate regard for Wright?s ongoing compliance program.
Source: http://www.memphisdailynews.com/news/2011/nov/3/wrights-q3-net-sales-drop-3-pct/
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