Wright Medical Group, Inc. (WMGI) reported first quarter fiscal 2010 earnings per share of 21 cents, outperforming the Zacks Consensus Estimate of 15 cents and the year-ago earnings of 20 cents.
Sales
Total revenues in the first quarter increased 8.5% year over year to $131.2 million. Excluding a favorable foreign currency translation, net sales increased 7.0% year over year. Growth was witnessed across all major business segments.
Hip, Knee, Extremity and Biologics products revenue increased 10.4%, 6.7%, 16.0%, and 0.1% year over year to $46.3 million, $32.4 million, $30.1 million and $19.8 million, respectively. Other category of revenue declined 8.7% year over year to $2.6 million.
Geographically, the U.S. contributed roughly 59% to total revenues and increased 4.5% year over year. International revenues contributed the balance and increased 14.9% year over year.
Gross margin increased 80 basis points (bps) year over year to 69.4%. Selling, general and administrative expenses as a percentage of sales increased 310 bps year over year to 58.2%. Research and development expenses as a percentage of sales increased 10 bps year over year to 7.5%. Higher operating expenses were responsible for a lower operating margin that declined 220 bps year over year to 2.8%.
Balance Sheet
Wright ended the first quarter with cash, cash equivalents and short-term marketable securities of $186.8 million, registering a sequential growth of 9.1%.
Outlook
Wright has reiterated its guidance for fiscal 2010. For the year, the company expects total revenues between $515 and $530 million, an increase of 6% to 9% year over year. Adjusted earnings per share should range between 88 and 94 cents, an increase of 4% to 11% year over year.
Wright is a global orthopedic devices company specializing in the design; manufacture and marketing of reconstructive joint devices and bio-orthopedic materials.
The orthopedic industry is highly competitive, and Wright Medical faces challenges from large players, such as, Zimmer Holdings Inc. (ZMH), Stryker Corp. (SYK), Johnson & Johnson/De Puy (JNJ), Smith & Nephew plc. (SNN) and Biomet.
Currently, we have a ‘Neutral’ recommendation on Wright.
Read the full analyst report on “WMGI”
Read the full analyst report on “ZMH”
Read the full analyst report on “SYK”
Read the full analyst report on “JNJ”
Read the full analyst report on “SNN”
Zacks Investment Research
