Wright plans to reorganize after another quarterly drop
Wright Medical Group ($WMGI) posted another loss and sales decline in the third quarter, and the company is planning to split up its business units in an effort to cut costs.
Wright pulled in Q3 revenue of $110.4 million, a 7% drop from the year before, but trimmed its quarterly loss to $5.3 million from last year's $16 million. Wright blames the loss on a series of one-time charges incurred on the quarter, as well as plummeting demand for its hip and knee replacement devices, which declined 12.2% on the quarter.
Now Wright is in the process of reorganizing its business, putting its orthopedic reconstruction devices in one group and its extremities products in another, The Commercial Appeal reports. The lone Q3 bright spot for Wright was 13% revenue growth for its foot and ankle products, and isolating the division will "better position our company to be a focused, growth-oriented operation," CEO Robert Palmisano told investors.
This is the latest organizational shakeup for the Tennessee devicemaker, which has shuffled execs in and out since its 2010 admission that it violated federal anti-kickback laws. Last month, Wright finally completed the deferred prosecution agreement stemming from the scandal, saying it has instituted new compliance practices that will keep it on the straight-and-narrow from now on.
While Wright has kept itself out of the regulatory doghouse, it still has the pressing matter of reversing its sales fortunes. The company's slumping hip sales are hardly unique--as competitors Stryker ($SYK) and DePuy can attest--but a third consecutive quarter of foot and ankle growth is something to build on.