Wright Medical (NSDQ:WMGI) yesterday posted first-quarter results that topped the consensus estimate on Wall Street and said it won a nearly $31 million dispute with an insurer over its recalled ProFemur hip implant.
Memphis, Tenn.-based Wright slashed its losses by -56.5% to -$25.5 million, or -24¢ per share, on sales growth of 12.0% to $198.5 million for the three months ended April 1, compared with Q1 2017.
Adjusted to exclude one-time items, earnings per share were -1¢, a full 6¢ ahead of The Street, where analysts were looking for revenues of $194.0 million.
“We delivered strong results across the board in the first quarter, including over 9% constant currency net sales growth, an estimated 250 basis point increase versus the fourth quarter of 2017, and we exited the quarter on a strong, positive trajectory, which we expect to continue throughout 2018. These results represent another outstanding performance in our U.S. upper extremities business, which grew 21% in the first quarter, driven by 23.5% growth in our U.S. shoulder business. We anticipate that our Simpliciti shoulder, our ongoing Perform Reversed launch and accelerating adoption of our Blueprint enabling technology will continue to drive outstanding shoulder sales growth in 2018,” president & CEO Robert Palmisano said in prepared remarks. “After two quarters of relatively flat to down sales versus the prior year, our U.S. lower extremities growth rate accelerated to 2.5% in the first quarter, driven by approximately 14% growth in total ankle and a return to growth in our core lower extremities business as we exited the quarter. In addition, we continued to make strong progress in our Ortholoc ankle and small bone fracture product launches. Most importantly, we saw an increased benefit from the sales force expansion and maturation as evidenced by the return to growth in our core lower extremities business. While we are not ready to declare victory, this positive progress and our current trajectory are very encouraging.”
Wright said it expects to report adjusted EPS of 16¢ to 23¢ on sales of $800 million to $812 million this year.
The company also said it reached a settlement in a dispute with an insurer over the eventually recalled ProFemur implant, which it sold along with its OrthoRecon business back in January 2014. After arbitration in the U.K., Wright won payment of the full policy limit of $25 million plus nearly $5.8 million in costs and interest.
And the company added $40 million to a loan agreement it said gives it enough dry powder for the foreseeable future.
“Earlier in the year we indicated that we would be evaluating our options for opportunistically enhancing our liquidity. The $30.75 million of proceeds from the U.K. insurance settlement, combined with the additional $40 million of loan capacity, provides us with adequate financial flexibility, and we have no further need for additional capital at this time,” added CFO Lance Berry.
WMGI shares closed up 1.1% yesterday at $20.98 apiece.