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Restructuring Plan Hits Wright Medical Group, Inc. (WGMI) Hard in Q2



8/2/2012 8:27:11 AM

Memphis Business Journal by Michael Sheffield, Staff writer

While global foot and ankle implant sales saw a 12 percent increase, Wright Medical Group Inc.’s total sales and net income declined in the second quarter of 2012.

The Memphis-based orthopedic medical device company reported quarterly results after the markets closed Wednesday.

It reported sales of $123.3 million in the second quarter, a 7 percent decline from $132.5 million in the second quarter of 2011. The company’s sales year-to-date also declined to $249.9 million, from $267.8 million in 2011.

Net income for the quarter also took a significant decline from $6.1 million last year to $700,000. Diluted earnings per share was 2 cents, down from 16 cents last year.

Wright did see an increase in its foot and ankle implant division, which increased sales to $28.8 million over $25.8 million in the second quarter of 2011. Sales for the year in that division have increased to $58.5 million compared to $52.5 million in the first six months of 2011. Robert Palmisano, the company’s president and CEO, tried to put the declines in perspective by pointing out that the company is still working out a restructuring plan that was announced in September 2011. That plan included cutting jobs, streamlining the company’s European operations and eliminating some older product lines.

“Although we are early in the execution phase of our plan, we are very encouraged by the initial results on our key measures with global foot and ankle constant currency growth,” Palmisano said in a statement. “In addition to significant foot and ankle sales growth, the conversion of a major portion of our foot and ankle distributor territories to direct sales representation is ahead of schedule, and we are pleased with our execution to date. We believe this increase in U.S. direct foot and ankle sales representation, coupled with our large and growing product portfolio and our increased investment in medical education, will enable us to continue improving our foot and ankle growth rate throughout 2012 and to exit the year at well above market growth rates.”

Palmisano said the company anticipates continued improvement in its foot and ankle sales as 2012 comes to a close.

Wright Medical Group’s (NASDAQ: WMGI) stock ended the day down 2.36 percent at $18.20 per share.


Read at News Release


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