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Wright Medical (WMGI) Posts Narrower-than-Expected Q4 Loss
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Wright Medical Group N.V. reported adjusted loss of 6 cents per share in the fourth quarter of 2016, narrower than loss of 8 cents reported in the year-ago quarter and the Zacks Consensus Estimate of a loss of 11 cents.
Net sales increased 15.7% year over year to $193 million and crushed the consensus estimate of $185 million.
Meanwhile, over the last four trailing quarters, the company posted positive earnings surprises, the average being 45.8%. Currently, the stock has a Zacks Rank #4 (Sell).
For full-year 2016, the company reported revenues of $690.3 million, up 70.3% on a year-over-year basis.
Highlights
The company’s flagship platforms – SIMPLICITI and ASCEND FLEX shoulder systems – recorded considerable growth and also hold promise going forward.
Notably, the INFINITY total ankle replacement system, AUGMENT Bone Graft and SALVATION limb salvage system (for treating Charcot foot) boosted Wright Medical’s trajectory in the fourth quarter.
The U.S. biologics business was again the fastest growing segment, growing 29% in the fourth quarter.
Quarter in Detail
Wright Medical currently reports revenues under one segment: Total Extremities & Biologics. Consolidated sales at the segment in the U.S. increased 15.7% from the year-ago quarter to almost $118 million.
Internationally, sales in the extremities and biologics business were up 15.8% year over year to $49.9 million, driven by strong growth in the Canadian and Australian markets.
Total Extremities & Biologics include four sub-segments, namely, Lower Extremities, Upper Extremities, Biologics and Sports Med & Other.
The U.S. lower extremities business sales increased 8.9% in the fourth quarter. However, the U.S. lower extremities business was affected by revenue dis-synergies of around 5% in the quarter.
Adjusted gross margin, as a percentage of revenues, is pegged at 77.6% for the quarter, a decrease of roughly 100 basis points (bps) on a year-over-year basis. Per management, this was primarily because of geographic mix.
Selling, general and administrative expenses accounted for 72.8% of total revenues in the fourth quarter, totaling $140.5 million, a contraction of 313 basis points (bps) from the year-ago quarter. This can be attributed to reduced cost structure and other cost synergies. Notably, expenses on Research and Development (R&D) decreased 6% year over year.
Guidance
Wright Medical projects net sales for full-year 2017 in the band of $755 million to $765 million, representing reported growth of 9% to 11%. This includes a negative impact from foreign currency exchange of approximately 2%. Notably, the midpoint of the net sales guidance represents constant currency growth of approximately 13%.
The company forecasts full-year 2017 adjusted EBITDA from continuing operations in the range of $78.5 million to $85.5 million.
Wright Medical anticipates a stage rollout of its BluePrint 3D Planning software by the first or second quarter of 2017.
Furthermore, the company is planning to launch line extensions for SALVATION Limb Salvage System by the second half of 2017.
Meanwhile, the rollouts of the INVISION Revision Ankle System and the ORTHOLOC 3Di Ankle Fracture System are on track and are expected to be unveiled by the third and fourth quarters of 2017, respectively.
Stocks to Consider
Better-ranked stocks in the broader medical sector include Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Glaukos and Fluidigm sport a Zacks Rank #1 (Strong Buy) while Avinger carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock represents an impressive one-year return of 176.2%.
Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 8.4% over the last one year.
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Wright Medical (WMGI) Posts Narrower-than-Expected Q4 Loss
Wright Medical Group N.V. reported adjusted loss of 6 cents per share in the fourth quarter of 2016, narrower than loss of 8 cents reported in the year-ago quarter and the Zacks Consensus Estimate of a loss of 11 cents.
Net sales increased 15.7% year over year to $193 million and crushed the consensus estimate of $185 million.
Meanwhile, over the last four trailing quarters, the company posted positive earnings surprises, the average being 45.8%. Currently, the stock has a Zacks Rank #4 (Sell).
For full-year 2016, the company reported revenues of $690.3 million, up 70.3% on a year-over-year basis.
Highlights
The company’s flagship platforms – SIMPLICITI and ASCEND FLEX shoulder systems – recorded considerable growth and also hold promise going forward.
Notably, the INFINITY total ankle replacement system, AUGMENT Bone Graft and SALVATION limb salvage system (for treating Charcot foot) boosted Wright Medical’s trajectory in the fourth quarter.
The U.S. biologics business was again the fastest growing segment, growing 29% in the fourth quarter.
Quarter in Detail
Wright Medical currently reports revenues under one segment: Total Extremities & Biologics. Consolidated sales at the segment in the U.S. increased 15.7% from the year-ago quarter to almost $118 million.
Internationally, sales in the extremities and biologics business were up 15.8% year over year to $49.9 million, driven by strong growth in the Canadian and Australian markets.
Total Extremities & Biologics include four sub-segments, namely, Lower Extremities, Upper Extremities, Biologics and Sports Med & Other.
The U.S. lower extremities business sales increased 8.9% in the fourth quarter. However, the U.S. lower extremities business was affected by revenue dis-synergies of around 5% in the quarter.
Wright Medical Group N.V. Price and EPS Surprise
Wright Medical Group N.V. Price and EPS Surprise | Wright Medical Group N.V. Quote
Margin Details
Adjusted gross margin, as a percentage of revenues, is pegged at 77.6% for the quarter, a decrease of roughly 100 basis points (bps) on a year-over-year basis. Per management, this was primarily because of geographic mix.
Selling, general and administrative expenses accounted for 72.8% of total revenues in the fourth quarter, totaling $140.5 million, a contraction of 313 basis points (bps) from the year-ago quarter. This can be attributed to reduced cost structure and other cost synergies. Notably, expenses on Research and Development (R&D) decreased 6% year over year.
Guidance
Wright Medical projects net sales for full-year 2017 in the band of $755 million to $765 million, representing reported growth of 9% to 11%. This includes a negative impact from foreign currency exchange of approximately 2%. Notably, the midpoint of the net sales guidance represents constant currency growth of approximately 13%.
The company forecasts full-year 2017 adjusted EBITDA from continuing operations in the range of $78.5 million to $85.5 million.
Wright Medical anticipates a stage rollout of its BluePrint 3D Planning software by the first or second quarter of 2017.
Furthermore, the company is planning to launch line extensions for SALVATION Limb Salvage System by the second half of 2017.
Meanwhile, the rollouts of the INVISION Revision Ankle System and the ORTHOLOC 3Di Ankle Fracture System are on track and are expected to be unveiled by the third and fourth quarters of 2017, respectively.
Stocks to Consider
Better-ranked stocks in the broader medical sector include Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Glaukos and Fluidigm sport a Zacks Rank #1 (Strong Buy) while Avinger carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock represents an impressive one-year return of 176.2%.
Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 8.4% over the last one year.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>