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, Feb. 23, 2016 (GLOBE NEWSWIRE) -- 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 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.” 

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

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  

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--


 


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  $298,027 
Cost of sales55,443  19,097  119,255  73,223 
Gross profit121,525  64,197  296,206  224,804 
Operating expenses:       
Selling, general and administrative178,596  81,991  429,398  289,620 
Research and development15,211  6,360  39,855  24,963 
Amortization of intangible assets9,181  2,786  16,922  10,027 
Total operating expenses202,988  91,137  486,175  324,610 
Operating loss(81,463) (26,940) (189,969) (99,806)
Interest expense, net11,565  4,525  41,358  17,398 
Other expense (income), net3,489  74,640  10,884  129,626 
Loss from continuing operations before income taxes(96,517) (106,105) (242,211) (246,830)
Provision (benefit) for income taxes(4,362) 863  (3,851) (6,334)
Net loss from continuing operations$(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.



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 extremities58,819  46,032  27.8% 187,096  148,631  25.9%
Upper extremities47,053  3,891  1,109.3% 58,756  15,311  283.8%
Biologics15,971  12,118  31.8% 50,583  45,494  11.2%
Sports med & other1,830  445  311.2% 3,388  2,641  28.3%
Total extremities & biologics123,673  62,486  97.9% 299,823  212,077  41.4%
Large joint18    N/A 18    N/A
Total U.S.$123,691  $62,486  97.9% $299,841  $212,077  41.4%
            
International           
Lower extremities15,887  11,119  42.9% 51,200  47,001  8.9%
Upper extremities19,066  2,437  682.4% 24,789  11,312  119.1%
Biologics4,582  5,153  (11.1)% 19,652  20,590  (4.6)%
Sports med & other3,625  2,099  72.7% 9,862  7,047  39.9%
Total extremities & biologics43,160  20,808  107.4% 105,503  85,950  22.7%
Large joint10,117    N/A 10,117    N/A
Total International$53,277  $20,808  156.0% $115,620  $85,950  34.5%
            
Global           
Lower extremities74,706  57,151  30.7% 238,296  195,632  21.8%
Upper extremities66,119  6,328  944.9% 83,545  26,623  213.8%
Biologics20,553  17,271  19.0% 70,235  66,084  6.3%
Sports med & other5,455  2,544  114.4% 13,250  9,688  36.8%
Total extremities & biologics166,833  83,294  100.3% 405,326  298,027  36.0%
Large joint10,135    N/A 10,135    N/A
Total sales$176,968  $83,294  112.5% $415,461  $298,027  39.4%




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 extremities47,053  1,773  48,826 
Biologics15,971  66  16,037 
Sports med & other1,830  4  1,834 
Total extremities & biologics123,673  2,122  125,795 
Large joint18    18 
Total U.S.$123,691  $2,122  $125,813 
      
International     
Lower extremities$15,887  $152  $16,039 
Upper extremities19,066  1,260  20,326 
Biologics4,582  13  4,595 
Sports med & other3,625  132  3,757 
Total extremities & biologics43,160  1,557  44,717 
Large joint10,117  753  10,870 
Total International$53,277  $2,310  $55,587 
      
Global     
Lower extremities$74,706  $431  $75,137 
Upper extremities66,119  3,033  69,152 
Biologics20,553  79  20,632 
Sports med & other5,455  136  5,591 
Total extremities & biologics166,833  3,679  170,512 
Large joint10,135  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. 



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 extremities187,096  29,637  (9,733) 279  207,279 
Upper extremities58,756  115,846    1,773  176,375 
Biologics50,583  1,290    66  51,939 
Sports med & other3,388  5,021    4  8,413 
Total extremities & biologics299,823  151,794  (9,733) 2,122  444,006 
Large joint18  119      137 
Total U.S.$299,841  $151,913  $(9,733) $2,122  $444,143 
          
International         
Lower extremities51,200  7,402    152  58,754 
Upper extremities24,789  51,293    1,260  77,342 
Biologics19,652  357    13  20,022 
Sports med & other9,862  5,372    132  15,366 
Total extremities & biologics105,503  64,424    1,557  171,484 
Large joint10,117  29,921    753  40,791 
Total International$115,620  $94,345  $  $2,310  $212,275 
          
Global         
Lower extremities238,296  37,039  (9,733) 431  266,033 
Upper extremities83,545  167,139    3,033  253,717 
Biologics70,235  1,647    79  71,961 
Sports med & other13,250  10,393    136  23,779 
Total extremities & biologics405,326  216,218  (9,733) 3,679  615,490 
Large joint10,135  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.




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 Tornier51,552  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 days61  65    61  65   
Legacy Wright selling days58  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).



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) $(269,064)
Other reconciling items:   
Inventory step-up amortization11,377  11,446 
Distributor conversions and non-competes  65 
Non-cash interest expense on 2017 & 2020 convertible notes6,910  24,767 
Write-off of unamortized debt discount and deferred financing fees  25,101 
Derivatives mark-to-market adjustments2,257  (9,764)
Due diligence, Transaction and transition costs39,155  82,195 
Share-based compensation acceleration14,190  14,190 
CVR mark-to-market adjustments(280) (7,630)
Contingent consideration fair value adjustment  155 
Standalone Tornier N.V. transaction and transition costs  8,860 
Standalone Tornier N.V. instrument use tax refund  (2,000)
Tax effect of reconciling items(1,827) (1,854)
Non-GAAP combined pro forma net loss from continuing operations, as adjusted$(17,491) $(123,533)
Add back amortization of intangible assets9,181  16,856 
Add back Tornier N.V. amortization nine months ended September 27, 2015  12,057 
Non-GAAP combined pro forma cash earnings$(8,310) $(94,620)
Pro forma weighted-average basic shares outstanding102,659  101,959 
Non-GAAP combined pro forma cash earnings per share$(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.



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)
 
 December 27,
2015
 December 31,
2014
Assets   
Current assets:   
Cash and cash equivalents$139,804  $227,326 
Marketable securities  2,575 
Accounts receivable, net131,050  57,190 
Inventories229,109  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, net240,769  104,235 
Goodwill and intangible assets, net1,133,087  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 obligations2,171  718 
Total current liabilities(1)206,938  187,061 
Long-term obligations577,382  280,612 
Other liabilities(1)250,329  143,597 
Total liabilities(1)1,034,649  611,270 
    
Shareholders' equity1,055,026  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.



 

Investors & Media:  

Wright Medical Group N.V. 
Julie D. Tracy
Chief Communications Officer
(901) 290-5817 (office)
julie.tracy@wright.com

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