Wright Medical Sees Broader Loss

Zacks Equity Research

Wright Medical Group, Inc. (WMGI) posted a broader loss of $8.2 million or 18 cents per share in the third quarter of the year compared with $1.6 million or 4 cents in the same quarter of 2012. With this, earnings meet the Zacks Consensus Estimate.

Reported net loss was $124.5 million or $2.68 per share, compared with $4.1 million or 11 cents in the third quarter of 2012. Net revenues increased 13.3% (14% in constant currency) to $57.6 million during the quarter, exceeding the Zacks Consensus Estimate of $56.0 million.

Gross profit rose 11.3% to $43.6 million from $39.2 million a year ago but gross margin decreased 200 basis points (bps) to 75.6% from 77% a year ago. Adjusted operating loss significantly increased to $11.5 million from $1.0 million a year ago. Adjusted operating (loss) margin rose to 19.9% from 2.0% a year ago.

WMGI had cash and cash equivalents and marketable securities of $279.2 million as of Sep 30, 2013, down from $333.0 million as of Dec 31, 2012 due to the closing of the BioMimetic transaction and expenses associated with the MicroPort transaction. Long-term obligations rose to $265.0 million from $258.5 million as of Dec 31, 2012.

In the first nine months of the year, cash flow from operations declined significantly to $5.7 million from $57.8 million in the same period a year ago. Capital expenditures increased 69.4% to $22.5 million from $13.3 million a year ago.

Wright Medical narrowed its revenue guidance for 2013 to $237–$240 million from $235–$240 million, which has incorporated short-term dis-synergies due to the previously announced transaction with MicroPort. However, WMGI reiterated its adjusted earnings per share guidance of a loss of 55 to 59 cents, based on approximately 45.3 million shares outstanding.

Arlington, Tenn.-based Wright Medical Group is a global orthopaedic device company specializing in the design, manufacture and marketing of reconstructive joint devices and bio-orthopaedic materials. Currently, WMGI retains a Zacks Rank #3 (Hold).

Other medical stocks that are performing well include Bio-Rad Laboratories, Inc. (BIO), Hill-Rom Holdings, Inc. (HRC), and INSYS Therapeutics, Inc. (INSY). All of them carry a Zacks Rank #1 (Strong Buy).
 

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