Cover
Cover - shares | 9 Months Ended | |
Sep. 27, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 27, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35065 | |
Entity Registrant Name | WRIGHT MEDICAL GROUP N.V. | |
Entity Incorporation, State or Country Code | P7 | |
Entity Tax Identification Number | 98-0509600 | |
Entity Address, Address Line One | Prins Bernhardplein 200 | |
Entity Address, Address Line Two | 1097 JB | |
Entity Address, City or Town | Amsterdam, | |
Entity Address, Country | NL | |
Entity Address, Postal Zip Code | None | |
City Area Code | 20 | |
Local Phone Number | 521 4777 | |
Title of 12(b) Security | Ordinary shares, par value €0.03 per share | |
Trading Symbol | WMGI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 129,934,836 | |
Entity Central Index Key | 0001492658 | |
Current Fiscal Year End Date | --12-27 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 27, 2020 | Dec. 29, 2019 | ||
Current assets: | |||
Cash and cash equivalents | $ 141,549 | $ 166,856 | |
Accounts receivable, net | 120,597 | 147,400 | |
Inventories | 243,072 | 198,374 | |
Prepaid expenses | 21,867 | 16,031 | |
Other current assets | [1] | 235,769 | 214,997 |
Total current assets | 762,854 | 743,658 | |
Property, plant and equipment, net | 260,730 | 251,922 | |
Goodwill | 1,273,967 | 1,260,967 | |
Intangible assets, net | 239,843 | 257,382 | |
Deferred income taxes | 1,020 | 1,012 | |
Other assets | 60,305 | 70,699 | |
Total assets | 2,598,719 | 2,585,640 | |
Current liabilities: | |||
Accounts payable | 28,526 | 32,121 | |
Accrued expenses and other current liabilities | [1] | 392,061 | 387,025 |
Current portion of long-term obligations | [1] | 487,216 | 430,862 |
Total current liabilities | 907,803 | 850,008 | |
Long-term debt and finance lease obligations | 736,668 | 737,167 | |
Deferred income taxes | 9,985 | 10,384 | |
Other liabilities | 90,012 | 96,288 | |
Total liabilities | 1,744,468 | 1,693,847 | |
Commitments and Contingencies | |||
Stockholders' equity: | |||
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 129,744,257 shares at September 27, 2020 and 128,614,026 shares at December 29, 2019 | 4,730 | 4,691 | |
Additional paid-in capital | 2,641,951 | 2,608,939 | |
Accumulated other comprehensive loss | (6,071) | (29,499) | |
Accumulated deficit | (1,786,359) | (1,692,338) | |
Total shareholders’ equity | 854,251 | 891,793 | |
Total liabilities and shareholders’ equity | $ 2,598,719 | $ 2,585,640 | |
Threshold for conversion as percent of conversion price | 130.00% | ||
Minimum consecutive business day period | 20 days | ||
Trading period | 30 days | ||
2021 Convertible Debt | |||
Threshold for conversion as percent of conversion price | 130.00% | ||
Minimum consecutive business day period | 20 days | ||
Trading period | 30 days | ||
[1] | At September 27, 2020 and December 29, 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 are able to convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges were classified as current assets as of September 27, 2020 and December 29, 2019 . See Note 5 and Note 8 . |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - € / shares | Sep. 27, 2020 | Dec. 29, 2019 |
Consolidated Balance Sheet Parenthetical [Abstract] | ||
Common stock, par value (in usd per share) | € 0.03 | € 0.03 |
Common stock, shares authorized (in shares) | 320,000,000 | 320,000,000 |
Common stock, shares issued (in shares) | 129,744,257 | 128,614,026 |
Common stock, shares outstanding (in shares) | 129,744,257 | 128,614,026 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | ||
Income Statement [Abstract] | |||||
Net sales | $ 223,367 | $ 212,434 | $ 571,862 | $ 672,295 | |
Cost of sales | [1] | 45,141 | 44,441 | 112,779 | 139,096 |
Gross profit | 178,226 | 167,993 | 459,083 | 533,199 | |
Operating expenses: | |||||
Selling, general and administrative | [1] | 137,783 | 152,780 | 410,613 | 458,198 |
Research and development | [1] | 16,330 | 18,045 | 50,108 | 53,773 |
Amortization of intangible assets | 7,755 | 8,308 | 23,970 | 23,757 | |
Total operating expenses | 161,868 | 179,133 | 484,691 | 535,728 | |
Operating income (loss) | 16,358 | (11,140) | (25,608) | (2,529) | |
Interest expense, net | 21,831 | 20,448 | 63,477 | 60,138 | |
Other expense (income), net | 10,162 | 1,317 | (11,007) | 12,381 | |
Loss from continuing operations before income taxes | (15,635) | (32,905) | (78,078) | (75,048) | |
Provision for income taxes | 1,302 | 3,295 | 3,429 | 10,340 | |
Net loss from continuing operations | (16,937) | (36,200) | (81,507) | (85,388) | |
Loss from discontinued operations, net of tax | (2,785) | (7,589) | (12,514) | (12,814) | |
Net loss | $ (19,722) | $ (43,789) | $ (94,021) | $ (98,202) | |
Net income (loss) per share: | |||||
Net loss from continuing operations per share - basic and diluted (in usd per share) | $ (0.13) | $ (0.29) | $ (0.63) | $ (0.68) | |
Net loss from discontinued operations per share - basic and diluted (in usd per share) | (0.02) | (0.06) | (0.10) | (0.10) | |
Net loss per share - basic and diluted (in usd per share) | $ (0.15) | $ (0.35) | $ (0.73) | $ (0.78) | |
Weighted-average number of ordinary shares outstanding - basic and diluted (in shares) | 129,463 | 126,767 | 129,043 | 126,282 | |
[1] | 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 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Cost of sales $ 260 $ 156 $ 737 $ 413 Selling, general and administrative 7,620 7,284 20,744 21,106 Research and development 854 795 2,154 1,960 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Cost of sales | ||||
Stock-based compensation expense | $ 260 | $ 156 | $ 737 | $ 413 |
Selling, general and administrative | ||||
Stock-based compensation expense | 7,620 | 7,284 | 20,744 | 21,106 |
Research and development | ||||
Stock-based compensation expense | $ 854 | $ 795 | $ 2,154 | $ 1,960 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (19,722) | $ (43,789) | $ (94,021) | $ (98,202) |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Changes in foreign currency translation | 21,269 | (20,287) | 23,428 | (31,713) |
Other comprehensive income (loss) | 21,269 | (20,287) | 23,428 | (31,713) |
Comprehensive income (loss) | $ 1,547 | $ (64,076) | $ (70,593) | $ (129,915) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Operating activities: | ||
Net loss | $ (94,021) | $ (98,202) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 47,658 | 47,688 |
Share-based compensation expense | 23,635 | 23,479 |
Amortization of intangible assets | 23,970 | 23,757 |
Amortization of deferred financing costs and debt discount | 40,929 | 40,577 |
Deferred income taxes | (762) | (1,857) |
Provision for excess and obsolete inventory | 11,895 | 10,144 |
Amortization of inventory step-up adjustment | 0 | 1,057 |
Non-cash adjustment to derivative fair values | (18,443) | (885) |
Net loss on exchange of cash convertible notes | 0 | 14,274 |
Asset Impairment Charges | 0 | 5,597 |
Mark-to-market adjustment for CVRs | 0 | (420) |
Other | 2,825 | (3,862) |
Changes in assets and liabilities (net of acquisitions): | ||
Accounts receivable | 23,695 | 2,617 |
Inventories | (53,516) | (30,382) |
Prepaid expenses and other current assets | 4,121 | (5,725) |
Accounts payable | (4,174) | (12,059) |
Accrued expenses and other liabilities | 6,722 | 15,534 |
Metal-on-metal product liabilities | (4,130) | (13,053) |
Net cash provided by operating activities | 10,404 | 18,279 |
Investing activities: | ||
Capital expenditures | (51,965) | (63,849) |
Purchase of intangible assets | (4,354) | (6,887) |
Acquisition of business | 0 | 722 |
Other investing | 0 | 3,766 |
Net cash used in investing activities | (56,319) | (66,248) |
Financing activities: | ||
Issuance of ordinary shares | 9,290 | 15,621 |
Issuance of stock warrants | 0 | 21,210 |
Payment of notes premium | (146) | 0 |
Payment of notes hedge options | 0 | (30,144) |
Repurchase of stock warrants | 0 | (11,026) |
Payment of equity issuance costs | 0 | (350) |
Proceeds from notes hedge options | 351 | 16,849 |
Proceeds from debt | 77,010 | 4,704 |
Payments of debt | (60,345) | (3,466) |
Payment of financing costs | 0 | (2,978) |
Payment of contingent consideration | (435) | 0 |
Payments of finance lease obligations | (5,745) | (5,874) |
Net cash provided by financing activities | 19,980 | 4,546 |
Effect of exchange rates on cash and cash equivalents | 628 | (665) |
Net decrease in cash and cash equivalents | (25,307) | (44,088) |
Cash and cash equivalents, beginning of period | 166,856 | 191,351 |
Cash and cash equivalents, end of period | $ 141,549 | $ 147,263 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Shareholders' Equity Statement - USD ($) $ in Thousands | Total | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive loss (income) | Accumulated deficit | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentAccumulated deficit |
Common stock, shares outstanding, beginning balance (in shares) at Dec. 30, 2018 | 125,555,751 | ||||||
Stockholder's equity, beginning balance at Dec. 30, 2018 | $ 932,459 | $ 4,589 | $ 2,514,295 | $ (8,083) | $ (1,578,342) | $ 229 | $ 229 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (98,202) | (98,202) | |||||
Foreign currency translation | (31,713) | (31,713) | |||||
Issuance of ordinary shares (in shares) | 754,682 | ||||||
Issuances of ordinary shares | 15,621 | $ 25 | 15,596 | ||||
Vesting of restricted and performance stock units (in shares) | 583,161 | ||||||
Vesting of restricted stock units | $ 20 | (20) | |||||
Share-based compensation | 23,692 | 23,692 | |||||
Issuance of stock warrants, net of repurchases and equity issuance costs | 9,834 | 9,834 | |||||
Common stock, shares outstanding, ending balance (in shares) at Sep. 29, 2019 | 126,893,594 | ||||||
Stockholder's equity, ending balance at Sep. 29, 2019 | 851,920 | $ 4,634 | 2,563,397 | (39,796) | (1,676,315) | ||
Common stock, shares outstanding, beginning balance (in shares) at Jun. 30, 2019 | 126,580,952 | ||||||
Stockholder's equity, beginning balance at Jun. 30, 2019 | 906,030 | $ 4,623 | 2,553,442 | (19,509) | (1,632,526) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (43,789) | (43,789) | |||||
Foreign currency translation | (20,287) | (20,287) | |||||
Issuance of ordinary shares (in shares) | 71,097 | ||||||
Issuances of ordinary shares | 1,607 | $ 2 | 1,605 | ||||
Vesting of restricted and performance stock units (in shares) | 241,545 | ||||||
Vesting of restricted stock units | $ 9 | (9) | |||||
Share-based compensation | 8,359 | 8,359 | |||||
Common stock, shares outstanding, ending balance (in shares) at Sep. 29, 2019 | 126,893,594 | ||||||
Stockholder's equity, ending balance at Sep. 29, 2019 | $ 851,920 | $ 4,634 | 2,563,397 | (39,796) | (1,676,315) | ||
Common stock, shares outstanding, beginning balance (in shares) at Dec. 29, 2019 | 128,614,026 | 128,614,026 | |||||
Stockholder's equity, beginning balance at Dec. 29, 2019 | $ 891,793 | $ 4,691 | 2,608,939 | (29,499) | (1,692,338) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (94,021) | (94,021) | |||||
Foreign currency translation | 23,428 | 23,428 | |||||
Issuance of ordinary shares (in shares) | 420,645 | ||||||
Issuances of ordinary shares | 9,290 | $ 14 | 9,276 | ||||
Vesting of restricted and performance stock units (in shares) | 709,586 | ||||||
Vesting of restricted stock units | $ 25 | (25) | |||||
Share-based compensation | $ 23,761 | 23,761 | |||||
Common stock, shares outstanding, ending balance (in shares) at Sep. 27, 2020 | 129,744,257 | 129,744,257 | |||||
Stockholder's equity, ending balance at Sep. 27, 2020 | $ 854,251 | $ 4,730 | 2,641,951 | (6,071) | (1,786,359) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201602Member | ||||||
Common stock, shares outstanding, beginning balance (in shares) at Jun. 28, 2020 | 129,059,876 | ||||||
Stockholder's equity, beginning balance at Jun. 28, 2020 | $ 840,923 | $ 4,706 | 2,630,194 | (27,340) | (1,766,637) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (19,722) | (19,722) | |||||
Foreign currency translation | 21,269 | 21,269 | |||||
Issuance of ordinary shares (in shares) | 121,694 | ||||||
Issuances of ordinary shares | 2,937 | $ 4 | 2,933 | ||||
Vesting of restricted and performance stock units (in shares) | 562,687 | ||||||
Vesting of restricted stock units | $ 20 | (20) | |||||
Share-based compensation | $ 8,844 | 8,844 | |||||
Common stock, shares outstanding, ending balance (in shares) at Sep. 27, 2020 | 129,744,257 | 129,744,257 | |||||
Stockholder's equity, ending balance at Sep. 27, 2020 | $ 854,251 | $ 4,730 | $ 2,641,951 | $ (6,071) | $ (1,786,359) |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation. The unaudited condensed consolidated interim financial statements of Wright Medical Group N.V. have been prepared in accordance with U.S. generally accepted accounting principles (US GAAP) for interim financial statements and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to these rules and regulations. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 29, 2019 , as filed with the SEC on February 24, 2020 . In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments necessary for a fair presentation of our interim financial results. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not indicative of results for the full fiscal year. The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. Revenue recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers and stocking distributors, with the majority of our revenue derived from sales to hospitals and surgery centers. Our products are sold through a network of employee and independent sales representatives in the United States and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the United States. We record revenues from sales to hospitals and surgery centers upon transfer of control of promised products in an amount that reflects the consideration we expect to receive in exchange for those products, which is generally when the product is surgically implanted in a patient. We record revenues from sales to our stocking distributors at a point in time upon transfer of control of promised products to the distributor. Our stocking distributors, who sell the products to their customers, take control of the products and assume all risks of ownership upon transfer. Our stocking distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our stocking distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of sales related to these types of agreements was deferred and not yet recognized as revenue as of September 27, 2020 and September 29, 2019 . We must make estimates of potential future product returns related to current period product sales. We base our estimate for sales returns on historical sales and product return information, including historical experience and trend information. Our reserve for sales returns has historically been immaterial. We incur shipping and handling costs associated with the shipment of goods to customers, independent distributors, and our subsidiaries. Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products to customers are included in selling, general and administrative expenses. We also record depreciation on surgical instruments used by our hospital and surgery center customers within selling, general and administrative expense as these costs are considered to be similar to shipping and handling costs, necessary to deliver the implant products to the end customer. Inventories. Our inventories are valued at the lower of cost or market on a first in, first out (FIFO) basis. Inventory costs include material, labor costs, and manufacturing overhead. We regularly review inventory quantities on hand for excess and obsolete inventory, and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million . We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years. Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $5.2 million and $4.1 million for the three months ended September 27, 2020 and September 29, 2019 , respectively. Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $11.9 million and $10.1 million for the nine months ended September 27, 2020 and September 29, 2019 , respectively. During the three and nine months ended September 27, 2020 , our cost of sales included a favorable adjustment of $2.6 million and $7.8 million , respectively, as a result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold. During the three and nine months ended September 29, 2019 , our cost of sales included a favorable adjustment of $2.6 million as a result of our change in accounting estimate of reserves for excess and obsolete inventory, as such inventory was sold. Discontinued Operations. On January 9, 2014, pursuant to an Asset Purchase Agreement, dated as of June 18, 2013 (the MicroPort Agreement), by and among us and MicroPort Scientific Corporation (MicroPort), we completed the divestiture and sale of our business operations operating under our prior OrthoRecon operating segment to MicroPort. All historical operating results for the OrthoRecon business are reflected within discontinued operations in the condensed consolidated financial statements. See Note 3 for further discussion of discontinued operations. Other than Note 3 , unless otherwise stated, all discussion of assets and liabilities in these Notes to the condensed consolidated financial statements reflects the assets and liabilities held and used in our continuing operations, and all discussion of revenues and expenses reflects those associated with our continuing operations. Recent Accounting Pronouncements. On February 25, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases , and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 842). ASC 842 introduced a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in FASB Accounting Standards Codification (ASC) 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). We adopted ASC 842 during the quarter ended March 31, 2019 using the hindsight practical expedient, the practical expedient for short-term leases, and the practical expedient package which primarily limited the need for reassessing lease classification on existing leases. During 2019, with the adoption of ASC 842, we recognized all operating leases with terms greater than twelve months in duration on our condensed consolidated balance sheet as right-of-use assets and lease liabilities which totaled approximately $20 million . Additionally, we recorded a cumulative adjustment of $0.2 million to our accumulated deficit upon adoption during the quarter ended March 31, 2019. We adopted the standard using the prospective approach and did not retrospectively apply it to prior periods. On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments and has subsequently issued several supplemental and/or clarifying ASUs. The new standard adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. We adopted this ASU in fiscal year 2020, however, this guidance did not have a significant impact on our condensed consolidated financial statements. On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) to provide guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40, Internal Use Software , to determine which implementation costs should be capitalized in such a CCA. We adopted this ASU in fiscal year 2020; however, this guidance did not have a significant impact on our condensed consolidated financial statements. On December 18, 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 27, 2020 | |
Organization and Description of Business [Abstract] | |
Organization and Description of Business | Organization and Description of Business Wright Medical Group N.V. (Wright or we) is a global medical device company focused on extremities and biologics products. We are committed to delivering innovative, value-added solutions improving quality of life for patients worldwide and are 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. We market our products in approximately 50 countries worldwide. On November 4, 2019 , we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the purchase agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. has commenced a tender offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash (the Offer). The Offer is currently scheduled to expire at 5:00 p.m., Eastern Time, on November 10, 2020 , but may be extended in accordance with the terms of the purchase agreement between Stryker and Wright. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders (which condition has been met), completion of the Offer, and other customary closing conditions. Our global corporate headquarters are located in Amsterdam, the Netherlands. We also have significant operations located in Memphis, Tennessee (U.S. headquarters, research and development, sales and marketing administration, and administrative activities); Bloomington, Minnesota (upper extremities sales and marketing and warehousing operations); Arlington, Tennessee (manufacturing and warehousing operations); Franklin, Tennessee (manufacturing and warehousing operations); Columbia City, Indiana (research and development); Alpharetta, Georgia (manufacturing and warehousing operations); Montbonnot, France (manufacturing and warehousing operations); Plouzané, France (research and development); and Macroom, Ireland (manufacturing). In addition, we have local sales and distribution offices in Canada, Australia, Asia, Latin America, and throughout Europe. For purposes of this report, references to “international” or “foreign” relate to non-U.S. matters while references to “domestic” relate to U.S. matters. Our ordinary shares are traded on the Nasdaq Global Select Market under the symbol “WMGI.” Impact of Global COVID-19 Pandemic. The global COVID-19 pandemic has led to the temporary closure of businesses, travel restrictions and the implementation of social distancing measures. Hospitals, ambulatory surgery centers and other medical facilities have deferred elective procedures, diverted resources to patients suffering from infections and limited access for non-patients, including our sales representatives. Because of the COVID-19 pandemic, surgeons and their patients are required, or are choosing, to defer procedures in which our products otherwise would be used, and many facilities that specialize in the procedures in which our products otherwise would be used have temporarily closed or reduced operating hours. These circumstances have negatively impacted the ability of our employees, independent sales representatives and distributors to effectively market and sell our products. In response to the COVID-19 pandemic, we set our corporate priorities and actions as follows. First, we are focused on the health and safety of our employees. Second, we are focused on continuity of product supply and service for our customers and their patients. Third, we are focused on minimizing the spread of the virus to reduce the impact on our communities and hospital systems. Finally, we are focused on maintaining the sustainability of our Company by diligently and thoughtfully conserving and allocating resources, and pausing non-critical spending and non-critical hiring. In furtherance of this objective, we implemented temporary reductions in base salaries for our executive officers and certain other employees, including a 50% reduction for our Chief Executive Officer, 25% reductions for other officers and 15% reductions for certain other employees, as well as a temporary 50% reduction in cash retainers for our Board of Directors. These temporary reductions ended in July 2020 for our executive officers and in June 2020 for our other employees. Our other sustainability measures remain in place. During the second quarter of 2020, because of the anticipated temporary decline in our net sales, on May 7, 2020, we agreed with MidCap to amend the Credit Agreement to, among other things, suspend the quarterly-tested minimum net revenue and minimum adjusted EBITDA financial covenants through the end of 2020 and add a minimum liquidity covenant that will apply from the date of the amendment through May 15, 2021. See Note 8 to the condensed consolidated financial statements for a description of this amendment. Our fiscal year-end is generally determined on a 52-week basis and runs from the Monday nearest to the 31st of December of a year and ends on the Sunday nearest to the 31st of December of the following year. Every few years, it is necessary to add an extra week to the year making it a 53-week period. The condensed consolidated financial statements and accompanying notes present our consolidated results for each of the three and nine months ended September 27, 2020 and September 29, 2019 . The three and nine months ended September 27, 2020 and September 29, 2019 each consisted of thirteen and thirty-nine weeks, respectively. All amounts are presented in U.S. dollars ($), except where expressly stated as being in other currencies, e.g., Euros (€). |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 27, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On January 9, 2014, we completed the divestiture and sale of our OrthoRecon business to MicroPort Scientific Corporation. Certain liabilities associated with the OrthoRecon business, including product liability claims associated with hip and knee products sold by us prior to the closing, were not assumed by MicroPort. Charges associated with these product liability claims, including legal defense, settlements and judgments, income associated with product liability insurance recoveries, and changes to any contingent liabilities associated with the OrthoRecon business have been reflected within results of discontinued operations, and we will continue to reflect these within results of discontinued operations in future periods. For the three and nine months ended September 27, 2020 , our loss from discontinued operations, net of tax , totaled $2.8 million and $12.5 million , respectively. For the three and nine months ended September 29, 2019 , our loss from discontinued operations, net of tax , totaled $7.6 million and $12.8 million , respectively. Our operating results from discontinued operations and cash used in discontinued operations during 2020 and 2019 were attributable primarily to expenses, net of insurance recoveries, associated with our former OrthoRecon business as described in Note 11 . Cash used in discontinued operations totaled $22.2 million and $36.8 million for the nine months ended September 27, 2020 and September 29, 2019 , respectively. We will incur continuing cash outflows associated with legal defense costs and the ultimate resolution of these contingent liabilities, net of insurance proceeds, until these liabilities are resolved. |
Inventories
Inventories | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): September 27, 2020 December 29, 2019 Raw materials $ 13,571 $ 12,681 Work-in-process 30,189 27,528 Finished goods 199,312 158,165 $ 243,072 $ 198,374 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments and Derivatives | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments and Derivatives | Fair Value of Financial Instruments and Derivatives We account for derivatives in accordance with FASB ASC 815, which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivatives’ fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met. FASB ASC Section 820, Fair Value Measurement requires fair value measurements be classified and disclosed in one of the following three categories: 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. As of September 27, 2020 , we had 2.25% cash convertible senior notes due 2021 (2021 Notes) and 1.625% cash convertible senior notes due 2023 (2023 Notes) outstanding. The 2.00% cash convertible senior notes due 2020 (2020 Notes) matured and were repaid on February 15, 2020. See Note 8 of the condensed consolidated financial statements for additional information about the convertible notes. These notes are cash settled upon conversion for the principal amount of the notes plus a conversion premium (valued at the amount our ordinary share price exceeds the respective conversion price of the notes). The conversion premium is a conversion derivative feature that requires bifurcation from the notes in accordance with ASC Topic 815 and is accounted for as a derivative liability (Notes Conversion Derivative). At the time of issuance of the notes, we entered into hedges with certain option counterparties to reduce our exposure to potential cash payments required for these conversion premiums (Notes Hedges). Upon conversion of the notes, the option counterparties would settle these hedges with us in cash, valued in the same manner as the conversion premiums. The Notes Hedges are accounted for as a derivative asset in accordance with ASC Topic 815. In connection with certain events, including in connection with the Offer as further described in Note 8 , our option counterparties have the discretion to make certain adjustments to the Note Hedges, which may reduce the effectiveness of the Note Hedges. The following table summarizes the fair values and the presentation in our condensed consolidated balance sheets (in thousands) of our Notes Hedges and our Notes Conversion Derivatives: September 27, 2020 December 29, 2019 Location on condensed consolidated balance sheet Amount Location on condensed consolidated balance sheet Amount 2023 Notes Hedges Other assets $ 33,659 Other assets $ 39,240 2023 Notes Conversion Derivative Other liabilities $ 31,985 Other liabilities $ 31,555 2021 Notes Hedges Other current assets $ 206,949 Other current assets $ 183,437 2021 Notes Conversion Derivative Accrued expenses and other current liabilities $ 178,438 Accrued expenses and other current liabilities $ 179,478 2020 Notes Hedges Other current assets $ — Other current assets $ 1,969 2020 Notes Conversion Derivative Accrued expenses and other current liabilities $ — Accrued expenses and other current liabilities $ 1,666 As of September 27, 2020 and December 29, 2019 , the sale price condition (as defined in Note 8 ) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding calendar quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative are classified as current liabilities, and the fair value of the 2021 Notes Hedges are classified as current assets as of September 27, 2020 and December 29, 2019 . There were no significant conversions through October 28, 2020 . The 2020 Note Hedge and 2020 Conversion Derivative were settled during the first quarter of 2020 and resulted in net proceeds of approximately $0.2 million . Neither the Notes Conversion Derivatives nor the Notes Hedges qualify for hedge accounting; thus, any changes in the fair value of the derivatives are recognized immediately in our condensed consolidated statements of operations. The following table summarizes the net (loss) gain on changes in fair value (in thousands) related to the Notes Hedges and Notes Conversion Derivatives: Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 2023 Notes Hedges $ (28,648 ) $ (81,171 ) $ (5,581 ) $ (62,738 ) 2023 Notes Conversion Derivative 6,996 81,194 (430 ) 62,875 2021 Notes Hedges 24,513 (119,666 ) 23,512 (95,103 ) 2021 Notes Conversion Derivative (10,180 ) 118,923 1,040 95,706 2020 Notes Hedges — (5,675 ) (1,618 ) (633 ) 2020 Notes Conversion Derivative — 5,468 1,520 778 Net (loss) gain on changes in fair value $ (7,319 ) $ (927 ) $ 18,443 $ 885 In addition to the above net (loss) gain on changes in fair value , we also recognized a $12.6 million net loss on the Notes Conversion Derivatives during the quarter ended March 31, 2019 as part of the additional 2023 Notes exchange as described in Note 8 . The Notes Hedges and the Notes Conversion Derivative are measured at fair value using Level 3 inputs. These instruments are not actively traded and are valued using an option pricing model that uses observable and unobservable market data for inputs. To determine the fair value of the embedded conversion option in the 2020, 2021, and 2023 Notes Conversion Derivatives, a trinomial lattice model was used. A trinomial stock price lattice generates three possible outcomes of stock price - one up, one down, and one stable. This lattice generates a distribution of stock prices at the maturity date and throughout the life of the 2020, 2021, and 2023 Notes. Using this stock price lattice, a convertible note lattice was created where the value of the embedded conversion option was estimated by comparing the value produced in a convertible note lattice with the option to convert against the value without the ability to convert. In each case, the convertible note lattice first calculates the possible convertible note values at the maturity date, using the distribution of stock prices, which equals the maximum of (x) the remaining bond cash flows and (y) stock price times the conversion price. The values of the 2020, 2021, and 2023 Notes Conversion Derivatives at the valuation date were estimated using the values at the maturity date and moving back in time on the lattices (both for the lattice with the conversion option and without the conversion option). Specifically, at each node, if the 2020, 2021, or 2023 Notes are eligible for early conversion, the value at this node is the maximum of (i) converting to stock, which is the stock price times the conversion price, and (ii) holding onto the 2020, 2021, and 2023 Notes, which is the discounted and probability-weighted value from the three possible outcomes at the future nodes plus any accrued but unpaid coupons that are not considered at the future nodes. If the 2020, 2021, or 2023 Notes are not eligible for early conversion, the value of the conversion option at this node equals to (ii). In the lattice, a credit adjustment was applied to the discount for each cash flow in the model as the embedded conversion option, as well as the coupon and notional payments, is settled with cash instead of shares. To estimate the fair value of the 2020, 2021 and 2023 Notes Hedges, we used the Black-Scholes formula combined with credit adjustments, as the option counterparties have credit risk and the call options are cash settled. We assumed that the call options will be exercised at maturity since our ordinary shares do not pay any dividends and management does not expect to declare dividends in the near term. The following assumptions were used in the fair market valuations as of September 27, 2020 : 2021 Notes Conversion Derivative 2021 Notes Hedge 2023 Notes Conversion Derivative 2023 Notes Hedge Black Stock Volatility (1) 51.1% 51.1% 12.09% 12.09% Credit Spread for Wright (2) 8.98% N/A 0.99% N/A Credit Spread for Deutsche Bank AG (3) N/A N/A N/A 0.81% Credit Spread for JPMorgan Chase Bank (3) N/A 0.42% N/A 0.51% Credit Spread for Bank of America (3) N/A 0.42% N/A 0.51% (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. Derivatives not Designated as Hedging Instruments As a result of the acquired business of IMASCAP in 2017, we have recorded the estimated fair value of future contingent consideration of approximately €28.5 million , or approximately $33.2 million , related to the achievement of certain technical milestones and sales earnouts as of September 27, 2020 . The estimated fair value of contingent consideration related to technical milestones totaled $25.4 million and $20.8 million as of September 27, 2020 and December 29, 2019 , respectively, and is contingent upon the development of a next generation reverse shoulder implant system and new software modules. The estimated fair value of contingent consideration related to sales earnouts totaled $7.8 million and $7.2 million as of September 27, 2020 and December 29, 2019 , respectively, and is contingent upon the sale of certain guides and the next generation reverse shoulder implant system. The fair values of the sales earn out contingent consideration as of September 27, 2020 and December 29, 2019 were determined using a discounted cash flow model and probability adjusted estimates of the future earnings and are classified in Level 3. The discount rate is 12% for the sales earnout contingent consideration. The contingent consideration from the IMASCAP acquisition related to technical milestones is based on meeting certain developmental milestones for new software modules. The contingent consideration is due upon the earlier of (1) the date the FDA and CE submissions for the next generation reverse shoulder implant system are made or (2) March 31, 2021. The fair value of this contingent consideration as of September 27, 2020 and December 29, 2019 was determined using probability adjusted estimates of the future payments and is classified in Level 3. The discount rate is approximately 6% for the contingent consideration related to technical milestones. A change in the discount rate would have limited impact on our profits or the fair value of this contingent consideration. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximates the fair value of these financial instruments at September 27, 2020 and December 29, 2019 due to their short maturities and variable rates. The following tables summarize the valuation of our financial instruments (in thousands): Total Quoted prices in active markets (Level 1) Prices with other observable inputs (Level 2) Prices with unobservable inputs (Level 3) September 27, 2020 Assets Cash and cash equivalents $ 141,549 $ 141,549 $ — $ — 2021 Notes Hedges 206,949 — — 206,949 2023 Notes Hedges 33,659 — — 33,659 Total $ 382,157 $ 141,549 $ — $ 240,608 Liabilities 2021 Notes Conversion Derivative $ 178,438 $ — $ — $ 178,438 2023 Notes Conversion Derivative 31,985 — — 31,985 Contingent consideration 33,153 — — 33,153 Total $ 243,576 $ — $ — $ 243,576 Total Quoted prices Prices with Prices with December 29, 2019 Assets Cash and cash equivalents $ 166,856 $ 166,856 $ — $ — 2020 Notes Hedges 1,969 — — 1,969 2021 Notes Hedges 183,437 — — 183,437 2023 Notes Hedges 39,240 — — 39,240 Total $ 391,502 $ 166,856 $ — $ 224,646 Liabilities 2020 Notes Conversion Derivative $ 1,666 $ — $ — $ 1,666 2021 Notes Conversion Derivative 179,478 — — 179,478 2023 Notes Conversion Derivative 31,555 — — 31,555 Contingent consideration 28,077 — — 28,077 Total $ 240,776 $ — $ — $ 240,776 The following is a roll forward of our assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) (in thousands): Balance at December 29, 2019 Additions Transfers into Level 3 Gain/(loss) on fair value adjustments included in earnings Settlements Currency Balance at September 27, 2020 2020 Notes Hedges $ 1,969 — — (1,618 ) (351 ) — $ — 2020 Notes Conversion Derivative $ (1,666 ) — — 1,520 146 — $ — 2021 Notes Hedges $ 183,437 — — 23,512 — — $ 206,949 2021 Notes Conversion Derivative $ (179,478 ) — — 1,040 — — $ (178,438 ) 2023 Notes Hedges $ 39,240 — — (5,581 ) — — $ 33,659 2023 Notes Conversion Derivative $ (31,555 ) — — (430 ) — — $ (31,985 ) Contingent consideration $ (28,077 ) — — (4,146 ) 435 (1,365 ) $ (33,153 ) |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 27, 2020 | |
Property, Plant and Equipment, Net [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment, net consists of the following (in thousands): September 27, 2020 December 29, 2019 Property, plant and equipment, at cost $ 676,171 $ 648,318 Less: Accumulated depreciation (415,441 ) (396,396 ) $ 260,730 $ 251,922 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Changes in the carrying amount of goodwill occurring during the nine months ended September 27, 2020 and September 29, 2019 are as follows (in thousands): U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Total Balance at December 29, 2019 $ 569,970 $ 625,926 $ 65,071 $ 1,260,967 Foreign currency translation — 2,985 10,015 13,000 Balance at September 27, 2020 $ 569,970 $ 628,911 $ 75,086 $ 1,273,967 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 Goodwill is recognized for the excess of the purchase price over the fair value of net assets of businesses acquired. Goodwill is required to be tested for impairment at least annually. Unless circumstances otherwise dictate, the annual impairment test is performed in the fourth quarter annually. Following the December 2017 IMASCAP acquisition, foreign currency translation has been reported within the U.S. Upper Extremities segment. While the IMASCAP offices are located in France and the majority of their operations have a functional currency of the euro, the results of the IMASCAP business are managed by the U.S. Upper Extremities segment. The components of our identifiable intangible assets, net, are as follows (in thousands): September 27, 2020 December 29, 2019 Cost Accumulated amortization Cost Accumulated amortization Indefinite life intangibles: In-process research and development (IPRD) technology $ 8,698 $ — $ 6,238 $ — Total indefinite life intangibles 8,698 6,238 Finite life intangibles: Completed technology 175,978 87,282 172,111 72,140 Licenses 9,247 3,675 9,247 2,835 Customer relationships 183,090 50,054 181,094 41,389 Trademarks 14,111 12,224 14,002 11,834 Non-compete agreements 3,454 2,656 5,713 4,090 Other 1,571 415 2,022 757 Total finite life intangibles 387,451 $ 156,306 384,189 $ 133,045 Total intangibles 396,149 390,427 Less: Accumulated amortization (156,306 ) (133,045 ) Intangible assets, net $ 239,843 $ 257,382 Based on the total finite life intangible assets held at September 27, 2020 , we expect amortization expense of approximately $32 million in 2020 , $31 million in 2021 , $30 million in 2022 , $30 million in 2023 , and $27 million in 2024 |
Debt and Finance Lease Obligati
Debt and Finance Lease Obligations | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Finance Lease Obligations | Debt and Finance Lease Obligations Debt and finance lease obligations consist of the following (in thousands): Maturity by Fiscal Year September 27, 2020 December 29, 2019 Finance lease obligations 2020-2026 $ 23,508 $ 25,086 Convertible Notes 1.625% Notes 2023 716,410 695,748 2.25% Notes 1 2021 363,688 344,635 2.0% Notes 2020 — 55,997 Term loan facility 2021 54,549 19,296 Asset-based line of credit 2 2021 60,919 20,652 Other debt 2020-2024 4,810 6,615 1,223,884 1,168,029 Less: Current portion 1,2 (487,216 ) (430,862 ) Long-term debt and finance lease obligations $ 736,668 $ 737,167 _______________________ 1 As of September 27, 2020 and December 29, 2019 , the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding calendar quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of September 27, 2020 and December 29, 2019 . 2 We have reflected this debt as a current liability as of September 27, 2020 and December 29, 2019 , as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances as described below. Convertible Notes The components of our Convertible Notes were as follows (in thousands): September 27, 2020 December 29, 2019 Principal amount of 2023 Notes $ 814,556 $ 814,556 Unamortized debt discount (89,147 ) (107,916 ) Unamortized debt issuance costs (8,999 ) (10,892 ) Net carrying amount of 2023 Notes $ 716,410 $ 695,748 Principal amount of 2021 Notes $ 395,000 $ 395,000 Unamortized debt discount (29,469 ) (47,405 ) Unamortized debt issuance costs (1,843 ) (2,960 ) Net carrying amount of 2021 Notes $ 363,688 $ 344,635 Principal amount of 2020 Notes $ — $ 56,455 Unamortized debt discount — (408 ) Unamortized debt issuance costs — (50 ) Net carrying amount of 2020 Notes $ — $ 55,997 The 2021 Notes were issued by us and the 2020 Notes and the 2023 Notes were issued by Wright Medical Group, Inc. (WMG) and are fully and unconditionally guaranteed by Wright Medical Group N.V. The 2020 Notes matured and were repaid on February 15, 2020. The holders of the Convertible Notes may convert their notes solely into cash at their option at any time prior to the Early Conversion date (as defined below) only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our ordinary shares for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (the sale price condition); (2) during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our ordinary shares and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including in connection with the Offer as further described below and within Note 1 . The Certain terms of conversion are set forth below: 2021 Notes 2023 Notes Conversion rate 46.8165 29.9679 Conversion price $ 21.36 $ 33.37 Early Conversion date May 15, 2021 December 15, 2022 Maturity date November 15, 2021 June 15, 2023 On or after the Early Conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes solely into cash, regardless of the foregoing circumstances. Upon conversion, a holder will receive an amount in cash, per $1,000 principal amount of the Convertible Notes, equal to the settlement amount as calculated under the Notes Indenture. If a fundamental change, as defined in the applicable Notes Indenture, occurs, subject to certain conditions, holders of the applicable series of Convertible Notes will have the option to require us to repurchase for cash all or a portion of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the applicable Notes Indenture. In addition, if a make-whole fundamental change, as defined in the applicable Notes Indenture, occurs prior to the maturity date, we are required to increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. On November 4, 2019, we entered into a definitive agreement with Stryker and its subsidiary, Stryker B.V. Under the terms of the agreement, and upon the terms and subject to the conditions thereof, Stryker B.V. commenced the Offer to purchase all of the outstanding ordinary shares of Wright for $30.75 per share, without interest and less applicable withholding taxes, in cash. The obligation of Stryker and Stryker B.V. to consummate the Offer is subject to the tender of a minimum number of our outstanding shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders (which condition has been met), receipt of applicable regulatory approvals and other customary conditions. If these conditions are satisfied and the Offer closes, Stryker may acquire any remaining shares through a post-offer reorganization. Wright expects that a fundamental change and a make-whole fundamental change will occur at the time Stryker B.V. accepts for purchase and pays for all shares validly tendered pursuant to the Offer. Wright also expects that the Offer will trigger certain conversion rights under each of the Notes Indentures prior to the closing of the proposed acquisition by Stryker. As described above, the 2021 Notes were convertible during the first and second quarters of 2020 and are convertible for the third quarter of 2020. There were no significant conversions through October 28, 2020 . The 2021 Notes and our guarantee of the 2023 Notes are senior unsecured obligations that rank: (i) senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the guarantee; (ii) equal in right of payment to any of our unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. Because the 2023 Notes were issued by WMG, they are structurally senior to all indebtedness and other liabilities of Wright Medical Group N.V. The estimated fair value of the 2021 and 2023 Notes was approximately $568.9 million and $854.7 million , respectively, at September 27, 2020 , based on a quoted price in an active market (Level 1). The Notes Conversion Derivatives require bifurcation from the Convertible Notes in accordance with ASC Topic 815, Derivatives and Hedging , and are accounted for as a derivative liability. See Note 5 for additional information regarding the Notes Conversion Derivative. In connection with the issuance of each series of Convertible Notes, we and WMG entered into the Note Hedges, which are generally intended to reduce exposure to potential cash payments that we or WMG, as applicable, would be required to make if holders elect to convert the Convertible Notes at a time when our ordinary share price exceeds the conversion price. We also entered into warrant transactions (the Warrants) in connection with the issuance of each series of Convertible Notes in which we sold warrants that are initially exercisable in the same number of shares as are issuable upon conversion of the applicable series of Convertible Notes at the initial conversion rate. The strike price of the Note Hedge for each series of Convertible Notes is equal to the conversion price of the applicable series of Convertible Notes and the exercise prices for the Warrants issued with the 2021 and 2023 Notes are $30.00 and $40.86 , respectively. The strike prices of the Notes Hedges and exercise prices of the Warrants are subject to adjustment upon the occurrence of certain events including in connection with the Offer as further described above and within Note 1 . See Note 5 for additional information regarding the Notes Hedges. The 2020 Note Hedge and 2020 Conversion Derivative were settled during the first quarter of 2020 and resulted in net proceeds of approximately $0.2 million . The warrants associated with the 2020 Notes have an exercise price of $38.80 and are expected to be net-share settled and exercisable over a certain trading period as detailed below. However, in connection with certain events, including, among others, (i) a merger or other make-whole fundamental change, including in connection with the Offer as further described above and within Note 1 ; (ii) certain hedging disruption events, which may include changes in tax laws, an increase in the cost of borrowing our ordinary shares in the market or other material increases in the cost to the option counterparties of hedging the Note Hedges; (iii) our failure to perform certain obligations under the Notes Indenture or under the Notes Hedges; (iv) certain defaults on our, or any of our other subsidiary’s indebtedness in excess of $25 million ; (v) if we, or any of our significant subsidiaries become insolvent or otherwise become subject to bankruptcy proceedings or (vi) if we repurchase Convertible Notes in the open market, through a tender or exchange offer or in individually negotiated transactions, the option counterparties have the discretion to terminate the Notes Hedges, which may reduce the effectiveness of the Notes Hedges. In addition, the option counterparties have broad discretion to make certain adjustments to the Notes Hedges and Warrants upon the occurrence of certain other events, including, among others, (i) upon the announcement of certain significant corporate events, including events that may give rise to a termination event as described above, such as the announcement of a third-party tender offer, including in connection with the Offer as further described above and within Note 1 ; or (ii) solely with respect to the Notes Hedges, any adjustment to the conversion rate of the Notes. Any such adjustment may also reduce the effectiveness of the Note Hedges and further the dilutive effect of the Warrants. Aside from the initial premiums paid to the option counterparties and subject to the right of the option counterparties to terminate the Notes Hedges and Warrants in certain circumstances, we do not generally expect to be required to make any cash payments to the option counterparties under the Notes Hedges and Warrants and expect to be entitled to receive from the option counterparties cash, generally equal to the amount by which the market price per ordinary share exceeds the strike price of the applicable Note Hedge during the relevant valuation period. The Warrants are expected to be net-share settled and exercisable over a certain trading period after the Convertible Notes mature as detailed below: 2020 Notes 2021 Notes 2023 Notes Exercisable period 200 trading day period beginning on May 15, 2020 100 trading day period beginning on February 15, 2022 120 trading day period beginning on September 15, 2023 If the market value per ordinary share exceeds the strike price on any settlement date under the applicable Warrant, we will generally be obligated to issue to the Warrant holders in the aggregate, a number of shares equal in value to the amount by which the then-current market value of one ordinary share exceeds the then-effective strike price of each Warrant, multiplied by the number of Warrants exercised. As a result, the Warrants will have a dilutive effect on our ordinary shares to the extent that the market value per ordinary share during such period exceeds the applicable strike price of the Warrants. As of September 27, 2020 and December 29, 2019 , we had warrants outstanding related to the 2020 Notes, 2021 Notes and 2023 Notes which were exercisable for 1.9 million ordinary shares, 18.5 million ordinary shares, and 24.4 million ordinary shares, respectively. As of September 27, 2020 , our effective interest rates for the 2020, 2021, and 2023 Notes were 8.54% , 9.72% , and 5.76% , respectively. For the three and nine months ended September 27, 2020 and September 29, 2019 , we recorded the following interest expense related to the amortization of the debt discount (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 2023 Notes $ 6,348 $ 5,983 $ 18,771 $ 17,443 2021 Notes 6,124 5,559 17,936 16,282 2020 Notes — 787 408 3,002 On February 7, 2019, WMG issued an additional $139.6 million aggregate principal amount of 2023 Notes in exchange for $130.1 million aggregate principal amount of 2020 Notes. For each $1,000 principal amount of 2020 Notes validly submitted for exchange, we delivered $1,072.40 principal amount of 2023 Notes to the exchanging investor (subject, in each case, to rounding to the nearest $1,000 aggregate principal amount for each such exchanging investor). As this was a debt modification, a pro rata share of the 2020 Notes discount and deferred financing costs which totaled $7.4 million and $0.9 million , respectively, was transferred to the 2023 Notes discount and deferred financing costs. Additionally, the 2023 Notes discount was adjusted in order for net debt to remain the same subsequent to the exchange. The discount and deferred financing costs will be amortized over the remaining term of the 2023 Notes using the effective interest method. The fair value of the 2023 Notes Conversion Derivative associated with the additional $139.6 million of 2023 Notes was $28.9 million at the time of issuance, and the pro rata share of the 2020 Notes Conversion Derivative that was settled as part of the additional 2023 Notes exchange had a fair value of $16.3 million immediately prior to issuance of the additional 2023 Notes. As the exchange was accounted for as a debt modification, the net amount of $12.6 million was recognized as a loss on settlement during the quarter ended March 31, 2019. On January 30, 2019 and January 31, 2019 , we entered into additional Note Hedge and Warrant transactions with the same strike and exercise prices as set forth above for the 2023 Notes. We paid approximately $30.1 million in the aggregate to the option counterparties for the additional Note Hedge, and received approximately $21.2 million in the aggregate from the option counterparties for the Warrants, resulting in a net cost to us of approximately $8.9 million . In addition, we settled a pro rata share of the 2020 Notes Hedges corresponding to the amount of the 2020 Notes exchanged pursuant to the above-described exchange. We received proceeds of approximately $16.8 million related to the 2020 Notes Hedges and paid $11.0 million related to the 2020 Warrants, generating net proceeds of $5.8 million . For more information relating to our Convertible Notes, please refer to our Annual Report on Form 10-K for the year ended December 29, 2019 . Credit Agreement On December 23, 2016 , we, together with WMG and certain of our other wholly-owned U.S. subsidiaries (collectively, Borrowers), entered into a Credit, Security and Guaranty Agreement with MidCap Financial Trust, as administrative agent (Agent) and a lender and the additional lenders from time to time party thereto, which agreement was subsequently amended and restated in May 2018 and subsequently amended thereafter on several occasions, including the May 7, 2020 amendment described herein, which, among other things, suspended certain financial covenants through the end of 2020 (as amended, the Credit Agreement). The Credit Agreement provides for a $175 million senior secured asset-based line of credit, subject to the satisfaction of a borrowing base requirement (ABL Facility) and a $55 million term loan facility (Term Loan Facility). The ABL Facility may be increased by up to $75 million upon the Borrowers’ request, subject to the consent of the Agent and each of the other lenders providing such increase. All borrowings under the ABL Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy of representations and warranties in all material respects and the delivery of an updated borrowing base certificate. The initial $20 million term loan tranche was funded at closing in May 2018 and the second $35 million term loan tranche was funded in May 2020. All borrowings under the Term Loan Facility are subject to the satisfaction of customary conditions, including the absence of default and the accuracy of representations and warranties in all material respects. As of September 27, 2020 , we had $60.9 million in borrowings outstanding under the ABL Facility and $114.1 million in unused availability under the ABL Facility. We borrowed $40 million under the ABL Facility during the second quarter of 2020. As of December 29, 2019 , we had $20.7 million in borrowings outstanding under the ABL Facility and $154.3 million in unused availability under the ABL Facility. In addition to paying interest on the outstanding loans under the ABL Facility, the Borrowers also are required to pay a customary unused line fee equal to 0.50% per annum in respect of unutilized commitments and certain other customary fees related to Agent’s administration of the ABL Facility. Beginning January 1, 2017, the Borrowers are required to maintain a minimum drawn balance on the ABL Facility equal to 20% of the average borrowing base for each month. To the extent the actual drawn balance is less than 20% , the Borrowers must pay a fee equal to the amount the lenders under the ABL Facility would have earned had the Borrowers maintained a minimum drawn balance equal to 20% of the average borrowing base for such month. The Credit Agreement requires that the Borrowers calculate the borrowing base for the ABL Facility on at least a monthly basis and each time the Borrowers make a draw on the ABL Facility in accordance with the formula set forth in the Credit Agreement. The borrowing base is subject to adjustment and the implementation of reserves by the Agent in its permitted discretion, as further described in the Credit Agreement. If at any time the outstanding drawn balance under the ABL Facility exceeds the borrowing base as in effect at such time, Borrowers will be required to prepay loans under the ABL Facility in an amount equal to such excess. Certain accounts receivables and proceeds of collateral of the Borrowers will be applied to reduce the outstanding principal amount of the ABL Facility on a periodic basis. There is no scheduled amortization under the ABL Facility and (subject to borrowing base requirements and applicable conditions to borrowing) the available revolving commitment may be borrowed, repaid, and reborrowed without restriction. All outstanding loans under the ABL Facility will be due and payable in full on the date that is the earliest to occur of December 23, 2021 or the date that is 91 days prior to the maturity date of the 2021 Notes; provided if we refinance, extend, renew or replace at least 85% of the 2021 Notes, as applicable, outstanding as of the closing date of the ABL Facility pursuant to the terms of the Credit Agreement, the maturity date will be deemed extended. Any voluntary or mandatory permanent reduction or termination of the revolving commitments under the ABL Facility is subject to a prepayment premium equal to 0.75% of such reduced or terminated amount. The Credit Agreement previously provided that amortization payments under the Term Loan Facility were due in equal monthly installments beginning on May 1, 2019 unless we meet certain adjusted EBITDA targets; in which case, the amortization payments would not commence until May 1, 2021. We had previously met all such targets. As a result of the May 7, 2020 amendment to the Credit Agreement, the monthly straight line amortization payments of the Term Loan Facility will now commence on January 1, 2021. Notwithstanding the foregoing, the entire remaining outstanding principal balance under the Term Loan Facility shall mature and be due and payable at the same time as the outstanding loans under the ABL Facility. Although it is difficult for us to predict our future liquidity requirements, we believe that our cash and cash equivalents of $141.5 million as of September 27, 2020 and anticipated net cash flows will be sufficient for at least the next 12 months to fund the working capital requirements and operations, permit anticipated capital expenditures, pay retained metal-on-metal product and other liabilities of the OrthoRecon business, fund contingent considerations, and meet our other anticipated contractual cash obligations during the next twelve months. While our borrowings under the Credit Agreement contractually mature within the next twelve months, we have not sought to renegotiate the maturity date due to the proposed acquisition of Wright by Stryker (the Acquisition). We currently expect the Acquisition to close during the fourth quarter of 2020, but no assurance can be provided that it will close within this time frame, or at all. In the event that the Acquisition does not close, we would undertake to renegotiate the terms of the Credit Agreement or obtain additional financing. There can be no assurance that we will be able to successfully renegotiate such terms, that any such refinancing would be possible, or that any additional financing could be obtained on terms that are favorable or acceptable to us. The Term Loan Facility requires mandatory prepayments, subject to the right of reinvestment and certain other exceptions, in amounts equal to 100% of the net cash proceeds from certain asset sales and casualty and condemnation events in excess of $10 million in any fiscal year. Any voluntary or mandatory prepayment under the Term Loan Facility, subject to certain exceptions, was previously subject to a 1.00% prepayment premium, but as a result of the May 7, 2020 amendment to the Credit Agreement, the prepayment premium under the Term Loan Facility is now 1.25% . All of the obligations under the ABL Facility and the Term Loan Facility are guaranteed jointly and severally by us and each of the Borrowers and are secured by a senior first priority security interest in substantially all existing and after-acquired assets of us and each Borrower on the terms set forth in the Credit Agreement. The Credit Agreement contains certain negative covenants that restrict our ability to take certain actions as specified in the ABL Credit Agreement and an affirmative covenant that we maintain net revenue at or above minimum levels and maintain liquidity in the United States at a level specified in the Credit Agreement, subject to certain exceptions. In addition to financial and liquidity covenants consistent with those in the Credit Agreement, while the Term Loan Facility is outstanding, the Company is required to maintain a minimum adjusted EBITDA, as described in the Credit Agreement. On May 7, 2020, we agreed with MidCap to amend the Credit Agreement to suspend the quarterly-tested minimum net revenue and minimum adjusted EBITDA financial covenants through the end of 2020 and add a minimum liquidity covenant that will apply from the date of the amendment through May 15, 2021. The Credit Agreement will not affect our ability to meet our existing contractual obligations, except in circumstances where an event of default (subject to certain exceptions) has occurred and is continuing. The Credit Agreement also contains negative covenants, representations and warranties, affirmative covenants and events of default, in each case subject to grace periods, thresholds, and materiality qualifiers consistent with the Credit Agreement. Our exposure to interest rate risk arises principally from variable interest rates applicable to borrowings under our Credit Agreement and the interest rates associated with our invested cash balances. Borrowings under our Credit Agreement, including our ABL Facility and Term Loan Facility, bear interest at variable rates. The interest rate margin applicable to borrowings under the ABL Facility is, at the option of the Borrowers, equal to either (a) 3.25% for base rate loans or (b) 4.25% for LIBOR rate loans, subject to a 0.75% LIBOR floor. The interest rate applicable to borrowings under the Term Loan Facility is equal to one-month LIBOR plus 7.85% , subject to a 1.00% LIBOR floor. Based upon our debt level and the LIBOR floor on our interest rate, a 100 basis point increase in the annual interest rate on such borrowings would have an immaterial impact on our interest expense on an annual basis. In addition to paying interest on the outstanding loans under the Term Loan Facility, the Borrowers are also required to pay certain other customary fees related to Agent’s administration of the Term Loan Facility. Other Debt Other debt primarily includes government loans, mortgages, and miscellaneous international bank loans. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (AOCI) | 9 Months Ended |
Sep. 27, 2020 | |
Accumulated Other Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Income (AOCI) | Accumulated Other Comprehensive Income (AOCI) Other comprehensive income (OCI) includes certain gains and losses that under US GAAP are included in comprehensive income (loss) but are excluded from net loss as these amounts are initially recorded as an adjustment to shareholders’ equity. Amounts in OCI may be reclassified to net loss upon the occurrence of certain events. For the three and nine months ended September 27, 2020 and September 29, 2019 , OCI was comprised solely of foreign currency translation adjustments. Changes in AOCI for the three and nine months ended September 27, 2020 and September 29, 2019 were as follows (in thousands): Three months ended September 27, 2020 Currency translation adjustment Balance at June 28, 2020 $ (27,340 ) Other comprehensive income 21,269 Balance at September 27, 2020 $ (6,071 ) 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 ) Nine months ended September 27, 2020 Currency translation adjustment Balance at December 29, 2019 $ (29,499 ) Other comprehensive income 23,428 Balance at September 27, 2020 $ (6,071 ) 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 ) |
Capital Stock and Earnings Per
Capital Stock and Earnings Per Share | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Capital Stock and Earnings Per Share | Capital Stock and Earnings Per Share Our articles of association provide an authorized capital of €9.6 million divided into 320 million ordinary shares, each with a par value of three Euro cents ( €0.03 ). At our 2020 Annual General Meeting of Shareholders, our shareholders authorized our board of directors until October 28, 2022 to issue, or grant rights to purchase or subscribe for, our unissued ordinary shares up to 20% of our issued and outstanding shares at the time of issue, which is further divided into 10% for general corporate purposes (including potential mergers and acquisitions) and an additional 10% only for potential mergers and acquisitions. We had 129.7 million and 128.6 million ordinary shares issued and outstanding as of September 27, 2020 and December 29, 2019 , respectively. FASB ASC Topic 260, Earnings Per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our ordinary share equivalents. For the three and nine months ended September 27, 2020 and September 29, 2019 , our ordinary share equivalents consisted of stock options, restricted stock units, performance share units, and warrants. The dilutive effect of the stock options, restricted stock units, performance share units, and warrants is calculated using the treasury-stock method. We had outstanding options to purchase 8.5 million ordinary shares, 1.7 million restricted stock units, and 0.6 million performance share units, assuming maximum performance, at September 27, 2020 and outstanding options to purchase 10.6 million ordinary shares, 1.2 million restricted stock units, and 0.8 million performance share units, assuming maximum performance, at September 29, 2019 . We had outstanding net-share settled warrants on the 2020 Notes, 2021 Notes and 2023 Notes of 1.9 million ordinary shares, 18.5 million ordinary shares, and 24.4 million ordinary shares, respectively, at September 27, 2020 and September 29, 2019 . See Note 8 of the condensed consolidated financial statements for additional information about the convertible notes and the related warrants. None of the options, restricted stock units, performance share units, or warrants were included in the calculation of diluted net loss from continuing operations per share, diluted loss from discontinued operations per share, and diluted net loss per share for the three and nine months ended September 27, 2020 or September 29, 2019 , because we recorded a net loss from continuing operations for all periods. Including these instruments would be anti-dilutive as the net loss from continuing operations is the control number in determining whether those potential common shares are dilutive or anti-dilutive. The weighted-average number of ordinary shares outstanding for basic and diluted earnings per share purposes is as follows (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Weighted-average number of ordinary shares outstanding-basic and diluted 129,463 126,767 129,043 126,282 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Contingencies The legal contingencies described in this footnote relate primarily to WMT, an indirect subsidiary of Wright Medical Group N.V., and are not necessarily applicable to Wright Medical Group N.V. or other affiliated entities. Maintaining separate legal entities within our corporate structure is intended to ring-fence liabilities. We believe our ring-fenced structure should preclude corporate veil-piercing efforts against entities whose assets are not associated with particular claims. As described below, our business is subject to various contingencies, including patent and other litigation and product liability claims. These contingencies could result in losses, including damages, fines, or penalties, any of which could be substantial. Although such matters are inherently unpredictable, and negative outcomes or verdicts can occur, we believe we have significant defenses in all of them and are vigorously defending all of them. However, we could incur judgments, pay settlements, or revise our expectations regarding the outcome of any matter. Such developments, if any, could have a material adverse effect on our results of operations in the period in which applicable amounts are accrued, or on our cash flows in the period in which amounts are paid, however, unless otherwise indicated, we do not believe any of them will have a material adverse effect on our financial position. Our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss or the measurement of a loss can be complex. We have accrued for losses that are both probable and reasonably estimable. Unless otherwise indicated, we are unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessment process relies on estimates and assumptions that may prove to be incomplete or inaccurate. Unanticipated events and circumstances may occur that could cause us to change our estimates and assumptions. Patent Litigation On March 23, 2018, WMT filed suit against Paragon 28, Inc. (Paragon 28) in the United States District Court for the District of Colorado, alleging infringement of ten patents concerning orthopaedic plates, plating systems and instruments, and related methods of use. Our complaint seeks damages, injunctive relief and attorneys’ fees. On June 4, 2018, Paragon 28 filed an amended answer and counterclaim seeking declaratory judgment of non-infringement and invalidity of the patent-in-suit, and attorneys’ fees. On September 28, 2018, WMT filed an amended complaint adding claims against Paragon 28 for misappropriation of trade secrets and related wrongdoing. Paragon 28 filed a motion to dismiss those trade secret-related claims, which WMT opposed. On September 30, 2019, the Court issued an order granting in part and denying in part the motion to dismiss, leaving intact the majority of the trade secret-related claims. A motion for clarification of the order was ruled upon on May 21, 2020, confirming that Paragon 28 had misinterpreted many of the Court’s rulings and leaving intact the majority of the trade secret-related claims as well as the intentional interference with contract claims. On September 30, 2020, the Court issued its claim construction order, substantially adopting WMT’s claim construction positions. In March 2019, Paragon 28 filed four petitions with the Patent Trial and Appeal Board seeking Inter Partes Reviews of some of the asserted claims of four of the ten patents at issue in the lawsuit, which WMT opposed. On September 25, 2019 and October 4, 2019, the Patent Trial and Appeal Board granted Paragon 28’s petitions. Oral arguments were heard on June 18, 2020, and, on September 23 and October 1, 2020, the Patent Trial and Appeal Board issued Final Written Decisions and found all the challenged claims to be unpatentable. WMT is currently evaluating the decisions and considering available options, including a possible appeal. On April 24, 2020, ConforMIS, Inc. filed suit against WMT and Tornier, Inc. in the United States District Court for the District of Delaware alleging that the patient specific instrumentation (PSI) Wright makes available for use in certain shoulder arthroplasty procedures infringes its asserted patents. The suit alleges that shoulder implants and related products, when used together with PSI, also infringe the asserted patents. The suit seeks, among other things, a permanent injunction, statutory damages and treble damages for willful infringement. While we dispute these allegations and are defending the suit vigorously, the parties continue to negotiate and discuss a resolution. Product Liability We have received claims for personal injury against us associated with fractures of the PROFEMUR ® titanium modular neck product (PROFEMUR ® Claims). As of September 27, 2020 , there were approximately 36 unresolved pending U.S. lawsuits and approximately five unresolved pending non-U.S. lawsuits alleging such claims. The overall fracture rate for the product is low and the fractures appear, at least in part, to relate to patient demographics. In 2009, we began offering a cobalt-chrome version of the PROFEMUR ® modular neck, which has greater strength characteristics than the alternative titanium version. However, during the fiscal quarter ended September 30, 2011, as a result of an increase in the number and monetary amount of these claims, management estimated our liability to patients in the United States and Canada who have previously required a revision following a fracture of a PROFEMUR ® titanium modular neck, or who may require a revision in the future. As of September 27, 2020 , our accrual for PROFEMUR ® Claims totaled $7.8 million , of which $1.2 million is included in our condensed consolidated balance sheet within “Accrued expenses and other current liabilities” and $6.6 million is included within “Other liabilities.” As of December 29, 2019 , our accrual for PROFEMUR ® Claims totaled $12.1 million , of which $8.8 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $3.3 million is included within “Other liabilities.” We expect to pay the majority of these claims within the next two years . Any claims associated with this product outside of the United States and Canada, or for any other products, will be managed as part of our standard product liability accrual methodology on a case-by-case basis. We are aware that MicroPort has recalled a certain size of its cobalt chrome modular neck product as a result of alleged fractures. As of September 27, 2020 , there were 14 pending U.S. lawsuits and six pending non-U.S. lawsuits against us alleging personal injury resulting from the fractures of a cobalt chrome modular neck. These claims will be managed as part of our standard product liability accrual methodology on a case-by-case basis. On May 18, 2020, certain plaintiffs’ counsel filed a motion to coordinate pre-trial management of cases filed in federal courts involving both titanium and cobalt chrome PROFEMUR ® modular necks in a multi-district litigation. We opposed the motion. On August 7, 2020, the Judicial Panel for Multidistrict Litigation granted Plaintiffs’ motion to coordinate and transferred the cases to the United States District Court for the Eastern District of Arkansas. As of September 27, 2020 , there are 64 cases pending in this multi-district litigation; six of which are being defended by MicroPort. Claims for personal injury have also been made against us associated with metal-on-metal hip products (primarily the CONSERVE ® product line). The pre-trial management of certain of these claims was consolidated in the federal court system, in the United States District Court for the Northern District of Georgia under multi-district litigation (MDL) and certain other claims by the Judicial Counsel Coordinated Proceedings in state court in Los Angeles County, California (JCCP and, together with the MDL, the Consolidated Metal-on-Metal Claims). Pursuant to previously disclosed settlement agreements with the Court-appointed attorneys representing plaintiffs in the MDL and JCCP described below (the MoM Settlement Agreements), the MDL and JCCP were closed to new cases effective October 18, 2017 and October 31, 2017, respectively. Excluding claims resolved in the MoM Settlement Agreements, as of September 27, 2020 , there were approximately 251 unresolved metal-on-metal hip cases pending in the U.S. This number includes cases ineligible for settlement under the MoM Settlement Agreements, cases which opted out of such settlements, post-settlement cases, tolled cases, and existing state court cases that were not part of the MDL or JCCP. As of September 27, 2020 , we estimate there also were pending approximately 29 unresolved non-U.S. metal-on metal hip cases, 47 unresolved U.S. modular neck cases alleging claims related to the release of metal ions, and zero non-U.S. modular neck cases with metal ion allegations. We also estimate that as of September 27, 2020 , there were approximately 506 non-revision claims either dismissed or awaiting dismissal from the MDL and JCCP, which dismissal is a condition of the MoM Settlement Agreements. Although there is a limited time period during which dismissed non-revision claims may be refiled, it is presently unclear how many non-revision claimants will elect to do so. As of September 27, 2020 , no dismissed non-revision cases have been refiled. We believe we have data that supports the efficacy and safety of these hip products. Every hip implant case, including metal-on-metal hip cases, involves fundamental issues of law, science, and medicine that often are uncertain, that continue to evolve, and which present contested facts and issues that can differ significantly from case to case. Such contested facts and issues include medical causation, individual patient characteristics, surgery specific factors, statutes of limitation, and the existence of actual, provable injury. As previously disclosed, between November 2016 and October 2017, WMT entered into three MoM Settlement Agreements with Court-appointed attorneys representing plaintiffs in the MDL and JCCP to settle a total of 1,974 cases that met the eligibility requirements of the MoM Settlement Agreements and were either pending in the MDL or JCCP, or subject to court-approved tolling agreements in the MDL or JCCP, for an aggregate sum of $339.2 million . As of September 27, 2020 , we had funded $339.0 million under the MoM Settlement Agreements. We, the indirect parent company of WMT, have guaranteed WMT’s obligations under the MoM Settlement Agreements. The MoM Settlement Agreements contain specific eligibility requirements and establish procedures for proof and administration of claims, negotiation, and execution of individual settlement agreements, determination of the final total settlement amount, and funding of individual settlement amounts by WMT. Eligibility requirements include, without limitation, that the claimant has a claim pending or tolled in the MDL or JCCP, that, with limited exceptions, the claimant has undergone a revision surgery within eight years of the original implantation surgery, and that the claim has not been identified by WMT as having possible statute of limitation issues. Claimants who have had bilateral revision surgeries will be counted as two claims but only to the extent both claims separately satisfy all eligibility criteria. The MoM Settlement Agreements were entered into solely as a compromise of the disputed claims being settled and are not evidence that any claim has merit nor are they an admission of wrongdoing or liability by WMT. WMT will continue to vigorously defend metal-on-metal hip claims not settled pursuant to the MoM Settlement Agreements. As of September 27, 2020 , our accrual for metal-on-metal claims totaled $36.3 million , of which $28.7 million is included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.6 million is included within “Other liabilities.” As of December 29, 2019 , our accrual for metal-on-metal claims totaled $40.5 million , of which $33.0 million was included in our consolidated balance sheet within “Accrued expenses and other current liabilities” and $7.5 million was included within “Other liabilities.” Our accrual is based on (i) case by case accruals for specific cases where facts and circumstances warrant, and (ii) the implied settlement values for eligible claims under the MoM Settlement Agreements. We are unable to reasonably estimate the high-end of a possible range of loss for claims which elected to opt out of the MoM Settlement Agreements. Claims we can confirm would meet the eligibility criteria set forth in the MoM Settlement Agreements but are excluded from the settlements due to the maximum settlement cap, or because they are cases not part of the MDL or JCCP, have been accrued consistent with the respective settlement rates. Due to the general uncertainties surrounding all metal-on metal claims as noted above, as well as insufficient information about individual claims, we are presently unable to reasonably estimate a range of loss for future claims; hence we have not accrued for these claims at the present time. We continue to believe the high-end of a possible range of loss for existing revision claims that do not meet eligibility criteria of the MoM Settlement Agreements will not, on an average per case basis, exceed the average per case accrual we take for revision claims we can confirm do meet eligibility criteria of the applicable settlement agreement. Future claims will be evaluated for accrual on a case by case basis using the accrual methodologies described above (which could change if future facts and circumstances warrant). We have maintained product liability insurance coverage on a claims-made basis. During the fiscal quarter ended September 30, 2012, we received a customary reservation of rights from Federal, our then primary product liability insurance carrier, asserting that certain present and future claims which allege certain types of injury related to the CONSERVE ® metal-on-metal hip products (CONSERVE ® Claims) would be covered as a single occurrence under the policy year the first such claim was asserted. The effect of this coverage position would have been to place CONSERVE ® Claims into a single prior policy year in which applicable claims-made coverage was available, subject to the overall policy limits then in effect. We notified Federal that we disputed its characterization of the CONSERVE ® Claims as a single occurrence, which resulted in multi-year insurance coverage litigation (the Tennessee Coverage Litigation) that has recently been resolved as discussed below. As previously disclosed, we entered into settlement agreements with all seven insurance carriers with whom metal-on-metal hip coverage was in dispute - Columbia Casualty Company, Travelers, AXIS Surplus Lines Insurance Company, Federal, Catlin Specialty Insurance Company, Catlin Underwriting Agencies Limited for and on behalf of Syndicate 2003 at Lloyd’s of London, and Lexington Insurance Company (Lexington), thus resolving in full the Tennessee Coverage Litigation and the separate litigation and arbitration proceedings with Lexington. As of September 27, 2020 , our insurance carriers have paid an aggregate of $120.4 million of insurance proceeds related to the metal-on-metal claims, including amounts received under the above referenced settlement agreements, of which $113.7 million has been paid directly to us and $6.7 million has been paid directly to claimants. Except as provided in such settlement agreements, our acceptance of the insurance proceeds was not a waiver of any other claim we may have against the insurance carriers unrelated to metal-on-metal coverage and our disputes with carriers relating thereto. Given the substantial or indeterminate amounts sought in these matters, and the inherent unpredictability of such matters, an adverse outcome in these matters in excess of the amounts included in our accrual for contingencies could have a material adverse effect on our financial condition, results of operations and cash flow. Future revisions to our estimates of these provisions could materially impact our results of operations and financial position. We use the best information available to determine the level of accrued product liabilities, and believe our accruals are adequate. Stryker Acquisition Related Litigation On January 15, 2020, John Thompson, a purported shareholder of the Company, filed a putative class action lawsuit against us, members of our board of directors, Stryker B.V., and Stryker Corporation in the United States District Court for the District of Delaware. The lawsuit is captioned Thompson v. Wright Medical Group N.V., et al. , Case No. 1:20-cv-00061 (the Thompson Action). The complaint filed in the Thompson Action alleged that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the plaintiff in the Thompson Action alleged rendered the Schedule 14D-9 false and misleading. In addition, the plaintiff in the Thompson Action alleged that members of our board of directors and Stryker acted as controlling persons of the company within the meaning of and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The plaintiff in the Thompson Action sought, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; an order directing our board of directors to file a Schedule 14D-9 that does not contain any untrue statements of material fact and that states all material facts required or necessary to make the statements contained therein not misleading; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including attorneys’ fees and expenses. On January 31, 2020, William Grubb, a purported shareholder of the Company, filed a lawsuit against us and members of our board of directors in the United States District Court for the Eastern District of New York. The lawsuit is captioned Grubb v. Wright Medical Group N.V., et al. , Case No. 1:20-cv-00553 (the Grubb Action). The complaint filed in the Grubb Action alleged that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the plaintiff in the Grubb Action alleged rendered the Schedule 14D-9 false and misleading. In addition, the plaintiff in the Grubb Action alleged that members of our board of directors acted as controlling persons of the company within the meaning of and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The plaintiff in the Grubb Action sought, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including attorneys’ fees and expenses. On April 9, 2020, Gracie Woodward, a purported shareholder of the Company, filed a lawsuit against us and members of our board of directors in the United States District Court for the District of Delaware. The lawsuit is captioned Woodward v. Wright Medical Group N.V., et al. , Case No. 1:20-cv-494 (the Woodward Action). The complaint filed in the Woodward Action alleged that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the plaintiff in the Woodward Action alleged rendered the Schedule 14D-9 false and misleading. In addition, the plaintiff in the Woodward Action alleged that members of our board of directors acted as controlling persons of the company within the meaning of and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The plaintiff in the Woodward Action sought, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including attorneys’ fees and expenses. On April 15, 2020, Marcy Curtis, a purported shareholder of the Company, filed a putative class action lawsuit against us, members of our board of directors, Stryker B.V., and Stryker Corporation in the United States District Court for the District of Delaware. That suit is captioned Curtis v. Wright Medical Group N.V. , et al., Case No. 1:20-cv-00509 (the Curtis Action). The complaint filed in the Curtis Action alleged that we and the members of our board of directors violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the plaintiff in the Curtis Action alleged rendered the Schedule 14D-9 false and misleading. In addition, the plaintiff in the Curtis Action alleged that members of our board of directors and Stryker acted as controlling persons of the company within the meaning of and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The plaintiff in the Curtis Action sought, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; an order directing our board of directors to file a Schedule 14D-9 that does not contain any untrue statements of material fact and that states all material facts required or necessary to make the statements contained therein not misleading; a declaration that the defendants violated certain federal securities laws and regulations; and an award of plaintiff’s costs, including attorneys’ fees and expenses. On April 28, 2020, Shiva Stein, a purported shareholder of the Company, filed a lawsuit against us, members of our board of directors, Stryker B.V., and Stryker Corporation in the United States District Court for the District of Delaware. That suit is captioned Stein v. Wright Medical Group N.V., et al. , Case No. 1:20-cv-00582 (the Stein Action and, together with the Thompson, Grubb, Woodward, and Curtis Actions, the Federal Shareholder Actions). The complaint filed in the Stein Action alleged that we, the members of our board of directors, and the Stryker defendants violated federal securities laws and regulations by failing to disclose material information in the Schedule 14D-9 filed in connection with the transactions contemplated by the Stryker purchase agreement, which the plaintiff in the Stein Action alleged rendered the Schedule 14D-9 false and misleading. In addition, the plaintiff in the Stein Action alleged that members of our board of directors acted as controlling persons of the company within the meaning of and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14D-9. The plaintiff in the Stein Action sought, among other things, an order enjoining consummation of the transactions contemplated by the Stryker purchase agreement; rescission of such transactions if they have already been consummated and rescissory damages; and an award of plaintiff’s costs, including attorneys’ fees and expenses. While the Company believed the Federal Shareholder Actions were entirely meritless, to avoid any risk that those litigations might delay or otherwise adversely affect the transactions contemplated by the Stryker purchase agreement, and to minimize costs and risk, the Company filed with the United States Securities and Exchange Commission on September 18, 2020 certain limited supplemental disclosures regarding the transactions contemplated by the Stryker purchase agreement, and the plaintiffs in the Federal Shareholder Actions agreed that such disclosures mooted all of their claims. The Thompson Action, Grubb Action, Curtis Action and Woodward Action were dismissed on September 22, 2020, and the Stein Action was dismissed on September 23, 2020. Other In addition to those noted above, we are subject to various other legal proceedings, product liability claims, corporate governance, and other matters which arise in the ordinary course of business. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 27, 2020 | |
Segment Data [Abstract] | |
Segment Information | Segment Information Our management, including our Chief Executive Officer, who is our chief operating decision maker, manages our operations as three operating business segments: U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics. We determined that each of these operating segments represented a reportable segment. Our Chief Executive Officer reviews financial information at the operating segment level to allocate resources and to assess the operating results and performance of each segment. Our U.S. Lower Extremities & Biologics segment consists of our operations focused on the sale in the United States of our lower extremities products, such as joint implants and bone fixation devices for the foot and ankle, and our biologics products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth. Our U.S. Upper Extremities segment consists of our operations focused on the sale primarily in the United States of our upper extremities products, such as joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand, and products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products. As the IMASCAP operations are managed by the U.S. Upper Extremities management team, results of operations and assets related to IMASCAP are included within the U.S. Upper Extremities segment. Our International Extremities and Biologics segment consists of our operations focused on the sale outside the United States of all lower and upper extremities products, including associated biologics products. Management measures segment profitability using an internal operating performance measure that excludes the impact of inventory step-up amortization and transaction and transition costs associated with acquisitions, as such items are not considered representative of segment results. We have determined that each reportable segment represents a reporting unit and, in accordance with ASC 350, each reporting unit requires an allocation of goodwill. Selected financial information related to our segments is presented below for the three and nine months ended September 27, 2020 and September 29, 2019 (in thousands): Three months ended September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate 1 Total Net sales from external customers $ 89,299 $ 89,795 $ 44,273 $ — $ 223,367 Depreciation expense 2,950 3,192 4,058 6,226 16,426 Amortization expense — — — 7,755 7,755 Segment operating income (loss) $ 27,563 $ 37,455 $ (2,738 ) $ (42,477 ) $ 19,803 Other: Transaction and transition costs 3,445 Operating income 16,358 Interest expense, net 21,831 Other expense, net 10,162 Loss before income taxes $ (15,635 ) 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 ) Nine months ended September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate 1 Total Net sales from external customers $ 228,903 $ 228,289 $ 114,670 $ — $ 571,862 Depreciation expense 8,298 9,997 11,117 18,246 47,658 Amortization expense — — — 23,970 23,970 Segment operating income (loss) $ 55,386 $ 86,352 $ (20,524 ) $ (132,994 ) $ (11,780 ) Other: Transaction and transition costs 13,828 Operating loss (25,608 ) Interest expense, net 63,477 Other income, net (11,007 ) Loss before income taxes $ (78,078 ) 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 Transaction and 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 ) __________________________ 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. Our principal geographic regions consist of the United States, EMEAC (which includes Europe, the Middle East, Africa, and Canada), and Other (which principally represents Asia, Australia, and Latin America). Net sales attributed to each geographic region are based on the location in which the products were sold. Net sales by geographic region by product line are as follows (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 United States Lower extremities $ 66,461 $ 61,733 $ 170,846 $ 199,873 Upper extremities 88,731 77,160 225,492 239,033 Biologics 22,093 21,292 56,048 67,520 Sports med & other 1,809 2,047 4,806 6,119 Total United States $ 179,094 $ 162,232 $ 457,192 $ 512,545 EMEAC Lower extremities $ 8,379 $ 9,826 $ 22,920 $ 34,195 Upper extremities 19,884 19,541 50,921 66,956 Biologics 1,493 1,866 3,947 6,030 Sports med & other 1,790 2,109 4,947 7,248 Total EMEAC $ 31,546 $ 33,342 $ 82,735 $ 114,429 Other Lower extremities $ 2,863 $ 4,955 $ 7,675 $ 13,120 Upper extremities 5,918 7,654 14,905 20,858 Biologics 3,759 4,046 8,880 10,751 Sports med & other 187 205 475 592 Total other $ 12,727 $ 16,860 $ 31,935 $ 45,321 Total net sales $ 223,367 $ 212,434 $ 571,862 $ 672,295 Assets in the U.S. Upper Extremities, U.S. Lower Extremities & Biologics, and International Extremities & Biologics segments are those assets used exclusively in the operations of each business segment or allocated when used jointly. Assets in the Corporate category are principally cash and cash equivalents, derivative assets, property, plant and equipment associated with our corporate headquarters, assets associated with discontinued operations, product liability insurance receivables, and assets associated with income taxes. Total assets by business segment as of September 27, 2020 and December 29, 2019 are as follows (in thousands): September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate Total Total assets $ 943,894 $ 923,771 $ 310,073 $ 420,981 $ 2,598,719 December 29, 2019 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate Total Total assets $ 952,187 $ 914,317 $ 292,929 $ 426,207 $ 2,585,640 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Presentation. The unaudited condensed consolidated interim financial statements of Wright Medical Group N.V. have been prepared in accordance with U.S. generally accepted accounting principles (US GAAP) for interim financial statements and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to these rules and regulations. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 29, 2019 , as filed with the SEC on February 24, 2020 . In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments necessary for a fair presentation of our interim financial results. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not indicative of results for the full fiscal year. The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. |
Revenue Recognition | Revenue recognition. Our revenues are primarily generated through two types of customers, hospitals and surgery centers and stocking distributors, with the majority of our revenue derived from sales to hospitals and surgery centers. Our products are sold through a network of employee and independent sales representatives in the United States and by a combination of employee sales representatives, independent sales representatives, and stocking distributors outside the United States. We record revenues from sales to hospitals and surgery centers upon transfer of control of promised products in an amount that reflects the consideration we expect to receive in exchange for those products, which is generally when the product is surgically implanted in a patient. We record revenues from sales to our stocking distributors at a point in time upon transfer of control of promised products to the distributor. Our stocking distributors, who sell the products to their customers, take control of the products and assume all risks of ownership upon transfer. Our stocking distributors are obligated to pay us within specified terms regardless of when, if ever, they sell the products. In general, our stocking distributors do not have any rights of return or exchange; however, in limited situations, we have repurchase agreements with certain stocking distributors. Those certain agreements require us to repurchase a specified percentage of the inventory purchased by the distributor within a specified period of time prior to the expiration of the contract. During those specified periods, we defer the applicable percentage of the sales. An insignificant amount of sales related to these types of agreements was deferred and not yet recognized as revenue as of September 27, 2020 and September 29, 2019 . We must make estimates of potential future product returns related to current period product sales. We base our estimate for sales returns on historical sales and product return information, including historical experience and trend information. Our reserve for sales returns has historically been immaterial. We incur shipping and handling costs associated with the shipment of goods to customers, independent distributors, and our subsidiaries. Amounts billed to customers for shipping and handling of products are included in net sales. Costs incurred related to shipping and handling of products to customers are included in selling, general and administrative expenses. We also record depreciation on surgical instruments used by our hospital and surgery center customers within selling, general and administrative expense as these costs are considered to be similar to shipping and handling costs, necessary to deliver the implant products to the end customer. |
Inventory | Inventories. Our inventories are valued at the lower of cost or market on a first in, first out (FIFO) basis. Inventory costs include material, labor costs, and manufacturing overhead. We regularly review inventory quantities on hand for excess and obsolete inventory, and, when circumstances indicate, we incur charges to write down inventories to their net realizable value. Historically, our excess and obsolete inventory reserve was based on both the current age of kit inventory as compared to its estimated life cycle and our forecasted product demand and production requirements for other inventory items for the next 36 months. During the quarter ended September 29, 2019, we changed our estimate of excess and obsolete inventory reserves to better reflect the future usage for inventory in excess of estimated three-year demand. The impact of this change in estimate was approximately $26 million . We reduce our inventory reserve and recognize an offset to cost of sales as the related inventory is sold based on an estimated inventory turnover period of 2.5 years. Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $5.2 million and $4.1 million for the three months ended September 27, 2020 and September 29, 2019 , respectively. Total charges incurred to write down excess and obsolete inventory to net realizable value included in “Cost of sales” were approximately $11.9 million and $10.1 million for the nine months ended September 27, 2020 and September 29, 2019 , respectively. During the three and nine months ended September 27, 2020 , our cost of sales included a favorable adjustment of $2.6 million and $7.8 million |
Discontinued Operations | Discontinued Operations. On January 9, 2014, pursuant to an Asset Purchase Agreement, dated as of June 18, 2013 (the MicroPort Agreement), by and among us and MicroPort Scientific Corporation (MicroPort), we completed the divestiture and sale of our business operations operating under our prior OrthoRecon operating segment to MicroPort. All historical operating results for the OrthoRecon business are reflected within discontinued operations in the condensed consolidated financial statements. See Note 3 for further discussion of discontinued operations. Other than Note 3 , unless otherwise stated, all discussion of assets and liabilities in these Notes to the condensed consolidated financial statements reflects the assets and liabilities held and used in our continuing operations, and all discussion of revenues and expenses reflects those associated with our continuing operations. |
New Accounting Pronouncements | Recent Accounting Pronouncements. On February 25, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases , and has subsequently issued several supplemental and/or clarifying ASUs (collectively ASC 842). ASC 842 introduced a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in FASB Accounting Standards Codification (ASC) 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). We adopted ASC 842 during the quarter ended March 31, 2019 using the hindsight practical expedient, the practical expedient for short-term leases, and the practical expedient package which primarily limited the need for reassessing lease classification on existing leases. During 2019, with the adoption of ASC 842, we recognized all operating leases with terms greater than twelve months in duration on our condensed consolidated balance sheet as right-of-use assets and lease liabilities which totaled approximately $20 million . Additionally, we recorded a cumulative adjustment of $0.2 million to our accumulated deficit upon adoption during the quarter ended March 31, 2019. We adopted the standard using the prospective approach and did not retrospectively apply it to prior periods. On June 16, 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments and has subsequently issued several supplemental and/or clarifying ASUs. The new standard adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. We adopted this ASU in fiscal year 2020, however, this guidance did not have a significant impact on our condensed consolidated financial statements. On August 29, 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) to provide guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40, Internal Use Software , to determine which implementation costs should be capitalized in such a CCA. We adopted this ASU in fiscal year 2020; however, this guidance did not have a significant impact on our condensed consolidated financial statements. On December 18, 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes |
Fair Value Measurement | We account for derivatives in accordance with FASB ASC 815, which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivatives’ fair value shall be recognized currently in earnings unless specific hedge accounting criteria are met. FASB ASC Section 820, Fair Value Measurement requires fair value measurements be classified and disclosed in one of the following three categories: 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. |
Earnings Per Share | Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated to include any dilutive effect of our ordinary share equivalents. For the three and nine months ended September 27, 2020 and September 29, 2019 , our ordinary share equivalents consisted of stock options, restricted stock units, performance share units, and warrants. The dilutive effect of the stock options, restricted stock units, performance share units, and warrants is calculated using the treasury-stock method. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands): September 27, 2020 December 29, 2019 Raw materials $ 13,571 $ 12,681 Work-in-process 30,189 27,528 Finished goods 199,312 158,165 $ 243,072 $ 198,374 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments and Derivatives (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Derivative Assets at Fair Value | The following table summarizes the fair values and the presentation in our condensed consolidated balance sheets (in thousands) of our Notes Hedges and our Notes Conversion Derivatives: September 27, 2020 December 29, 2019 Location on condensed consolidated balance sheet Amount Location on condensed consolidated balance sheet Amount 2023 Notes Hedges Other assets $ 33,659 Other assets $ 39,240 2023 Notes Conversion Derivative Other liabilities $ 31,985 Other liabilities $ 31,555 2021 Notes Hedges Other current assets $ 206,949 Other current assets $ 183,437 2021 Notes Conversion Derivative Accrued expenses and other current liabilities $ 178,438 Accrued expenses and other current liabilities $ 179,478 2020 Notes Hedges Other current assets $ — Other current assets $ 1,969 2020 Notes Conversion Derivative Accrued expenses and other current liabilities $ — Accrued expenses and other current liabilities $ 1,666 |
Derivative Instruments, Gain (Loss) | The following table summarizes the net (loss) gain on changes in fair value (in thousands) related to the Notes Hedges and Notes Conversion Derivatives: Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 2023 Notes Hedges $ (28,648 ) $ (81,171 ) $ (5,581 ) $ (62,738 ) 2023 Notes Conversion Derivative 6,996 81,194 (430 ) 62,875 2021 Notes Hedges 24,513 (119,666 ) 23,512 (95,103 ) 2021 Notes Conversion Derivative (10,180 ) 118,923 1,040 95,706 2020 Notes Hedges — (5,675 ) (1,618 ) (633 ) 2020 Notes Conversion Derivative — 5,468 1,520 778 Net (loss) gain on changes in fair value $ (7,319 ) $ (927 ) $ 18,443 $ 885 |
Fair Value Measurement Inputs and Valuation Techniques | The following assumptions were used in the fair market valuations as of September 27, 2020 : 2021 Notes Conversion Derivative 2021 Notes Hedge 2023 Notes Conversion Derivative 2023 Notes Hedge Black Stock Volatility (1) 51.1% 51.1% 12.09% 12.09% Credit Spread for Wright (2) 8.98% N/A 0.99% N/A Credit Spread for Deutsche Bank AG (3) N/A N/A N/A 0.81% Credit Spread for JPMorgan Chase Bank (3) N/A 0.42% N/A 0.51% Credit Spread for Bank of America (3) N/A 0.42% N/A 0.51% (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. |
Fair Value Financial Instruments | The following tables summarize the valuation of our financial instruments (in thousands): Total Quoted prices in active markets (Level 1) Prices with other observable inputs (Level 2) Prices with unobservable inputs (Level 3) September 27, 2020 Assets Cash and cash equivalents $ 141,549 $ 141,549 $ — $ — 2021 Notes Hedges 206,949 — — 206,949 2023 Notes Hedges 33,659 — — 33,659 Total $ 382,157 $ 141,549 $ — $ 240,608 Liabilities 2021 Notes Conversion Derivative $ 178,438 $ — $ — $ 178,438 2023 Notes Conversion Derivative 31,985 — — 31,985 Contingent consideration 33,153 — — 33,153 Total $ 243,576 $ — $ — $ 243,576 Total Quoted prices Prices with Prices with December 29, 2019 Assets Cash and cash equivalents $ 166,856 $ 166,856 $ — $ — 2020 Notes Hedges 1,969 — — 1,969 2021 Notes Hedges 183,437 — — 183,437 2023 Notes Hedges 39,240 — — 39,240 Total $ 391,502 $ 166,856 $ — $ 224,646 Liabilities 2020 Notes Conversion Derivative $ 1,666 $ — $ — $ 1,666 2021 Notes Conversion Derivative 179,478 — — 179,478 2023 Notes Conversion Derivative 31,555 — — 31,555 Contingent consideration 28,077 — — 28,077 Total $ 240,776 $ — $ — $ 240,776 The following is a roll forward of our assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) (in thousands): Balance at December 29, 2019 Additions Transfers into Level 3 Gain/(loss) on fair value adjustments included in earnings Settlements Currency Balance at September 27, 2020 2020 Notes Hedges $ 1,969 — — (1,618 ) (351 ) — $ — 2020 Notes Conversion Derivative $ (1,666 ) — — 1,520 146 — $ — 2021 Notes Hedges $ 183,437 — — 23,512 — — $ 206,949 2021 Notes Conversion Derivative $ (179,478 ) — — 1,040 — — $ (178,438 ) 2023 Notes Hedges $ 39,240 — — (5,581 ) — — $ 33,659 2023 Notes Conversion Derivative $ (31,555 ) — — (430 ) — — $ (31,985 ) Contingent consideration $ (28,077 ) — — (4,146 ) 435 (1,365 ) $ (33,153 ) |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net consists of the following (in thousands): September 27, 2020 December 29, 2019 Property, plant and equipment, at cost $ 676,171 $ 648,318 Less: Accumulated depreciation (415,441 ) (396,396 ) $ 260,730 $ 251,922 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the Carrying Amount of Goodwill Table | Changes in the carrying amount of goodwill occurring during the nine months ended September 27, 2020 and September 29, 2019 are as follows (in thousands): U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Total Balance at December 29, 2019 $ 569,970 $ 625,926 $ 65,071 $ 1,260,967 Foreign currency translation — 2,985 10,015 13,000 Balance at September 27, 2020 $ 569,970 $ 628,911 $ 75,086 $ 1,273,967 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 |
Components of Identifiable Assets Table | The components of our identifiable intangible assets, net, are as follows (in thousands): September 27, 2020 December 29, 2019 Cost Accumulated amortization Cost Accumulated amortization Indefinite life intangibles: In-process research and development (IPRD) technology $ 8,698 $ — $ 6,238 $ — Total indefinite life intangibles 8,698 6,238 Finite life intangibles: Completed technology 175,978 87,282 172,111 72,140 Licenses 9,247 3,675 9,247 2,835 Customer relationships 183,090 50,054 181,094 41,389 Trademarks 14,111 12,224 14,002 11,834 Non-compete agreements 3,454 2,656 5,713 4,090 Other 1,571 415 2,022 757 Total finite life intangibles 387,451 $ 156,306 384,189 $ 133,045 Total intangibles 396,149 390,427 Less: Accumulated amortization (156,306 ) (133,045 ) Intangible assets, net $ 239,843 $ 257,382 |
Debt and Finance Lease Obliga_2
Debt and Finance Lease Obligations (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Debt and finance lease obligations consist of the following (in thousands): Maturity by Fiscal Year September 27, 2020 December 29, 2019 Finance lease obligations 2020-2026 $ 23,508 $ 25,086 Convertible Notes 1.625% Notes 2023 716,410 695,748 2.25% Notes 1 2021 363,688 344,635 2.0% Notes 2020 — 55,997 Term loan facility 2021 54,549 19,296 Asset-based line of credit 2 2021 60,919 20,652 Other debt 2020-2024 4,810 6,615 1,223,884 1,168,029 Less: Current portion 1,2 (487,216 ) (430,862 ) Long-term debt and finance lease obligations $ 736,668 $ 737,167 _______________________ 1 As of September 27, 2020 and December 29, 2019 , the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding calendar quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of September 27, 2020 and December 29, 2019 . 2 We have reflected this debt as a current liability as of September 27, 2020 and December 29, 2019 , as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances as described below. |
Convertible Debt | The components of our Convertible Notes were as follows (in thousands): September 27, 2020 December 29, 2019 Principal amount of 2023 Notes $ 814,556 $ 814,556 Unamortized debt discount (89,147 ) (107,916 ) Unamortized debt issuance costs (8,999 ) (10,892 ) Net carrying amount of 2023 Notes $ 716,410 $ 695,748 Principal amount of 2021 Notes $ 395,000 $ 395,000 Unamortized debt discount (29,469 ) (47,405 ) Unamortized debt issuance costs (1,843 ) (2,960 ) Net carrying amount of 2021 Notes $ 363,688 $ 344,635 Principal amount of 2020 Notes $ — $ 56,455 Unamortized debt discount — (408 ) Unamortized debt issuance costs — (50 ) Net carrying amount of 2020 Notes $ — $ 55,997 |
Components of 2020 Convertible Debt | The Certain terms of conversion are set forth below: 2021 Notes 2023 Notes Conversion rate 46.8165 29.9679 Conversion price $ 21.36 $ 33.37 Early Conversion date May 15, 2021 December 15, 2022 Maturity date November 15, 2021 June 15, 2023 |
Schedule of Warrants | The Warrants are expected to be net-share settled and exercisable over a certain trading period after the Convertible Notes mature as detailed below: 2020 Notes 2021 Notes 2023 Notes Exercisable period 200 trading day period beginning on May 15, 2020 100 trading day period beginning on February 15, 2022 120 trading day period beginning on September 15, 2023 |
Interest Income and Interest Expense Disclosure | For the three and nine months ended September 27, 2020 and September 29, 2019 , we recorded the following interest expense related to the amortization of the debt discount (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 2023 Notes $ 6,348 $ 5,983 $ 18,771 $ 17,443 2021 Notes 6,124 5,559 17,936 16,282 2020 Notes — 787 408 3,002 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (AOCI) (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Accumulated Other Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in AOCI for the three and nine months ended September 27, 2020 and September 29, 2019 were as follows (in thousands): Three months ended September 27, 2020 Currency translation adjustment Balance at June 28, 2020 $ (27,340 ) Other comprehensive income 21,269 Balance at September 27, 2020 $ (6,071 ) 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 ) Nine months ended September 27, 2020 Currency translation adjustment Balance at December 29, 2019 $ (29,499 ) Other comprehensive income 23,428 Balance at September 27, 2020 $ (6,071 ) 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 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Weighted Average Number of Shares Outstanding for Basic and Diluted Earnings Per Share | The weighted-average number of ordinary shares outstanding for basic and diluted earnings per share purposes is as follows (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Weighted-average number of ordinary shares outstanding-basic and diluted 129,463 126,767 129,043 126,282 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Segment Data [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Selected financial information related to our segments is presented below for the three and nine months ended September 27, 2020 and September 29, 2019 (in thousands): Three months ended September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate 1 Total Net sales from external customers $ 89,299 $ 89,795 $ 44,273 $ — $ 223,367 Depreciation expense 2,950 3,192 4,058 6,226 16,426 Amortization expense — — — 7,755 7,755 Segment operating income (loss) $ 27,563 $ 37,455 $ (2,738 ) $ (42,477 ) $ 19,803 Other: Transaction and transition costs 3,445 Operating income 16,358 Interest expense, net 21,831 Other expense, net 10,162 Loss before income taxes $ (15,635 ) 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 ) Nine months ended September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate 1 Total Net sales from external customers $ 228,903 $ 228,289 $ 114,670 $ — $ 571,862 Depreciation expense 8,298 9,997 11,117 18,246 47,658 Amortization expense — — — 23,970 23,970 Segment operating income (loss) $ 55,386 $ 86,352 $ (20,524 ) $ (132,994 ) $ (11,780 ) Other: Transaction and transition costs 13,828 Operating loss (25,608 ) Interest expense, net 63,477 Other income, net (11,007 ) Loss before income taxes $ (78,078 ) 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 Transaction and 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 ) __________________________ 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. |
Net Sales and Operating Income by Product Line and Information by Geographic Region | Net sales by geographic region by product line are as follows (in thousands): Three months ended Nine months ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 United States Lower extremities $ 66,461 $ 61,733 $ 170,846 $ 199,873 Upper extremities 88,731 77,160 225,492 239,033 Biologics 22,093 21,292 56,048 67,520 Sports med & other 1,809 2,047 4,806 6,119 Total United States $ 179,094 $ 162,232 $ 457,192 $ 512,545 EMEAC Lower extremities $ 8,379 $ 9,826 $ 22,920 $ 34,195 Upper extremities 19,884 19,541 50,921 66,956 Biologics 1,493 1,866 3,947 6,030 Sports med & other 1,790 2,109 4,947 7,248 Total EMEAC $ 31,546 $ 33,342 $ 82,735 $ 114,429 Other Lower extremities $ 2,863 $ 4,955 $ 7,675 $ 13,120 Upper extremities 5,918 7,654 14,905 20,858 Biologics 3,759 4,046 8,880 10,751 Sports med & other 187 205 475 592 Total other $ 12,727 $ 16,860 $ 31,935 $ 45,321 Total net sales $ 223,367 $ 212,434 $ 571,862 $ 672,295 |
Reconciliation of Assets from Segment to Consolidated | Total assets by business segment as of September 27, 2020 and December 29, 2019 are as follows (in thousands): September 27, 2020 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate Total Total assets $ 943,894 $ 923,771 $ 310,073 $ 420,981 $ 2,598,719 December 29, 2019 U.S. Lower Extremities & Biologics U.S. Upper Extremities International Extremities & Biologics Corporate Total Total assets $ 952,187 $ 914,317 $ 292,929 $ 426,207 $ 2,585,640 |
Organization and Description _2
Organization and Description of Business (Details) | 9 Months Ended | |
Sep. 27, 2020segment | Nov. 04, 2019$ / shares | |
Business Acquisition [Line Items] | ||
Number of operating segments | segment | 3 | |
Number of countries in which entity operates | 50 | |
Stryker Corporation | ||
Business Acquisition [Line Items] | ||
Sale of stock, price per share (in usd per share) | $ / shares | $ 30.75 | |
Chief Executive Officer | ||
Business Acquisition [Line Items] | ||
Reduction in base salary, percentage | 50.00% | |
Other Executive Officers | ||
Business Acquisition [Line Items] | ||
Reduction in base salary, percentage | 25.00% | |
Other Employees | ||
Business Acquisition [Line Items] | ||
Reduction in base salary, percentage | 15.00% | |
Director | ||
Business Acquisition [Line Items] | ||
Reduction in base salary, percentage | 50.00% |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)customer | Sep. 29, 2019USD ($) | Dec. 30, 2018USD ($) | Dec. 29, 2019USD ($) | |
Change in Accounting Estimate [Line Items] | ||||||
Types of customers | customer | 2 | |||||
Estimated life cycle and forecasted product demand period | 36 months | |||||
Impact of change in estimate, obsolete inventory | $ 26,000 | |||||
Estimated inventory turnover period | 2 years 6 months | |||||
Inventory write-down | $ (11,895) | $ (10,144) | ||||
Operating lease, right-of-use asset | $ 20,000 | |||||
Operating lease, liability | $ 20,000 | |||||
Cumulative impact of lease accounting adoption | $ (1,786,359) | $ (1,786,359) | $ (1,692,338) | |||
Accounting standards update | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201602Member | ||||
Continuing Operations | ||||||
Change in Accounting Estimate [Line Items] | ||||||
Inventory write-down | (5,200) | $ (4,100) | $ (11,900) | (10,100) | ||
Inventory Valuation and Obsolescence | Continuing Operations | ||||||
Change in Accounting Estimate [Line Items] | ||||||
Inventory write-down | $ 2,600 | $ 2,600 | $ 7,800 | $ 2,600 | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||||
Change in Accounting Estimate [Line Items] | ||||||
Cumulative impact of lease accounting adoption | $ 200 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | ||||
Loss from discontinued operations, net of tax | $ (2,785) | $ (7,589) | $ (12,514) | $ (12,814) |
Cash used in discontinued operations | $ 22,200 | $ 36,800 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,571 | $ 12,681 |
Work-in-process | 30,189 | 27,528 |
Finished goods | 199,312 | 158,165 |
Total Inventory | $ 243,072 | $ 198,374 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments and Derivatives Narrative (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 29, 2020USD ($) | Mar. 31, 2019USD ($) | Sep. 27, 2020USD ($) | Sep. 27, 2020EUR (€) | Dec. 29, 2019USD ($) | |
Derivative [Line Items] | |||||
Derivative settlement gain or loss | $ (12.6) | ||||
2020 Notes Conversion Derivative | |||||
Derivative [Line Items] | |||||
Derivative settlement gain or loss | $ 0.2 | $ (12.6) | $ 0.2 | ||
Technical Milestones And Sales Earnouts | IMASCAP SAS | |||||
Derivative [Line Items] | |||||
Contingent consideration, liability | 33.2 | € 28.5 | |||
Technical Milestones | IMASCAP SAS | |||||
Derivative [Line Items] | |||||
Contingent consideration, liability | $ 25.4 | $ 20.8 | |||
Contingent consideration, liability, measurement input | 0.06 | 0.06 | |||
Sales Earnouts | IMASCAP SAS | |||||
Derivative [Line Items] | |||||
Contingent consideration, liability | $ 7.8 | $ 7.2 | |||
Contingent consideration, liability, measurement input | 0.12 | 0.12 | |||
Convertible Debt | 2021 Convertible Debt | |||||
Derivative [Line Items] | |||||
Stated interest rate | 2.25% | 2.25% | |||
Convertible Debt | 2023 Convertible Debt | |||||
Derivative [Line Items] | |||||
Stated interest rate | 1.625% | 1.625% | |||
Convertible Debt | 2020 Convertible Debt | |||||
Derivative [Line Items] | |||||
Stated interest rate | 2.00% | 2.00% |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments and Derivatives, Derivative Assets at Fair Value (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Other assets | 2023 Notes Hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | $ 33,659 | $ 39,240 |
Other liabilities | 2023 Notes Conversion Derivative | ||
Derivative [Line Items] | ||
Derivative liability, fair value | 31,985 | 31,555 |
Accrued expenses and other current liabilities | 2021 Notes Conversion Derivative | ||
Derivative [Line Items] | ||
Derivative liability, fair value | 178,438 | 179,478 |
Accrued expenses and other current liabilities | 2020 Notes Conversion Derivative | ||
Derivative [Line Items] | ||
Derivative liability, fair value | 0 | 1,666 |
Other current assets | 2021 Notes Hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | 206,949 | 183,437 |
Other current assets | 2020 Notes Hedges | ||
Derivative [Line Items] | ||
Derivative asset, fair value | $ 0 | $ 1,969 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments and Derivatives, Derivative Instruments, Gain (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | $ (7,319) | $ (927) | $ 18,443 | $ 885 |
2023 Notes Hedges | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | (28,648) | (81,171) | (5,581) | (62,738) |
2023 Notes Conversion Derivative | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | 6,996 | 81,194 | (430) | 62,875 |
2021 Notes Hedges | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | 24,513 | (119,666) | 23,512 | (95,103) |
2021 Notes Conversion Derivative | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | (10,180) | 118,923 | 1,040 | 95,706 |
2020 Notes Hedges | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | 0 | (5,675) | (1,618) | (633) |
2020 Notes Conversion Derivative | ||||
Derivative [Line Items] | ||||
Net gain (loss) on changes in fair value | $ 0 | $ 5,468 | $ 1,520 | $ 778 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments and Derivatives, Fair Market Valuations (Details) | Sep. 27, 2020 |
2021 Notes Conversion Derivative | |
Derivative [Line Items] | |
Derivative liability, measurement input | 0.511 |
2021 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.511 |
2023 Notes Conversion Derivative | |
Derivative [Line Items] | |
Derivative liability, measurement input | 0.1209 |
2023 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.1209 |
Wright Medical Group, Inc. | 2021 Notes Conversion Derivative | |
Derivative [Line Items] | |
Derivative liability, measurement input | 0.0898 |
Wright Medical Group, Inc. | 2023 Notes Conversion Derivative | |
Derivative [Line Items] | |
Derivative liability, measurement input | 0.0099 |
DEUTSCHE BANK | 2023 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.0081 |
JP Morgan Chase | 2021 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.0042 |
JP Morgan Chase | 2023 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.0051 |
Bank of America | 2021 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.0042 |
Bank of America | 2023 Notes Hedges | |
Derivative [Line Items] | |
Derivative asset, measurement input | 0.0051 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments and Derivatives, Valuation of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | Dec. 30, 2018 |
Derivative [Line Items] | ||||
Cash and cash equivalents | $ 141,549 | $ 166,856 | $ 147,263 | $ 191,351 |
Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Cash and cash equivalents | 141,549 | 166,856 | ||
Total assets | 382,157 | 391,502 | ||
Total liabilities | 243,576 | 240,776 | ||
Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Cash and cash equivalents | 141,549 | 166,856 | ||
Total assets | 141,549 | 166,856 | ||
Total liabilities | 0 | 0 | ||
Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Cash and cash equivalents | 0 | 0 | ||
Total assets | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Cash and cash equivalents | 0 | 0 | ||
Total assets | 240,608 | 224,646 | ||
Total liabilities | 243,576 | 240,776 | ||
Contingent consideration | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Contingent consideration fair value | 33,153 | 28,077 | ||
Contingent consideration | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Contingent consideration fair value | 0 | 0 | ||
Contingent consideration | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Contingent consideration fair value | 0 | 0 | ||
Contingent consideration | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Contingent consideration fair value | 33,153 | 28,077 | ||
2020 Notes Hedges | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 1,969 | |||
2020 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | |||
2020 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | |||
2020 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 1,969 | |||
2021 Notes Hedges | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 206,949 | 183,437 | ||
2021 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | 0 | ||
2021 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | 0 | ||
2021 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 206,949 | 183,437 | ||
2023 Notes Hedges | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 33,659 | 39,240 | ||
2023 Notes Hedges | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | 0 | ||
2023 Notes Hedges | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 0 | 0 | ||
2023 Notes Hedges | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative asset, fair value | 33,659 | 39,240 | ||
2020 Notes Conversion Derivative | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 1,666 | |||
2020 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | |||
2020 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | |||
2020 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 1,666 | |||
2021 Notes Conversion Derivative | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 178,438 | 179,478 | ||
2021 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | 0 | ||
2021 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | 0 | ||
2021 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 178,438 | 179,478 | ||
2023 Notes Conversion Derivative | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 31,985 | 31,555 | ||
2023 Notes Conversion Derivative | Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | 0 | ||
2023 Notes Conversion Derivative | Prices with other observable inputs (Level 2) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | 0 | 0 | ||
2023 Notes Conversion Derivative | Prices with unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | ||||
Derivative [Line Items] | ||||
Derivative liability, fair value | $ 31,985 | $ 31,555 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments and Derivatives, Assets and Liabilities Measured at Fair Value, Rollforward (Details) $ in Thousands | 9 Months Ended |
Sep. 27, 2020USD ($) | |
2020 Notes Hedges | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, asset, beginning balance | $ 1,969 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | (1,618) |
Settlements | (351) |
Currency | 0 |
Fair value, asset, ending balance | 0 |
2020 Notes Conversion Derivative | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, liability, beginning balance | 1,666 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | (1,520) |
Settlements | 146 |
Currency | 0 |
Fair value, liability, ending balance | 0 |
2021 Notes Hedges | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, asset, beginning balance | 183,437 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | 23,512 |
Settlements | 0 |
Currency | 0 |
Fair value, asset, ending balance | 206,949 |
2021 Notes Conversion Derivative | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, liability, beginning balance | 179,478 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | (1,040) |
Settlements | 0 |
Currency | 0 |
Fair value, liability, ending balance | 178,438 |
2023 Notes Hedges | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, asset, beginning balance | 39,240 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | (5,581) |
Settlements | 0 |
Currency | 0 |
Fair value, asset, ending balance | 33,659 |
2023 Notes Conversion Derivative | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, liability, beginning balance | 31,555 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | 430 |
Settlements | 0 |
Currency | 0 |
Fair value, liability, ending balance | 31,985 |
Contingent consideration | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value, liability, beginning balance | 28,077 |
Additions | 0 |
Gain/(loss) on fair value adjustments included in earnings | 4,146 |
Settlements | 435 |
Currency | (1,365) |
Fair value, liability, ending balance | $ 33,153 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Property, Plant and Equipment, Net [Abstract] | ||
Property, plant and equipment, at cost | $ 676,171 | $ 648,318 |
Less: Accumulated depreciation | (415,441) | (396,396) |
Property, plant and equipment, net | $ 260,730 | $ 251,922 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | |
Goodwill [Roll Forward] | |||
Goodwill beginning balance | $ 1,260,967 | $ 1,268,954 | |
Foreign currency translation | 13,000 | (14,650) | |
Goodwill ending balance | 1,273,967 | 1,254,304 | |
Indefinite life intangibles | 8,698 | $ 6,238 | |
Definite life intangibles, cost | 387,451 | 384,189 | |
Total intangibles | 396,149 | 390,427 | |
Less: Accumulated amortization | 156,306 | 133,045 | |
Intangible assets, net | 239,843 | 257,382 | |
Future amortization [Abstract] | |||
2020 | 32,000 | ||
2021 | 31,000 | ||
2022 | 30,000 | ||
2023 | 30,000 | ||
2024 | 27,000 | ||
Completed technology | |||
Goodwill [Roll Forward] | |||
Indefinite life intangibles | 8,698 | 6,238 | |
Definite life intangibles, cost | 175,978 | 172,111 | |
Less: Accumulated amortization | 87,282 | 72,140 | |
Licenses | |||
Goodwill [Roll Forward] | |||
Definite life intangibles, cost | 9,247 | 9,247 | |
Less: Accumulated amortization | 3,675 | 2,835 | |
Customer relationships | |||
Goodwill [Roll Forward] | |||
Definite life intangibles, cost | 183,090 | 181,094 | |
Less: Accumulated amortization | 50,054 | 41,389 | |
Trademarks | |||
Goodwill [Roll Forward] | |||
Definite life intangibles, cost | 14,111 | 14,002 | |
Less: Accumulated amortization | 12,224 | 11,834 | |
Non-compete agreements | |||
Goodwill [Roll Forward] | |||
Definite life intangibles, cost | 3,454 | 5,713 | |
Less: Accumulated amortization | 2,656 | 4,090 | |
Other | |||
Goodwill [Roll Forward] | |||
Definite life intangibles, cost | 1,571 | 2,022 | |
Less: Accumulated amortization | 415 | $ 757 | |
UNITED STATES | U.S. Lower Extremities & Biologics | |||
Goodwill [Roll Forward] | |||
Goodwill beginning balance | 569,970 | 569,970 | |
Foreign currency translation | 0 | 0 | |
Goodwill ending balance | 569,970 | 569,970 | |
UNITED STATES | U.S. Upper Extremities | |||
Goodwill [Roll Forward] | |||
Goodwill beginning balance | 625,926 | 627,850 | |
Foreign currency translation | 2,985 | (3,261) | |
Goodwill ending balance | 628,911 | 624,589 | |
International | International Extremities & Biologics | |||
Goodwill [Roll Forward] | |||
Goodwill beginning balance | 65,071 | 71,134 | |
Foreign currency translation | 10,015 | (11,389) | |
Goodwill ending balance | $ 75,086 | $ 59,745 |
Debt and Finance Lease Obliga_3
Debt and Finance Lease Obligations (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 | |
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | $ 1,223,884 | $ 1,168,029 | |
Current portion of long-term obligations | [1] | (487,216) | (430,862) |
Long-term debt and finance lease obligations | 736,668 | 737,167 | |
Finance lease obligations | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | 23,508 | 25,086 | |
Term loan facility | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | 54,549 | 19,296 | |
Other debt | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | 4,810 | 6,615 | |
Secured Debt | |||
Debt Instrument [Line Items] | |||
Asset based line of credit | 60,919 | ||
Convertible Debt | 2023 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | $ 716,410 | 695,748 | |
Stated interest rate | 1.625% | ||
Convertible Debt | 2021 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | $ 363,688 | 344,635 | |
Stated interest rate | 2.25% | ||
Convertible Debt | 2020 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt and finance lease obligations | $ 0 | $ 55,997 | |
Stated interest rate | 2.00% | ||
[1] | At September 27, 2020 and December 29, 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 are able to convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2021 Notes Hedges were classified as current assets as of September 27, 2020 and December 29, 2019 . See Note 5 and Note 8 . |
Debt and Finance Lease Obliga_4
Debt and Finance Lease Obligations Convertible Debt (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Debt Instrument [Line Items] | ||
Debt and finance lease obligations | $ 1,223,884 | $ 1,168,029 |
2023 Convertible Debt | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 814,556 | 814,556 |
Unamortized debt discount | (89,147) | (107,916) |
Unamortized debt issuance costs | (8,999) | (10,892) |
Debt and finance lease obligations | 716,410 | 695,748 |
2021 Convertible Debt | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 395,000 | 395,000 |
Unamortized debt discount | (29,469) | (47,405) |
Unamortized debt issuance costs | (1,843) | (2,960) |
Debt and finance lease obligations | 363,688 | 344,635 |
2020 Convertible Debt | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 0 | 56,455 |
Unamortized debt discount | 0 | (408) |
Unamortized debt issuance costs | 0 | (50) |
Debt and finance lease obligations | $ 0 | $ 55,997 |
Debt and Finance Lease Obliga_5
Debt and Finance Lease Obligations Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | Feb. 07, 2019 | Jan. 31, 2019 | Dec. 23, 2016 | May 31, 2018 | Sep. 27, 2020 | Mar. 29, 2020 | Mar. 31, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Nov. 04, 2019 | Dec. 30, 2018 |
Debt Instrument [Line Items] | ||||||||||||
Minimum consecutive business day period | 20 days | |||||||||||
Trading period | 30 days | |||||||||||
Threshold for conversion as percent of conversion price | 130.00% | |||||||||||
Minimum consecutive business day period | 5 days | |||||||||||
Debt instrument, convertible, trading price multiple per $1000 principle amount | $ 1,000 | |||||||||||
Debt instrument, convertible, purchase price as a percent of principal amount if fundamental change event occurs | 100.00% | |||||||||||
Derivative settlement gain or loss | $ (12,600,000) | |||||||||||
Indebtedness in excess, default | $ 25,000,000 | |||||||||||
Proceeds from notes hedge options | $ 351,000 | $ 16,849,000 | ||||||||||
Line of credit facility, commitment fee percentage | 0.50% | |||||||||||
Minimum borrowing capacity as percentage of available borrowing capacity | 20.00% | |||||||||||
Percent of debt outstanding | 85.00% | |||||||||||
Prepayment penalty | 1.00% | |||||||||||
Cash and cash equivalents | $ 141,549,000 | $ 141,549,000 | $ 147,263,000 | $ 166,856,000 | $ 191,351,000 | |||||||
Prepayment speed | 100.00% | |||||||||||
Proceeds from collaborators | $ 10,000,000 | |||||||||||
Circumstance 1 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum consecutive business day period | 20 days | |||||||||||
Trading period | 30 days | |||||||||||
Threshold for conversion as percent of conversion price | 130.00% | |||||||||||
Circumstance 2 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument, convertible, trading price multiple per $1000 principle amount | $ 1,000 | |||||||||||
Threshold for conversion | 98.00% | |||||||||||
Stryker Corporation | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Sale of stock, price per share (in usd per share) | $ 30.75 | |||||||||||
Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity, credit agreement | $ 175,000,000 | $ 175,000,000 | ||||||||||
2020 Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument, convertible, trading price multiple per $1000 principle amount | $ 1,000 | |||||||||||
Exercise price of warrants or rights (in usd per share) | $ 38.80 | $ 38.80 | ||||||||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 1.9 | 1.9 | 1.9 | |||||||||
Effective interest rate, percentage | 8.54% | 8.54% | ||||||||||
Debt conversion, converted instrument, amount | $ 130,100,000 | |||||||||||
2023 Exchange | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt discount | $ 7,400,000 | $ 7,400,000 | ||||||||||
Deferred financing charges | 900,000 | $ 900,000 | ||||||||||
2021 Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum consecutive business day period | 20 days | |||||||||||
Trading period | 30 days | |||||||||||
Threshold for conversion as percent of conversion price | 130.00% | |||||||||||
Long term debt, fair value | $ 568,900,000 | $ 568,900,000 | ||||||||||
Exercise price of warrants or rights (in usd per share) | $ 30 | $ 30 | ||||||||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 18.5 | 18.5 | 18.5 | |||||||||
Effective interest rate, percentage | 9.72% | 9.72% | ||||||||||
Payment terms, days to maturity | 91 days | |||||||||||
2023 Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt instrument, convertible, trading price multiple per $1000 principle amount | $ 1,072.40 | |||||||||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 24.4 | 24.4 | 24.4 | |||||||||
Effective interest rate, percentage | 5.76% | 5.76% | ||||||||||
Debt instrument, fair value | 28,900,000 | |||||||||||
Proceeds from warrant exercises | $ 8,900,000 | |||||||||||
2023 Notes Hedges | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Payments for warrants | 30,100,000 | |||||||||||
Proceeds from derivatives settled | 21,200,000 | |||||||||||
Additional 2023 Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long term debt, fair value | $ 854,700,000 | $ 854,700,000 | ||||||||||
Exercise price of warrants or rights (in usd per share) | $ 40.86 | $ 40.86 | ||||||||||
Debt instrument, face amount | 139,600,000 | |||||||||||
Debt instrument, fair value | $ 16,300,000 | |||||||||||
2020 Settled Hedges | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Payments for warrants | 11,000,000 | |||||||||||
Proceeds from notes hedge options | 16,800,000 | |||||||||||
Net proceeds from hedge, financing activities | $ 5,800,000 | |||||||||||
Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term line of credit | $ 60,919,000 | $ 60,919,000 | ||||||||||
Secured Debt | ABL Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term line of credit | $ 20,652,000 | |||||||||||
Line of Credit | Term loan facility | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity, credit agreement | 55,000,000 | $ 55,000,000 | ||||||||||
Line of credit facility, prepayment premium, percentage | 1.25% | |||||||||||
Line of Credit | ABL Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term line of credit | 60,900,000 | $ 60,900,000 | 20,700,000 | |||||||||
Unused borrowing capacity | 114,100,000 | 114,100,000 | $ 154,300,000 | |||||||||
Proceeds from lines of credit | 40,000,000 | |||||||||||
Debt Instrument, Tranche 2 | Line of Credit | Term loan facility | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity, credit agreement | 35,000,000 | |||||||||||
Debt Instrument, Tranche 1 | Line of Credit | Term loan facility | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity, credit agreement | $ 20,000,000 | |||||||||||
Maximum | Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity, credit agreement | $ 75,000,000 | 75,000,000 | ||||||||||
Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Prepayment penalty | 0.75% | |||||||||||
London Interbank Offered Rate (LIBOR) | Term loan facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 7.85% | |||||||||||
London Interbank Offered Rate (LIBOR) | ABL Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 4.25% | |||||||||||
London Interbank Offered Rate (LIBOR) | Minimum | Term loan facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 1.00% | |||||||||||
London Interbank Offered Rate (LIBOR) | Minimum | ABL Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 0.75% | |||||||||||
Base Rate | ABL Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 3.25% | |||||||||||
2020 Notes Conversion Derivative | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Derivative settlement gain or loss | $ 200,000 | $ (12,600,000) | $ 200,000 |
Debt and Finance Lease Obliga_6
Debt and Finance Lease Obligations Conversion Terms (Details) | Jun. 28, 2018$ / shares | May 20, 2016$ / shares | Dec. 29, 2019 |
2020 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Convertible notes trading period | 200 days | ||
2021 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Convertible notes trading period | 100 days | ||
2023 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Convertible notes trading period | 120 days | ||
Convertible Debt | 2021 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, convertible, conversion ratio | 46.8165 | ||
Conversion price (in dollars per share) | $ 21.36 | ||
Convertible Debt | 2023 Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt instrument, convertible, conversion ratio | 29.9679 | ||
Conversion price (in dollars per share) | $ 33.37 |
Debt and Finance Lease Obliga_7
Debt and Finance Lease Obligations Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
2023 Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | $ 6,348 | $ 5,983 | $ 18,771 | $ 17,443 |
2021 Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | 6,124 | 5,559 | 17,936 | 16,282 |
2020 Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | $ 0 | $ 787 | $ 408 | $ 3,002 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Stockholder's equity, beginning balance | $ 840,923 | $ 906,030 | $ 891,793 | $ 932,459 |
Foreign currency translation | 21,269 | (20,287) | 23,428 | (31,713) |
Stockholder's equity, ending balance | 854,251 | 851,920 | 854,251 | 851,920 |
Accumulated other comprehensive loss (income) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Stockholder's equity, beginning balance | (27,340) | (19,509) | (29,499) | (8,083) |
Foreign currency translation | 21,269 | (20,287) | 23,428 | (31,713) |
Stockholder's equity, ending balance | $ (6,071) | $ (39,796) | $ (6,071) | $ (39,796) |
Capital Stock and Earnings pe_2
Capital Stock and Earnings per share Capital Stock (Details) - EUR (€) € / shares in Units, € in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common stock, value, authorized | € 9.6 | |||
Common stock, shares authorized (in shares) | 320,000,000 | 320,000,000 | ||
Common stock, par value (in usd per share) | € 0.03 | € 0.03 | ||
Percentage of outstanding stock | 20.00% | |||
Common stock, shares issued (in shares) | 129,744,257 | 128,614,026 | ||
Antidilutive securities excluded from EPS (in shares) | 10,600,000 | 8,500,000 | ||
Antidilutive RSUs (in shares) | 1,200,000 | 1,700,000 | ||
Antidilutive securities, non-vested shares, performance shares (in shares) | 800,000 | 600,000 | 800,000 | |
General Purpose | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Percentage of outstanding stock | 10.00% | |||
Potential Mergers and Acquisitions | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Percentage of outstanding stock | 10.00% | |||
2023 Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 24,400,000 | 24,400,000 | 24,400,000 | |
2021 Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 18,500,000 | 18,500,000 | 18,500,000 | |
2020 Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Common shares attributable to dilutive effect of options and warrants (in shares) | 1,900,000 | 1,900,000 | 1,900,000 |
Earnings per share (Details)
Earnings per share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Earnings Per Share [Abstract] | ||||
Weighted-average number of ordinary shares outstanding - basic and diluted (in shares) | 129,463 | 126,767 | 129,043 | 126,282 |
Commitments and Contingencies -
Commitments and Contingencies - Product Liability Contingency (Details) $ in Millions | Mar. 23, 2018patent | Mar. 31, 2019petition | Sep. 27, 2020USD ($)settlementlawsuit | Oct. 31, 2017settlementlawsuit | Dec. 29, 2019USD ($) |
Product Liability Contingency [Line Items] | |||||
Claims payment period | 2 years | ||||
PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | $ 12.1 | ||||
CONSERVE (R) DYNASTY (R) AND LINEAGE (R) | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | $ 36.3 | 40.5 | |||
PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 64 | ||||
Loss contingency accrual | $ 7.8 | ||||
Master Settlement Agreement - MDL & JCCP | CONSERVE (R) DYNASTY (R) AND LINEAGE (R) | |||||
Product Liability Contingency [Line Items] | |||||
Estimated product liability range | 339.2 | ||||
Loss contingency, damages paid | 339 | ||||
Metal-On-Metal Claims | |||||
Product Liability Contingency [Line Items] | |||||
Proceeds from insurance policies | 120.4 | ||||
Proceeds from insurance policies, paid directly to entity | 113.7 | ||||
Proceeds from insurance policies, paid to third party claimants | 6.7 | ||||
Accrued Liabilities, Current | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | 8.8 | ||||
Accrued Liabilities, Current | CONSERVE (R) DYNASTY (R) AND LINEAGE (R) | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | 28.7 | 33 | |||
Accrued Liabilities, Current | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | 1.2 | ||||
Other Noncurrent Liabilities | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | 3.3 | ||||
Other Noncurrent Liabilities | CONSERVE (R) DYNASTY (R) AND LINEAGE (R) | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | 7.6 | $ 7.5 | |||
Other Noncurrent Liabilities | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Loss contingency accrual | $ 6.6 | ||||
Paragon 28 | |||||
Product Liability Contingency [Line Items] | |||||
Number of patent infringements | patent | 10 | ||||
Number of petitions | petition | 4 | ||||
MicroPort | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 6 | ||||
Pending Litigatiion | UNITED STATES | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 36 | ||||
Pending Litigatiion | UNITED STATES | Metal-On-Metal Claims | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 251 | ||||
Pending Litigatiion | UNITED STATES | Modular Neck Cases Related to Release of Metal Ions | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 47 | ||||
Pending Litigatiion | UNITED STATES | MicroPort | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 14 | ||||
Pending Litigatiion | Non-US | PROFEMUR Titanium Modular Neck Product | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 5 | ||||
Pending Litigatiion | Non-US | Metal-On-Metal Claims | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 29 | ||||
Pending Litigatiion | Non-US | Modular Neck Cases Related to Release of Metal Ions | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 0 | ||||
Pending Litigatiion | Non-US | MicroPort | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 6 | ||||
Dismissed | Non-revision claims | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 506 | ||||
Refiled | Non-revision claims | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 0 | ||||
Settled Litigation | Master Settlement Agreement - MDL & JCCP | |||||
Product Liability Contingency [Line Items] | |||||
Number of lawsuits | lawsuit | 1,974 | ||||
Settled Litigation | Metal-On-Metal Claims | |||||
Product Liability Contingency [Line Items] | |||||
Number of settlement agreements | settlement | 7 | 3 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)segment | Sep. 29, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 3 | |||
Revenues | $ 223,367 | $ 212,434 | $ 571,862 | $ 672,295 |
Depreciation | 16,426 | 16,015 | 47,658 | 47,688 |
Amortization expense | 7,755 | 8,308 | 23,970 | 23,757 |
Segment operating income (loss) | 19,803 | (4,596) | (11,780) | 5,740 |
Inventory step-up amortization | 353 | 0 | 1,057 | |
Transaction and transition costs | 3,445 | 594 | 13,828 | 1,615 |
Non-cash asset impairment | 5,597 | 0 | 5,597 | |
Operating loss | 16,358 | (11,140) | (25,608) | (2,529) |
Interest expense, net | 21,831 | 20,448 | 63,477 | 60,138 |
Other expense, net | 10,162 | 1,317 | (11,007) | 12,381 |
Loss before income taxes | (15,635) | (32,905) | (78,078) | (75,048) |
UNITED STATES | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 179,094 | 162,232 | 457,192 | 512,545 |
Corporate Segment | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Depreciation | 6,226 | 6,715 | 18,246 | 19,109 |
Amortization expense | 7,755 | 8,308 | 23,970 | 23,757 |
Segment operating income (loss) | (42,477) | (48,742) | (132,994) | (149,407) |
Operating Segments | U.S. Lower Extremities & Biologics | UNITED STATES | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 89,299 | 83,940 | 228,903 | 269,960 |
Depreciation | 2,950 | 2,694 | 8,298 | 7,915 |
Amortization expense | 0 | 0 | 0 | 0 |
Segment operating income (loss) | 27,563 | 18,335 | 55,386 | 70,285 |
Operating Segments | U.S. Upper Extremities | UNITED STATES | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 89,795 | 78,292 | 228,289 | 242,585 |
Depreciation | 3,192 | 3,165 | 9,997 | 9,490 |
Amortization expense | 0 | 0 | 0 | 0 |
Segment operating income (loss) | 37,455 | 27,450 | 86,352 | 87,682 |
Operating Segments | International Extremities & Biologics | International | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 44,273 | 50,202 | 114,670 | 159,750 |
Depreciation | 4,058 | 3,441 | 11,117 | 11,174 |
Amortization expense | 0 | 0 | 0 | 0 |
Segment operating income (loss) | $ (2,738) | $ (1,639) | $ (20,524) | $ (2,820) |
Segment Data by Geographical Re
Segment Data by Geographical Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | $ 223,367 | $ 212,434 | $ 571,862 | $ 672,295 | |
Assets | 2,598,719 | 2,598,719 | $ 2,585,640 | ||
UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 179,094 | 162,232 | 457,192 | 512,545 | |
EMEAC | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 31,546 | 33,342 | 82,735 | 114,429 | |
Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 12,727 | 16,860 | 31,935 | 45,321 | |
U.S. Lower Extremities & Biologics | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 66,461 | 61,733 | 170,846 | 199,873 | |
U.S. Lower Extremities & Biologics | EMEAC | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 8,379 | 9,826 | 22,920 | 34,195 | |
U.S. Lower Extremities & Biologics | Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 2,863 | 4,955 | 7,675 | 13,120 | |
U.S. Upper Extremities | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 88,731 | 77,160 | 225,492 | 239,033 | |
U.S. Upper Extremities | EMEAC | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 19,884 | 19,541 | 50,921 | 66,956 | |
U.S. Upper Extremities | Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 5,918 | 7,654 | 14,905 | 20,858 | |
International Extremities & Biologics | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 22,093 | 21,292 | 56,048 | 67,520 | |
International Extremities & Biologics | EMEAC | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 1,493 | 1,866 | 3,947 | 6,030 | |
International Extremities & Biologics | Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 3,759 | 4,046 | 8,880 | 10,751 | |
Sports Med And Other | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 1,809 | 2,047 | 4,806 | 6,119 | |
Sports Med And Other | EMEAC | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 1,790 | 2,109 | 4,947 | 7,248 | |
Sports Med And Other | Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 187 | 205 | 475 | 592 | |
Operating Segments | U.S. Lower Extremities & Biologics | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | 943,894 | 943,894 | 952,187 | ||
Operating Segments | U.S. Upper Extremities | UNITED STATES | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | 923,771 | 923,771 | 914,317 | ||
Operating Segments | International Extremities & Biologics | International | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | 310,073 | 310,073 | 292,929 | ||
Corporate Segment | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 0 | $ 0 | 0 | $ 0 | |
Assets | $ 420,981 | $ 420,981 | $ 426,207 |