Surgical devices maker ArthroCare (NSDQ:ARTC) posted quarterly earnings about 9¢ shy of Wall Street’s expectations and the company’s stock is slowly creeping back down since a spike spurred by a $1.7 billion acquisition offer from Smith & Nephew (FTSE:SN, NYSE:SNN).
ArthroCare reported a 1.9% increase in sales and a 4.9% bump in sales for the 3 months ended December 31. Full-year earnings took a major hit as the company paid out huge sums related to a Justice Dept. investigation, including a $20.2 million charge recorded in Q2 and a $30 million settlement recorded after the end of the year.
The Austin, Texas-based company reported profits of $11.4 million, or 30¢ per diluted share, on sales of $101.7 million during its 4th quarter of 2013. That compared with profits of $11.2 million, or 30¢ per share, on sales of $96.9 million during the same period last year. Analysts had projected per-share earnings of 39¢ for the most recent quarter.
For the full year ArthroCare reported profits of $26.1 million, or 64¢ per diluted share, on sales of $378 million. That compared with profits of $46.4 million, or $1.25 per share, on sales of $368.5 million in 2012. Analysts had projected per-share earnings of $1.41 for 2013.
ARTC shares dropped about 0.2% today to trade at $48.60 as of about 2:55 p.m., slowly coming down off of a major spike following news of Smith & Nephew’s $48.25 per-share offer early this month. ARTC shares are still up 7.1% since the offer and 20.8% since the start of the year.
The share-spike may lure other buyers to scoop ArthroCare up before Smith & Nephew can close the deal, analysts have speculated. Industry titans such as Johnson & Johnson (NYSE:JNJ) and Stryker (NYSE:SYK) are among the most likely to get into the game and attempt to out-bid Smith & Nephew, analysts said.