EX-99.1 2 wmgi12272015exhibit991pres.htm EXHIBIT 99.1 Exhibit


FOR IMMEDIATE RELEASE
Investors and Media:
Wright Medical Group N.V.
Julie D. Tracy
Chief Communications Officer
(901) 290-5817 (office)
julie.tracy@wright.com


Wright Medical Group N.V. Reports 2015 Fourth Quarter and Full-Year Financial Results and Provides 2016 Guidance

Fourth Quarter 2015 Net Sales of $177 Million As Reported; $181 Million Pro-Forma

Full-Year 2015 Net Sales of $415 Million As Reported; Pro-Forma Full-Year 2015 Net Sales of $656 Million Exceeds High-End Of Company’s Previously Provided 2015 Guidance Range

Company Provides Full-Year 2016 Net Sales Guidance of $695 Million to $705 Million

AMSTERDAM, The Netherlands - February 23, 2016 - Wright Medical Group N.V. (NASDAQ:WMGI) today reported financial results for its fourth quarter and full-year ended December 27, 2015 and provided 2016 guidance.  Certain unaudited non-GAAP pro forma financial results for the combined Wright Medical Group N.V. which give effect to the Wright/Tornier merger as if it had occurred on the first day of fiscal 2014 can be found on Wright’s website at ir.wright.com.

As previously announced, Wright Medical Group, Inc. and Tornier N.V. completed their merger on October 1, 2015, and, in accordance with U.S. GAAP, legacy Wright’s historical results of operations replaced legacy Tornier’s historical results of operations for all periods prior to the merger and the results of the two legacy businesses have been consolidated only from that date forward. Since the legacy Tornier business began its fourth quarter on September 28, 2015, its financial results from the operating days between September 28, 2015 and September 30, 2015 are not included in the combined company’s as reported results of operations for the fourth quarter of 2015.

Following the closing of the merger, Wright adopted legacy Tornier’s fiscal calendar, which resulted in four fewer calendar days for the fourth quarter of 2015 than under the legacy Wright fiscal calendar. Additionally, the Wright business conformed its methodology for recognizing revenue to legacy Tornier's methodology.

Net sales totaled $177.0 million during the fourth quarter ended December 27, 2015. Combined company pro forma net sales totaled $181.4 million during the fourth quarter ended December 27, 2015. On a same sales day and constant currency basis and excluding the impact of conforming Wright’s methodology for recognizing revenue, combined pro forma global extremities and biologics revenue grew 14%. The attached financial tables include a reconciliation of U.S. GAAP to these non-GAAP financial measures.

Robert Palmisano, president and chief executive officer, commented, “In our first quarter as a newly merged Wright Medical, we delivered outstanding fourth quarter results that reflect the continued strong underlying growth and positive momentum in our legacy Wright lower extremities and legacy Tornier upper extremities businesses. Our pro forma global extremities and biologics growth of 14% was a two

1


percentage point acceleration from the third quarter of 2015, and combined with earlier than anticipated progress on capturing cost synergies, resulted in pro forma net sales and positive adjusted EBITDA results that significantly exceeded our expectations. We also got off to a strong start on executing our merger integration plans and with the early success we are seeing, we believe we are well positioned to continue our strong business momentum and to deliver on our synergy commitments as we progress through 2016.”

Palmisano continued, “Highlights in the quarter included strong contributions from our new SIMPLICITI shoulder system and the ongoing rollout of the AEQUALIS ASCEND FLEX convertible shoulder system, a positive start to our U.S. commercial activities for AUGMENT Bone Graft, and the ongoing launch of the INFINITY total ankle replacement system, which drove over 40% sales growth in U.S. total ankle replacement for the fourth quarter of 2015 and over 45% growth for the full-year of 2015.”

Palmisano further commented, “Our 2016 guidance assumes mid-teens underlying combined pro forma constant currency growth in extremities and biologics, excluding the impact of anticipated revenue dis-synergies. We also expect growth to accelerate in our biologics business due to the ongoing launch of AUGMENT Bone Graft in the U.S. We will continue to focus on successfully executing our integration plans to realize our full potential and believe that the positive progress we saw in the fourth quarter is setting us up well for continued strong revenue growth and significant margin expansion in 2016 and beyond.”

Net loss from continuing operations for the fourth quarter of 2015 totaled $92.2 million, or $(0.90) per diluted share. Our combined pro forma net loss from continuing operations, as defined in the GAAP to non-GAAP reconciliation provided later in this release, for the fourth quarter of 2015 totaled $89.3 million.

The company’s combined pro forma net loss from continuing operations for the fourth quarter of 2015 included the after-tax effects of $39.2 million of transaction and transition costs, $14.2 million of non-cash share-based compensation charges associated with the closing of the merger, $11.4 million of inventory step-up amortization, a loss of $2.3 million related to mark-to-market adjustments on derivatives, and $6.9 million of non-cash interest expense related to its 2017 convertible notes and 2020 convertible notes.

The company's fourth quarter 2015 combined pro forma net loss from continuing operations, as adjusted for the above items, was $17.5 million. The company's fourth quarter 2015 combined pro forma adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $10.9 million. The attached financial tables include reconciliations of U.S. GAAP to non-GAAP measures.

Cash and cash equivalents and marketable securities for the combined business totaled $139.8 million as of the end of the fourth quarter of 2015.

Palmisano concluded, “Following our merger, we have leading positions in the highest growth markets in orthopaedics with differentiated technologies and focused sales forces. We have multiple opportunities through a robust new product pipeline to further accelerate our growth, continue to expand our markets and gain market share. With the execution of our integration plans off to a positive and productive start, we are well positioned to continue to accelerate our business momentum and drive market leading growth and profitability.”


2


Outlook

The company anticipates net sales for full-year 2016 of approximately $695 million to $705 million. This range assumes a negative impact from foreign currency exchange rates as compared to 2015 of approximately 2% and reflects approximately $25 million to $30 million of potential net sales dis-synergies expected to be realized throughout 2016 from the merger with Tornier. The midpoint of this net sales guidance range assumes combined pro forma extremities and biologics constant currency growth of 14%, excluding the impact of revenue dis-synergies.

The company anticipates 2016 adjusted EBITDA from continuing operations, as described in the GAAP to non-GAAP reconciliation provided later in this release, of $20.0 million to $30.0 million. This range reflects approximately $10 million to $15 million of potential cost synergies expected to be realized in 2016 from the merger with Tornier.

The company anticipates adjusted cash earnings per share from continuing operations, including share-based compensation, as described in the GAAP to non-GAAP reconciliation provided later in this release, for full-year 2016 of $(0.65) to $(0.71) per diluted share.

The company estimates approximately 103 million diluted weighted average ordinary shares outstanding for fiscal year 2016.

The company's adjusted EBITDA from continuing operations target is measured by adding back to net income/loss from continuing operations charges for interest, income taxes, depreciation and amortization expenses, non-cash share-based compensation expense, and non-operating income and expense. Additionally, the company’s adjusted EBITDA from continuing operations target excludes possible future acquisitions; other material future business developments; and due diligence, transaction and transition costs associated with acquisitions and divestitures. Further, this adjusted EBITDA from continuing operations target excludes any expenses, earnings or losses related to Wright’s divested OrthoRecon business and Tornier’s divested ankle and silastic toe products.

The company’s adjusted cash earnings per share from continuing operations target is measured by adding back to net income/loss from continuing operations charges for non-cash amortization expenses, net of taxes. Note that due to the company’s relatively low effective tax rate due to the valuation allowance impacting a substantial portion of the company’s income/loss, the company is currently estimating the tax effect on amortization expense at 0%. Additionally, this adjusted cash earnings per share from continuing operations target excludes possible future acquisitions; other material future business developments; non-cash interest expense associated with the 2017 and 2020 convertible notes; due diligence, transaction and transition costs associated with acquisitions and divestitures; mark-to-market adjustments to the CVRs; and non-cash mark-to-market derivative adjustments.

The company's anticipated ranges for net sales, adjusted EBITDA from continuing operations, and adjusted cash earnings per share from continuing operations are forward-looking statements, as are any other statements that anticipate or aspire to future events or performance. They are subject to various risks and uncertainties that could cause the company's actual results to differ materially from the anticipated targets. The anticipated targets are not predictions of the company's actual performance. See the cautionary information about forward-looking statements in the “Cautionary Note Regarding Forward-Looking Statements” section of this press release.

Supplemental Financial Information


3


To view the fourth quarter of 2015 supplemental financial information, visit ir.wright.com. For updated information on Wright Medical Group N.V. revenue reporting changes and preliminary, combined non-GAAP pro forma historical financial information, including fourth quarter of 2015, please refer to the presentation posted on Wright’s website at ir.wright.com in the “Financial Information” section.

Internet Posting of Information

Wright routinely posts information that may be important to investors in the “Investor Relations” section of its website at www.wright.com. The company encourages investors and potential investors to consult the Wright website regularly for important information about Wright.

Conference Call and Webcast
 
As previously announced, Wright will host a conference call starting at 3:30 p.m. Central Time today. The live dial-in number for the call is 800-237-9752 (U.S.) / 617-847-8706 (Outside U.S.). The participant passcode for the call is “Wright.” A simultaneous webcast of the call will be available via Wright’s corporate website at www.wright.com.

A replay of the conference call by telephone will be available starting at 5:30 p.m. Central Time today and continuing through March 1, 2016. To hear this replay, dial 888-286-8010 (U.S.) or 617-801-6888 (Outside U.S.) and enter the passcode 70431489. A replay of the conference call will also be available via the internet starting today and continuing for at least 12 months. To access a replay of the conference call via the internet, go to the “Investor Relations - Presentations/Calendar” section of the company's website located at www.wright.com.

The conference call may include a discussion of non-GAAP financial measures. Reference is made to the most directly comparable GAAP financial measures, the reconciliation of the differences between the two financial measures, and the other information included in this press release, the Current Report on Form 8-K filed with the SEC today, or otherwise available in the “Investor Relations - Supplemental Financial Information” section of the company's website located at www.wright.com.

The conference call may include forward-looking statements. See the cautionary information about forward-looking statements in the “Forward-Looking Statements Safe Harbor” section of this press release.
 
About Wright

Wright Medical Group N.V. is a global medical device company focused on Extremities and Biologics. The company is committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and is a recognized leader of surgical solutions for the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, three of the fastest growing segments in orthopaedics. For more information about Wright, visit www.wright.com.

WRIGHT®, INFINITY®, AUGMENT®, TORNIER®, AEQUALIS®, AEQUALIS ASCEND®, AEQUALIS ASCEND® FLEX™, and SIMPLICITI® are trademarks of Wright Medical Group N.V. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

Non-GAAP Financial Measures


4


To supplement the company’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this press release. Wright’s non-GAAP financial measures, include combined pro forma net sales; combined pro forma net sales, excluding the impact of foreign currency and revenue recognition conformance; combined pro forma net income, as adjusted; combined pro forma EBITDA, as adjusted; combined pro forma cash earnings, as adjusted; and combined pro forma cash earnings, as adjusted, per diluted share. The company's management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the company's operations, period over period. While pro forma data gives effect to the merger as if it had occurred on the first day of fiscal 2014 and enhances comparability of financial information between periods, pro forma data is not indicative of the results that actually would have been obtained if the merger had occurred as of the beginning of the fiscal year. Wright’s non-GAAP financial measures exclude such items as costs associated with distributor conversions and non-competes, non-cash interest expense related to the company's 2017 convertible notes and 2020 convertible notes, write-off of the pro rata unamortized deferred financing costs and debt discount associated with the 2017 convertible notes, net gains and losses on mark-to-market adjustments on and settlements of derivative assets and liabilities, mark-to-market adjustments on CVRs, transaction and transition costs, all of which may be highly variable, difficult to predict and of a size that could have substantial impact on the company's reported results of operations for a period. Management uses these measures internally for evaluation of the performance of the business, including the allocation of resources and the evaluation of results relative to employee performance compensation targets. Investors should consider these non-GAAP financial measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “target,” “project,” "continue," "outlook," “guidance,” "future,” other words of similar meaning and the use of future dates. Forward-looking statements in this press release include, but are not limited to, statements about the company’s anticipated financial results for 2016, including net sales, adjusted EBITDA from continuing operations and adjusted cash earnings per share from continuing operations; anticipated sales and cost synergies and dis-synergies, the timing thereof, and level of risk of achievement; the company’s expectations regarding the sales growth of its lower extremities, upper extremities, biologics, and international businesses; the benefits of its recently completed merger with Tornier and integration efforts and progress; and the company’s anticipated growth opportunities, accelerated path to profitability, adjusted EBITDA margin goal and ability to drive long-term growth and profitability and generate long-term value for shareholders. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the failure to integrate the businesses and realize net sales synergies and cost-savings from the recently completed merger with Tornier or delay in realization thereof; operating costs and business disruption as a result of the merger, including adverse effects on employee retention and sales force productivity and on business relationships with third parties; transaction and integration costs; actual or contingent liabilities; the adequacy of the company’s capital resources and need for additional financing; the timing of regulatory approvals and introduction of new products; physician acceptance, endorsement, and use of new products; failure to achieve the anticipated benefits from approval of AUGMENT® Bone Graft; the effect of regulatory actions, changes in and adoption of reimbursement rates; product liability claims and product recalls; pending and threatened litigation; risks associated with international operations and expansion; fluctuations in foreign currency exchange rates; other business effects, including the effects of industry, economic or political conditions outside of the company’s control; reliance on independent distributors and sales agencies; competitor activities; changes in tax and other legislation; and the risks identified under the heading “Risk Factors” in Wright’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2015 filed with the SEC on November 5, 2015 and Annual Report on Form 10-K for the year ended December 27, 2015 to be filed by Wright with the SEC. Investors should not place considerable reliance on the forward-looking statements contained in this press release. You are encouraged to read Wright’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this release, and Wright undertakes no obligation to update or revise any of these statements. Wright’s business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

--Tables Follow--



5


Wright Medical Group N.V.
Condensed Consolidated Statements of Operations
(in thousands, except per share data--unaudited)

 
Three months ended
 
Fiscal year ended
 
December 27, 2015
 
December 31, 2014
 
December 27, 2015
 
December 31, 2014
Net sales
$
176,968

 
$
83,294

 
$
415,461

 
$
298,027

Cost of sales
55,443

 
19,097

 
119,255

 
73,223

Gross profit
121,525


64,197


296,206


224,804

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
178,596

 
81,991

 
429,398

 
289,620

Research and development
15,211

 
6,360

 
39,855

 
24,963

Amortization of intangible assets
9,181

 
2,786

 
16,922

 
10,027

Total operating expenses
202,988

 
91,137

 
486,175

 
324,610

Operating loss
(81,463
)
 
(26,940
)
 
(189,969
)
 
(99,806
)
Interest expense, net
11,565

 
4,525

 
41,358

 
17,398

Other expense (income), net
3,489

 
74,640

 
10,884

 
129,626

Loss from continuing operations before income taxes
(96,517
)
 
(106,105
)
 
(242,211
)
 
(246,830
)
Provision (benefit) for income taxes
(4,362
)
 
863

 
(3,851
)
 
(6,334
)
Net loss from continuing operations
$
(92,155
)

$
(106,968
)
 
$
(238,360
)
 
$
(240,496
)
Loss from discontinued operations, net of tax
(13,621
)
 
$
(4,262
)
 
$
(60,341
)
 
$
(19,187
)
Net loss
$
(105,776
)
 
$
(111,230
)
 
$
(298,701
)
 
$
(259,683
)
 
 
 
 
 
 
 
 
Net loss from continuing operations per share, basic(1)
$
(0.90
)
 
$
(2.05
)
 
$
(3.68
)
 
$
(4.69
)
Net loss from continuing operations per share, diluted(1)
$
(0.90
)
 
$
(2.05
)
 
$
(3.68
)
 
$
(4.69
)
 
 
 
 
 
 
 
 
Net loss per share, basic(1)
$
(1.03
)
 
$
(2.13
)
 
$
(4.61
)
 
$
(5.06
)
Net loss per share, diluted(1)
$
(1.03
)
 
$
(2.13
)
 
$
(4.61
)
 
$
(5.06
)
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding-basic(1)
102,659

 
52,262

 
64,808

 
51,293

Weighted-average number of shares outstanding-diluted(1)
102,659

 
52,262

 
64,808

 
51,293

_______________________________
(1) 
The prior quarter and prior year balances were converted to meet post-merger valuations.

6


Wright Medical Group N.V.
Consolidated Sales Analysis
(dollars in thousands--unaudited)
 
Three months ended
 
Fiscal year ended
 
December 27, 2015
 
December 31, 2014
 
%
change
 
December 27, 2015
 
December 31, 2014
 
%
change
U.S.
 
 
 
 
 
 
 
 
 
 
 
Lower extremities
58,819

 
46,032

 
27.8
 %
 
187,096

 
148,631

 
25.9
 %
Upper extremities
47,053

 
3,891

 
1,109.3
 %
 
58,756

 
15,311

 
283.8
 %
Biologics
15,971

 
12,118

 
31.8
 %
 
50,583

 
45,494

 
11.2
 %
Sports med & other
1,830

 
445

 
311.2
 %
 
3,388

 
2,641

 
28.3
 %
Total extremities & biologics
123,673

 
62,486

 
97.9
 %
 
299,823

 
212,077

 
41.4
 %
Large joint
18

 
—

 
N/A
 
18

 
—

 
N/A
Total U.S.
$
123,691

 
$
62,486

 
97.9
 %
 
$
299,841

 
$
212,077

 
41.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
 
 
 
Lower extremities
15,887

 
11,119

 
42.9
 %
 
51,200

 
47,001

 
8.9
 %
Upper extremities
19,066

 
2,437

 
682.4
 %
 
24,789

 
11,312

 
119.1
 %
Biologics
4,582

 
5,153

 
(11.1
)%
 
19,652

 
20,590

 
(4.6
)%
Sports med & other
3,625

 
2,099

 
72.7
 %
 
9,862

 
7,047

 
39.9
 %
Total extremities & biologics
43,160

 
20,808

 
107.4
 %
 
105,503

 
85,950

 
22.7
 %
Large joint
10,117

 
—

 
N/A
 
10,117

 
—

 
N/A
Total International
$
53,277

 
$
20,808

 
156.0
 %
 
$
115,620

 
$
85,950

 
34.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Global
 
 
 
 
 
 
 
 
 
 
 
Lower extremities
74,706

 
57,151

 
30.7
 %
 
238,296

 
195,632

 
21.8
 %
Upper extremities
66,119

 
6,328

 
944.9
 %
 
83,545

 
26,623

 
213.8
 %
Biologics
20,553

 
17,271

 
19.0
 %
 
70,235

 
66,084

 
6.3
 %
Sports med & other
5,455

 
2,544

 
114.4
 %
 
13,250

 
9,688

 
36.8
 %
Total extremities & biologics
166,833

 
83,294

 
100.3
 %
 
405,326

 
298,027

 
36.0
 %
Large joint
10,135

 
—

 
N/A
 
10,135

 
—

 
N/A
Total sales
$
176,968

 
$
83,294

 
112.5
 %
 
$
415,461

 
$
298,027

 
39.4
 %



7


Wright Medical Group N.V.
Reconciliation of Net Sales to Non-GAAP Combined Pro Forma Net Sales
(unaudited)

 
Three months ended
 
December 27, 2015
 
Net Sales
As Reported
 
Legacy Tornier
stub period
(September 28, 2015 - September 30, 2015)(1)
 
Non-GAAP
Combined Pro Forma
Net Sales
U.S.
 
 
 
 
 
Lower extremities
$
58,819

 
$
279

 
$
59,098

Upper extremities
47,053

 
1,773

 
48,826

Biologics
15,971

 
66

 
16,037

Sports med & other
1,830

 
4

 
1,834

Total extremities & biologics
123,673

 
2,122

 
125,795

Large joint
18

 
—

 
18

Total U.S.
$
123,691

 
$
2,122

 
$
125,813

 
 
 
 
 
 
International
 
 
 
 
 
Lower extremities
$
15,887

 
$
152

 
$
16,039

Upper extremities
19,066

 
1,260

 
20,326

Biologics
4,582

 
13

 
4,595

Sports med & other
3,625

 
132

 
3,757

Total extremities & biologics
43,160

 
1,557

 
44,717

Large joint
10,117

 
753

 
10,870

Total International
$
53,277

 
$
2,310

 
$
55,587

 
 
 
 
 
 
Global
 
 
 
 
 
Lower extremities
$
74,706

 
$
431

 
$
75,137

Upper extremities
66,119

 
3,033

 
69,152

Biologics
20,553

 
79

 
20,632

Sports med & other
5,455

 
136

 
5,591

Total extremities & biologics
166,833

 
3,679

 
170,512

Large joint
10,135

 
753

 
10,888

Total sales
$
176,968

 
$
4,432

 
$
181,400

_______________________________
(1) 
To add revenues from Legacy Tornier's fourth quarter for the period prior to the merger closing date when operations became consolidated.    



8


Wright Medical Group N.V.
Reconciliation of Net Sales to Non-GAAP Combined Pro Forma Net Sales
(unaudited)
 
Twelve months ended
 
December 27, 2015
 
Net Sales
As Reported
 
Legacy Tornier N.V. standalone nine months ended September 27, 2015 (1)
 
Legacy Tornier Net Sales Divested (2)
 
Legacy Tornier
stub period
(September 28, 2015 - September 30, 2015) (3)
 
Non-GAAP Combined
Pro Forma
Net Sales
U.S.
 
 
 
 
 
 
 
 
 
Lower extremities
187,096

 
29,637

 
(9,733
)
 
279

 
207,279

Upper extremities
58,756

 
115,846

 
—

 
1,773

 
176,375

Biologics
50,583

 
1,290

 
—

 
66

 
51,939

Sports med & other
3,388

 
5,021

 
—

 
4

 
8,413

Total extremities & biologics
299,823

 
151,794

 
(9,733
)
 
2,122

 
444,006

Large joint
18

 
119

 
—

 
—

 
137

Total U.S.
$
299,841

 
$
151,913

 
$
(9,733
)
 
$
2,122

 
$
444,143

 
 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
 
Lower extremities
51,200

 
7,402

 
—

 
152

 
58,754

Upper extremities
24,789

 
51,293

 
—

 
1,260

 
77,342

Biologics
19,652

 
357

 
—

 
13

 
20,022

Sports med & other
9,862

 
5,372

 
—

 
132

 
15,366

Total extremities & biologics
105,503

 
64,424

 
—

 
1,557

 
171,484

Large joint
10,117

 
29,921

 
—

 
753

 
40,791

Total International
$
115,620

 
$
94,345

 
$
—

 
$
2,310

 
$
212,275

 
 
 
 
 
 
 
 
 
 
Global
 
 
 
 
 
 
 
 
 
Lower extremities
238,296

 
37,039

 
(9,733
)
 
431

 
266,033

Upper extremities
83,545

 
167,139

 
—

 
3,033

 
253,717

Biologics
70,235

 
1,647

 
—

 
79

 
71,961

Sports med & other
13,250

 
10,393

 
—

 
136

 
23,779

Total extremities & biologics
405,326

 
216,218

 
(9,733
)
 
3,679

 
615,490

Large joint
10,135

 
30,040

 
—

 
753

 
40,928

Total sales
$
415,461

 
$
246,258

 
$
(9,733
)
 
$
4,432

 
$
656,418

_______________________________
(1) 
Legacy Tornier product line sales have been recast to reflect the reclassification of cement, instruments and freight from the historical Tornier product line "Large Joints and Other" to the product line associated with those revenues that will be utilized for future revenue reporting.
(2) 
To reduce from Tornier’s historical sales the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement products.
(3) 
To add revenues from Legacy Tornier's fourth quarter for the period prior to the merger closing date when operations became consolidated.

9


Wright Medical Group N.V.
Reconciliation of Total Extremities & Biologics Net Sales to
Adjusted Combined Pro Forma Total Extremities & Biologics Net Sales
Average Sales per Day
(unaudited)
 
Three months ended
 
December 27, 2015
 
December 31, 2014
 
U.S.
 
International
 
Global
 
U.S.
 
International
 
Global
Legacy Wright
$
72,121

 
$
21,444

 
$
93,565

 
$
62,486

 
$
20,808

 
$
83,294

Legacy Tornier
51,552

 
21,716

 
73,268

 
N/A

 
N/A

 
N/A

Net sales, as reported
$
123,673

 
$
43,160

 
$
166,833

 
$
62,486

 
$
20,808

 
$
83,294

 
 
 
 
 
 
 
 
 
 
 
 
Standalone Tornier N.V. recast (1)
—

 
—

 
—

 
53,607

 
24,588

 
78,195

Revenues divested (2)
—

 
—

 
—

 
(4,214
)
 
—

 
(4,214
)
Legacy Tornier stub period (September 28, 2015 - September 30, 2015) (3)
2,122

 
1,557

 
3,679

 
—

 
—

 
—

Legacy Tornier impact of FX (4)
—

 
2,951

 
2,951

 
—

 
—

 
—

Pro forma legacy Tornier, excluding the impact of FX
$
53,674

 
$
26,224

 
$
79,898

 
$
49,393

 
$
24,588

 
$
73,981

 
 
 
 
 
 
 
 
 
 
 
 
Legacy Wright impact of revenue recognition (5)
(2,994
)
 
—

 
(2,994
)
 
—

 
—

 
—

Legacy Wright impact of FX (4)
—

 
2,155

 
2,155

 
—

 
—

 
—

Adjusted legacy Wright, excluding the impact of FX
$
69,127

 
$
23,599

 
$
92,726

 
$
62,486

 
$
20,808

 
$
83,294

 
 
 
 
 
 
 
 
 
 
 
 
Legacy Tornier selling days
61

 
65

 
 
 
61

 
65

 
 
Legacy Wright selling days
58

 
62

 
 
 
62

 
66

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted combined pro forma average sales per day, excluding the impact of FX (6)
$
2,072

 
$
784

 
$
2,856

 
$
1,818

 
$
694

 
$
2,512

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted pro forma average sales per day constant currency growth % (7)
14.0
%
 
13.0
%
 
13.7
%
 
 
 
 
 
 
_______________________________
(1)
Legacy Tornier's product line sales have been recast to reflect the reclassification of cement, instruments and freight from the historical Tornier product line "Large Joints and Other" to the product line associated with those revenues that will be utilized for future revenue reporting.
(2)
To reduce from Legacy Tornier’s historical sales the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement products.
(3)
To add revenues from Legacy Tornier's fourth quarter for the period prior to Merger closing date when operations became consolidated.
(4)
The impact of FX on net sales is calculated by translating current year results at prior year average foreign currency exchange rates.
(5)
Legacy Wright recognized approximately $3 million during the fourth quarter of 2015, as result of conforming its methodology for revenue recognition with Legacy Tornier.
(6)
Legacy Wright and Legacy Tornier have historically operated on different fiscal periods. In order to calculate Pro Forma sales growth, we have calculated average sales per day ("ASPD") based on the respective legacy company and the associated geographic region, then added the legacy company ASPD together.
[Example: Q4 2015 Pro Forma Legacy Tornier U.S. Sales / Legacy Tornier U.S. Selling Days = $880K. Q4 2015 Adjusted Legacy Wright U.S. Sales / Legacy Wright U.S. Selling Days = $1,191K. Adjusted Pro Forma Combined Average Sales per Day = $2,072K]
(7)
Reflects growth of Pro Forma ASPD over comparable period. International Sales and Global Sales growth excludes the impact of FX (see Note 4).

10


Wright Medical Group N.V.
Reconciliation of Non-GAAP Combined Pro Forma Cash Earnings Per Share to Net Loss from Continuing Operations
(in thousands, except per share data--unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
December 27, 2015
 
December 27, 2015
Net loss from continuing operations, as reported
$
(92,155
)
 
$
(238,360
)
Standalone Tornier N.V. nine months ended September 27, 2015
—

 
(25,253
)
Impact of divested products(1)
—

 
(5,414
)
Impact of purchase accounting adjustments(2)
—

 
(2,919
)
Impact of legacy Tornier stub period (September 28, 2015 - September 30, 2015)(3)
2,882

 
2,882

Non-GAAP combined pro forma net loss from continuing operations
$
(89,273
)
 
$
(269,064
)
Other reconciling items:
 
 
 
Inventory step-up amortization
11,377

 
11,446

Distributor conversions and non-competes
—

 
65

Non-cash interest expense on 2017 & 2020 convertible notes
6,910

 
24,767

Write-off of unamortized debt discount and deferred financing fees
—

 
25,101

Derivatives mark-to-market adjustments
2,257

 
(9,764
)
Due diligence, Transaction and transition costs
39,155

 
82,195

Share-based compensation acceleration
14,190

 
14,190

CVR mark-to-market adjustments
(280
)
 
(7,630
)
Contingent consideration fair value adjustment
—

 
155

Standalone Tornier N.V. transaction and transition costs
—

 
8,860

Standalone Tornier N.V. instrument use tax refund
—

 
(2,000
)
Tax effect of reconciling items
(1,827
)
 
(1,854
)
Non-GAAP combined pro forma net loss from continuing operations, as adjusted
$
(17,491
)
 
$
(123,533
)
Add back amortization of intangible assets
9,181

 
16,856

Add back Tornier N.V. amortization nine months ended September 27, 2015
—

 
12,057

Non-GAAP combined pro forma cash earnings
$
(8,310
)
 
$
(94,620
)
Pro forma weighted-average basic shares outstanding
102,659

 
101,959

Non-GAAP combined pro forma cash earnings per share
$
(0.08
)
 
$
(0.93
)
_______________________________
(1) 
To reduce from Legacy Tornier’s historical results the net income impact of the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement products.
(2) 
To reflect the pro forma impact of preliminary purchase accounting adjustments for estimated depreciation, amortization, interest and taxes associated with the preliminary purchase price allocation identified as part of Wright Medical Group N.V.’s Form 8-K/A filed on November 17, 2015.
(3) 
To add net income from Legacy Tornier's fourth quarter for the period prior to Merger closing date when operations became consolidated.



11


Wright Medical Group N.V.
Reconciliation of Non-GAAP Combined Pro Forma Adjusted EBITDA to Net Loss from Continuing Operations
(in thousands, except per share data--unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
December 27, 2015
 
December 27, 2015
 
Wright Medical Group N.V.
 
Wright Medical Group N.V. (reported)
 
Standalone legacy Tornier N.V.
 
Pro forma combined
Net loss from continuing operations
$
(92,155
)
 
$
(238,360
)
 
$
(25,253
)
 
$
(263,613
)
Impact of divested products(1)
—

 
—

 
(5,414
)
 
(5,414
)
Impact of purchase accounting adjustments(2)
—

 
—

 
(2,919
)
 
(2,919
)
Impact of legacy Tornier stub period (September 28, 2015 - September 30, 2015)(3)
2,882

 
—

 
2,882

 
2,882

Non-GAAP combined pro forma net loss from continuing operations
$
(89,273
)
 
$
(238,360
)
 
$
(30,704
)
 
$
(269,064
)
Interest expense, net(4)
11,565

 
41,358

 
1,352

 
42,710

Benefit (provision) from income taxes(4)
(4,362
)
 
(3,851
)
 
577

 
(3,274
)
Depreciation(4)
12,542

 
29,508

 
23,702

 
53,210

Amortization(4)
9,181

 
16,922

 
13,419

 
30,341

Non-GAAP combined pro forma EBITDA
$
(60,347
)
 
$
(154,423
)
 
$
8,346

 
$
(146,077
)
Reconciling items impacting EBITDA:
 
 
 
 
 
 
 
Non-cash share-based compensation expense
17,259

 
24,965

 
6,512

 
31,477

Other expense, net
3,489

 
10,884

 
262

 
11,146

Inventory step-up amortization
11,377

 
11,446

 
—

 
11,446

Due diligence, transaction and transition costs
39,155

 
82,195

 
8,860

 
91,055

Instrument use tax refund
—

 
—

 
(2,000
)
 
(2,000
)
Non-GAAP combined pro forma adjusted EBITDA
$
10,933

 
$
(24,933
)
 
$
21,980

 
$
(2,953
)
_______________________________
(1) 
To add net income from Legacy Tornier's fourth quarter for the period prior to Merger closing date when operations became consolidated.
(2) 
To reflect the pro forma impact of preliminary purchase accounting adjustments for estimated depreciation, amortization, interest and taxes associated with the preliminary purchase price allocation identified as part of Wright Medical Group N.V.’s Form 8-K/A filed on November 17, 2015.
(3) 
To reduce from Legacy Tornier’s historical results the net income impact of the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement products.
(4) 
Amounts for Standalone Legacy Tornier N.V. include estimated depreciation, amortization, interest and taxes associated with the preliminary purchase price allocation (see Note 2).
Wright Medical Group N.V.
Condensed Consolidated Balance Sheets
(dollars in thousands--unaudited)

12


 
December 27, 2015
 
December 31, 2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
139,804

 
$
227,326

Marketable securities
—

 
2,575

Accounts receivable, net
131,050

 
57,190

Inventories
229,109

 
88,412

Prepaid expenses and other current assets(1)
59,921

 
61,516

Total current assets(1)
559,884

 
437,019

 
 
 
 
Property, plant and equipment, net
240,769

 
104,235

Goodwill and intangible assets, net
1,133,087

 
259,991

Other assets(1)
155,935

 
88,828

Total assets(1)
$
2,089,675

 
$
890,073

 
 
 
 
Liabilities and shareholders' equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
30,904

 
$
16,729

Accrued expenses and other current liabilities(1)
173,863

 
169,614

Current portion of long-term obligations
2,171

 
718

Total current liabilities(1)
206,938

 
187,061

Long-term obligations
577,382

 
280,612

Other liabilities(1)
250,329

 
143,597

Total liabilities(1)
1,034,649

 
611,270

 
 
 
 
Shareholders' equity
1,055,026

 
278,803

Total liabilities and shareholders' equity(1)
$
2,089,675

 
$
890,073

_______________________________
(1) 
The prior year deferred tax balances were reclassified to account for early adoption of ASU 2015-17.


13