Full-Year 2016 Net Sales of $690 Million
As Reported Exceeds High-End Of Company’s Previously Provided 2016
Guidance Range
Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial
results for its fourth quarter and full-year ended December
25, 2016 and provided 2017 guidance.
As a result of the previously announced sale of the large joints
(hip/knee) business to Corin Orthopaedics Holdings Limited (Corin),
this business which was previously reported as a separate reporting
segment is now reported as discontinued operations. In addition, as
a result of the merger between Wright Medical Group, Inc. and
Tornier N.V. on October 1, 2015, legacy Wright’s historical
results of operations replaced legacy Tornier’s historical results
of operations for all periods prior to the merger and the results
of the two legacy businesses have been consolidated only from that
date forward in accordance with United States generally accepted
accounting principles (GAAP). This release and Wright’s website at
ir.wright.com contain certain unaudited non-GAAP combined pro forma
financial results for Wright Medical Group N.V. which give effect
to the merger as if it had occurred on the first day of fiscal
2015. In addition, following the closing of the merger, Wright
adopted legacy Tornier’s fiscal calendar, which resulted in four
fewer calendar days for the fourth quarter of 2015 than under the
legacy Wright fiscal calendar. Additionally, the Wright
business conformed its methodology for recognizing revenue to
legacy Tornier's methodology. The attached financial tables include
a reconciliation of U.S. GAAP to these non-GAAP financial
measures.
Net sales from continuing operations totaled $193.0 million
during the fourth quarter ended December 25, 2016, representing 16%
as reported growth. On a same sales day and constant currency
basis and excluding the impact of conforming Wright’s methodology
for recognizing revenue in the fourth quarter of 2015, non-GAAP
pro-forma global net sales grew 12%. Gross margins from
continuing operations were 73.8% during the quarter ended December
25, 2016 and were 77.6% on a non-GAAP adjusted basis.
Reconciliations of all historical non-GAAP financial measures used
in this release to the most comparable GAAP measures can be found
in the attached financial tables.
Robert Palmisano, president and chief executive officer,
commented, “We had a very good fourth quarter, and our full-year
results reflect the continued strong underlying growth and positive
momentum in all three of our high-growth businesses and our
leadership positions in these markets. Our pro forma constant
currency global sales growth of 12%, despite an estimated 3%
headwind from dis-synergies, was an acceleration from the third
quarter of 2016, and combined with earlier than anticipated
progress on capturing cost synergies, resulted in net sales and
positive adjusted EBITDA results that exceeded our
expectations. We drove significant overperformance on the top
and bottom line in 2016, and we believe we are well positioned to
continue driving high sales growth rates and EBITDA margin
expansion.”
Palmisano continued, “Highlights in the quarter included strong
contributions from our SIMPLICITI shoulder system and the ongoing
rollout of AUGMENT and the INFINITY total ankle replacement system,
which for the fourth quarter drove 14% sales growth in U.S.
shoulder replacement, 29% sales growth in U.S. biologics and 23%
sales growth in U.S. total ankle replacement.”
Palmisano further commented, “Our 2017 guidance assumes
continued strong underlying constant currency growth, driven by
successfully executing our SIMPLICITI and AUGMENT new product
launches, launching the PERFORM Reverse Shoulder and expanding the
U.S. sales force in order to realize our full potential. We
believe that the positive progress we saw in the fourth quarter is
setting us up well for continued strong revenue growth and
significant margin expansion in 2017 and beyond.”
Net loss from continuing operations for the fourth quarter of
2016 totaled $30.0 million, or $(0.29) per diluted share.
The company’s net loss from continuing operations for the fourth
quarter of 2016 included the after-tax effects of $6.8 million of
inventory step-up amortization, $8.4 million of transaction and
transition costs, a gain of $1.8 million related to mark-to-market
adjustments on derivatives, $10.8 million of non-cash interest
expense related to its convertible notes, and a $0.3 million
unrealized gain related to mark-to-market adjustments on contingent
value rights (CVRs) issued in connection with the BioMimetic
acquisition, as well as a $5.6 million tax benefit representing the
deferred tax effects associated with the acquired Tornier
operations.
The company's fourth quarter 2016 non-GAAP net loss from
continuing operations, as adjusted for the above items, was $13.8
million. The company's fourth quarter 2016 non-GAAP adjusted
EBITDA from continuing operations, as defined in the non-GAAP to
GAAP reconciliation provided later in this release, was $22.7
million. The attached financial tables include reconciliations of
all historical non-GAAP measures to the most comparable GAAP
measures.
Cash, cash equivalents and restricted cash totaled $412.3
million as of the end of the fourth quarter of 2016. This
amount includes $150 million classified as restricted cash on the
company’s balance sheet that is held in escrow to fund a portion of
the metal-on-metal hip litigation Master Settlement Agreement
(MSA). The company currently estimates the opt-in rate for
the MSA to be in excess of 98%, which is well above the 95%
requirement.
Palmisano concluded, “With the significant progress made in
2016, we are a stronger business that is now well positioned and
completely focused on the high-growth extremities and biologics
markets. While I am very pleased with what we accomplished in
2016, we are nowhere close to meeting our full potential, and we
continue to have great opportunities for revenue growth and cash
improvement. I believe we are positioned well for future
success and achieving our key financial goals of mid-teens constant
currency net sales growth, gross margins in the high 70% range and
non-GAAP adjusted EBITDA margins of approximately 20% three to four
years post the close of the merger.”
Outlook
The company anticipates net sales for full-year 2017 of
approximately $755 million to $765 million, representing an as
reported growth rate of 9% to 11%. This range assumes:
- a negative impact from foreign currency exchange rates as
compared to 2016 of approximately 2%;
- $10 million of net sales dis-synergies resulting from customers
lost over the course of 2016 due to the sales force
integrations;
- approximately $3 million of dis-synergies from the anticipated
divestiture of the international Salto ankle business;
and
- a positive impact of approximately 1% due to four extra selling
days in the fourth quarter of 2017.
The midpoint of this net sales guidance range assumes constant
currency growth of approximately 13%, excluding the negative
impacts of revenue dis-synergies and Salto divestiture of 2%, and
the approximately 1% positive impact of the extra selling
days. Additionally, the company anticipates the second half
of the year to grow faster than the first half of the year as it
realizes the benefits from its new product launches and sales force
expansion.
The company anticipates full-year 2017 non-GAAP adjusted EBITDA
from continuing operations, as described in the non-GAAP
reconciliation provided later in this release, of $78.5 million to
$85.5 million.
The company anticipates non-GAAP adjusted earnings per share
from continuing operations, including share-based compensation, as
described in the non-GAAP to GAAP reconciliation provided later in
this release, for full-year 2017 of $(0.33) to $(0.26) per diluted
share.
The company estimates approximately 104.5 million diluted
weighted average ordinary shares outstanding for fiscal year
2017.
The company's non-GAAP adjusted EBITDA from continuing
operations target is measured by adding back to net loss from
continuing operations charges for interest, income taxes,
depreciation and amortization expenses, non-cash share-based
compensation expense and non-operating income and expense.
Additionally, the company’s adjusted EBITDA from continuing
operations target excludes possible future acquisitions; other
material future business developments; and due diligence,
transaction and transition costs associated with acquisitions and
divestitures. Further, this adjusted EBITDA from continuing
operations target excludes any expenses, earnings or losses related
to the divested large joints business, legacy Wright’s divested
OrthoRecon business and legacy Tornier’s divested ankle replacement
and silastic toe products.
The company’s non-GAAP adjusted earnings per share from
continuing operations target is measured by adding back to net loss
from continuing operations non-cash interest expense associated
with the 2017, 2020 and 2021 convertible notes; due diligence,
transaction and transition costs associated with acquisitions and
divestitures; mark-to-market adjustments to CVRs; non-cash
mark-to-market derivative adjustments; and charges for non-cash
amortization expenses, net of taxes. Note that as a result of the
company’s relatively low effective tax rate due to the valuation
allowance impacting a substantial portion of the company’s
income/loss, the company is currently estimating the tax effect on
amortization expense at 0%. Further, this adjusted earnings per
share from continuing operations target excludes possible future
acquisitions; other material future business developments; and any
expenses, earnings or losses related to the large joints
business.
All of the historical non-GAAP financial measures used in this
release are reconciled to the most directly comparable GAAP
measures. With respect to the company’s 2017 financial guidance
regarding non-GAAP adjusted EBITDA from continuing operations and
non-GAAP adjusted earnings per share from continuing operations,
however, the company cannot provide a quantitative reconciliation
to the most directly comparable GAAP measures without unreasonable
effort due to its inability to make accurate projections and
estimates related to certain information needed to calculate some
of the adjustments as described above, including the market driven
fair value adjustments to CVRs and derivatives. The anticipated
differences between these non-GAAP financial measures and the most
directly comparable GAAP measure are described above
qualitatively.
The company's anticipated ranges for net sales from continuing
operations, non-GAAP adjusted EBITDA from continuing operations,
and non-GAAP adjusted earnings per share from continuing operations
are forward-looking statements, as are any other statements that
anticipate or aspire to future events or performance. They
are subject to various risks and uncertainties that could cause the
company's actual results to differ materially from the anticipated
targets. The anticipated targets are not predictions of the
company's actual performance. See the cautionary information
about forward-looking statements in the “Cautionary Note Regarding
Forward-Looking Statements” section of this release.
Supplemental Financial Information
To view the fourth quarter of 2016 supplemental financial
information, visit ir.wright.com. For updated information on
Wright Medical Group N.V. segment reporting changes and non-GAAP
combined pro forma historical financial information, including
fourth quarter of 2016, please refer to the presentation posted on
Wright’s website at ir.wright.com in the “Financial Information”
section.
Internet Posting of Information
Wright routinely posts information that may be important to
investors in the “Investor Relations” section of its website at
www.wright.com. The company encourages investors and
potential investors to consult the Wright website regularly for
important information about Wright.
Conference Call and Webcast
As previously announced, Wright will host a conference call
starting at 3:30 p.m. Central Time today. The live dial-in
number for the call is (844) 295-9436 (U.S.) / (574) 990-1040
(Outside U.S.). The participant passcode for the call is
“Wright.” A simultaneous webcast of the call will be
available via Wright’s corporate website at www.wright.com.
A replay of the call will be available beginning at 5:30 p.m.
Central Time on February 21, 2017 through February 28, 2017.
To hear this replay, dial (855) 859-2056 (U.S.) / (404) 537-3406
(Outside U.S.) and enter code 43718210. A replay of the
conference call will also be available via the internet starting
today and continuing for at least 12 months. To access a
replay of the conference call via the internet, go to the Investor
Relations -Presentations/Calendar” section of the company’s
corporate website located at www.wright.com.
The conference call may include a discussion of non-GAAP
financial measures. Reference is made to the most directly
comparable GAAP financial measures, the reconciliation of the
differences between the two financial measures, and the other
information included in this release, the Current Report on Form
8-K filed with the U.S. Securities and Exchange Commission (SEC)
today, or otherwise available in the “Investor Relations -
Supplemental Financial Information” section of the company's
corporate website located at www.wright.com.
The conference call may include forward-looking
statements. See the cautionary information about
forward-looking statements in the “Cautionary Note Regarding
Forward-Looking Statements” section of this release.
About Wright Medical Group N.V.
Wright Medical Group N.V. is a global medical device company
focused on extremities and biologics products. The company is
committed to delivering innovative, value-added solutions improving
quality of life for patients worldwide and is a recognized leader
of surgical solutions for the upper extremities (shoulder, elbow,
wrist and hand), lower extremities (foot and ankle) and biologics
markets, three of the fastest growing segments in
orthopaedics. For more information about Wright, visit
www.wright.com.
™ and ® denote trademarks and registered trademarks of Wright
Medical Group N.V. or its affiliates, registered as indicated
in the United States, and in other countries. All other
trademarks and trade names referred to in this release are the
property of their respective owners.
Non-GAAP Financial Measures
To supplement the company’s consolidated financial statements
prepared in accordance with U.S. generally accepted accounting
principles, the company uses certain non-GAAP financial measures in
this release. Reconciliations of the historical non-GAAP financial
measures used in this release to the most comparable GAAP measures
for the respective periods can be found in tables later in this
release. Wright’s non-GAAP financial measures include combined pro
forma net sales; combined pro forma net sales, excluding the impact
of foreign currency; adjusted average sales per day (ASPD);
adjusted combined pro forma ASPD; net income, as adjusted; EBITDA,
as adjusted; gross margin, as adjusted; earnings, as adjusted; and
earnings, as adjusted, per diluted share, in each case, from
continuing operations. The company's management believes that the
presentation of these measures provides useful information to
investors. These measures may assist investors in evaluating
the company's operations, period over period. While pro forma data
gives effect to the merger with Tornier as if it had occurred on
the first day of fiscal 2015 and enhances comparability of
financial information between periods, pro forma data is not
indicative of the results that actually would have been obtained if
the merger had occurred as of the beginning of 2015. Wright’s
non-GAAP financial measures exclude such items as non-cash interest
expense related to the company's 2017 convertible notes, 2020
convertible notes and 2021 convertible notes, net gains and losses
on mark-to-market adjustments on and settlements of derivative
assets and liabilities, write-off of unamortized debt discount and
deferred financing charges following the partial settlement of 2017
convertible notes and 2020 convertible notes, mark-to-market
adjustments on CVRs, and transaction and transition costs, all of
which may be highly variable, difficult to predict and of a size
that could have substantial impact on the company's reported
results of operations for a period. It is for this reason
that the company cannot provide without unreasonable effort a
quantitative reconciliation to the most directly comparable GAAP
measures for its 2017 financial guidance regarding non-GAAP
adjusted EBITDA from continuing operations and non-GAAP adjusted
earnings per share from continuing operations. Management uses the
non-GAAP measures in this release 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 non-GAAP
financial 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 release includes forward-looking statements under the
Private Securities Litigation Reform Act of 1995.
These forward-looking statements generally can be identified
by the use of words such as “anticipate,” “expect,” “intend,”
“could,” “may,” “will,” “believe,” “estimate,” “look forward,”
“forecast,” “goal,” “target,” “project,” “continue,”
“outlook,” “guidance,” “future,” other words of similar meaning and
the use of future dates. Forward-looking statements in this
release include, but are not limited to, statements about the
company’s anticipated financial results for 2017, including
net sales from continuing operations, adjusted EBITDA
from continuing operations and adjusted earnings per share
from continuing operations; anticipated sales and
cost synergies and dis-synergies and the timing thereof; the
company’s expectations regarding the benefits of its
merger with Tornier and integration efforts and progress; and
the company’s ability to achieve its key financial goals.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. Each forward-looking
statement contained in this release is subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statement. Applicable risks
and uncertainties include, among others, the failure to integrate
the businesses and realize net sales synergies and cost savings
from the merger with Tornier or delay in realization thereof;
operating costs and business disruption as a result of the merger,
including adverse effects on employee retention and sales force
productivity and on business relationships with third parties;
integration costs; actual or contingent liabilities; adverse
effects of diverting resources and attention to providing
transition services to the purchaser of the large joints business;
the adequacy of the company’s capital resources and need for
additional financing; the timing of regulatory approvals and
introduction of new products; physician acceptance, endorsement,
and use of new products; failure to achieve the anticipated
benefits from approval of AUGMENT® Bone Graft; the effect of
regulatory actions, changes in and adoption of reimbursement rates;
product liability claims and product recalls; pending and
threatened litigation; risks associated with the metal-on-metal
master settlement agreement and the settlement agreement with the
three settling insurers; risks associated with international
operations and expansion; fluctuations in foreign currency exchange
rates; other business effects, including the effects of industry,
economic or political conditions outside of the company’s control;
reliance on independent distributors and sales agencies; competitor
activities; changes in tax and other legislation; and the risks
identified under the heading “Risk Factors” in Wright’s Annual
Report on Form 10-K for the year ended December 25, 2016
anticipated to be filed by Wright with the SEC by February 23,
2017. Investors should not place considerable reliance on the
forward-looking statements contained in this
release. Investors are encouraged to read Wright’s filings
with the SEC, available at www.sec.gov, for a discussion of
these and other risks and uncertainties. The forward-looking
statements in this release speak only as of the date of
this release, and Wright undertakes no obligation to update or
revise any of these statements. Wright’s business is subject
to substantial risks and uncertainties, including those referenced
above. Investors, potential investors, and others should give
careful consideration to these risks and uncertainties.
--Tables Follow--
|
|
Wright Medical Group N.V.Condensed
Consolidated Statements of Operations (in thousands, except
per share data--unaudited) |
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 27, 2015 |
|
December 25, 2016 |
|
December 27, 2015 |
Net sales 1 |
$ |
193,023 |
|
|
$ |
166,833 |
|
|
$ |
690,362 |
|
|
$ |
405,326 |
|
Cost of sales 1 |
50,583 |
|
|
49,810 |
|
|
192,407 |
|
|
113,622 |
|
Gross
profit 1 |
142,440 |
|
|
117,023 |
|
|
497,955 |
|
|
291,704 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative 1 |
140,489 |
|
|
173,576 |
|
|
541,558 |
|
|
424,377 |
|
Research
and development 1 |
13,809 |
|
|
14,695 |
|
|
50,514 |
|
|
39,339 |
|
Amortization of intangible assets 1 |
7,434 |
|
|
9,013 |
|
|
28,841 |
|
|
16,754 |
|
Total
operating expenses 1 |
161,732 |
|
|
197,284 |
|
|
620,913 |
|
|
480,470 |
|
Operating
loss 1 |
(19,292 |
) |
|
(80,261 |
) |
|
(122,958 |
) |
|
(188,766 |
) |
Interest expense,
net |
16,857 |
|
|
11,565 |
|
|
58,530 |
|
|
41,358 |
|
Other expense (income),
net |
346 |
|
|
3,489 |
|
|
(3,148 |
) |
|
10,884 |
|
Loss from
continuing operations before income taxes 1 |
(36,495 |
) |
|
(95,315 |
) |
|
(178,340 |
) |
|
(241,008 |
) |
Provision (benefit) for
income taxes |
(6,493 |
) |
|
(4,163 |
) |
|
(13,406 |
) |
|
(3,652 |
) |
Net loss
from continuing operations 1 |
$ |
(30,002 |
) |
|
$ |
(91,152 |
) |
|
$ |
(164,934 |
) |
|
$ |
(237,356 |
) |
Loss from discontinued
operations, net of tax 1 |
(14,874 |
) |
|
$ |
(14,624 |
) |
|
$ |
(267,439 |
) |
|
$ |
(61,345 |
) |
Net loss
1 |
$ |
(44,876 |
) |
|
$ |
(105,776 |
) |
|
$ |
(432,373 |
) |
|
$ |
(298,701 |
) |
|
|
|
|
|
|
|
|
Net loss from
continuing operations per share, basic 2 |
$ |
(0.29 |
) |
|
$ |
(0.89 |
) |
|
$ |
(1.60 |
) |
|
$ |
(3.66 |
) |
Net loss from
continuing operations per share, diluted 2 |
$ |
(0.29 |
) |
|
$ |
(0.89 |
) |
|
$ |
(1.60 |
) |
|
$ |
(3.66 |
) |
|
|
|
|
|
|
|
|
Net loss per share,
basic 2 |
$ |
(0.43 |
) |
|
$ |
(1.03 |
) |
|
$ |
(4.20 |
) |
|
$ |
(4.61 |
) |
Net loss per share,
diluted 2 |
$ |
(0.43 |
) |
|
$ |
(1.03 |
) |
|
$ |
(4.20 |
) |
|
$ |
(4.61 |
) |
|
|
|
|
|
|
|
|
Weighted-average number
of shares outstanding-basic 2 |
103,309 |
|
|
102,659 |
|
|
102,968 |
|
|
64,808 |
|
Weighted-average number
of shares outstanding-diluted 2 |
103,309 |
|
|
102,659 |
|
|
102,968 |
|
|
64,808 |
|
_______________________________
1 The prior year balances were revised to reflect the
historical results of the company’s Large Joints business within
Loss from discontinued operations, net of tax.
2 The prior year weighted-average shares outstanding and net
loss per share amounts were converted to meet post-merger
valuations.
|
Wright Medical Group
N.V.Consolidated Sales Analysis(dollars
in thousands--unaudited) |
|
|
|
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 27, 2015 |
|
%change |
|
December 25, 2016 |
|
December 27, 2015 |
|
%change |
U.S. |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
64,064 |
|
|
58,819 |
|
|
8.9 |
% |
|
222,936 |
|
|
187,096 |
|
|
19.2 |
% |
Upper
extremities |
55,462 |
|
|
47,053 |
|
|
17.9 |
% |
|
201,579 |
|
|
58,756 |
|
|
243.1 |
% |
Biologics |
21,436 |
|
|
15,971 |
|
|
34.2 |
% |
|
74,603 |
|
|
50,583 |
|
|
47.5 |
% |
Sports
med & other |
2,103 |
|
|
1,830 |
|
|
14.9 |
% |
|
8,429 |
|
|
3,388 |
|
|
148.8 |
% |
Total
U.S. |
$ |
143,065 |
|
|
$ |
123,673 |
|
|
15.7 |
% |
|
$ |
507,547 |
|
|
$ |
299,823 |
|
|
69.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
16,717 |
|
|
15,887 |
|
|
5.2 |
% |
|
62,701 |
|
|
51,200 |
|
|
22.5 |
% |
Upper
extremities |
24,261 |
|
|
19,066 |
|
|
27.2 |
% |
|
86,502 |
|
|
24,789 |
|
|
249.0 |
% |
Biologics |
5,079 |
|
|
4,582 |
|
|
10.8 |
% |
|
18,883 |
|
|
19,652 |
|
|
(3.9 |
)% |
Sports
med & other |
3,901 |
|
|
3,625 |
|
|
7.6 |
% |
|
14,729 |
|
|
9,862 |
|
|
49.4 |
% |
Total
International |
$ |
49,958 |
|
|
$ |
43,160 |
|
|
15.8 |
% |
|
$ |
182,815 |
|
|
$ |
105,503 |
|
|
73.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Global |
|
|
|
|
|
|
|
|
|
|
|
Lower
extremities |
80,781 |
|
|
74,706 |
|
|
8.1 |
% |
|
285,637 |
|
|
238,296 |
|
|
19.9 |
% |
Upper
extremities |
79,723 |
|
|
66,119 |
|
|
20.6 |
% |
|
288,081 |
|
|
83,545 |
|
|
244.8 |
% |
Biologics |
26,515 |
|
|
20,553 |
|
|
29.0 |
% |
|
93,486 |
|
|
70,235 |
|
|
33.1 |
% |
Sports
med & other |
6,004 |
|
|
5,455 |
|
|
10.1 |
% |
|
23,158 |
|
|
13,250 |
|
|
74.8 |
% |
Total
sales |
$ |
193,023 |
|
|
$ |
166,833 |
|
|
15.7 |
% |
|
$ |
690,362 |
|
|
$ |
405,326 |
|
|
70.3 |
% |
Wright Medical Group
N.V.Reconciliation of Non-GAAP Combined Pro Forma
Net Sales to Net Sales(dollars in
thousands--unaudited) |
|
|
Three months ended |
|
December 27, 2015 |
|
Net SalesAs
Reported |
|
Legacy Tornier Stub Period
(September 28, 2015 - September 30, 2015) 1 |
|
Legacy Tornier Net Sales
Divested 2 |
|
Non-GAAP combined pro forma net
sales |
U.S. |
|
|
|
|
|
|
|
Lower
extremities |
$ |
58,819 |
|
|
$ |
279 |
|
|
$ |
— |
|
|
$ |
59,098 |
|
Upper
extremities |
47,053 |
|
|
1,773 |
|
|
— |
|
|
48,826 |
|
Biologics |
15,971 |
|
|
66 |
|
|
— |
|
|
16,037 |
|
Sports
med & other |
1,830 |
|
|
4 |
|
|
— |
|
|
1,834 |
|
Total
extremities & biologics |
123,673 |
|
|
2,122 |
|
|
— |
|
|
125,795 |
|
Large
joint |
— |
|
|
— |
|
|
— |
|
|
— |
|
Total
U.S. |
$ |
123,673 |
|
|
$ |
2,122 |
|
|
$ |
— |
|
|
$ |
125,795 |
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
Lower
extremities |
$ |
15,887 |
|
|
$ |
152 |
|
|
$ |
— |
|
|
$ |
16,039 |
|
Upper
extremities |
19,066 |
|
|
1,260 |
|
|
— |
|
|
20,326 |
|
Biologics |
4,582 |
|
|
13 |
|
|
— |
|
|
4,595 |
|
Sports
med & other |
3,625 |
|
|
132 |
|
|
— |
|
|
3,757 |
|
Total
extremities & biologics |
43,160 |
|
|
1,557 |
|
|
— |
|
|
44,717 |
|
Large
joint |
— |
|
|
753 |
|
|
(753 |
) |
|
— |
|
Total
International |
$ |
43,160 |
|
|
$ |
2,310 |
|
|
$ |
(753 |
) |
|
$ |
44,717 |
|
|
|
|
|
|
|
|
|
Global |
|
|
|
|
|
|
|
Lower
extremities |
$ |
74,706 |
|
|
$ |
431 |
|
|
$ |
— |
|
|
$ |
75,137 |
|
Upper
extremities |
66,119 |
|
|
3,033 |
|
|
— |
|
|
69,152 |
|
Biologics |
20,553 |
|
|
79 |
|
|
— |
|
|
20,632 |
|
Sports
med & other |
5,455 |
|
|
136 |
|
|
— |
|
|
5,591 |
|
Total
extremities & biologics |
166,833 |
|
|
3,679 |
|
|
— |
|
|
170,512 |
|
Large
joint |
— |
|
|
753 |
|
|
(753 |
) |
|
— |
|
Total net
sales |
$ |
166,833 |
|
|
$ |
4,432 |
|
|
$ |
(753 |
) |
|
$ |
170,512 |
|
_______________________________
1 To add revenues from Legacy Tornier's fourth quarter for
the period prior to the merger closing date when operations became
consolidated.
2 To reduce from Tornier’s historical sales the global
sales associated with Tornier's Large Joints business that have
been reflected in discontinued operations.
|
Wright Medical Group
N.V.Reconciliation of Non-GAAP Combined Pro Forma
Net Sales to Net Sales(dollars in
thousands--unaudited) |
|
|
Fiscal year ended |
|
December 27, 2015 |
|
Net SalesAs
Reported |
|
Legacy Tornier N.V. standalone nine months
ended September 27, 2015 1 |
|
Legacy Tornier stub period
(September 28, 2015 - September 30, 2015) 2 |
|
Legacy Tornier Net Sales Divested
3 |
|
Non-GAAP CombinedPro
FormaNet Sales |
U.S. |
|
|
|
|
|
|
|
|
|
Lower
extremities |
187,096 |
|
|
29,637 |
|
|
279 |
|
|
(9,733 |
) |
|
207,279 |
|
Upper
extremities |
58,756 |
|
|
115,846 |
|
|
1,773 |
|
|
— |
|
|
176,375 |
|
Biologics |
50,583 |
|
|
1,290 |
|
|
66 |
|
|
— |
|
|
51,939 |
|
Sports
med & other |
3,388 |
|
|
5,021 |
|
|
4 |
|
|
— |
|
|
8,413 |
|
Total
extremities & biologics |
299,823 |
|
|
151,794 |
|
|
2,122 |
|
|
(9,733 |
) |
|
444,006 |
|
Large
joint |
— |
|
|
119 |
|
|
— |
|
|
(119 |
) |
|
— |
|
Total
U.S. |
$ |
299,823 |
|
|
$ |
151,913 |
|
|
$ |
2,122 |
|
|
$ |
(9,852 |
) |
|
$ |
444,006 |
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
Lower
extremities |
51,200 |
|
|
7,402 |
|
|
152 |
|
|
— |
|
|
58,754 |
|
Upper
extremities |
24,789 |
|
|
51,293 |
|
|
1,260 |
|
|
— |
|
|
77,342 |
|
Biologics |
19,652 |
|
|
357 |
|
|
13 |
|
|
— |
|
|
20,022 |
|
Sports
med & other |
9,862 |
|
|
5,372 |
|
|
132 |
|
|
— |
|
|
15,366 |
|
Total
extremities & biologics |
105,503 |
|
|
64,424 |
|
|
1,557 |
|
|
— |
|
|
171,484 |
|
Large
joint |
— |
|
|
29,921 |
|
|
753 |
|
|
(30,674 |
) |
|
— |
|
Total
International |
$ |
105,503 |
|
|
$ |
94,345 |
|
|
$ |
2,310 |
|
|
$ |
(30,674 |
) |
|
$ |
171,484 |
|
|
|
|
|
|
|
|
|
|
|
Global |
|
|
|
|
|
|
|
|
|
Lower
extremities |
238,296 |
|
|
37,039 |
|
|
431 |
|
|
(9,733 |
) |
|
266,033 |
|
Upper
extremities |
83,545 |
|
|
167,139 |
|
|
3,033 |
|
|
— |
|
|
253,717 |
|
Biologics |
70,235 |
|
|
1,647 |
|
|
79 |
|
|
— |
|
|
71,961 |
|
Sports
med & other |
13,250 |
|
|
10,393 |
|
|
136 |
|
|
— |
|
|
23,779 |
|
Total
extremities & biologics |
405,326 |
|
|
216,218 |
|
|
3,679 |
|
|
(9,733 |
) |
|
615,490 |
|
Large
joint |
— |
|
|
30,040 |
|
|
753 |
|
|
(30,793 |
) |
|
— |
|
Total
sales |
$ |
405,326 |
|
|
$ |
246,258 |
|
|
$ |
4,432 |
|
|
$ |
(40,526 |
) |
|
$ |
615,490 |
|
_______________________________
1 Legacy Tornier product line sales have been recast to
reflect the reclassification of cement, instruments and freight
from the historical Tornier product line "Large Joints and Other"
to the product line associated with those revenues that will be
utilized for future revenue reporting.
2 To add revenues from Legacy Tornier's fourth quarter for
the period prior to the merger closing date when operations became
consolidated.
3 To reduce from Tornier’s historical sales the U.S. sales
associated with Tornier’s Salto Talaris and Salto XT ankle
replacement products and silastic toe replacement products that
were divested prior to the merger and the global sales associated
with Tornier's Large Joints business that have been reflected in
discontinued operations.
|
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted Combined
Pro Forma Average Sales per Day to Average Sales per
Day(dollars in thousands--unaudited) |
|
|
Three months ended |
|
December 25, 2016 |
|
U.S. |
|
International |
|
Global |
Net sales |
$ |
143,065 |
|
|
$ |
49,958 |
|
|
$ |
193,023 |
|
|
|
|
|
|
|
Average sales per day
(ASPD) |
$ |
2,308 |
|
|
$ |
769 |
|
|
$ |
3,077 |
|
|
|
|
|
|
|
|
|
|
ASPD growth % |
8.3 |
% |
|
10.5 |
% |
|
8.8 |
% |
|
|
|
|
|
|
|
|
|
Impact of foreign
currency exchange rates (FX) 1 |
— |
|
|
1,695 |
|
|
1,695 |
|
Non-GAAP net
sales, excluding the impact of FX |
$ |
143,065 |
|
|
$ |
51,653 |
|
|
$ |
194,718 |
|
|
|
|
|
|
|
Selling days |
62 |
|
|
65 |
|
|
|
|
|
|
|
|
|
Non-GAAP ASPD,
excluding the impact of FX |
$ |
2,308 |
|
|
$ |
795 |
|
|
$ |
3,103 |
|
|
|
|
|
|
|
Non-GAAP pro
forma ASPD constant currency growth % 2 |
11.4 |
% |
|
12.9 |
% |
|
11.8 |
% |
|
Three months ended |
|
December 27, 2015 |
|
U.S. |
|
International |
|
Global |
Legacy Wright |
$ |
72,121 |
|
|
$ |
21,444 |
|
|
$ |
93,565 |
|
Legacy Tornier |
51,552 |
|
|
21,716 |
|
|
73,268 |
|
Net sales, as
reported |
$ |
123,673 |
|
|
$ |
43,160 |
|
|
$ |
166,833 |
|
|
|
|
|
|
|
ASPD |
$ |
2,132 |
|
|
$ |
696 |
|
|
$ |
2,828 |
|
|
|
|
|
|
|
Legacy Tornier stub
period (September 28, 2015 - September 30, 2015) 3 |
2,122 |
|
|
1,557 |
|
|
3,679 |
|
Non-GAAP pro
forma legacy Tornier |
$ |
53,674 |
|
|
$ |
23,273 |
|
|
$ |
76,947 |
|
|
|
|
|
|
|
Legacy Wright impact of
revenue recognition 4 |
(2,994 |
) |
|
— |
|
|
(2,994 |
) |
Non-GAAP
adjusted legacy Wright |
$ |
69,127 |
|
|
$ |
21,444 |
|
|
$ |
90,571 |
|
|
|
|
|
|
|
Legacy Tornier selling
days |
61 |
|
|
65 |
|
|
|
Legacy Wright selling
days |
58 |
|
|
62 |
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted combined pro forma ASPD 5 |
$ |
2,072 |
|
|
$ |
704 |
|
|
$ |
2,776 |
|
_______________________________
1 The impact of FX on net sales is calculated by translating
current year results at prior year average foreign currency
exchange rates.
2 Reflects growth of Q4 2016 Non-GAAP ASPD, excluding the
impact of FX, over the Q4 2015 Non-GAAP adjusted combined pro forma
ASPD.
3 To add revenues from Legacy Tornier's fourth quarter for
the period prior to merger closing date when operations became
consolidated.
4 Legacy Wright recognized approximately $3 million during
the fourth quarter of 2015, as result of conforming its methodology
for revenue recognition with Legacy Tornier.
5 Legacy Wright and Legacy Tornier have historically
operated on different fiscal periods. In order to calculate pro
forma sales growth, we have calculated average sales per day based
on the respective legacy company and the associated geographic
region, then added the legacy company ASPD together.
[Example: Q4 2015 Pro Forma Legacy Tornier U.S. Sales / Legacy
Tornier U.S. Selling Days = $880K. Q4 2015 Adjusted Legacy Wright
U.S. Sales / Legacy Wright U.S. Selling Days = $1,192K. Adjusted
Pro Forma Combined Average Sales per Day = $2,072K]
|
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted Gross
Margins to Gross Margins from Continuing
Operations (dollars in
thousands--unaudited) |
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 25, 2016 |
Gross profit
from continuing operations, as reported |
$ |
142,440 |
|
|
$ |
497,955 |
|
Gross margins
from continuing operations, as reported |
73.8 |
% |
|
72.1 |
% |
Reconciling items
impacting gross profit: |
|
|
|
Inventory
step-up amortization |
6,767 |
|
|
37,689 |
|
Transaction and transition costs |
547 |
|
|
4,198 |
|
Non-GAAP gross
profit from continuing operations, as adjusted |
$ |
149,754 |
|
|
$ |
539,842 |
|
Net sales
from continuing operations |
193,023 |
|
|
690,362 |
|
Non-GAAP
adjusted gross margins from continuing operations |
77.6 |
% |
|
78.2 |
% |
Wright Medical Group
N.V.Reconciliation of Adjusted Non-GAAP Earnings Per Share
to Net Loss from Continuing Operations Per
Share (dollars in thousands, except per share
data--unaudited) |
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 25, 2016 |
Net loss from
continuing operations, as reported |
$ |
(30,002 |
) |
|
$ |
(164,934 |
) |
Net loss from
continuing operations per share, as reported |
(0.29 |
) |
|
(1.60 |
) |
Reconciling items: |
|
|
|
Inventory
step-up amortization |
6,767 |
|
|
37,689 |
|
Non-cash
interest expense on convertible notes |
10,755 |
|
|
36,567 |
|
Non-cash
loss on extinguishment of debt |
— |
|
|
12,343 |
|
Derivatives mark-to-market adjustments |
(1,813 |
) |
|
(28,273 |
) |
Transaction and transition costs |
8,422 |
|
|
36,374 |
|
Management changes |
— |
|
|
1,348 |
|
CVR
mark-to-market adjustments |
(280 |
) |
|
8,688 |
|
Contingent consideration fair value adjustment |
93 |
|
|
469 |
|
Legal
settlement |
— |
|
|
1,800 |
|
Costs
associated with new convertible debt |
— |
|
|
234 |
|
IRS
settlement 1 |
— |
|
|
(3,073 |
) |
Tax
effect of reconciling items 2 |
(2,114 |
) |
|
(7,748 |
) |
Deferred
tax benefit from acquired operations |
(5,598 |
) |
|
(5,598 |
) |
Non-GAAP net
loss from continuing operations, as adjusted |
$ |
(13,770 |
) |
|
$ |
(74,114 |
) |
Add back
amortization of intangible assets |
7,434 |
|
|
28,841 |
|
Adjusted
non-GAAP earnings |
$ |
(6,336 |
) |
|
$ |
(45,273 |
) |
Weighted-average basic shares outstanding |
103,309 |
|
|
102,968 |
|
Adjusted
non-GAAP earnings per share |
$ |
(0.06 |
) |
|
$ |
(0.44 |
) |
_______________________________
1 IRS settlement includes $0.8 million of interest
income and $2.3 million tax benefit.
2 Determined based upon the effective tax rate in the
jurisdiction in which the expense was incurred.
|
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted EBITDA to
Net Loss from Continuing
Operations (dollars in
thousands--unaudited) |
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 25, 2016 |
Net loss from
continuing operations |
$ |
(30,002 |
) |
|
$ |
(164,934 |
) |
Interest expense,
net |
16,857 |
|
|
58,530 |
|
Benefit (provision)
from income taxes |
(6,493 |
) |
|
(13,406 |
) |
Depreciation |
14,825 |
|
|
55,830 |
|
Amortization |
7,434 |
|
|
28,841 |
|
Non-GAAP
EBITDA |
$ |
2,621 |
|
|
$ |
(35,139 |
) |
Reconciling items
impacting EBITDA: |
|
|
|
Non-cash
share-based compensation expense |
4,515 |
|
|
14,416 |
|
Other
expense (income), net |
346 |
|
|
(3,148 |
) |
Inventory
step-up amortization |
6,767 |
|
|
37,689 |
|
Transaction and transition costs |
8,422 |
|
|
36,374 |
|
Management changes |
— |
|
|
1,348 |
|
Legal
settlement |
— |
|
|
1,800 |
|
Costs
associated with new convertible debt |
— |
|
|
234 |
|
Non-GAAP
adjusted EBITDA |
$ |
22,671 |
|
|
$ |
53,574 |
|
Net sales
from continuing operations |
193,023 |
|
|
690,362 |
|
Non-GAAP
adjusted EBITDA margin |
11.7 |
% |
|
7.8 |
% |
Wright Medical Group
N.V.Reconciliation of Other Non-GAAP Financial
Measures to Other As Reported
Results (dollars in
thousands--unaudited) |
|
|
Three months ended |
|
Fiscal year ended |
|
December 25, 2016 |
|
December 25, 2016 |
Net
sales |
$ |
193,023 |
|
|
$ |
690,362 |
|
|
|
|
|
Selling,
general and administrative expense, as reported |
$ |
140,489 |
|
|
$ |
541,558 |
|
Selling, general and
administrative expense as a percentages of net sales, as
reported |
72.8 |
% |
|
78.4 |
% |
Reconciling items
impacting selling, general and administrative expense: |
|
|
|
Transaction and transition costs - selling, general and
administrative |
7,948 |
|
|
31,860 |
|
Management changes |
— |
|
|
1,348 |
|
Legal
settlement |
— |
|
|
1,800 |
|
Costs
associated with new convertible debt |
— |
|
|
234 |
|
Selling,
general and administrative expense, as adjusted |
$ |
132,541 |
|
|
$ |
506,316 |
|
Selling,
general and administrative expense as a percentage of net sales, as
adjusted |
68.7 |
% |
|
73.3 |
% |
|
|
|
|
Research &
development expense, as reported |
$ |
13,809 |
|
|
$ |
50,514 |
|
Research &
development expense as a percentages of net sales, as reported |
7.2 |
% |
|
7.3 |
% |
Reconciling items
impacting research & development expense: |
|
|
|
Transaction and transition costs - research & development |
(73 |
) |
|
316 |
|
Research &
development expense, as adjusted |
$ |
13,882 |
|
|
$ |
50,198 |
|
Research &
development expense as a percentage of net sales, as
adjusted |
7.2 |
% |
|
7.3 |
% |
Wright Medical Group
N.V.Condensed Consolidated Balance
Sheets(dollars in thousands--unaudited) |
|
|
December 25, 2016 |
|
December 27, 2015 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
262,265 |
|
|
$ |
139,804 |
|
Restricted cash |
150,000 |
|
|
— |
|
Accounts
receivable, net |
130,602 |
|
|
131,050 |
|
Inventories 1 |
150,849 |
|
|
210,701 |
|
Prepaid
expenses and other current assets 1 |
65,909 |
|
|
59,842 |
|
Current
assets held for sale 1 |
— |
|
|
18,487 |
|
Total
current assets |
759,625 |
|
|
559,884 |
|
|
|
|
|
Property, plant and
equipment, net 1 |
201,732 |
|
|
224,256 |
|
Goodwill and intangible
assets, net 1 |
1,082,839 |
|
|
1,117,917 |
|
Other assets 2 |
246,390 |
|
|
139,754 |
|
Other assets held for
sale 1 |
— |
|
|
31,683 |
|
Total
assets 1, 2 |
$ |
2,290,586 |
|
|
$ |
2,073,494 |
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
32,866 |
|
|
$ |
30,904 |
|
Accrued
expenses and other current liabilities 1 |
407,704 |
|
|
171,171 |
|
Current
portion of long-term obligations |
33,948 |
|
|
2,171 |
|
Current
liabilities held for sale 1 |
— |
|
|
2,692 |
|
Total
current liabilities |
474,518 |
|
|
206,938 |
|
Long-term obligations
2 |
780,407 |
|
|
561,201 |
|
Other liabilities |
348,797 |
|
|
250,329 |
|
Total
liabilities 1, 2 |
1,603,722 |
|
|
1,018,468 |
|
|
|
|
|
Shareholders'
equity |
686,864 |
|
|
1,055,026 |
|
Total
liabilities and shareholders' equity 1, 2 |
$ |
2,290,586 |
|
|
$ |
2,073,494 |
|
_______________________________
1 The prior period balances exclude amounts
associated with the company’s Large Joints business, as these
amounts are classified as held for sale at December 27, 2015.
2 The prior period debt issuance costs were reclassified to
account for adoption of ASU 2015-03 and ASU 2015-15.
Investors & Media:
Julie D. Tracy
Sr. Vice President, Chief Communications Officer
Wright Medical Group N.V.
(901) 290-5817
julie.tracy@wright.com
Wright Medical Group NV (NASDAQ:WMGI)
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