Orthopedic devices maker Wright Medical Group (WMGI) reported fourth-quarter adjusted (excluding one-time items other than stock-based compensation expense) earnings per share of 1 cent, which was better than the Zacks Consensus Estimate of loss of 1 cent per share. For 2012, adjusted earnings per share of 24 cents beat the Zacks Consensus Estimate of 20 cents per share.
The company witnessed net profit of $5.4 million (or 14 cents per share) in the quarter versus net income of $1.2 million (or 3 cents per share) in the prior-year quarter.
Net sales in the quarter were $123.5 million, down 3% year over year in reported terms (down 2% on a constant currency basis), beating the Zacks Consensus Estimate of $121 million. For 2012, net sales were down 5.7% to $483.8 million, ahead of the Zacks Consensus Estimate of $481 million.
During the reported quarter, the company’s growth in worldwide ankle and foot franchise was negated by loss of client base in OrthoRecon segments in the domestic market and pricing pressure in the high focus Japanese market.
Geographically, revenues from the domestic market came in at $70.7 million (57.2% of total sales), down 3.6% year over year, while revenues from the overseas market declined 1.5% in reported terms (flat on a constant currency basis) on a year-over-year basis to $52.8 million (42.8% of total revenues) in the fourth quarter.
Wright Medical earlier restated its segments to broadly comprise Extremities and OrthoRecon segments. OrthoRecon comprises Hips, Knees and Other. The Extremities segment is composed of Foot and Ankle, Upper Extremity, Biologics and Other sub segments.
OrthoRecon comprised 53% of sales in the reported quarter with Hips contributing 29%, Knees 23% and Other 1%. Extremities constituted 47% of revenues with Foot and Ankle contributing 29%, Upper Extremity 5%, Biologics 12% and Other 1%.
In terms of constant currency, OrthoRecon sales declined 11% year over year in the fourth quarter. Among its components, Hips fell 14%, while Knees dropped 8% and Other increased 30%.
Sales of Extremities segment clambered 11% year over year in constant currency in the reported quarter. Among its constituents, Foot and Ankle improved 20%, Upper Extremity was down 10% while Biologics dipped 2% and Other rose 84%.
Gross margin in the quarter came in at 67.9% compared with 67.7% in the year-ago quarter. Adjusted operating margin declined to 3% in the quarter versus 10.1% a year ago. Operating margin for OrthoRecon segment was 6.