Wright Medical Group (WMGI) reported third quarter 2010 adjusted (excluding one-time items) earnings per share of 14 cents, missing the Zacks Consensus Estimate by a penny while meeting the year-ago result.
Net sales were $121.7 million, up 3% year over year in reported terms and 4% on a constant currency basis, also missing the Zacks Consensus Estimate of $124 million. Revenues from domestic markets totaled $74.6 million (61% of total sales), up 1.1% year over year. Overseas sales increased 7.2% to $47.1 million (39% of revenue).
Segment-wise Results
Wright Medical reports revenues in four segments, namely Hip, Knee, Extremity and Biologics, which constituted 33%, 24%, 25% and 16%, respectively, of net sales for the quarter.
Hip and Knee products had an annualized constant currency revenue growth of 0% and -1%, respectively. Extremity posted a sharp increase of 18.0%. Biologics sales edged up 1%.
Wright Medical reported gross margin of 68.8% in the quarter, slightly lower than 69.5% in the year-ago quarter. The company reported operating margin of 7.6%, higher than 6.3% in the year-ago quarter.
Balance Sheet
Cash and cash equivalents totaled $123.2 million, up 1.6% year over year. Total debt remained approximately unchanged at about $200 million on a year-over-year basis.
Outlook
Wright Medical reduced its sales forecast to a band of $507 million to $512 million from the earlier range of $515 million to $530 million for 2010. The revised range represents an increase of 4% to 5%. The company also cut its earnings per share to a band of 86 to 89 cents from its earlier range of 88 cents to 94 cents per share, representing a growth of 1% to 5%.
We currently have a long-term Neutral recommendation on Wright Medical. The stock currently retains a Zacks #4 Rank, which translates into a short-term Sell recommendation.
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