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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Wright Medical Group NV | NASDAQ:WMGI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 29.98 | 30.05 | 30.59 | 0 | 01:00:00 |
|
☑
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
|
to
|
|
The
|
Netherlands
|
|
98-0509600
|
(State or other jurisdiction
of incorporation or organization) |
|
(I.R.S. Employer
Identification No.)
|
Prins Bernhardplein 200
|
|
None
|
|||
1097 JB
|
Amsterdam,
|
The
|
Netherlands
|
|
(Zip Code)
|
(Address of principal executive offices)
|
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Ordinary shares, par value €0.03 per share
|
|
WMGI
|
|
Nasdaq Global Select Market
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement that we entered into with Stryker Corporation (Stryker) and its wholly-owned acquisition subsidiary on November 4, 2019, pursuant to which we expect to become a wholly-owned subsidiary of Stryker;
|
•
|
the failure to satisfy required closing conditions under the agreement with Stryker, including, but not limited to, the tender of a minimum number of our outstanding ordinary shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders and the receipt of required regulatory approvals, or the failure to complete the acquisition in a timely manner;
|
•
|
risks related to disruption of management’s attention from our ongoing business operations due to the pendency of the transaction with Stryker;
|
•
|
the effect of the announcement of the transaction with Stryker on our operating results and business generally, including, but not limited to, our ability to retain and hire key personnel and maintain our relationships with customers, strategic partners and suppliers;
|
•
|
the impact of the pending transaction with Stryker on our strategic plans and operations and our ability to respond effectively to competitive pressures, industry developments and future opportunities;
|
•
|
the outcome of any legal proceedings that may be instituted against us and others relating to the proposed transaction with Stryker;
|
•
|
inability to achieve or sustain profitability;
|
•
|
failure to achieve our financial guidance or projected goals and objectives, including long-term financial targets, in the time periods that we anticipate or announce publicly;
|
•
|
failure to realize the anticipated benefits from previous acquisitions and dispositions, including our October 2018 acquisition of Cartiva, Inc. (Cartiva);
|
•
|
failure to obtain anticipated commercial sales of our AUGMENT® Bone Graft and AUGMENT® Injectable products;
|
•
|
liability for product liability claims on hip/knee (OrthoRecon) products sold by Wright Medical Technology, Inc. (WMT) prior to the divestiture of the OrthoRecon business;
|
•
|
risks and uncertainties associated with our metal-on-metal master settlement agreements and the settlement agreements with certain of our insurance companies, including without limitation, the resolution of the remaining unresolved claims, the effect of the broad release of certain insurance coverage for present and future claims, and the resolution of WMT’s dispute with the remaining carrier;
|
•
|
adverse outcomes in existing product liability litigation;
|
•
|
copycat claims against modular hip systems resulting from a competitor’s recall of its modular hip product;
|
•
|
the ability of a creditor of any one particular entity within our corporate structure to reach the assets of the other entities within our corporate structure not liable for the underlying claims of the one particular entity, despite our corporate structure which is intended to ring-fence liabilities;
|
•
|
new product liability claims;
|
•
|
pending and future other litigation, which could have an adverse effect on our business, financial condition, or operating results;
|
•
|
challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;
|
•
|
the possibility of private securities litigation or shareholder derivative suits;
|
•
|
inadequate insurance coverage;
|
•
|
inability to generate sufficient cash flow to satisfy our capital requirements, including future milestone payments, and existing debt, including the conversion features of our convertible senior notes, or refinance our existing debt as it matures;
|
•
|
risks associated with our credit, security and guaranty agreement for our senior secured asset-based line of credit and term loan facility;
|
•
|
inability to raise additional financing when needed and on favorable terms;
|
•
|
the loss of key suppliers, which may result in our inability to meet customer orders for our products in a timely manner or within our budget;
|
•
|
the incurrence of significant expenditures of resources to maintain relatively high levels of inventory, which could reduce our cash flows and increase the risk of inventory obsolescence, which could harm our operating results;
|
•
|
our inability to timely manufacture products or instrument sets to meet demand;
|
•
|
our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;
|
•
|
our plans to bring the manufacturing of certain of our products in-house and possible disruptions we may experience in connection with such transition;
|
•
|
our plans to increase our gross margins by taking certain actions designed to do so;
|
•
|
inventory reductions or fluctuations in buying patterns by wholesalers or distributors;
|
•
|
not successfully competing against our existing or potential competitors and the effect of significant recent consolidations amongst our competitors;
|
•
|
not successfully developing and marketing new products and technologies and implementing our business strategy;
|
•
|
insufficient demand for and market acceptance of our new and existing products;
|
•
|
the reliance of our business plan on certain market assumptions;
|
•
|
lack of suitable business development opportunities;
|
•
|
inability to capitalize on business development opportunities;
|
•
|
future actions of the SEC, the United States Attorney’s office, the U.S. Food and Drug Administration (FDA), the Department of Health and Human Services, or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the U.S. Foreign Corrupt Practices Act and similar laws, that could delay, limit, or suspend our development, manufacturing, commercialization, and sale of products, or result in seizures, injunctions, monetary sanctions, or criminal or civil liabilities;
|
•
|
failure or delay in obtaining FDA or other regulatory clearance for our products;
|
•
|
the compliance of our products and activities with the laws and regulations of the countries in which they are marketed, which compliance may be costly and time-consuming;
|
•
|
the use, misuse or off-label use of our products that may harm our image in the marketplace or result in injuries that may lead to product liability suits, which could be costly to our business or result in governmental sanctions;
|
•
|
changes in healthcare laws, which could generate downward pressure on our product pricing;
|
•
|
ability of healthcare providers to obtain reimbursement for our products or a reduction in the current levels of reimbursement, which could result in reduced use of our products and a decline in sales;
|
•
|
the potentially negative effect of our ongoing compliance efforts on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products;
|
•
|
failures of, interruptions to, or unauthorized tampering with, our information technology systems;
|
•
|
our inability to maintain effective internal controls;
|
•
|
product quality or patient safety issues;
|
•
|
geographic and product mix impact on our sales;
|
•
|
deriving a significant portion of our revenues from operations in certain geographic markets that are subject to political, economic, and social instability, including in particular France, and risks and uncertainties involved in launching our products in certain new geographic markets;
|
•
|
the negative impact of the commercial and credit environment on us, our customers, and our suppliers;
|
•
|
inability to retain key sales representatives, independent distributors, and other personnel or to attract new talent;
|
•
|
consolidation in the healthcare industry that could lead to demands for price concessions or the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition, or operating results;
|
•
|
our clinical trials and their results and our reliance on third parties to conduct them;
|
•
|
potentially burdensome tax measures; and
|
•
|
fluctuations in foreign currency exchange rates.
|
Wright Medical Group N.V.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
|
|||||||
|
September 29, 2019
|
|
December 30, 2018
|
||||
Assets:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
147,263
|
|
|
$
|
191,351
|
|
Accounts receivable, net
|
137,411
|
|
|
141,019
|
|
||
Inventories
|
197,283
|
|
|
180,690
|
|
||
Prepaid expenses
|
17,460
|
|
|
11,823
|
|
||
Other current assets 1
|
141,347
|
|
|
78,349
|
|
||
Total current assets
|
640,764
|
|
|
603,232
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
233,494
|
|
|
224,929
|
|
||
Goodwill
|
1,254,304
|
|
|
1,268,954
|
|
||
Intangible assets, net
|
263,023
|
|
|
282,332
|
|
||
Deferred income taxes
|
923
|
|
|
942
|
|
||
Other assets 1
|
116,324
|
|
|
314,012
|
|
||
Total assets
|
$
|
2,508,832
|
|
|
$
|
2,694,401
|
|
Liabilities and Shareholders’ Equity:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
35,651
|
|
|
$
|
48,359
|
|
Accrued expenses and other current liabilities 1
|
282,691
|
|
|
217,081
|
|
||
Current portion of long-term obligations 1
|
425,312
|
|
|
201,686
|
|
||
Total current liabilities
|
743,654
|
|
|
467,126
|
|
||
|
|
|
|
||||
Long-term debt and finance lease obligations 1
|
731,756
|
|
|
913,441
|
|
||
Deferred income taxes
|
10,785
|
|
|
13,146
|
|
||
Other liabilities 1
|
170,717
|
|
|
368,229
|
|
||
Total liabilities
|
1,656,912
|
|
|
1,761,942
|
|
||
|
|
|
|||||
Shareholders’ equity:
|
|
|
|
||||
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 126,893,594 shares at September 29, 2019 and 125,555,751 shares at December 30, 2018
|
4,634
|
|
|
4,589
|
|
||
Additional paid-in capital
|
2,563,397
|
|
|
2,514,295
|
|
||
Accumulated other comprehensive loss
|
(39,796
|
)
|
|
(8,083
|
)
|
||
Accumulated deficit
|
(1,676,315
|
)
|
|
(1,578,342
|
)
|
||
Total shareholders’ equity
|
851,920
|
|
|
932,459
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,508,832
|
|
|
$
|
2,694,401
|
|
1
|
At June 30, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end; and, therefore, the holders of the 2021 Notes were able to convert the notes during the succeeding calendar quarterly period ending September 30, 2019. Due to the ability of the
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
|
|||||||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
Net sales
|
$
|
212,434
|
|
|
$
|
194,106
|
|
|
$
|
672,295
|
|
|
$
|
598,043
|
|
Cost of sales 1
|
44,441
|
|
|
44,307
|
|
|
139,096
|
|
|
131,004
|
|
||||
Gross profit
|
167,993
|
|
|
149,799
|
|
|
533,199
|
|
|
467,039
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative 1
|
152,780
|
|
|
139,223
|
|
|
458,198
|
|
|
417,297
|
|
||||
Research and development 1
|
18,045
|
|
|
13,829
|
|
|
53,773
|
|
|
42,393
|
|
||||
Amortization of intangible assets
|
8,308
|
|
|
5,881
|
|
|
23,757
|
|
|
19,031
|
|
||||
Total operating expenses
|
179,133
|
|
|
158,933
|
|
|
535,728
|
|
|
478,721
|
|
||||
Operating loss
|
(11,140
|
)
|
|
(9,134
|
)
|
|
(2,529
|
)
|
|
(11,682
|
)
|
||||
Interest expense, net
|
20,448
|
|
|
19,753
|
|
|
60,138
|
|
|
60,243
|
|
||||
Other expense, net
|
1,317
|
|
|
3,902
|
|
|
12,381
|
|
|
75,649
|
|
||||
Loss from continuing operations before income taxes
|
(32,905
|
)
|
|
(32,789
|
)
|
|
(75,048
|
)
|
|
(147,574
|
)
|
||||
Provision (benefit) for income taxes
|
3,295
|
|
|
3,040
|
|
|
10,340
|
|
|
(1,217
|
)
|
||||
Net loss from continuing operations
|
(36,200
|
)
|
|
(35,829
|
)
|
|
(85,388
|
)
|
|
(146,357
|
)
|
||||
(Loss) income from discontinued operations, net of tax
|
(7,589
|
)
|
|
(6,696
|
)
|
|
(12,814
|
)
|
|
10,620
|
|
||||
Net loss
|
$
|
(43,789
|
)
|
|
$
|
(42,525
|
)
|
|
$
|
(98,202
|
)
|
|
$
|
(135,737
|
)
|
|
|
|
|
|
|
|
|
||||||||
$
|
(0.29
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(1.35
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(1.25
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of ordinary shares outstanding - basic and diluted:
|
126,767
|
|
|
113,043
|
|
|
126,282
|
|
|
108,348
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
Cost of sales
|
$
|
156
|
|
|
$
|
141
|
|
|
$
|
413
|
|
|
$
|
452
|
|
Selling, general and administrative
|
7,284
|
|
|
6,537
|
|
|
21,106
|
|
|
16,496
|
|
||||
Research and development
|
795
|
|
|
579
|
|
|
1,960
|
|
|
1,388
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
Net loss
|
$
|
(43,789
|
)
|
|
$
|
(42,525
|
)
|
|
$
|
(98,202
|
)
|
|
$
|
(135,737
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Changes in foreign currency translation
|
(20,287
|
)
|
|
(2,773
|
)
|
|
(31,713
|
)
|
|
(19,642
|
)
|
||||
Other comprehensive loss
|
(20,287
|
)
|
|
(2,773
|
)
|
|
(31,713
|
)
|
|
(19,642
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive loss
|
$
|
(64,076
|
)
|
|
$
|
(45,298
|
)
|
|
$
|
(129,915
|
)
|
|
$
|
(155,379
|
)
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
|
|||||||
|
Nine months ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(98,202
|
)
|
|
$
|
(135,737
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation
|
47,688
|
|
|
42,986
|
|
||
Share-based compensation expense
|
23,479
|
|
|
18,336
|
|
||
Amortization of intangible assets
|
23,757
|
|
|
19,031
|
|
||
Amortization of deferred financing costs and debt discount
|
40,577
|
|
|
40,641
|
|
||
Deferred income taxes
|
(1,857
|
)
|
|
(2,976
|
)
|
||
Provision for excess and obsolete inventory
|
10,144
|
|
|
17,358
|
|
||
Amortization of inventory step-up adjustment
|
1,057
|
|
|
—
|
|
||
Non-cash adjustment to derivative fair values
|
(885
|
)
|
|
34,343
|
|
||
Net loss on exchange or extinguishment of debt
|
14,274
|
|
|
39,935
|
|
||
Non-cash asset impairment
|
5,597
|
|
|
—
|
|
||
(420
|
)
|
|
(3,084
|
)
|
|||
Other
|
(3,862
|
)
|
|
617
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
2,617
|
|
|
6,029
|
|
||
Inventories
|
(30,382
|
)
|
|
(32,738
|
)
|
||
Prepaid expenses and other current assets
|
(5,725
|
)
|
|
34,847
|
|
||
Accounts payable
|
(12,059
|
)
|
|
3,731
|
|
||
Accrued expenses and other liabilities
|
15,534
|
|
|
(23,905
|
)
|
||
(13,053
|
)
|
|
(71,963
|
)
|
|||
Net cash provided by (used in) operating activities
|
18,279
|
|
|
(12,549
|
)
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(63,849
|
)
|
|
(49,920
|
)
|
||
Purchase of intangible assets
|
(6,887
|
)
|
|
(2,288
|
)
|
||
Acquisition of business
|
722
|
|
|
—
|
|
||
Other investing
|
3,766
|
|
|
(500
|
)
|
||
Net cash used in investing activities
|
(66,248
|
)
|
|
(52,708
|
)
|
||
Financing activities:
|
|
|
|
||||
Issuance of ordinary shares
|
15,621
|
|
|
10,975
|
|
||
Proceeds from equity offering
|
—
|
|
|
448,924
|
|
||
Payment of equity offering costs
|
—
|
|
|
(25,566
|
)
|
||
Issuance of stock warrants
|
21,210
|
|
|
102,137
|
|
||
Payment of notes premium
|
—
|
|
|
(55,643
|
)
|
||
Payment of notes hedge options
|
(30,144
|
)
|
|
(141,278
|
)
|
||
Repurchase of stock warrants
|
(11,026
|
)
|
|
(23,972
|
)
|
||
Payment of equity issuance costs
|
(350
|
)
|
|
(1,870
|
)
|
||
Proceeds from notes hedge options
|
16,849
|
|
|
34,553
|
|
||
Proceeds from exchangeable senior notes
|
—
|
|
|
675,000
|
|
||
Proceeds from other debt
|
4,704
|
|
|
23,434
|
|
Wright Medical Group N.V.
Consolidated Statements of Cash Flows (Continued)
(In thousands)
|
|||||||
|
Nine months ended
|
||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||
Payments of debt
|
$
|
(3,466
|
)
|
|
$
|
(34,067
|
)
|
Redemption of convertible senior notes
|
—
|
|
|
(400,911
|
)
|
||
Payment of financing costs
|
(2,978
|
)
|
|
(14,092
|
)
|
||
Payment of contingent consideration
|
—
|
|
|
(919
|
)
|
||
Payments of finance lease obligations
|
(5,874
|
)
|
|
(3,905
|
)
|
||
Net cash provided by financing activities
|
4,546
|
|
|
592,800
|
|
||
Effect of exchange rates on cash and cash equivalents
|
(665
|
)
|
|
(380
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(44,088
|
)
|
|
527,163
|
|
||
Cash and cash equivalents, beginning of period
|
191,351
|
|
|
167,740
|
|
||
Cash and cash equivalents, end of period
|
$
|
147,263
|
|
|
$
|
694,903
|
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(In thousands, except share data)
(unaudited)
|
||||||||||||||||||||||
|
Three months ended September 29, 2019
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive loss
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at June 30, 2019
|
126,580,952
|
|
|
$
|
4,623
|
|
|
$
|
2,553,442
|
|
|
$
|
(19,509
|
)
|
|
$
|
(1,632,526
|
)
|
|
$
|
906,030
|
|
2019 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,789
|
)
|
|
(43,789
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,287
|
)
|
|
—
|
|
|
(20,287
|
)
|
|||||
Issuances of ordinary shares
|
71,097
|
|
|
2
|
|
|
1,605
|
|
|
—
|
|
|
—
|
|
|
1,607
|
|
|||||
Vesting of restricted stock units
|
241,545
|
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
8,359
|
|
|
—
|
|
|
—
|
|
|
8,359
|
|
|||||
Balance at September 29, 2019
|
126,893,594
|
|
|
$
|
4,634
|
|
|
$
|
2,563,397
|
|
|
$
|
(39,796
|
)
|
|
$
|
(1,676,315
|
)
|
|
$
|
851,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Three months ended September 30, 2018
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive income (loss)
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at July 1, 2018
|
106,443,280
|
|
|
$
|
3,919
|
|
|
$
|
2,060,949
|
|
|
$
|
5,421
|
|
|
$
|
(1,502,049
|
)
|
|
$
|
568,240
|
|
2018 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,525
|
)
|
|
(42,525
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,773
|
)
|
|
—
|
|
|
(2,773
|
)
|
|||||
Issuances of ordinary shares
|
252,631
|
|
|
9
|
|
|
5,253
|
|
|
—
|
|
|
—
|
|
|
5,262
|
|
|||||
18,248,932
|
|
|
641
|
|
|
422,371
|
|
|
—
|
|
|
—
|
|
|
423,012
|
|
||||||
Vesting of restricted stock units
|
120,397
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
7,282
|
|
|
—
|
|
|
—
|
|
|
7,282
|
|
|||||
Balance at September 30, 2018
|
125,065,240
|
|
|
$
|
4,573
|
|
|
$
|
2,495,851
|
|
|
$
|
2,648
|
|
|
$
|
(1,544,574
|
)
|
|
$
|
958,498
|
|
|
||||||||||||||||||||||
|
Nine months ended September 29, 2019
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive loss
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 30, 2018
|
125,555,751
|
|
|
$
|
4,589
|
|
|
$
|
2,514,295
|
|
|
$
|
(8,083
|
)
|
|
$
|
(1,578,342
|
)
|
|
$
|
932,459
|
|
2019 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,202
|
)
|
|
(98,202
|
)
|
|||||
Cumulative impact of lease accounting adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
229
|
|
|
229
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,713
|
)
|
|
—
|
|
|
(31,713
|
)
|
|||||
Issuances of ordinary shares
|
754,682
|
|
|
25
|
|
|
15,596
|
|
|
—
|
|
|
—
|
|
|
15,621
|
|
|||||
Vesting of restricted stock units
|
583,161
|
|
|
20
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
23,692
|
|
|
—
|
|
|
—
|
|
|
23,692
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
9,834
|
|
|
—
|
|
|
—
|
|
|
9,834
|
|
|||||
Balance at September 29, 2019
|
126,893,594
|
|
|
$
|
4,634
|
|
|
$
|
2,563,397
|
|
|
$
|
(39,796
|
)
|
|
$
|
(1,676,315
|
)
|
|
$
|
851,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Continued)
(In thousands, except share data)
(unaudited)
|
||||||||||||||||||||||
|
Nine months ended September 30, 2018
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive income (loss)
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 31, 2017
|
105,807,424
|
|
|
$
|
3,896
|
|
|
$
|
1,971,347
|
|
|
$
|
22,290
|
|
|
$
|
(1,408,837
|
)
|
|
$
|
588,696
|
|
2018 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(135,737
|
)
|
|
(135,737
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,642
|
)
|
|
—
|
|
|
(19,642
|
)
|
|||||
Issuances of ordinary shares
|
556,827
|
|
|
20
|
|
|
10,955
|
|
|
—
|
|
|
—
|
|
|
10,975
|
|
|||||
18,248,932
|
|
|
641
|
|
|
422,371
|
|
|
—
|
|
|
—
|
|
|
423,012
|
|
||||||
Vesting of restricted stock units
|
452,057
|
|
|
16
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
18,238
|
|
|
—
|
|
|
—
|
|
|
18,238
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
72,956
|
|
|
—
|
|
|
—
|
|
|
72,956
|
|
|||||
Balance at September 29, 2019
|
125,065,240
|
|
|
$
|
4,573
|
|
|
$
|
2,495,851
|
|
|
$
|
2,648
|
|
|
$
|
(1,544,574
|
)
|
|
$
|
958,498
|
|
Cash and cash equivalents
|
$
|
309
|
|
Accounts receivable
|
4,352
|
|
|
Inventories
|
2,686
|
|
|
Other current assets
|
486
|
|
|
Property, plant and equipment
|
1,446
|
|
|
Intangible assets
|
81,000
|
|
|
Total assets acquired
|
90,279
|
|
|
Current liabilities
|
(4,226
|
)
|
|
Deferred income taxes
|
(3,622
|
)
|
|
Total liabilities assumed
|
(7,848
|
)
|
|
Net assets acquired
|
$
|
82,431
|
|
|
|
||
Goodwill
|
351,445
|
|
|
|
|
||
Total purchase consideration
|
$
|
433,876
|
|
(in thousands)
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
Net sales
|
$
|
212,434
|
|
|
$
|
201,916
|
|
|
$
|
672,295
|
|
|
$
|
622,763
|
|
Net loss from continuing operations
|
(35,847
|
)
|
|
(36,742
|
)
|
|
(84,331
|
)
|
|
(148,696
|
)
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative
|
7,589
|
|
|
8,553
|
|
|
12,814
|
|
|
(15,309
|
)
|
||||
(Loss) income from discontinued operations before income taxes
|
(7,589
|
)
|
|
(8,553
|
)
|
|
(12,814
|
)
|
|
15,309
|
|
||||
(Benefit) provision for income taxes
|
—
|
|
|
(2,188
|
)
|
|
—
|
|
|
3,995
|
|
||||
(Loss) income from discontinued operations, net of tax
|
$
|
(7,589
|
)
|
|
$
|
(6,365
|
)
|
|
$
|
(12,814
|
)
|
|
$
|
11,314
|
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
Raw materials
|
$
|
13,414
|
|
|
$
|
9,612
|
|
Work-in-process
|
28,270
|
|
|
26,839
|
|
||
Finished goods
|
155,599
|
|
|
144,239
|
|
||
|
$
|
197,283
|
|
|
$
|
180,690
|
|
Level 1:
|
Financial instruments with unadjusted, quoted prices listed on active market exchanges.
|
Level 2:
|
Financial instruments determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
|
Level 3:
|
Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.
|
|
September 29, 2019
|
|
December 30, 2018
|
||||||||
|
Location on condensed consolidated balance sheet
|
|
Amount
|
|
Location on condensed consolidated balance sheet
|
|
Amount
|
||||
2023 Notes Hedges
|
Other assets
|
|
$
|
83,329
|
|
|
Other assets
|
|
$
|
115,923
|
|
2023 Notes Conversion Derivative
|
Other liabilities
|
|
$
|
82,833
|
|
|
Other liabilities
|
|
$
|
116,833
|
|
2021 Notes Hedges
|
Other current assets
|
|
$
|
93,198
|
|
|
Other assets
|
|
$
|
188,301
|
|
2021 Notes Conversion Derivative
|
Accrued expenses and other current liabilities
|
|
$
|
91,833
|
|
|
Other liabilities
|
|
$
|
187,539
|
|
2020 Notes Hedges
|
Other current assets
|
|
$
|
340
|
|
|
Other current assets
|
|
$
|
17,822
|
|
2020 Notes Conversion Derivative
|
Accrued expenses and other current liabilities
|
|
$
|
331
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
17,386
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
2023 Notes Hedges
|
$
|
(81,171
|
)
|
|
$
|
25,880
|
|
|
$
|
(62,738
|
)
|
|
$
|
9,575
|
|
2023 Notes Conversion Derivative
|
81,194
|
|
|
(25,244
|
)
|
|
62,875
|
|
|
(26,482
|
)
|
||||
2021 Notes Hedges
|
(119,666
|
)
|
|
46,591
|
|
|
(95,103
|
)
|
|
95,856
|
|
||||
2021 Notes Conversion Derivative
|
118,923
|
|
|
(45,715
|
)
|
|
95,706
|
|
|
(95,208
|
)
|
||||
2020 Notes Hedges
|
(5,675
|
)
|
|
3,317
|
|
|
(633
|
)
|
|
16,847
|
|
||||
2020 Warrants Derivative
|
—
|
|
|
3,586
|
|
|
—
|
|
|
3,336
|
|
||||
2020 Notes Conversion Derivative
|
5,468
|
|
|
(8,186
|
)
|
|
778
|
|
|
(38,268
|
)
|
||||
Net (loss) gain on changes in fair value
|
$
|
(927
|
)
|
|
$
|
229
|
|
|
$
|
885
|
|
|
$
|
(34,344
|
)
|
|
2020 Notes Conversion Derivative
|
2020 Notes
Hedge |
2021 Notes Conversion Derivative
|
2021 Notes
Hedge
|
2023 Notes Conversion Derivative
|
2023 Notes
Hedge
|
Black Stock Volatility (1)
|
39.53%
|
39.53%
|
42.89%
|
42.89%
|
40.05%
|
40.05%
|
Credit Spread for Wright (2)
|
3.88%
|
N/A
|
3.54%
|
N/A
|
4.60%
|
N/A
|
Credit Spread for Deutsche Bank AG (3)
|
N/A
|
0.37%
|
N/A
|
N/A
|
N/A
|
0.74%
|
Credit Spread for Wells Fargo Securities, LLC (3)
|
N/A
|
0.15%
|
N/A
|
N/A
|
N/A
|
N/A
|
Credit Spread for JPMorgan Chase Bank (3)
|
N/A
|
0.15%
|
N/A
|
0.25%
|
N/A
|
0.38%
|
Credit Spread for Bank of America (3)
|
N/A
|
N/A
|
N/A
|
0.29%
|
N/A
|
0.42%
|
(1)
|
Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.
|
(2)
|
Credit spread implied from traded price.
|
(3)
|
Credit spread of each bank is estimated using CDS curves. Source: Bloomberg.
|
|
Total
|
Quoted prices
in active
markets
(Level 1)
|
Prices with
other
observable
inputs
(Level 2)
|
Prices with
unobservable
inputs
(Level 3)
|
||||||||
September 29, 2019
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
147,263
|
|
$
|
147,263
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
340
|
|
—
|
|
—
|
|
340
|
|
||||
2021 Notes Hedges
|
93,198
|
|
—
|
|
—
|
|
93,198
|
|
||||
2023 Notes Hedges
|
83,329
|
|
—
|
|
—
|
|
83,329
|
|
||||
Total
|
$
|
324,130
|
|
$
|
147,263
|
|
$
|
—
|
|
$
|
176,867
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2020 Notes Conversion Derivative
|
$
|
331
|
|
$
|
—
|
|
$
|
—
|
|
$
|
331
|
|
2021 Notes Conversion Derivative
|
91,833
|
|
—
|
|
—
|
|
91,833
|
|
||||
2023 Notes Conversion Derivative
|
82,833
|
|
—
|
|
—
|
|
82,833
|
|
||||
Contingent consideration
|
21,017
|
|
—
|
|
—
|
|
21,017
|
|
||||
Total
|
$
|
196,014
|
|
$
|
—
|
|
$
|
—
|
|
$
|
196,014
|
|
|
Total
|
Quoted prices
in active markets (Level 1) |
Prices with
other observable inputs (Level 2) |
Prices with
unobservable inputs (Level 3) |
||||||||
December 30, 2018
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
191,351
|
|
$
|
191,351
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
17,822
|
|
—
|
|
—
|
|
17,822
|
|
||||
2021 Notes Hedges
|
188,301
|
|
—
|
|
—
|
|
188,301
|
|
||||
2023 Notes Hedges
|
115,923
|
|
—
|
|
—
|
|
115,923
|
|
||||
Total
|
$
|
513,397
|
|
$
|
191,351
|
|
$
|
—
|
|
$
|
322,046
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||
2020 Notes Conversion Derivative
|
$
|
17,386
|
|
$
|
—
|
|
$
|
—
|
|
$
|
17,386
|
|
2021 Notes Conversion Derivative
|
187,539
|
|
—
|
|
—
|
|
187,539
|
|
||||
2023 Notes Conversion Derivative
|
116,833
|
|
—
|
|
—
|
|
116,833
|
|
||||
Contingent consideration
|
19,248
|
|
—
|
|
—
|
|
19,248
|
|
||||
Contingent consideration (CVRs)
|
420
|
|
420
|
|
—
|
|
—
|
|
||||
Total
|
$
|
341,426
|
|
$
|
420
|
|
$
|
—
|
|
$
|
341,006
|
|
|
Balance at December 30, 2018
|
Additions
|
Transfers into Level 3
|
Gain/(loss) on fair value adjustments included in earnings
|
Gain/(loss) on issuance/settlement
included in earnings
|
Settlements
|
Currency
|
Balance at September 29, 2019
|
||||||||||
2020 Notes Hedges
|
$
|
17,822
|
|
—
|
|
—
|
|
(633
|
)
|
—
|
|
(16,849
|
)
|
—
|
|
$
|
340
|
|
2020 Notes Conversion Derivative
|
$
|
(17,386
|
)
|
—
|
|
—
|
|
778
|
|
16,277
|
|
—
|
|
—
|
|
$
|
(331
|
)
|
2021 Notes Hedges
|
$
|
188,301
|
|
—
|
|
—
|
|
(95,103
|
)
|
—
|
|
—
|
|
—
|
|
$
|
93,198
|
|
2021 Notes Conversion Derivative
|
$
|
(187,539
|
)
|
—
|
|
—
|
|
95,706
|
|
—
|
|
—
|
|
—
|
|
$
|
(91,833
|
)
|
2023 Notes Hedges
|
$
|
115,923
|
|
30,144
|
|
—
|
|
(62,738
|
)
|
—
|
|
—
|
|
—
|
|
$
|
83,329
|
|
2023 Notes Conversion Derivative
|
$
|
(116,833
|
)
|
—
|
|
—
|
|
62,875
|
|
(28,875
|
)
|
—
|
|
—
|
|
$
|
(82,833
|
)
|
Contingent consideration
|
$
|
(19,248
|
)
|
—
|
|
—
|
|
(2,946
|
)
|
—
|
|
—
|
|
1,177
|
|
$
|
(21,017
|
)
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
Property, plant and equipment, at cost
|
$
|
603,967
|
|
|
$
|
534,366
|
|
Less: Accumulated depreciation
|
(370,473
|
)
|
|
(309,437
|
)
|
||
|
$
|
233,494
|
|
|
$
|
224,929
|
|
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
|
Total
|
||||||||
Balance at December 30, 2018
|
$
|
569,970
|
|
|
$
|
627,850
|
|
|
$
|
71,134
|
|
|
$
|
1,268,954
|
|
Foreign currency translation
|
—
|
|
|
(3,261
|
)
|
|
(11,389
|
)
|
|
(14,650
|
)
|
||||
Balance at September 29, 2019
|
$
|
569,970
|
|
|
$
|
624,589
|
|
|
$
|
59,745
|
|
|
$
|
1,254,304
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017
|
$
|
218,525
|
|
|
$
|
630,650
|
|
|
$
|
84,487
|
|
|
$
|
933,662
|
|
Goodwill adjustment associated with IMASCAP acquisition
|
—
|
|
|
(917
|
)
|
|
—
|
|
|
(917
|
)
|
||||
Foreign currency translation
|
—
|
|
|
(1,111
|
)
|
|
(10,258
|
)
|
|
(11,369
|
)
|
||||
Balance at September 30, 2018
|
$
|
218,525
|
|
|
$
|
628,622
|
|
|
$
|
74,229
|
|
|
$
|
921,376
|
|
|
September 29, 2019
|
|
December 30, 2018
|
||||||||||||
|
Cost
|
|
Accumulated
amortization
|
|
Cost
|
|
Accumulated
amortization
|
||||||||
Indefinite life intangibles:
|
|
|
|
|
|
|
|
||||||||
In-process research and development (IPRD) technology
|
$
|
6,986
|
|
|
$
|
—
|
|
|
$
|
6,262
|
|
|
$
|
—
|
|
Total indefinite life intangibles
|
6,986
|
|
|
|
|
6,262
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Finite life intangibles:
|
|
|
|
|
|
|
|
||||||||
Completed technology
|
170,332
|
|
|
66,989
|
|
|
174,596
|
|
|
55,114
|
|
||||
Licenses
|
9,247
|
|
|
2,555
|
|
|
6,547
|
|
|
1,851
|
|
||||
Customer relationships
|
179,901
|
|
|
38,389
|
|
|
179,605
|
|
|
30,935
|
|
||||
Trademarks
|
13,834
|
|
|
11,633
|
|
|
14,048
|
|
|
11,564
|
|
||||
Non-compete agreements
|
5,609
|
|
|
3,320
|
|
|
3,252
|
|
|
2,514
|
|
||||
Other
|
742
|
|
|
742
|
|
|
764
|
|
|
764
|
|
||||
Total finite life intangibles
|
379,665
|
|
|
$
|
123,628
|
|
|
378,812
|
|
|
$
|
102,742
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total intangibles
|
386,651
|
|
|
|
|
385,074
|
|
|
|
||||||
Less: Accumulated amortization
|
(123,628
|
)
|
|
|
|
(102,742
|
)
|
|
|
||||||
Intangible assets, net
|
$
|
263,023
|
|
|
|
|
$
|
282,332
|
|
|
|
•
|
We elected the package of practical expedients available for transition which allows us to not reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases and whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.
|
•
|
We elected to use hindsight when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset.
|
•
|
For all asset classes, we elected to not recognize a right-of-use asset and lease liability for short-term leases.
|
•
|
For all asset classes, we elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component.
|
•
|
The determination of the discount rate used in a lease is our incremental borrowing rate which is based on what we would normally pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.
|
|
September 29, 2019
|
||
Buildings
|
$
|
18,056
|
|
Machinery and equipment
|
1,884
|
|
|
Furniture, fixtures and office equipment
|
899
|
|
|
|
$
|
20,839
|
|
2019
|
$
|
2,132
|
|
2020
|
7,129
|
|
|
2021
|
5,368
|
|
|
2022
|
3,652
|
|
|
2023
|
2,061
|
|
|
Thereafter
|
5,223
|
|
|
Total minimum payments
|
25,565
|
|
|
Less amount representing interest
|
(4,080
|
)
|
|
Present value of minimum lease payments
|
21,485
|
|
|
Current portion
|
(6,773
|
)
|
|
Long-term portion
|
$
|
14,712
|
|
2019
|
$
|
9,606
|
|
2020
|
7,498
|
|
|
2021
|
6,019
|
|
|
2022
|
4,433
|
|
|
2023
|
2,678
|
|
|
Thereafter
|
10,998
|
|
|
Total minimum payments
|
$
|
41,232
|
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
Buildings
|
$
|
12,017
|
|
|
$
|
12,017
|
|
Machinery and equipment
|
30,886
|
|
|
24,331
|
|
||
Furniture, fixtures and office equipment
|
653
|
|
|
559
|
|
||
|
43,556
|
|
|
36,907
|
|
||
Less: Accumulated depreciation
|
(15,836
|
)
|
|
(11,906
|
)
|
||
|
$
|
27,720
|
|
|
$
|
25,001
|
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
2019
|
$
|
2,229
|
|
|
$
|
7,369
|
|
2020
|
7,755
|
|
|
6,106
|
|
||
2021
|
6,057
|
|
|
4,545
|
|
||
2022
|
5,103
|
|
|
3,553
|
|
||
2023
|
3,297
|
|
|
2,430
|
|
||
Thereafter
|
4,922
|
|
|
4,682
|
|
||
Total minimum payments
|
29,363
|
|
|
28,685
|
|
||
Less amount representing interest
|
(2,794
|
)
|
|
(3,146
|
)
|
||
Present value of minimum lease payments
|
26,569
|
|
|
25,539
|
|
||
Current portion
|
(7,245
|
)
|
|
(6,384
|
)
|
||
Long-term portion
|
$
|
19,324
|
|
|
$
|
19,155
|
|
|
Three months ended
|
|
Nine months ended
|
||||
|
September 29, 2019
|
|
September 29, 2019
|
||||
|
|
|
|
||||
Lease cost
|
|
|
|
||||
Finance lease cost:
|
|
|
|
||||
Depreciation
|
$
|
1,487
|
|
|
$
|
4,390
|
|
Interest on lease liabilities
|
268
|
|
|
857
|
|
||
Operating lease cost
|
2,115
|
|
|
7,540
|
|
||
Short-term lease cost
|
—
|
|
|
100
|
|
||
Variable lease cost
|
106
|
|
|
320
|
|
||
Total lease cost
|
$
|
3,976
|
|
|
$
|
13,207
|
|
|
|
|
|
||||
Other information
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from finance leases
|
$
|
268
|
|
|
$
|
857
|
|
Operating cash flows from operating leases
|
$
|
1,950
|
|
|
$
|
7,046
|
|
Financing cash flows from finance leases
|
$
|
1,970
|
|
|
$
|
5,874
|
|
Weighted-average remaining lease term - finance leases
|
4.70
|
|
|||||
Weighted-average remaining lease term - operating leases
|
4.89
|
|
|||||
Weighted-average discount rate - finance leases
|
4.65
|
%
|
|||||
Weighted-average discount rate - operating leases
|
7.06
|
%
|
|
Maturity by Fiscal Year
|
September 29, 2019
|
|
December 30, 2018
|
||||
Finance lease obligations
|
2019-2026
|
$
|
26,569
|
|
|
$
|
25,539
|
|
Convertible Notes
|
|
|
|
|
||||
1.625% Notes
|
2023
|
689,060
|
|
|
548,076
|
|
||
2.25% Notes 1
|
2021
|
338,584
|
|
|
321,286
|
|
||
2.0% Notes 2
|
2020
|
55,096
|
|
|
173,533
|
|
||
Term loan facility
|
2021
|
19,214
|
|
|
18,979
|
|
||
Asset-based line of credit
|
2021
|
20,845
|
|
|
17,761
|
|
||
Other debt
|
2019-2024
|
7,700
|
|
|
9,953
|
|
||
|
|
1,157,068
|
|
|
1,115,127
|
|
||
Less: Current portion 1,2
|
|
(425,312
|
)
|
|
(201,686
|
)
|
||
Long-term debt and finance lease obligations
|
|
$
|
731,756
|
|
|
$
|
913,441
|
|
1
|
As of June 30, 2019, the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes were convertible at any time during the succeeding calendar quarterly period ended September 30, 2019. As a result, the carrying value of the 2021 Notes was classified as a current liability as of September 29, 2019. There were no conversions through September 30, 2019, and the 2021 Notes are no longer convertible as of the close of business on September 30, 2019.
|
2
|
The holders of the 2020 Notes may convert their notes at any time on or after August 15, 2019. Due to the ability of the holders of the 2020 Notes to convert their notes within the next year, the carrying value of the 2020 Notes was classified as a current liability as of September 29, 2019 and December 30, 2018.
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
Principal amount of 2023 Notes
|
$
|
814,556
|
|
|
$
|
675,000
|
|
Unamortized debt discount
|
(113,992
|
)
|
|
(114,554
|
)
|
||
Unamortized debt issuance costs
|
(11,504
|
)
|
|
(12,370
|
)
|
||
Net carrying amount of 2023 Notes
|
$
|
689,060
|
|
|
$
|
548,076
|
|
|
|
|
|
||||
Principal amount of 2021 Notes
|
$
|
395,000
|
|
|
$
|
395,000
|
|
Unamortized debt discount
|
(53,100
|
)
|
|
(69,382
|
)
|
||
Unamortized debt issuance costs
|
(3,316
|
)
|
|
(4,332
|
)
|
||
Net carrying amount of 2021 Notes
|
$
|
338,584
|
|
|
$
|
321,286
|
|
|
|
|
|
||||
Principal amount of 2020 Notes
|
$
|
56,455
|
|
|
$
|
186,589
|
|
Unamortized debt discount
|
(1,212
|
)
|
|
(11,642
|
)
|
||
Unamortized debt issuance costs
|
(147
|
)
|
|
(1,414
|
)
|
||
Net carrying amount of 2020 Notes
|
$
|
55,096
|
|
|
$
|
173,533
|
|
|
2020 Notes
|
|
2021 Notes
|
|
2023 Notes
|
||||||
Conversion rate
|
33.39487
|
|
|
46.8165
|
|
|
29.9679
|
|
|||
Conversion price
|
$
|
29.94
|
|
|
$
|
21.36
|
|
|
$
|
33.37
|
|
Early Conversion date
|
August 15, 2019
|
|
|
May 15, 2021
|
|
|
December 15, 2022
|
|
|||
Maturity date
|
February 15, 2020
|
|
|
November 15, 2021
|
|
|
June 15, 2023
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
2023 Notes
|
$
|
5,983
|
|
|
$
|
4,892
|
|
|
$
|
17,443
|
|
|
$
|
5,106
|
|
2021 Notes
|
5,559
|
|
|
5,046
|
|
|
16,282
|
|
|
14,800
|
|
||||
2020 Notes
|
787
|
|
|
2,388
|
|
|
3,002
|
|
|
16,727
|
|
|
Three months ended September 29, 2019
|
||
|
Currency translation adjustment
|
||
Balance at June 30, 2019
|
$
|
(19,509
|
)
|
Other comprehensive loss
|
(20,287
|
)
|
|
Balance at September 29, 2019
|
$
|
(39,796
|
)
|
|
Three months ended September 30, 2018
|
||
|
Currency translation adjustment
|
||
Balance at July 1, 2018
|
$
|
5,421
|
|
Other comprehensive loss
|
(2,773
|
)
|
|
Balance at September 30, 2018
|
$
|
2,648
|
|
|
Nine months ended September 29, 2019
|
||
|
Currency translation adjustment
|
||
Balance at December 30, 2018
|
$
|
(8,083
|
)
|
Other comprehensive loss
|
(31,713
|
)
|
|
Balance at September 29, 2019
|
$
|
(39,796
|
)
|
|
Nine months ended September 30, 2018
|
||
|
Currency translation adjustment
|
||
Balance at December 31, 2017
|
$
|
22,290
|
|
Other comprehensive loss
|
(19,642
|
)
|
|
Balance at September 30, 2018
|
$
|
2,648
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||
Weighted-average number of ordinary shares outstanding-basic and diluted
|
126,767
|
|
|
113,043
|
|
|
126,282
|
|
|
108,348
|
|
|
Three months ended September 29, 2019
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
83,940
|
|
$
|
78,292
|
|
$
|
50,202
|
|
$
|
—
|
|
$
|
212,434
|
|
Depreciation expense
|
2,694
|
|
3,165
|
|
3,441
|
|
6,715
|
|
16,015
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
8,308
|
|
8,308
|
|
|||||
Segment operating income (loss)
|
$
|
18,335
|
|
$
|
27,450
|
|
$
|
(1,639
|
)
|
$
|
(48,742
|
)
|
$
|
(4,596
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
353
|
|
|||||||||
Transition costs
|
|
|
|
|
594
|
|
|||||||||
Non-cash asset impairment
|
|
|
|
|
5,597
|
|
|||||||||
Operating loss
|
|
|
|
|
(11,140
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
20,448
|
|
|||||||||
Other expense, net
|
|
|
|
|
1,317
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(32,905
|
)
|
|
Three months ended September 30, 2018
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
79,296
|
|
$
|
66,269
|
|
$
|
48,541
|
|
$
|
—
|
|
$
|
194,106
|
|
Depreciation expense
|
2,474
|
|
2,836
|
|
3,366
|
|
5,928
|
|
14,604
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
5,881
|
|
5,881
|
|
|||||
Segment operating income (loss)
|
$
|
20,487
|
|
$
|
21,192
|
|
$
|
(278
|
)
|
$
|
(48,583
|
)
|
$
|
(7,182
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Transition costs
|
|
|
|
|
1,952
|
|
|||||||||
Operating loss
|
|
|
|
|
(9,134
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
19,753
|
|
|||||||||
Other expense, net
|
|
|
|
|
3,902
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(32,789
|
)
|
|
Nine months ended September 29, 2019
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
269,960
|
|
$
|
242,585
|
|
$
|
159,750
|
|
$
|
—
|
|
$
|
672,295
|
|
Depreciation expense
|
7,915
|
|
9,490
|
|
11,174
|
|
19,109
|
|
47,688
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
23,757
|
|
23,757
|
|
|||||
Segment operating income (loss)
|
$
|
70,285
|
|
$
|
87,682
|
|
$
|
(2,820
|
)
|
$
|
(149,407
|
)
|
$
|
5,740
|
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
1,057
|
|
|||||||||
Transition costs
|
|
|
|
|
1,615
|
|
|||||||||
Non-cash asset impairment
|
|
|
|
|
5,597
|
|
|||||||||
Operating loss
|
|
|
|
|
(2,529
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
60,138
|
|
|||||||||
Other expense, net
|
|
|
|
|
12,381
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(75,048
|
)
|
|
Nine months ended September 30, 2018
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
235,595
|
|
$
|
206,338
|
|
$
|
156,110
|
|
$
|
—
|
|
$
|
598,043
|
|
Depreciation expense
|
7,729
|
|
8,350
|
|
9,604
|
|
17,303
|
|
42,986
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
19,031
|
|
19,031
|
|
|||||
Segment operating income (loss)
|
$
|
62,211
|
|
$
|
69,864
|
|
$
|
(1,526
|
)
|
$
|
(138,044
|
)
|
$
|
(7,495
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Transition costs
|
|
|
|
|
4,187
|
|
|||||||||
Operating loss
|
|
|
|
|
(11,682
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
60,243
|
|
|||||||||
Other expense, net
|
|
|
|
|
75,649
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(147,574
|
)
|
1
|
The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of certain executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
United States
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
61,733
|
|
|
$
|
57,602
|
|
|
$
|
199,873
|
|
|
$
|
173,889
|
|
Upper extremities
|
77,160
|
|
|
65,334
|
|
|
239,033
|
|
|
203,163
|
|
||||
Biologics
|
21,292
|
|
|
20,654
|
|
|
67,520
|
|
|
59,053
|
|
||||
Sports med & other
|
2,047
|
|
|
1,975
|
|
|
6,119
|
|
|
5,828
|
|
||||
Total United States
|
$
|
162,232
|
|
|
$
|
145,565
|
|
|
$
|
512,545
|
|
|
$
|
441,933
|
|
|
|
|
|
|
|
|
|
||||||||
EMEAC
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
9,826
|
|
|
$
|
9,527
|
|
|
$
|
34,195
|
|
|
$
|
33,761
|
|
Upper extremities
|
19,541
|
|
|
18,985
|
|
|
66,956
|
|
|
64,935
|
|
||||
Biologics
|
1,866
|
|
|
1,828
|
|
|
6,030
|
|
|
6,244
|
|
||||
Sports med & other
|
2,109
|
|
|
2,591
|
|
|
7,248
|
|
|
8,182
|
|
||||
Total EMEAC
|
$
|
33,342
|
|
|
$
|
32,931
|
|
|
$
|
114,429
|
|
|
$
|
113,122
|
|
|
|
|
|
|
|
|
|
||||||||
Other
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
4,955
|
|
|
$
|
3,974
|
|
|
$
|
13,120
|
|
|
$
|
10,747
|
|
Upper extremities
|
7,654
|
|
|
6,696
|
|
|
20,858
|
|
|
19,477
|
|
||||
Biologics
|
4,046
|
|
|
4,721
|
|
|
10,751
|
|
|
12,144
|
|
||||
Sports med & other
|
205
|
|
|
219
|
|
|
592
|
|
|
620
|
|
||||
Total other
|
$
|
16,860
|
|
|
$
|
15,610
|
|
|
$
|
45,321
|
|
|
$
|
42,988
|
|
|
|
|
|
|
|
|
|
||||||||
Total net sales
|
$
|
212,434
|
|
|
$
|
194,106
|
|
|
$
|
672,295
|
|
|
$
|
598,043
|
|
|
September 29, 2019
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Total
|
||||||||||
Total assets
|
$
|
951,654
|
|
$
|
921,729
|
|
$
|
265,837
|
|
$
|
369,612
|
|
$
|
2,508,832
|
|
|
December 30, 2018
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Total
|
||||||||||
Total assets
|
$
|
940,075
|
|
$
|
923,036
|
|
$
|
272,127
|
|
$
|
559,163
|
|
$
|
2,694,401
|
|
•
|
Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;
|
•
|
Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;
|
•
|
Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and
|
•
|
Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products
|
|
Three months ended
|
||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
|
Amount
|
% of net sales
|
|
Amount
|
% of net sales
|
||||||
Net sales
|
$
|
212,434
|
|
100.0
|
%
|
|
$
|
194,106
|
|
100.0
|
%
|
Cost of sales 1
|
44,441
|
|
20.9
|
%
|
|
44,307
|
|
22.8
|
%
|
||
Gross profit
|
167,993
|
|
79.1
|
%
|
|
149,799
|
|
77.2
|
%
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative 1
|
152,780
|
|
71.9
|
%
|
|
139,223
|
|
71.7
|
%
|
||
Research and development 1
|
18,045
|
|
8.5
|
%
|
|
13,829
|
|
7.1
|
%
|
||
Amortization of intangible assets
|
8,308
|
|
3.9
|
%
|
|
5,881
|
|
3.0
|
%
|
||
Total operating expenses
|
179,133
|
|
84.3
|
%
|
|
158,933
|
|
81.9
|
%
|
||
Operating loss
|
(11,140
|
)
|
(5.2
|
)%
|
|
(9,134
|
)
|
(4.7
|
)%
|
||
Interest expense, net
|
20,448
|
|
9.6
|
%
|
|
19,753
|
|
10.2
|
%
|
||
Other expense, net
|
1,317
|
|
0.6
|
%
|
|
3,902
|
|
2.0
|
%
|
||
Loss from continuing operations before income taxes
|
(32,905
|
)
|
(15.5
|
)%
|
|
(32,789
|
)
|
(16.9
|
)%
|
||
Provision for income taxes
|
3,295
|
|
1.6
|
%
|
|
3,040
|
|
1.6
|
%
|
||
Net loss from continuing operations
|
$
|
(36,200
|
)
|
(17.0
|
)%
|
|
$
|
(35,829
|
)
|
(18.5
|
)%
|
Loss from discontinued operations, net of tax
|
(7,589
|
)
|
|
|
(6,696
|
)
|
|
||||
Net loss
|
$
|
(43,789
|
)
|
|
|
$
|
(42,525
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
||||||||||
|
September 29, 2019
|
% of net sales
|
|
September 30, 2018
|
% of net sales
|
||||||
Cost of sales
|
$
|
156
|
|
0.1
|
%
|
|
$
|
141
|
|
0.1
|
%
|
Selling, general and administrative
|
7,284
|
|
3.4
|
%
|
|
6,537
|
|
3.4
|
%
|
||
Research and development
|
795
|
|
0.4
|
%
|
|
579
|
|
0.3
|
%
|
|
Three months ended
|
|||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
% change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
61,733
|
|
|
$
|
57,602
|
|
|
7.2
|
%
|
Upper extremities
|
77,160
|
|
|
65,334
|
|
|
18.1
|
%
|
||
Biologics
|
21,292
|
|
|
20,654
|
|
|
3.1
|
%
|
||
Sports med & other
|
2,047
|
|
|
1,975
|
|
|
3.6
|
%
|
||
Total U.S.
|
162,232
|
|
|
145,565
|
|
|
11.4
|
%
|
||
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
14,781
|
|
|
$
|
13,501
|
|
|
9.5
|
%
|
Upper extremities
|
27,195
|
|
|
25,681
|
|
|
5.9
|
%
|
||
Biologics
|
5,912
|
|
|
6,549
|
|
|
(9.7
|
)%
|
||
Sports med & other
|
2,314
|
|
|
2,810
|
|
|
(17.7
|
)%
|
||
Total International
|
50,202
|
|
|
48,541
|
|
|
3.4
|
%
|
||
|
|
|
|
|
|
|||||
Total net sales
|
$
|
212,434
|
|
|
$
|
194,106
|
|
|
9.4
|
%
|
|
Three months ended September 29, 2019
|
||||||||||
|
Legacy Wright (organic)
|
|
Standalone Cartiva
|
|
Wright Medical Group N.V.
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
56,977
|
|
|
$
|
4,756
|
|
|
$
|
61,733
|
|
Upper extremities
|
77,160
|
|
|
—
|
|
|
77,160
|
|
|||
Biologics
|
21,292
|
|
|
—
|
|
|
21,292
|
|
|||
Sports med & other
|
2,047
|
|
|
—
|
|
|
2,047
|
|
|||
Total U.S.
|
$
|
157,476
|
|
|
$
|
4,756
|
|
|
$
|
162,232
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
13,849
|
|
|
$
|
932
|
|
|
$
|
14,781
|
|
Upper extremities
|
27,195
|
|
|
—
|
|
|
27,195
|
|
|||
Biologics
|
5,912
|
|
|
—
|
|
|
5,912
|
|
|||
Sports med & other
|
2,314
|
|
|
—
|
|
|
2,314
|
|
|||
Total International
|
$
|
49,270
|
|
|
$
|
932
|
|
|
$
|
50,202
|
|
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
70,826
|
|
|
$
|
5,688
|
|
|
$
|
76,514
|
|
Upper extremities
|
104,355
|
|
|
—
|
|
|
104,355
|
|
|||
Biologics
|
27,204
|
|
|
—
|
|
|
27,204
|
|
|||
Sports med & other
|
4,361
|
|
|
—
|
|
|
4,361
|
|
|||
Total net sales
|
$
|
206,746
|
|
|
$
|
5,688
|
|
|
$
|
212,434
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2018
|
||||||||||
|
Standalone Wright Medical Group N.V.
|
|
Standalone Cartiva
|
|
Non-GAAP combined pro forma
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
57,602
|
|
|
$
|
7,211
|
|
|
$
|
64,813
|
|
Upper extremities
|
65,334
|
|
|
—
|
|
|
65,334
|
|
|||
Biologics
|
20,654
|
|
|
—
|
|
|
20,654
|
|
|||
Sports med & other
|
1,975
|
|
|
—
|
|
|
1,975
|
|
|||
Total U.S.
|
$
|
145,565
|
|
|
$
|
7,211
|
|
|
$
|
152,776
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
13,501
|
|
|
$
|
599
|
|
|
$
|
14,100
|
|
Upper extremities
|
25,681
|
|
|
—
|
|
|
25,681
|
|
|||
Biologics
|
6,549
|
|
|
—
|
|
|
6,549
|
|
|||
Sports med & other
|
2,810
|
|
|
—
|
|
|
2,810
|
|
|||
Total International
|
$
|
48,541
|
|
|
$
|
599
|
|
|
$
|
49,140
|
|
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
71,103
|
|
|
$
|
7,810
|
|
|
$
|
78,913
|
|
Upper extremities
|
91,015
|
|
|
—
|
|
|
91,015
|
|
|||
Biologics
|
27,203
|
|
|
—
|
|
|
27,203
|
|
|||
Sports med & other
|
4,785
|
|
|
—
|
|
|
4,785
|
|
|||
Total net sales
|
$
|
194,106
|
|
|
$
|
7,810
|
|
|
$
|
201,916
|
|
|
|
|
|
|
|
||||||
|
Three months ended September 29, 2019
|
||||||||||
|
Non-GAAP organic and combined pro forma net sales growth/(decline)
|
||||||||||
|
Legacy Wright (organic)
|
|
Standalone Cartiva
|
|
Non-GAAP combined pro forma
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
(1.1)%
|
|
N/A
|
|
(4.8)%
|
||||||
Upper extremities
|
18.1%
|
|
N/A
|
|
18.1%
|
||||||
Biologics
|
3.1%
|
|
N/A
|
|
3.1%
|
||||||
Sports med & other
|
3.6%
|
|
N/A
|
|
3.6%
|
||||||
Total U.S.
|
8.2%
|
|
N/A
|
|
6.2%
|
||||||
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
2.6%
|
|
N/A
|
|
4.8%
|
||||||
Upper extremities
|
5.9%
|
|
N/A
|
|
5.9%
|
||||||
Biologics
|
(9.7)%
|
|
N/A
|
|
(9.7)%
|
||||||
Sports med & other
|
(17.7)%
|
|
N/A
|
|
(17.7)%
|
||||||
Total International
|
1.5%
|
|
N/A
|
|
2.2%
|
||||||
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
(0.4)%
|
|
N/A
|
|
(3.0)%
|
||||||
Upper extremities
|
14.7%
|
|
N/A
|
|
14.7%
|
||||||
Biologics
|
0.0%
|
|
N/A
|
|
0.0%
|
||||||
Sports med & other
|
(8.9)%
|
|
N/A
|
|
(8.9)%
|
||||||
Total net sales
|
6.5%
|
|
N/A
|
|
5.2%
|
|
Nine months ended
|
||||||||||
|
September 29, 2019
|
|
September 30, 2018
|
||||||||
|
Amount
|
% of net sales
|
|
Amount
|
% of net sales
|
||||||
Net sales
|
$
|
672,295
|
|
100.0
|
%
|
|
$
|
598,043
|
|
100.0
|
%
|
Cost of sales 1
|
139,096
|
|
20.7
|
%
|
|
131,004
|
|
21.9
|
%
|
||
Gross profit
|
533,199
|
|
79.3
|
%
|
|
467,039
|
|
78.1
|
%
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative 1
|
458,198
|
|
68.2
|
%
|
|
417,297
|
|
69.8
|
%
|
||
Research and development 1
|
53,773
|
|
8.0
|
%
|
|
42,393
|
|
7.1
|
%
|
||
Amortization of intangible assets
|
23,757
|
|
3.5
|
%
|
|
19,031
|
|
3.2
|
%
|
||
Total operating expenses
|
535,728
|
|
79.7
|
%
|
|
478,721
|
|
80.0
|
%
|
||
Operating loss
|
(2,529
|
)
|
(0.4
|
)%
|
|
(11,682
|
)
|
(2.0
|
)%
|
||
Interest expense, net
|
60,138
|
|
8.9
|
%
|
|
60,243
|
|
10.1
|
%
|
||
Other expense, net
|
12,381
|
|
1.8
|
%
|
|
75,649
|
|
12.6
|
%
|
||
Loss from continuing operations before income taxes
|
(75,048
|
)
|
(11.2
|
)%
|
|
(147,574
|
)
|
(24.7
|
)%
|
||
Provision (benefit) for income taxes
|
10,340
|
|
1.5
|
%
|
|
(1,217
|
)
|
(0.2
|
)%
|
||
Net loss from continuing operations
|
$
|
(85,388
|
)
|
(12.7
|
)%
|
|
$
|
(146,357
|
)
|
(24.5
|
)%
|
(Loss) income from discontinued operations, net of tax
|
(12,814
|
)
|
|
|
10,620
|
|
|
||||
Net loss
|
$
|
(98,202
|
)
|
|
|
$
|
(135,737
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Nine months ended
|
||||||||||
|
September 29, 2019
|
% of net sales
|
|
September 30, 2018
|
% of net sales
|
||||||
Cost of sales
|
$
|
413
|
|
0.1
|
%
|
|
$
|
452
|
|
0.1
|
%
|
Selling, general and administrative
|
21,106
|
|
3.1
|
%
|
|
16,496
|
|
2.8
|
%
|
||
Research and development
|
1,960
|
|
0.3
|
%
|
|
1,388
|
|
0.2
|
%
|
|
Nine months ended
|
|||||||||
|
September 29, 2019
|
|
September 30, 2018
|
|
% change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
199,873
|
|
|
$
|
173,889
|
|
|
14.9
|
%
|
Upper extremities
|
239,033
|
|
|
203,163
|
|
|
17.7
|
%
|
||
Biologics
|
67,520
|
|
|
59,053
|
|
|
14.3
|
%
|
||
Sports med & other
|
6,119
|
|
|
5,828
|
|
|
5.0
|
%
|
||
Total U.S.
|
$
|
512,545
|
|
|
$
|
441,933
|
|
|
16.0
|
%
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
47,315
|
|
|
$
|
44,508
|
|
|
6.3
|
%
|
Upper extremities
|
87,814
|
|
|
84,412
|
|
|
4.0
|
%
|
||
Biologics
|
16,781
|
|
|
18,388
|
|
|
(8.7
|
)%
|
||
Sports med & other
|
7,840
|
|
|
8,802
|
|
|
(10.9
|
)%
|
||
Total International
|
$
|
159,750
|
|
|
$
|
156,110
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|||||
Total net sales
|
$
|
672,295
|
|
|
$
|
598,043
|
|
|
12.4
|
%
|
|
Nine months ended September 29, 2019
|
||||||||||
|
Legacy Wright (organic)
|
|
Standalone Cartiva
|
|
Wright Medical Group N.V.
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
180,008
|
|
|
$
|
19,865
|
|
|
$
|
199,873
|
|
Upper extremities
|
239,033
|
|
|
—
|
|
|
239,033
|
|
|||
Biologics
|
67,520
|
|
|
—
|
|
|
67,520
|
|
|||
Sports med & other
|
6,119
|
|
|
—
|
|
|
6,119
|
|
|||
Total U.S.
|
$
|
492,680
|
|
|
$
|
19,865
|
|
|
$
|
512,545
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
44,385
|
|
|
$
|
2,930
|
|
|
$
|
47,315
|
|
Upper extremities
|
87,814
|
|
|
—
|
|
|
87,814
|
|
|||
Biologics
|
16,781
|
|
|
—
|
|
|
16,781
|
|
|||
Sports med & other
|
7,840
|
|
|
—
|
|
|
7,840
|
|
|||
Total International
|
$
|
156,820
|
|
|
$
|
2,930
|
|
|
$
|
159,750
|
|
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
224,393
|
|
|
$
|
22,795
|
|
|
$
|
247,188
|
|
Upper extremities
|
326,847
|
|
|
—
|
|
|
326,847
|
|
|||
Biologics
|
84,301
|
|
|
—
|
|
|
84,301
|
|
|||
Sports med & other
|
13,959
|
|
|
—
|
|
|
13,959
|
|
|||
Total net sales
|
$
|
649,500
|
|
|
$
|
22,795
|
|
|
$
|
672,295
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2018
|
||||||||||
|
Standalone Wright Medical Group N.V.
|
|
Standalone Cartiva
|
|
Non-GAAP combined pro forma
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
173,889
|
|
|
$
|
23,498
|
|
|
$
|
197,387
|
|
Upper extremities
|
203,163
|
|
|
—
|
|
|
203,163
|
|
|||
Biologics
|
59,053
|
|
|
—
|
|
|
59,053
|
|
|||
Sports med & other
|
5,828
|
|
|
—
|
|
|
5,828
|
|
|||
Total U.S.
|
$
|
441,933
|
|
|
$
|
23,498
|
|
|
$
|
465,431
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
44,508
|
|
|
$
|
1,222
|
|
|
$
|
45,730
|
|
Upper extremities
|
84,412
|
|
|
—
|
|
|
84,412
|
|
|||
Biologics
|
18,388
|
|
|
—
|
|
|
18,388
|
|
|||
Sports med & other
|
8,802
|
|
|
—
|
|
|
8,802
|
|
|||
Total International
|
$
|
156,110
|
|
|
$
|
1,222
|
|
|
$
|
157,332
|
|
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
218,397
|
|
|
$
|
24,720
|
|
|
$
|
243,117
|
|
Upper extremities
|
287,575
|
|
|
—
|
|
|
287,575
|
|
|||
Biologics
|
77,441
|
|
|
—
|
|
|
77,441
|
|
|||
Sports med & other
|
14,630
|
|
|
—
|
|
|
14,630
|
|
|||
Total net sales
|
$
|
598,043
|
|
|
$
|
24,720
|
|
|
$
|
622,763
|
|
|
|
|
|
|
|
||||||
|
Nine months ended September 29, 2019
|
||||||||||
|
Non-GAAP organic and combined pro forma net sales growth/(decline)
|
||||||||||
|
Legacy Wright (organic)
|
|
Standalone Cartiva
|
|
Non-GAAP combined pro forma
|
||||||
U.S.
|
|
|
|
|
|
||||||
Lower extremities
|
3.5%
|
|
N/A
|
|
1.3%
|
||||||
Upper extremities
|
17.7%
|
|
N/A
|
|
17.7%
|
||||||
Biologics
|
14.3%
|
|
N/A
|
|
14.3%
|
||||||
Sports med & other
|
5.0%
|
|
N/A
|
|
5.0%
|
||||||
Total U.S.
|
11.5%
|
|
N/A
|
|
10.1%
|
||||||
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
||||||
Lower extremities
|
(0.3)%
|
|
N/A
|
|
3.5%
|
||||||
Upper extremities
|
4.0%
|
|
N/A
|
|
4.0%
|
||||||
Biologics
|
(8.7)%
|
|
N/A
|
|
(8.7)%
|
||||||
Sports med & other
|
(10.9)%
|
|
N/A
|
|
(10.9)%
|
||||||
Total International
|
0.5%
|
|
N/A
|
|
1.5%
|
||||||
|
|
|
|
|
|
||||||
Global
|
|
|
|
|
|
||||||
Lower extremities
|
2.7%
|
|
N/A
|
|
1.7%
|
||||||
Upper extremities
|
13.7%
|
|
N/A
|
|
13.7%
|
||||||
Biologics
|
8.9%
|
|
N/A
|
|
8.9%
|
||||||
Sports med & other
|
(4.6)%
|
|
N/A
|
|
(4.6)%
|
||||||
Total net sales
|
8.6%
|
|
N/A
|
|
8.0%
|
|
Three months ended September 29, 2019
|
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
83,940
|
|
|
$
|
78,292
|
|
|
$
|
50,202
|
|
Operating income (loss)
|
$
|
18,335
|
|
|
$
|
27,450
|
|
|
$
|
(1,639
|
)
|
Operating income (loss) as a percent of net sales
|
21.8
|
%
|
|
35.1
|
%
|
|
(3.3
|
)%
|
|
Three months ended September 30, 2018
|
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
79,296
|
|
|
$
|
66,269
|
|
|
$
|
48,541
|
|
Operating income (loss)
|
$
|
20,487
|
|
|
$
|
21,192
|
|
|
$
|
(278
|
)
|
Operating income (loss) as a percent of net sales
|
25.8
|
%
|
|
32.0
|
%
|
|
(0.6
|
)%
|
|
Nine months ended September 29, 2019
|
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
269,960
|
|
|
$
|
242,585
|
|
|
$
|
159,750
|
|
Operating income (loss)
|
$
|
70,285
|
|
|
$
|
87,682
|
|
|
$
|
(2,820
|
)
|
Operating income (loss) as a percent of net sales
|
26.0
|
%
|
|
36.1
|
%
|
|
(1.8
|
)%
|
|
Nine months ended September 30, 2018
|
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
235,595
|
|
|
$
|
206,338
|
|
|
$
|
156,110
|
|
Operating income (loss)
|
$
|
62,211
|
|
|
$
|
69,864
|
|
|
$
|
(1,526
|
)
|
Operating income (loss) as a percent of net sales
|
26.4
|
%
|
|
33.9
|
%
|
|
(1.0
|
)%
|
|
September 29, 2019
|
|
December 30, 2018
|
||||
Cash and cash equivalents
|
$
|
147,263
|
|
|
$
|
191,351
|
|
Working capital 1
|
(102,890
|
)
|
|
136,106
|
|
1
|
As of June 30, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end, and, therefore, the holders of the 2021 Notes were able to convert the notes during the succeeding quarterly period ended September 30, 2019. Due to the ability of the holders of the 2021 Notes to convert the notes through September 30, 2019, the $338.6 million carrying value of the 2021 Notes and the $91.8 million fair value of the 2021 Notes Conversion Derivatives were classified as current liabilities and the $93.2 million fair value of the 2021 Notes Hedges was classified as current assets as of September 29, 2019. There were no conversions, and the 2021 Notes are no longer convertible as of the close of business on September 30, 2019.
|
•
|
The next generation reverse shoulder implant system is a reverse shoulder replacement implant having glenoid or glenoid and humeral implant components. We have an anticipated first clinical use in 2020 and launch in the second half of 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA and CE mark clearance. We have incurred expenses of approximately $0.1 million in the nine months ended September 29, 2019. Project cost to complete is estimated to be less than $2 million.
|
•
|
The CMC thumb implant is an arthroplasty device designed to resurface the CMC joint for the treatment of osteoarthritis. We anticipate the launch of the CMC thumb implant no earlier than 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA PMA approval. We have incurred expenses of approximately $0.5 million in the nine months ended September 29, 2019. Project cost to complete is estimated to be less than $3 million.
|
Share price
|
|
Shares (in thousands)
|
$44.95
|
(10% greater than strike price)
|
2,219
|
$49.03
|
(20% greater than strike price)
|
4,068
|
$53.12
|
(30% greater than strike price)
|
5,633
|
$57.20
|
(40% greater than strike price)
|
6,974
|
$61.29
|
(50% greater than strike price)
|
8,137
|
Share price
|
|
Shares (in thousands)
|
$33.00
|
(10% greater than strike price)
|
1,681
|
$36.00
|
(20% greater than strike price)
|
3,082
|
$39.00
|
(30% greater than strike price)
|
4,268
|
$42.00
|
(40% greater than strike price)
|
5,284
|
$45.00
|
(50% greater than strike price)
|
6,164
|
Share price
|
|
Shares (in thousands)
|
$42.68
|
(10% greater than strike price)
|
171
|
$46.56
|
(20% greater than strike price)
|
314
|
$50.44
|
(30% greater than strike price)
|
435
|
$54.32
|
(40% greater than strike price)
|
539
|
$58.20
|
(50% greater than strike price)
|
628
|
(a)
|
Exhibits.
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
2.1
|
|
Purchase Agreement, dated November 4, 2019, among Wright Medical Group N.V., Stryker Corporation and Stryker B.V.*
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
101
|
|
The following materials from Wright Medical Group N.V.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of September 29, 2019 and December 30, 2018, (ii) the Consolidated Statements of Operations for the three and nine months ended September 29, 2019 and September 30 2018, (iii) the Consolidated Statements of Comprehensive Loss for the three and nine months ended September 29, 2019 and September 30, 2018, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 29, 2019 and September 30, 2018, (v) the Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 29, 2019 and September 30, 2018, and (vi) Notes to Consolidated Financial Statements (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.)
|
|
Filed herewith
|
104
|
|
The cover page from Wright Medical Group N.V.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2019 is formatted in iXBRL (Inline eXtensible Business Reporting Language)
|
|
Included in Exhibit 101
|
WRIGHT MEDICAL GROUP N.V.
|
|
By:
|
/s/ Robert J. Palmisano
|
|
Robert J. Palmisano
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
|
|
By:
|
/s/ Lance A. Berry
|
|
Lance A. Berry
|
|
Executive Vice President, Chief Financial and Operations Officer
|
|
(principal financial officer)
|
1 Year Wright Medical Group NV Chart |
1 Month Wright Medical Group NV Chart |
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