Wright Medical Group Inc. (WMGI, Financial) filed Quarterly Report for the period ended 2010-09-30.
Wright Medical Group Inc. has a market cap of $549.9 million; its shares were traded at around $14.59 with a P/E ratio of 21.5 and P/S ratio of 1.1. WMGI is in the portfolios of PRIMECAP Management, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors.
Net Sales. Overall, our net sales increased 3% in the third quarter of 2010 compared to the third quarter of 2009. We experienced continued growth in our extremity product line, which increased 18% over prior year, as well as growth of 1% in our biologics line, while we experienced declines of 0.2% and 2% in our hip and knee product lines, respectively. Geographically, our domestic net sales totaled $74.6 million in the third quarter of 2010 and $73.8 million in the third quarter of 2009, representing 61% and 63% of total net sales, respectively, and growth of 1% in 2010 compared to 2009. Our international net sales totaled $47.1 million in the third quarter of 2010, compared to $44.0 million in the third quarter of 2009, representing growth of 7%. This increase is primarily a result of increased sales in Japan, Latin America, and Australia.
Our hip product net sales totaled $40.0 million during the third quarter of 2010, representing a 0.2% decrease from the prior year. Our domestic hip sales decreased 9% over prior year due to both decreased unit volumes and decreased pricing. Internationally, hip sales increased 7% over prior year primarily due to increased sales in Japan and Latin America.
Our extremity product line net sales increased to $30.1 million in the third quarter of 2010, representing growth of 18% over the third quarter of 2009. Domestically, extremity product sales increased 13% over the third quarter of 2009, as higher levels of sales of our foot and ankle products were partially offset by declines in certain of our upper extremity products. Our international extremity sales increased 49% compared to the same period in 2009 primarily due to increased sales by our subsidiary in Australia.
Selling, General and Administrative. Our selling, general and administrative expenses as a percentage of net sales totaled 53.3% in the third quarter of 2010, a 0.8 percentage point decrease from 54.1% in the third quarter of 2009. Selling, general and administrative expense for the third quarter of 2010 included $2.3 million of non-cash, stock based compensation expense (1.9% of net sales) and $942,000 of costs associated with U.S. government inquiries (0.8% of net sales). During the third quarter of 2009, selling, general and administrative expense included $2.5 million of non-cash, stock based compensation expense (2.1% of net sales) and $1.6 million of costs, primarily legal fees, associated with U.S. government inquiries (1.3% of net sales). The decrease in selling, general and administrative expenses as a percentage of sales during the third quarter of 2010 is primarily the result of lower levels of expenses associated with U.S. government inquiries and stock-based compensation expenses, as well as lower levels of cash incentive compensation. Additionally, increased spending on U.S. sales and marketing initiatives, such as our investment in our foot and ankle sales force, was offset by favorable expenses in Europe, primarily due to our restructuring efforts in Creteil, France.
Research and Development. Our investment in research and development activities represented approximately 7.2% of net sales in the third quarter of 2010, as compared to 7.3% of net sales in the third quarter of 2009. Our research and development expenses include approximately $0.5 million (0.4% of net sales) of non-cash, stock-based compensation expense in both the third quarter of 2010 and 2009.
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Wright Medical Group Inc. has a market cap of $549.9 million; its shares were traded at around $14.59 with a P/E ratio of 21.5 and P/S ratio of 1.1. WMGI is in the portfolios of PRIMECAP Management, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors.
Highlight of Business Operations:
Our third quarter domestic sales increased 1% in 2010, primarily due to 13% growth within our extremity line. Our domestic extremities growth is primarily attributable to higher sales volume of our foot and ankle products, in particular our INBONE products, our ORTHOLOC Polyaxial Locked Plating System, launched in September 2009, our DARCO® plating systems, and our VALOR® Hindfoot Fusion Nail System launched in June 2010. Domestic sales of our biologic products increased by 2% in the third quarter of 2010 as compared to the same period in 2009. Our domestic knee sales and domestic hip sales decreased by 5% and 9%, respectively, in the third quarter of 2010 as compared to the same period in 2009 due to lower levels of unit sales volume as well as lower pricing, both of which are impacted by market conditions throughout the industry.Net Sales. Overall, our net sales increased 3% in the third quarter of 2010 compared to the third quarter of 2009. We experienced continued growth in our extremity product line, which increased 18% over prior year, as well as growth of 1% in our biologics line, while we experienced declines of 0.2% and 2% in our hip and knee product lines, respectively. Geographically, our domestic net sales totaled $74.6 million in the third quarter of 2010 and $73.8 million in the third quarter of 2009, representing 61% and 63% of total net sales, respectively, and growth of 1% in 2010 compared to 2009. Our international net sales totaled $47.1 million in the third quarter of 2010, compared to $44.0 million in the third quarter of 2009, representing growth of 7%. This increase is primarily a result of increased sales in Japan, Latin America, and Australia.
Our hip product net sales totaled $40.0 million during the third quarter of 2010, representing a 0.2% decrease from the prior year. Our domestic hip sales decreased 9% over prior year due to both decreased unit volumes and decreased pricing. Internationally, hip sales increased 7% over prior year primarily due to increased sales in Japan and Latin America.
Our extremity product line net sales increased to $30.1 million in the third quarter of 2010, representing growth of 18% over the third quarter of 2009. Domestically, extremity product sales increased 13% over the third quarter of 2009, as higher levels of sales of our foot and ankle products were partially offset by declines in certain of our upper extremity products. Our international extremity sales increased 49% compared to the same period in 2009 primarily due to increased sales by our subsidiary in Australia.
Selling, General and Administrative. Our selling, general and administrative expenses as a percentage of net sales totaled 53.3% in the third quarter of 2010, a 0.8 percentage point decrease from 54.1% in the third quarter of 2009. Selling, general and administrative expense for the third quarter of 2010 included $2.3 million of non-cash, stock based compensation expense (1.9% of net sales) and $942,000 of costs associated with U.S. government inquiries (0.8% of net sales). During the third quarter of 2009, selling, general and administrative expense included $2.5 million of non-cash, stock based compensation expense (2.1% of net sales) and $1.6 million of costs, primarily legal fees, associated with U.S. government inquiries (1.3% of net sales). The decrease in selling, general and administrative expenses as a percentage of sales during the third quarter of 2010 is primarily the result of lower levels of expenses associated with U.S. government inquiries and stock-based compensation expenses, as well as lower levels of cash incentive compensation. Additionally, increased spending on U.S. sales and marketing initiatives, such as our investment in our foot and ankle sales force, was offset by favorable expenses in Europe, primarily due to our restructuring efforts in Creteil, France.
Research and Development. Our investment in research and development activities represented approximately 7.2% of net sales in the third quarter of 2010, as compared to 7.3% of net sales in the third quarter of 2009. Our research and development expenses include approximately $0.5 million (0.4% of net sales) of non-cash, stock-based compensation expense in both the third quarter of 2010 and 2009.
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