Wright Medical Group ($WMGI) had a tough 2011 with the departure of a number of top officials--including its CEO--and efforts to improve federal compliance. Last week, it disclosed that its net income for fourth-quarter 2011 was $1.2 million versus $8.9 million a year earlier--a drop of more than 86%.
In addition, the company's net sales fell 8% to $126.9 million from $138.3 million during the prior year period.
Still, CEO Robert Palmisano, who joined the company last year, said the results were stronger than officials expected, but there is work ahead. He emphasized growing Wright's foot and ankle business and running "a much more focused and efficient ortho-recon business."
The company says it will make the necessary investments to achieve its goals in foot and ankle and ortho-recon, among other activities, but these efforts will negatively impact full-year 2012 results. Wright now says 2012 net sales will be $472 million to $489 million compared with $512.9 million in 2011.
Wright is looking to pick itself up after a rough ride since the fall of 2010. At the time, it agreed to pay $7.9 million to settle allegations that it had conspired to violate anti-kickback laws. Wright announced last May that it was the recipient of a letter from the U.S. attorney stating that it "has knowingly and willfully committed at least two breaches of material provisions" of a deferred prosecution agreement related to the settlement. It subsequently reached an agreement with the feds to extend a deferred prosecution deal by a year.
Last year also saw the departure of a number of top Wright executives, including CEO Gary Henley and CTO Frank Bono, as well as three others who left the company "without good reason."
Beyond dealing with the compliance issues in its efforts to get back on track, Wright also faces tough competition from several bigger rivals, including Zimmer Holdings ($ZMH), Stryker ($SYK) and Smith & Nephew ($SNN), according to Zacks.
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