WMGI
$21.63
Wright Med Grp NV
$.38
1.79%
Earnings Details
2nd Quarter June 2019
Wednesday, August 7, 2019 4:05:00 PM
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Summary

Wright Med Grp NV Misses

Wright Med Grp NV (WMGI) reported 2nd Quarter June 2019 earnings of $0.02 per share on revenue of $229.7 million. The consensus earnings estimate was $0.01 per share on revenue of $233.5 million. The Earnings Whisper number was $0.03 per share. Revenue grew 11.8% on a year-over-year basis.

The company said it expects 2019 earnings of $0.15 to $0.20 per share on revenue of $925.0 million to $930.0 million. The company's previous guidance was earnings of $0.17 to $0.25 per share on revenue of $954.0 million to $966.0 million and the current consensus earnings estimate is $0.22 per share on revenue of $962.1 million for the year ending December 31, 2019.

Wright Medical Group Inc is a specialty orthopaedic company. The Company through its subsidiaries provides extremity and biologic solutions that enable clinicians to alleviate pain and restore their patients’ lifestyles.

Results
Reported Earnings
$0.02
Earnings Whisper
$0.03
Consensus Estimate
$0.01
Reported Revenue
$229.7 Mil
Revenue Estimate
$233.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wright Medical Group N.V. Reports 2019 Second Quarter Financial Results

Second Quarter 2019 Net Sales, Including Cartiva®, of $230 Million, Representing As-Reported Growth of 12%, Constant Currency Growth of 13% and Organic Constant Currency Growth of 9%

Second Quarter 2019 Net Loss From Continuing Operations of $19 Million; Non-GAAP Adjusted EBITDA From Continuing Operations of $35 Million, Representing Non-GAAP Adjusted EBITDA Margin of 15%, an Approximate 290 Basis Point Expansion Over Prior Year Quarter

Company Updates 2019 Annual Guidance

Reiterates Long-Term Financial Targets of Double-Digit Constant Currency Net Sales Growth, Gross Margins in High 70s% Range and Non-GAAP Adjusted EBITDA Margin of Mid-20% Range Exiting 2021

AMSTERDAM, The Netherlands, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial results for its second quarter ended June 30, 2019, updated its 2019 annual guidance and reiterated its long-term financial targets.  Unless otherwise noted, all net sales growth rates in this release are stated on a constant currency basis.

Net sales totaled $229.7 million during the second quarter ended June 30, 2019, representing 11.8% as reported, 13.2% constant currency, 8.9% pro-forma constant currency and 9.4% organic constant currency growth.  Gross margins were 79.0% during the second quarter of 2019 and 79.1% 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 U.S. upper extremities business delivered another strong quarter and grew approximately twice the market growth rate.  Additionally, Cartiva performed well in our direct sales force territories, which grew 29% pro forma in the second quarter.  However, both in total and for Cartiva specifically, the second quarter fell short of our expectations.  The second quarter Cartiva sales of approximately $8 million were negatively impacted by a significant drop off in Cartiva sales in the distributor territories.  Our core U.S. lower extremities business also did not perform as we expected.  We have already implemented several actions to address the unexpected shortfall we experienced in both of these areas and we have adjusted our annual guidance accordingly.  We believe this is transitory and remain confident in the growth prospects for the extremities markets overall, for Cartiva specifically and for our business in total.  Despite this impact, we achieved gross margins of 79%, adjusted EBITDA margin expansion of approximately 290 basis points and remain on track to achieve our previously stated financial goals of double-digit constant currency organic growth and gross margins in the high 70s% range for the full-year and adjusted EBITDA margin in excess of 20% for the full fourth quarter of 2019.”  

Palmisano continued, “Highlights in the quarter included 16% sales growth in U.S. shoulders, which is approximately double the market growth rate and consistent with our growth expectations for the full-year.  We launched our new REVIVE revision shoulder at the end of the second quarter and that launch is off to a strong start.  We expect the REVIVE launch, along with continued penetration of our PERFORM reversed glenoid system, SIMPLICITI shoulder and BLUEPRINT enabling technology will continue to drive outstanding shoulder sales growth in 2019 and beyond.  Based on our excellent growth, we now expect to be #1 in shoulders worldwide by the end of this year.”

Palmisano further commented, “The unexpected weakness in our U.S. lower extremities business was due to a combination of factors, including the significant reduction in sales by the Cartiva distributors and disappointing performance in our core foot products driven by a higher than normal level of sales rep turnover that occurred in a concentrated period of time mid-quarter.  To address this, we acted quickly and terminated the Cartiva distributors, and as of August 1, the U.S. Cartiva business has been transitioned to our direct U.S. lower extremities sales force.  We also adjusted the sales compensation program for our entire U.S. lower extremities sales team and are increasing the size of the sales force and aggressively adding experienced reps.  We are confident that the actions we have taken will improve the growth rates of Cartiva and the whole U.S. lower extremities business; however it will take some time for the benefits of these actions to be evident in the sales results, and we believe our updated guidance takes that timing appropriately into account.”

Net loss from continuing operations for the second quarter of 2019 totaled $18.9 million or $(0.15) per diluted share. The company’s net loss from continuing operations for the second quarter of 2019 included the after-tax impacts of non-cash interest expense of $12.1 million related to its convertible notes, a $1.7 million loss related to fair value adjustments to contingent consideration, $0.6 million of transition costs, non-cash amortization of inventory step-up of $0.4 million associated with inventory acquired from the Cartiva acquisition, a net gain on investments of $3.3 million, a $0.8 million gain related to mark-to-market adjustments on derivative assets and liabilities, and $2.6 million of tax expense due to a change in tax rates on income from deferred intercompany transactions.

The company’s second quarter 2019 non-GAAP net loss from continuing operations, as adjusted for the above items, was $5.7 million.  The company’s second quarter 2019 non-GAAP adjusted EBITDA from continuing operations, as defined in the non-GAAP to GAAP reconciliation provided later in this release, was $35.3 million. The attached financial tables include reconciliations of all historical non-GAAP measures to the most comparable GAAP measures.

Cash and cash equivalents totaled $150.6 million as of the end of the second quarter of 2019.

Palmisano concluded, “Although we had a setback in our lower extremities business this quarter, I continue to be optimistic as we look forward.  We remain confident and committed to our previously stated long-term financial goals of delivering double-digit constant currency net sales growth, maintaining gross margins in high 70s% range and achieving non-GAAP adjusted EBITDA margin in the mid-20% range exiting 2021.  With leadership positions in high-growth markets, truly differentiated products in all of our market segments, exceptional enabling technologies for shoulder and total ankle, advanced digital technologies, very high gross margins and specialized sales forces, we are well positioned to deliver these goals.”

Outlook

The company is updating its previous net sales guidance range for full-year 2019 of approximately $954 million to $966 million and now anticipates net sales for full-year 2019 of approximately $925 million to $930 million, which includes $30 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 12%, pro-forma constant currency net sales growth of 9% and organic constant currency net sales growth of approximately 10%.

The company is updating its full-year 2019 non-GAAP adjusted EBITDA from continuing operations guidance, as described in the non-GAAP reconciliation provided later in this release, from $160 million to $170 million and now anticipates non-GAAP adjusted EBITDA for full-year 2019 of $157 million to $163 million.  The mid-point of this updated guidance represents adjusted EBITDA margin of approximately 17.3%, in line with the company’s previous guidance for non-GAAP adjusted EBITDA margin and which with a normal quarterly cadence, would result in fourth quarter of 2019 non-GAAP adjusted EBITDA margin in excess of 20%.   

The company is updating 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 $0.15 to $0.20 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 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; inventory step-up; 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; gain or loss on investments; 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; inventory step-up; contingent consideration fair value adjustments; and charges for non-cash amortization expenses, net of taxes and tax expense due to change in tax rates on income from deferred intercompany transactions. 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, contingent consideration 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, including Cartiva sales, 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 second 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 August 7, 2019 through August 14, 2019.  To hear this replay, dial (855) 859-2056 (U.S.) / (404) 537-3406 (Outside U.S.) and enter code 2648479.  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, transition costs, net gains and losses on mark-to-market adjustments on CVRs and derivative assets and liabilities, inventory step-up, contingent consideration fair value adjustments, gains and losses on investments, and net non-cash gains and losses on foreign currency translation, net of tax, and tax expense due to change in tax rates on income from deferred intercompany transactions, 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,” “remain on track,” “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 together with adoption of our BLUEPRINT™ enabling technology and the company’s expectation to be #1 in shoulders by the end of this year, the long-term growth prospects of our extremities business as a whole, and our Cartiva® and lower extremities businesses in particular, the success of actions taken and to be taken to improve the performance of our Cartiva business and the U.S. lower extremities business as a whole, and the timing of benefits therefrom, and the company’s confidence in its ability to achieve its 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 recognize the benefits of actions taken to improve the growth rates of Cartiva and the whole U.S. lower extremities business on a timely basis or at all, 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; 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 Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 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 Six months ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Net sales$229,734  $205,400  $459,861  $403,937 
Cost of sales48,338  45,558  94,655  86,697 
Gross profit181,396  159,842  365,206  317,240 
Operating expenses:       
Selling, general and administrative152,112  140,826  305,418  278,074 
Research and development18,756  14,665  35,728  28,564 
Amortization of intangible assets7,862  6,009  15,449  13,150 
Total operating expenses178,730  161,500  356,595  319,788 
Operating income (loss)2,666  (1,658) 8,611  (2,548)
Interest expense, net19,995  20,678  39,690  40,490 
Other (income) expense, net(1,831) 72,747  11,064  71,747 
Loss from continuing operations before income taxes(15,498) (95,083) (42,143) (114,785)
Provision (benefit) for income taxes3,434  (4,462) 7,045  (4,257)
Net loss from continuing operations$(18,932) $(90,621) $(49,188) $(110,528)
Income (loss) from discontinued operations, net of tax1,120  22,923  (5,225) 17,316 
Net loss$(17,812) $(67,698) $(54,413) $(93,212)
        
Net loss from continuing operations per share, basic and diluted$(0.15) $(0.85) $(0.39) $(1.04)
Net income (loss) from discontinued operations per share, basic and diluted$0.01  $0.21  $(0.04) $0.16 
        
Net loss per share, basic and diluted$(0.14) $(0.64) $(0.43) $(0.88)
        
Weighted-average number of shares outstanding-basic and diluted126,267  106,095  126,040  106,000 
 


Wright Medical Group N.V.

Consolidated Net Sales Analysis
(dollars in thousands--unaudited)

 Three months ended Six months ended
 June 30, 2019 July 1, 2018 %
change
 June 30, 2019 July 1, 2018 %
change
U.S.           
Lower extremities$66,832  $59,464  12.4% $138,140  $116,287  18.8%
Upper extremities80,146  70,171  14.2% 161,873  137,829  17.4%
Biologics23,588  20,234  16.6% 46,228  38,399  20.4%
Sports med & other1,980  1,706  16.1% 4,072  3,853  5.7%
Total U.S.$172,546  $151,575  13.8% $350,313  $296,368  18.2%
            
International           
Lower extremities$16,983  $15,680  8.3% $32,534  $31,007  4.9%
Upper extremities31,154  29,137  6.9% 60,619  58,731  3.2%
Biologics6,331  6,582  (3.8)% 10,869  11,839  (8.2)%
Sports med & other2,720  2,426  12.1% 5,526  5,992  (7.8)%
Total International$57,188  $53,825  6.2% $109,548  $107,569  1.8%
            
Global           
Lower extremities$83,815  $75,144  11.5% $170,674  $147,294  15.9%
Upper extremities111,300  99,308  12.1% 222,492  196,560  13.2%
Biologics29,919  26,816  11.6% 57,097  50,238  13.7%
Sports med & other4,700  4,132  13.7% 9,598  9,845  (2.5)%
Total net sales$229,734  $205,400  11.8% $459,861  $403,937  13.8%
 


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 June 30, 2019
 Legacy Wright
(organic)
 Standalone Cartiva Wright Medical
Group N.V.
U.S.     
Lower extremities$60,168  $6,664  $66,832 
Upper extremities80,146    80,146 
Biologics23,588    23,588 
Sports med & other1,980    1,980 
Total U.S.$165,882  $6,664  $172,546 
      
International     
Lower extremities$15,776  $1,207  $16,983 
Upper extremities31,154    31,154 
Biologics6,331    6,331 
Sports med & other2,720    2,720 
Total International$55,981  $1,207  $57,188 
      
Global     
Lower extremities$75,944  $7,871  $83,815 
Upper extremities111,300    111,300 
Biologics29,919    29,919 
Sports med & other4,700    4,700 
Total net sales$221,863  $7,871  $229,734 
      
 Three months ended July 1, 2018
 Standalone Wright
Medical Group N.V.
 Standalone Cartiva Non-GAAP
combined pro forma
U.S.     
Lower extremities$59,464  $7,676  $67,140 
Upper extremities70,171    70,171 
Biologics20,234    20,234 
Sports med & other1,706    1,706 
Total U.S.$151,575  $7,676  $159,251 
      
International     
Lower extremities$15,680  $327  $16,007 
Upper extremities29,137    29,137 
Biologics6,582    6,582 
Sports med & other2,426    2,426 
Total International$53,825  $327  $54,152 
      
Global     
Lower extremities$75,144  $8,003  $83,147 
Upper extremities99,308    99,308 
Biologics26,816    26,816 
Sports med & other4,132    4,132 
Total net sales$205,400  $8,003  $213,403 
  
  
 Three months ended June 30, 2019
 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 extremities1.2% N/A (0.5)%
Upper extremities14.2% N/A 14.2%
Biologics16.6% N/A 16.6%
Sports med & other16.1% N/A 16.1%
Total U.S.9.4% N/A 8.3%
      
International     
Lower extremities5.2% N/A 10.6%
Upper extremities12.6% N/A 12.6%
Biologics(0.6)% N/A (0.6)%
Sports med & other18.6% N/A 18.6%
Total International9.1% N/A 10.7%
      
Global     
Lower extremities2.0% N/A 1.7%
Upper extremities13.8% N/A 13.8%
Biologics12.4% N/A 12.4%
Sports med & other17.6% N/A 17.6%
Total net sales9.4% N/A 8.9%
        


 Six months ended June 30, 2019
 Legacy Wright
(organic)
 Standalone Cartiva Wright Medical
Group N.V.
U.S.     
Lower extremities$123,031  $15,109  $138,140 
Upper extremities161,873    161,873 
Biologics46,228    46,228 
Sports med & other4,072    4,072 
Total U.S.$335,204  $15,109  $350,313 
      
International     
Lower extremities$30,536  $1,998  $32,534 
Upper extremities60,619    60,619 
Biologics10,869    10,869 
Sports med & other5,526    5,526 
Total International$107,550  $1,998  $109,548 
      
Global     
Lower extremities$153,567  $17,107  $170,674 
Upper extremities222,492    222,492 
Biologics57,097    57,097 
Sports med & other9,598    9,598 
Total net sales$442,754  $17,107  $459,861 
      
  
  
 Six months ended July 1, 2018
 Standalone Wright
Medical Group N.V.
 Standalone Cartiva Non-GAAP
combined pro forma
U.S.     
Lower extremities$116,287  $16,287  $132,574 
Upper extremities137,829    137,829 
Biologics38,399    38,399 
Sports med & other3,853    3,853 
Total U.S.$296,368  $16,287  $312,655 
      
International     
Lower extremities$31,007  $623  $31,630 
Upper extremities58,731    58,731 
Biologics11,839    11,839 
Sports med & other5,992    5,992 
Total International$107,569  $623  $108,192 
      
Global     
Lower extremities$147,294  $16,910  $164,204 
Upper extremities196,560    196,560 
Biologics50,238    50,238 
Sports med & other9,845    9,845 
Total net sales$403,937  $16,910  $420,847 
      
  
  
 Six months ended June 30, 2019
 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 extremities5.8% N/A 4.2%
Upper extremities17.4% N/A 17.4%
Biologics20.4% N/A 20.4%
Sports med & other5.7% N/A 5.7%
Total U.S.13.1% N/A 12.0%
      
International     
Lower extremities4.0% N/A 8.3%
Upper extremities9.9% N/A 9.9%
Biologics(4.3)% N/A (4.3)%
Sports med & other(1.6)% N/A (1.6)%
Total International6.0% N/A 7.2%
      
Global     
Lower extremities5.4% N/A 5.0%
Upper extremities15.2% N/A 15.2%
Biologics14.6% N/A 14.6%
Sports med & other1.3% N/A 1.3%
Total net sales11.2% N/A 10.8%
        

Wright Medical Group N.V.
Supplemental Net Sales Information
(unaudited)

  
 Three months ended June 30, 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 extremities12%13%8%12%12%
Upper extremities14%13%7%14%12%
Biologics17%(1)%(4%)12%12%
Sports med & other16%19%12%18%14%
Total net sales14%11%6%13%12%


 Six months ended June 30, 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 extremities19%10%5%17%16%
Upper extremities17%10%3%15%13%
Biologics20%(4)%(8%)15%14%
Sports med & other6%(2)%(8%)1%(3%)
Total net sales18%8%2%15%14%
           


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 Six months ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Net loss from continuing operations, as reported$(18,932) $(90,621) $(49,188) $(110,528)
Weighted-average diluted shares outstanding126,267  106,095  126,040  106,000 
Net loss from continuing operations per share, as reported$(0.15) $(0.85) $(0.39) $(1.04)
Reconciling items:       
Non-cash interest expense on convertible notes 112,133  12,275  24,398  24,287 
Net loss on exchange or extinguishment of debt 2  39,935  14,274  39,935 
Derivatives mark-to-market adjustments 2(816) 32,879  (1,812) 34,573 
Inventory step-up amortization352    704   
Transition costs597  1,325  1,021  2,235 
Foreign currency translation expense 224  1,893  (276) 2,656 
CVR mark-to-market adjustments 2  (2,523) (420) (6,447)
Contingent consideration fair value adjustment 21,652  365  2,028  779 
Tax expense due to change in tax rates on income from deferred intercompany transactions 32,566    5,132   
Gain on investments, net 2(3,266)   (3,266)  
U.S. tax benefit resulting from income from discontinued operations 3  (6,183)   (6,183)
Tax effect of reconciling items 4(5) 1,069  (10) 859 
Non-GAAP net loss from continuing operations, as adjusted$(5,695) $(9,586) $(7,415) $(17,834)
Add back amortization of intangible assets7,862  6,009  15,449  13,150 
Adjusted non-GAAP earnings$2,167  $(3,577) $8,034  $(4,684)
Adjusted non-GAAP weighted-average diluted shares outstanding 5128,616  106,095  128,401  106,000 
Adjusted non-GAAP earnings per share$0.02  $(0.03) $0.06  $(0.04)

_______________________________

1  Impacting interest expense, net.

2  Impacting other (income) expense, 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 2.3 million and 2.4 million for the three and six months ended June 30, 2019, respectively, 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 Six months ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Net loss from continuing operations$(18,932) $(90,621) $(49,188) $(110,528)
Interest expense, net19,995  20,678  39,690  40,490 
Provision (benefit) from income taxes3,434  (4,462) 7,045  (4,257)
Depreciation16,172  13,883  31,673  28,382 
Amortization7,862  6,009  15,449  13,150 
Non-GAAP EBITDA$28,531  $(54,513) $44,669  $(32,763)
Reconciling items impacting EBITDA:       
Non-cash share-based compensation expense7,623  6,061  15,244  11,079 
Other (income) expense, net(1,831) 72,747  11,064  71,747 
Inventory step-up amortization352    704   
Transition costs597  1,325  1,021  2,235 
Non-GAAP adjusted EBITDA$35,272  $25,620  $72,702  $52,298 
Net sales from continuing operations229,734  205,400  459,861  403,937 
Non-GAAP adjusted EBITDA margin15.4% 12.5% 15.8% 12.9%
 

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 Six months ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Gross profit from continuing operations, as reported$181,396  $159,842  $365,206  $317,240 
Gross margins from continuing operations, as reported79.0% 77.8% 79.4% 78.5%
Reconciling items impacting gross profit:       
Inventory step-up amortization352    704   
Transition costs  1,326    2,236 
Non-GAAP gross profit from continuing operations, as adjusted$181,748  $161,168  $365,910  $319,476 
Net sales from continuing operations229,734  205,400  459,861  403,937 
Non-GAAP adjusted gross margins from continuing operations79.1% 78.5% 79.6% 79.1%
 

Wright Medical Group N.V.
Reconciliation of Other Non-GAAP Financial Measures to Other As Reported Results
 (dollars in thousands--unaudited)

 Three months ended Six months ended
 June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Net sales$229,734  $205,400  $459,861  $403,937 
        
Selling, general and administrative expense, as reported$152,112  $140,826  $305,418  $278,074 
Selling, general and administrative expense as a percentage of net sales, as reported66.2% 68.6% 66.4% 68.8%
Reconciling items impacting selling, general and administrative expense:       
Transition costs597    1,021   
Selling, general and administrative expense, as adjusted$151,515  $140,826  $304,397  $278,074 
Selling, general and administrative expense as a percentage of net sales, as adjusted66.0% 68.6% 66.2% 68.8%
 


Wright Medical Group N.V.

Condensed Consolidated Balance Sheets
(dollars in thousands--unaudited)

 June 30, 2019 December 30, 2018
Assets   
Current assets:   
Cash and cash equivalents$150,574  $191,351 
Accounts receivable, net139,680  141,019 
Inventories194,720  180,690 
Prepaid expenses and other current assets294,568  90,172 
Total current assets779,542  603,232 
    
Property, plant and equipment, net239,734  224,929 
Goodwill and intangible assets, net1,537,490  1,551,286 
Other assets205,918  314,954 
Total assets$2,762,684  $2,694,401 
    
Liabilities and shareholders’ equity   
Current liabilities:   
Accounts payable$43,949  $48,359 
Accrued expenses and other current liabilities395,106  217,081 
Current portion of long-term obligations417,911  201,686 
Total current liabilities856,966  467,126 
Long-term obligations727,348  913,441 
Other liabilities272,340  381,375 
Total liabilities1,856,654  1,761,942 
    
Shareholders’ equity906,030  932,459 
Total liabilities and shareholders’ equity$2,762,684  $2,694,401 


Investors & Media:

Julie D. Dewey
Sr. Vice President, Chief Communications Officer
Wright Medical Group N.V.
(901) 290-5817
julie.dewey@wright.com

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Source: Wright Medical Group N.V.