Tornier Reports Third Quarter 2014 Results

• Revenue increased 14.0% over prior year quarter, in constant currency
• Upper extremity constant currency revenue growth of 20.0% led by Aequalis Ascend Flex
• Entered into definitive merger agreement with Wright Medical Group on October 27 to create premier high-growth extremities-biologics company

AMSTERDAM, The Netherlands, Nov. 6, 2014 (GLOBE NEWSWIRE) -- Tornier N.V. (Nasdaq:TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported today its financial results for the third quarter ended September 28, 2014.

As reported on October 27, 2014, revenue for the third quarter of 2014 was $76.7 million compared to third quarter 2013 revenue of $66.7 million, an increase of 14.9% as reported and 14.0% in constant currency. 

Third quarter 2014 revenue of Tornier's extremities product categories totaled $65.8 million compared to $56.9 million in the same quarter a year ago, an increase of 15.5% as reported and 14.4% in constant currency. Third quarter revenue of the Company's large joints and other product lines was $10.9 million, an increase of 11.0% as reported and 11.5% in constant currency over the same quarter in 2013.

Dave Mowry, President and Chief Executive Officer of Tornier, commented, "We achieved strong revenue growth in the quarter, reflecting the ongoing adoption of the Aequalis Ascend Flex shoulder system and robust growth across our ankle arthritis portfolio. During the quarter, we completed the planned transitions of our U.S. sales force to dedicated upper and lower extremity teams and are now focused on executing the sales force education and training that we believe will drive continued momentum in our extremities business."

Mr. Mowry added, "Last week we announced a definitive agreement to merge with Wright Medical Group, which would create a premier, high-growth Company focused on extremities and biologics. Our businesses are highly complementary, with a significant opportunity as a combined company to drive above market revenue growth while also accelerating our path to profitability. "

The Company's third quarter 2014 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $4.0 million, or 5.3% of reported revenue, compared to $4.8 million, or 7.2% of revenue, in the same quarter of the prior year.

Third Quarter 2014 Revenue Highlights

Extremities

• Revenue from the upper extremity joints and trauma category was $49.0 million, an increase of 20.0% in constant currency over the same quarter in 2013. This growth was led by the Aequalis Ascend family of shoulder joint replacement products, which continued to gain global surgeon acceptance.
   
• Revenue from Tornier's lower extremity joints and trauma category in the third quarter of 2014 was $13.8 million, an increase of 1.9% in constant currency over the prior year quarter. Solid sales growth of the Company's ankle arthritis products, including the Salto total ankle arthroplasty system was offset by lower sales of foot fixation products, which were impacted by the Company's U.S. sales transition activities.
   
• Revenue from the sports medicine and biologics product category was $3.0 million in the third quarter of 2014, a decrease of 3.8% in constant currency over the same quarter in 2013, reflecting a decline in the Company's biologics and soft tissue anchor products.

Large Joints

Constant currency revenue growth for large joints and other products was 11.5% in the third quarter of 2014 and was led by the Company's hip products that benefitted from the release of new minimally invasive instrumentation in Europe late in 2013.

Geographic Revenue

Tornier's international revenue increased 14.8% as reported and 12.5% in constant currency as compared to the third quarter of 2013 and represented 39% of reported global revenue.  Revenue in the United States increased by 14.9% and represented 61% of reported global revenue.

Fourth Quarter 2014 Outlook

• The Company is reiterating its previously announced fourth quarter 2014 guidance, with constant currency revenue expected to be in the range of $85.0 to $89.0 million, representing constant currency growth of 1.9% to 6.7% over the same period last year.
• Based on recent currency exchange rates, fourth quarter 2014 reported revenue is projected to be in the range of $83.0 to $87.0 million, representing growth of negative 0.4% to positive 4.3% over the same period last year.
• Revenue from Tornier's extremities product categories in the fourth quarter of 2014 is expected to be in the range of $70.5 to $73.5 million, representing constant currency growth of 3.5% to 7.9% over the same period last year.
• The Company projects fourth 2014 adjusted EBITDA to be in the range of $7.9 to $9.9 million, or 9.5% to 11.4% of reported revenue.

Fiscal Year 2014 Outlook

• The Company is reiterating its full year guidance for 2014, with constant currency revenue expected to be in the range of $334.9 to $338.9 million, representing an increase of 7.7% to 9.0% over last year.
• Based on recent currency exchange rates, 2014 reported revenue is projected to be in the range of $335.6 to $339.5 million, representing an increase of 7.9% to 9.2% over last year.
• Revenue from Tornier's extremities product categories in 2014 is expected to be in the range of $278.8 to $281.8 million, representing an increase in constant currency of 8.1% to 9.2% over last year.
• The Company projects 2014 adjusted EBITDA to be in the range of $27.5 to $29.5 million, or 8.2% to 8.7% of reported revenue.

As reported on October 27, 2014, Tornier announced a definitive agreement to merge with Wright Medical Group, Inc. in an all-stock transaction with a combined equity value of approximately $3.3 billion. Upon completion of the merger, Wright shareholders will own approximately 52% of the shares of the combined company on a fully diluted basis and Tornier shareholders will own approximately 48%. More information about the transaction can be found at www.ExtremitiesLeader.com.

Conference Call

Tornier will host a conference call today at 4:30 p.m. eastern time to discuss its third quarter 2014 financial results and its outlook for 2014. The conference call will be available to interested parties through a live audio webcast available through the Company's website at www.tornier.com. Those without internet access may join the call from within the U.S. by dialing (877) 673-5355; outside the U.S., dial (760) 666-3805.

A telephone replay will be available for ten days following the call by dialing (855) 859-2056 for domestic participants and (404) 537-3406 for international participants. When prompted, please enter the replay pin number 18422086. For those who are not available to listen to the live webcast, the call will be archived for one year on Tornier's website.

Forward-Looking Statements

Statements contained in this release that relate to future, not past, events are forward-looking statements under the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on current expectations of future events and often can be identified by words such as "expect," "should," "project," "anticipate," "intend," "will," "can," "may," "believe," "could," "continue," "outlook," "guidance," "future," other words of similar meaning or the use of future dates.  Examples of forward-looking statements in this release include Tornier's financial guidance for the fourth quarter and full year 2014 and Tornier's expectations for continued momentum in its extremities business.   Forward-looking statements by their nature address matters that are, to different degrees, uncertain.  Uncertainties and risks may cause Tornier's actual results to be materially different than those expressed in or implied by Tornier's forward-looking statements.  For Tornier, such uncertainties and risks include, among others,  risks relating to Tornier's proposed merger with Wright Medical Group, Inc., including the timing of the transaction; uncertainties as to whether Tornier shareholders and Wright shareholders will approve the transaction; the risk that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or the terms of such approval; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, customers, vendors and other business partners; the risk that shareholder litigation in connection with the transaction may result in significant costs of defense, indemnification and liability; other business effects, including the effects of industry, economic or political conditions outside of Wright's or Tornier's control; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of Wright and Tornier may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; operating costs and business disruption following completion of the transaction, including adverse effects on employee retention and on Wright's and Tornier's respective business relationships with third parties; transaction costs; actual or contingent liabilities; the adequacy of the combined company's capital resource; and other risks and uncertainties, including Tornier's future operating results and financial performance; Tornier's reliance on its independent sales agencies and distributors to sell its products and the effect on its business and operating results of agency and distributor changes, transitions to direct selling models in certain geographies and the recent transition of its U.S. sales channel towards focusing separately on upper and lower extremity products; risks associated with Tornier's  acquisition of OrthoHelix and subsequent integration activities; fluctuations in foreign currency exchange rates; the effect of global economic conditions; the European sovereign debt crisis and austerity measures; risks associated with Tornier's international operations and expansion; the timing of regulatory approvals and introduction of new products; physician acceptance, endorsement, and use of new products; the effect of regulatory actions, changes in and adoption of reimbursement rates and product recalls; competitor activities; Tornier's manufacturing capacity; Tornier's leverage and access to credit under its credit agreement; and changes in tax and other legislation. More detailed information on these and other factors that could affect Tornier's actual results are described in Tornier's filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K for the fiscal year ended December 29, 2013 and subsequent quarterly reports on Form 10-Q.  Tornier undertakes no obligation to update its forward-looking statements.