Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial
results for its first quarter ended March 31, 2019 and
reiterated its 2019 annual guidance. Unless otherwise noted,
all net sales growth rates in this release are stated on a constant
currency basis.
Net sales totaled $230.1 million during the first quarter ended
March 31, 2019, representing 15.9% as reported, 17.8% constant
currency, 12.7% pro-forma constant currency and 13.1% organic
constant currency growth. Gross margins were 80% during the
first quarter of 2019, both as reported and 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, “Our first quarter net sales results represent an
outstanding start to 2019, with 18% constant currency growth, and
13% pro-forma and organic constant currency growth, driven by
exceptional performance across our total U.S. business with organic
growth of 17%. This was led by U.S. upper extremities growth
of 21% and 11% organic U.S. foot and ankle growth, with 18% growth
in our total ankle franchise and above market growth in the
ambulatory surgery center segment. In addition, Cartiva sales
of $9.2 million finished ahead of expectations and returned to year
over year growth ahead of schedule.”
Palmisano continued, “Our U.S. shoulder business delivered
another strong performance with 21% growth, which is approximately
triple the market growth rate. We continue to take share in
U.S. shoulder, and we anticipate that accelerating adoption of our
BLUEPRINT enabling technology, SIMPLICITI shoulder, our ongoing
PERFORM Reversed launch and the upcoming full launch of our REVIVE
revision shoulder system will continue to drive outstanding
shoulder sales growth in 2019 and beyond. On the lower
extremities side of the business, we had an excellent quarter
organically with high teens growth in total ankle and strong
double-digit growth in the ambulatory surgery center portion of our
business. Additionally, Cartiva was fully launched with our
U.S. lower extremities sales force on January 1, including the
integration of the former Cartiva distributors that we have chosen
to retain. We couldn’t be happier with the Cartiva
acquisition. This provides us with another platform
technology with high gross margins and many avenues for
growth.”
Palmisano further commented, “In addition to these strong sales
growth results, we also achieved record gross margins of 80% and
adjusted EBITDA margin expansion of approximately 300 basis points,
all of which we believe put us on a strong pathway for the
remainder of the year and right on track to achieve our previously
stated goals of double-digit net sales growth and adjusted EBITDA
margin in excess of 20% for the full fourth quarter of
2019.”
Net loss from continuing operations for the first quarter of
2019 totaled $30.3 million, or $(0.24) per diluted share.
The company’s net loss from continuing operations for the first
quarter of 2019 included the after-tax impacts of a $14.3 million
loss on the exchange of cash convertible notes, primarily due to
the settlement of related conversion derivatives, non-cash interest
expense of $12.3 million related to its convertible notes, $0.4
million of transition costs, a $0.4 million loss related to fair
value adjustments to contingent consideration, non-cash
amortization of inventory step-up of $0.4 million associated with
inventory acquired from the Cartiva acquisition, a $1.0 million
gain related to mark-to-market adjustments on derivative assets and
liabilities, a $0.4 million gain related to mark-to-market
adjustments on contingent value rights (CVRs) issued in connection
with the BioMimetic acquisition, non-cash foreign currency
translation income of $0.3 million, and $2.6 million of tax expense
due to a change in tax rates on income from deferred intercompany
transactions.
The company's first quarter 2019 non-GAAP net loss from
continuing operations, as adjusted for the above items, was $1.7
million. The company's first quarter 2019 non-GAAP adjusted
EBITDA from continuing operations, as defined in the non-GAAP to
GAAP reconciliation provided later in this release, was $37.4
million. The attached financial tables include reconciliations of
all historical non-GAAP measures to the most comparable GAAP
measures.
Cash and cash equivalents totaled $161.5 million as of the end
of the first quarter of 2019.
Palmisano concluded, “We have accomplished much on all of our
financial and organizational metrics over the past several
quarters. We see that pace continuing. We exited the
quarter on a strong, positive trajectory, and I continue to be
optimistic as we look forward. I believe we are set up well
for double-digit net sales growth and significant EBITDA margin
expansion in 2019 and beyond. We also believe our new digital
organization that was announced earlier today will pay dividends
well into the future. We have leadership positions in three
of the fastest growing markets in orthopaedics. Additionally,
we have truly differentiated products in all of our market
segments, exceptional enabling technologies for shoulder and total
ankle, very high gross margins and specialized sales forces that
are performing at a high level.”
Outlook
The company continues to anticipate net sales for full-year 2019
of approximately $954 million to $966 million, which includes $47
million from Cartiva. This guidance assumes foreign currency
exchange rates in line with current rates, which results in a
negative impact of approximately one percentage point as compared
to 2018. This range implies full-year 2019 constant currency
net sales growth of 15% to 17%, pro-forma constant currency net
sales growth of 11% to 13% and organic constant currency net sales
growth of 10% to 12%.
The company continues to anticipate its full-year 2019 non-GAAP
adjusted EBITDA from continuing operations guidance, as described
in the non-GAAP reconciliation provided later in this release, to
be $160 million to $170 million, which with a normal quarterly
cadence, would result in fourth quarter of 2019 non-GAAP adjusted
EBITDA margin in excess of 20%.
The company continues to expect its 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 2019 to be $0.17 to
$0.25 per diluted share.
The company estimates approximately 131 million non-GAAP
adjusted diluted weighted average ordinary shares outstanding for
fiscal year 2019.
The company’s organic net sales growth rate reflects net sales
by the legacy Wright business, which does not include net sales of
products obtained through the Cartiva acquisition. The company’s
pro forma net sales growth rate has been adjusted to reflect the
effect on our net sales of incremental revenues that would have
been recognized had Cartiva been acquired on January 1, 2018.
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.
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 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; loss on modification or extinguishment of
debt; non-cash gains and losses associated with foreign currency
translation of balances denominated in foreign currencies; 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 non-GAAP
adjusted earnings per share from continuing operations target
excludes possible future acquisitions and other material future
business developments.
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 2019 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 foreign
currency fluctuations and 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 first quarter of 2019 supplemental financial
information, visit ir.wright.com. For historical information
on Wright Medical Group N.V. segment reporting changes and non-GAAP
combined pro forma financial information, 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 May 7, 2019 through May 14, 2019. To hear
this replay, dial (855) 859-2056 (U.S.) / (404) 537-3406 (Outside
U.S.) and enter code 7398697. 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
the quality of life for patients worldwide. Wright 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 net sales,
excluding the impact of foreign currency; pro-forma constant
currency growth; organic constant currency growth; 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. Wright’s
non-GAAP financial measures exclude such items as non-cash interest
expense related to the company's convertible notes, loss on
modification or extinguishment of debt, transaction and transition
costs, net gains and losses on mark-to-market adjustments on CVRs
and derivative assets and liabilities, and net non-cash gains and
losses on foreign currency translation, 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 2019
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,” “plans,” “intend,”
“could,” “may,” “will,” “believe,” “estimate,” “continue,”
“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 2019, including net sales, adjusted EBITDA
from continuing operations and adjusted earnings per share from
continuing operations, anticipated continued strong shoulder sales
growth and accelerating adoption of our BLUEPRINT™ enabling
technology, the anticipated success of Cartiva’s SCI and its
contribution to growth for our U.S. lower extremities business, the
upcoming launch of our REVIVE™ revision shoulder system, strong
execution and new product launches during 2019 and new long-term
financial targets. 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, failure
to achieve anticipated financial results for 2019 or long-term
financial targets, failure to achieve the anticipated financial
benefits of the Cartiva acquisition, unanticipated clinical
performance issues with our products (including Cartiva products)
or the introduction of competitive products with clinical
performance attributes that are superior to our products (including
Cartiva products), failure to achieve wide market acceptance of our
products (including Cartiva products) due to clinical, regulatory,
cost, reimbursement or other issues, delay or failure to drive U.S.
lower extremities or biologics sales to anticipated levels;
continued supply constraints; 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
commercial sales of AUGMENT® Bone Graft and other new products; 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 agreements; ability to obtain the
additional insurance proceeds; 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 30, 2018 filed by
Wright with the SEC on February 27, 2019 and subsequent SEC filings
by Wright, including without limitation its Quarterly Report on
Form 10-Q for the quarter ended March 31, 2019. 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 (dollars in thousands,
except per share data--unaudited)
|
Three months ended |
|
March 31, 2019 |
|
April 1, 2018 |
Net sales |
$ |
230,127 |
|
|
$ |
198,537 |
|
Cost of sales |
46,317 |
|
|
41,139 |
|
Gross profit |
183,810 |
|
|
157,398 |
|
Operating expenses: |
|
|
|
Selling, general and administrative |
153,306 |
|
|
137,248 |
|
Research and development |
16,972 |
|
|
13,899 |
|
Amortization of intangible assets |
7,587 |
|
|
7,141 |
|
Total operating expenses |
177,865 |
|
|
158,288 |
|
Operating income (loss) |
5,945 |
|
|
(890 |
) |
Interest expense, net |
19,695 |
|
|
19,812 |
|
Other expense (income),
net |
12,895 |
|
|
(1,000 |
) |
Loss from continuing operations before income taxes |
(26,645 |
) |
|
(19,702 |
) |
Provision for income
taxes |
3,611 |
|
|
205 |
|
Net loss from continuing operations |
$ |
(30,256 |
) |
|
$ |
(19,907 |
) |
Loss from discontinued
operations, net of tax |
(6,345 |
) |
|
(5,607 |
) |
Net loss |
$ |
(36,601 |
) |
|
$ |
(25,514 |
) |
|
|
|
|
Net loss from continuing
operations per share, basic and diluted |
$ |
(0.24 |
) |
|
$ |
(0.19 |
) |
Net loss from discontinued
operations per share, basic and diluted |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
Net loss per share, basic and
diluted |
$ |
(0.29 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
Weighted-average number of
shares outstanding-basic and diluted |
125,812 |
|
|
105,904 |
|
Wright Medical Group
N.V.Consolidated Net Sales
Analysis(dollars in thousands--unaudited)
|
Three months ended |
|
March 31, 2019 |
|
April 1, 2018 |
|
%change |
U.S. |
|
|
|
|
|
Lower extremities |
$ |
71,308 |
|
|
$ |
56,823 |
|
|
25.5 |
% |
Upper extremities |
81,727 |
|
|
67,658 |
|
|
20.8 |
% |
Biologics |
22,640 |
|
|
18,165 |
|
|
24.6 |
% |
Sports med & other |
2,092 |
|
|
2,147 |
|
|
(2.6 |
)% |
Total
U.S. |
$ |
177,767 |
|
|
$ |
144,793 |
|
|
22.8 |
% |
|
|
|
|
|
|
International |
|
|
|
|
|
Lower extremities |
$ |
15,551 |
|
|
$ |
15,327 |
|
|
1.5 |
% |
Upper extremities |
29,465 |
|
|
29,594 |
|
|
(0.4 |
)% |
Biologics |
4,538 |
|
|
5,257 |
|
|
(13.7 |
)% |
Sports med & other |
2,806 |
|
|
3,566 |
|
|
(21.3 |
)% |
Total
International |
$ |
52,360 |
|
|
$ |
53,744 |
|
|
(2.6 |
)% |
|
|
|
|
|
|
Global |
|
|
|
|
|
Lower extremities |
$ |
86,859 |
|
|
$ |
72,150 |
|
|
20.4 |
% |
Upper extremities |
111,192 |
|
|
97,252 |
|
|
14.3 |
% |
Biologics |
27,178 |
|
|
23,422 |
|
|
16.0 |
% |
Sports med & other |
4,898 |
|
|
5,713 |
|
|
(14.3 |
)% |
Total net
sales |
$ |
230,127 |
|
|
$ |
198,537 |
|
|
15.9 |
% |
Wright Medical Group
N.V.Reconciliation of Non-GAAP Combined Organic
and Pro Forma Net Sales to Net Sales(dollars in
thousands--unaudited)
|
Three months ended March 31, 2019 |
|
Legacy Wright (organic) |
|
Standalone Cartiva |
|
Wright Medical Group N.V. |
U.S. |
|
|
|
|
|
Lower extremities |
$ |
62,863 |
|
|
$ |
8,445 |
|
|
$ |
71,308 |
|
Upper extremities |
81,727 |
|
|
— |
|
|
81,727 |
|
Biologics |
22,640 |
|
|
— |
|
|
22,640 |
|
Sports med & other |
2,092 |
|
|
— |
|
|
2,092 |
|
Total
U.S. |
$ |
169,322 |
|
|
$ |
8,445 |
|
|
$ |
177,767 |
|
|
|
|
|
|
|
International |
|
|
|
|
|
Lower extremities |
$ |
14,760 |
|
|
$ |
791 |
|
|
$ |
15,551 |
|
Upper extremities |
29,465 |
|
|
— |
|
|
29,465 |
|
Biologics |
4,538 |
|
|
— |
|
|
4,538 |
|
Sports med & other |
2,806 |
|
|
— |
|
|
2,806 |
|
Total
International |
$ |
51,569 |
|
|
$ |
791 |
|
|
$ |
52,360 |
|
|
|
|
|
|
|
Global |
|
|
|
|
|
Lower extremities |
$ |
77,623 |
|
|
$ |
9,236 |
|
|
$ |
86,859 |
|
Upper extremities |
111,192 |
|
|
— |
|
|
111,192 |
|
Biologics |
27,178 |
|
|
— |
|
|
27,178 |
|
Sports med & other |
4,898 |
|
|
— |
|
|
4,898 |
|
Total net
sales |
$ |
220,891 |
|
|
$ |
9,236 |
|
|
$ |
230,127 |
|
|
Three months ended April 1, 2018 |
|
Standalone Wright Medical Group N.V. |
|
Standalone Cartiva |
|
Non-GAAP combined pro forma |
U.S. |
|
|
|
|
|
Lower extremities |
$ |
56,823 |
|
|
$ |
8,611 |
|
|
$ |
65,434 |
|
Upper extremities |
67,658 |
|
|
— |
|
|
67,658 |
|
Biologics |
18,165 |
|
|
— |
|
|
18,165 |
|
Sports med & other |
2,147 |
|
|
— |
|
|
2,147 |
|
Total
U.S. |
$ |
144,793 |
|
|
$ |
8,611 |
|
|
$ |
153,404 |
|
|
|
|
|
|
|
International |
|
|
|
|
|
Lower extremities |
$ |
15,327 |
|
|
$ |
296 |
|
|
$ |
15,623 |
|
Upper extremities |
29,594 |
|
|
— |
|
|
29,594 |
|
Biologics |
5,257 |
|
|
— |
|
|
5,257 |
|
Sports med & other |
3,566 |
|
|
— |
|
|
3,566 |
|
Total
International |
$ |
53,744 |
|
|
$ |
296 |
|
|
$ |
54,040 |
|
|
|
|
|
|
|
Global |
|
|
|
|
|
Lower extremities |
$ |
72,150 |
|
|
$ |
8,907 |
|
|
$ |
81,057 |
|
Upper extremities |
97,252 |
|
|
— |
|
|
97,252 |
|
Biologics |
23,422 |
|
|
— |
|
|
23,422 |
|
Sports med & other |
5,713 |
|
|
— |
|
|
5,713 |
|
Total net
sales |
$ |
198,537 |
|
|
$ |
8,907 |
|
|
$ |
207,444 |
|
|
|
|
Non-GAAP organic and combined pro forma constant currency
net sales growth/(decline) |
|
Legacy Wright (organic) constant currency |
|
Standalone Cartiva |
|
Non-GAAP combined pro forma constant currency |
U.S. |
|
|
|
|
|
Lower extremities |
10.6% |
|
|
N/A |
|
9.0% |
|
Upper extremities |
20.8% |
|
|
N/A |
|
20.8% |
|
Biologics |
24.6% |
|
|
N/A |
|
24.6% |
|
Sports med & other |
(2.6)% |
|
|
N/A |
|
(2.6)% |
|
Total
U.S. |
16.9% |
|
|
N/A |
|
15.9% |
|
|
|
|
|
|
|
International |
|
|
|
|
|
Lower extremities |
2.8% |
|
|
N/A |
|
5.9% |
|
Upper extremities |
7.1% |
|
|
N/A |
|
7.1% |
|
Biologics |
(8.8)% |
|
|
N/A |
|
(8.8)% |
|
Sports med & other |
(15.3)% |
|
|
N/A |
|
(15.3)% |
|
Total
International |
2.8% |
|
|
N/A |
|
3.7% |
|
|
|
|
|
|
|
Global |
|
|
|
|
|
Lower extremities |
9.0% |
|
|
N/A |
|
8.4% |
|
Upper extremities |
16.6% |
|
|
N/A |
|
16.6% |
|
Biologics |
17.1% |
|
|
N/A |
|
17.1% |
|
Sports med & other |
(10.6)% |
|
|
N/A |
|
(10.3)% |
|
Total net
sales |
13.1% |
|
|
N/A |
|
12.7% |
|
Wright Medical Group
N.V.Supplemental Net Sales
Information(unaudited)
|
Three months ended March 31, 2019 net sales
growth/(decline) |
|
U.S. as reported |
Int'l constant currency |
Int'l as reported |
Global constant currency |
Global as reported |
Product
line |
|
|
|
|
|
Lower extremities |
25% |
8% |
1% |
22% |
20% |
Upper extremities |
21% |
7% |
0% |
17% |
14% |
Biologics 1 |
25% |
(9%) |
(14%) |
17% |
16% |
Sports med & other |
(3%) |
(15%) |
(21%) |
(11%) |
(14%) |
Total net sales |
23% |
4% |
(3%) |
18% |
16% |
_______________________________1 The US biologics growth
rate includes an approximate 5 percentage point benefit from a bulk
sale of the PDGF raw material. [25% US as reported growth – 5%
impact of PDGF bulk sale = 20% growth rate excluding this
benefit]
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 |
|
March 31, 2019 |
|
April 1, 2018 |
Net loss from continuing operations, as
reported |
$ |
(30,256 |
) |
|
$ |
(19,907 |
) |
Weighted-average diluted shares outstanding |
|
125,812 |
|
|
|
105,904 |
|
Net loss from
continuing operations per share, as reported |
$ |
(0.24 |
) |
|
$ |
(0.19 |
) |
Reconciling items: |
|
|
|
Non-cash interest expense on convertible notes 1 |
12,265 |
|
|
12,012 |
|
Net charges on debt modification 2 |
14,274 |
|
|
— |
|
Derivatives mark-to-market adjustments 2 |
(996 |
) |
|
1,694 |
|
Inventory step-up amortization |
352 |
|
|
— |
|
Transition costs |
424 |
|
|
910 |
|
Foreign currency translation expense 2 |
(300 |
) |
|
763 |
|
CVR mark-to-market adjustments 2 |
(420 |
) |
|
(3,924 |
) |
Contingent consideration fair value adjustment 2 |
376 |
|
|
414 |
|
Tax expense due to change in tax rates on income from deferred
intercompany transactions 3 |
2,566 |
|
|
— |
|
Tax effect of reconciling items 4 |
(5 |
) |
|
(210 |
) |
Non-GAAP net loss from
continuing operations, as adjusted |
$ |
(1,720 |
) |
|
$ |
(8,248 |
) |
Add back amortization of intangible assets |
7,587 |
|
|
7,141 |
|
Adjusted non-GAAP
earnings |
$ |
5,867 |
|
|
$ |
(1,107 |
) |
Adjusted non-GAAP weighted-average diluted shares outstanding
5 |
129,042 |
|
|
105,904 |
|
Adjusted non-GAAP
earnings per share |
$ |
0.05 |
|
|
$ |
(0.01 |
) |
_______________________________1 Impacting interest
expense, net.2 Impacting other expense (income),
net.3 Impacting provision from income taxes.4 Determined
based upon the effective tax rate in the jurisdiction in which the
expense was incurred.5 Adjusted non-GAAP weighted-average
diluted shares outstanding includes common stock equivalents of 3.2
million for the three months ended March 31, 2019, based on the
income position of our adjusted non-GAAP earnings.
Wright Medical Group
N.V.Reconciliation of Non-GAAP Adjusted EBITDA to
Net Loss from Continuing
Operations (dollars in
thousands--unaudited)
|
Three months ended |
|
March 31, 2019 |
|
April 1, 2018 |
Net loss from continuing operations |
$ |
(30,256 |
) |
|
$ |
(19,907 |
) |
Interest expense, net |
19,695 |
|
|
19,812 |
|
Provision from income
taxes |
3,611 |
|
|
205 |
|
Depreciation |
15,501 |
|
|
14,499 |
|
Amortization |
7,587 |
|
|
7,141 |
|
Non-GAAP
EBITDA |
$ |
16,138 |
|
|
$ |
21,750 |
|
Reconciling items impacting
EBITDA: |
|
|
|
Non-cash share-based compensation expense |
7,621 |
|
|
5,018 |
|
Other expense (income), net |
12,895 |
|
|
(1,000 |
) |
Inventory step-up amortization |
352 |
|
|
— |
|
Transition costs |
424 |
|
|
910 |
|
Non-GAAP adjusted
EBITDA |
$ |
37,430 |
|
|
$ |
26,678 |
|
Net sales from continuing operations |
230,127 |
|
|
198,537 |
|
Non-GAAP adjusted
EBITDA margin |
16.3 |
% |
|
13.4 |
% |
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 |
|
March 31, 2019 |
|
April 1, 2018 |
Gross profit from continuing operations, as
reported |
$ |
183,810 |
|
|
$ |
157,398 |
|
Gross margins from
continuing operations, as reported |
79.9 |
% |
|
79.3 |
% |
Reconciling items impacting
gross profit: |
|
|
|
Inventory step-up amortization |
352 |
|
|
— |
|
Transition costs |
— |
|
|
910 |
|
Non-GAAP gross profit
from continuing operations, as adjusted |
$ |
184,162 |
|
|
$ |
158,308 |
|
Net sales from continuing operations |
230,127 |
|
|
198,537 |
|
Non-GAAP adjusted
gross margins from continuing operations |
80.0 |
% |
|
79.7 |
% |
Wright Medical Group
N.V.Reconciliation of Other Non-GAAP Financial
Measures to Other As Reported
Results (dollars in
thousands--unaudited)
|
Three months ended |
|
March 31, 2019 |
|
April 1, 2018 |
Net sales |
$ |
230,127 |
|
|
$ |
198,537 |
|
|
|
|
|
Selling, general and
administrative expense, as reported |
$ |
153,306 |
|
|
$ |
137,248 |
|
Selling, general and
administrative expense as a percentage of net sales, as
reported |
66.6 |
% |
|
69.1 |
% |
Reconciling items impacting
selling, general and administrative expense: |
|
|
|
Transition costs |
424 |
|
|
— |
|
Selling, general and
administrative expense, as adjusted |
$ |
152,882 |
|
|
$ |
137,248 |
|
Selling, general and
administrative expense as a percentage of net sales, as
adjusted |
66.4 |
% |
|
69.1 |
% |
Wright Medical Group
N.V.Condensed Consolidated Balance
Sheets(dollars in thousands--unaudited)
|
March 31, 2019 |
|
December 30, 2018 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
161,516 |
|
|
$ |
191,351 |
|
Accounts receivable, net |
138,666 |
|
|
141,019 |
|
Inventories |
186,910 |
|
|
180,690 |
|
Prepaid expenses and other current assets |
323,391 |
|
|
90,172 |
|
Total current assets |
810,483 |
|
|
603,232 |
|
|
|
|
|
Property, plant and equipment, net |
233,368 |
|
|
224,929 |
|
Goodwill and intangible assets, net |
1,540,749 |
|
|
1,551,286 |
|
Other assets |
244,748 |
|
|
314,954 |
|
Total assets |
$ |
2,829,348 |
|
|
$ |
2,694,401 |
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
44,471 |
|
|
$ |
48,359 |
|
Accrued expenses and other current liabilities |
434,523 |
|
|
217,081 |
|
Current portion of long-term obligations |
410,311 |
|
|
201,686 |
|
Total current liabilities |
889,305 |
|
|
467,126 |
|
Long-term obligations |
721,719 |
|
|
913,441 |
|
Other liabilities |
305,069 |
|
|
381,375 |
|
Total liabilities |
1,916,093 |
|
|
1,761,942 |
|
|
|
|
|
Shareholders' equity |
913,255 |
|
|
932,459 |
|
Total liabilities and shareholders' equity |
$ |
2,829,348 |
|
|
$ |
2,694,401 |
|
Investors & Media:
Julie D. DeweySr. Vice President, Chief Communications
OfficerWright Medical Group N.V.(901)
290-5817julie.dewey@wright.com
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