Wright Medical Announces Restructuring Plan, Extends DPA
BY SANDER DUNCAN, SEPTEMBER 16, 2011
Wright Medical announced a restructuring plan yesterday to create what interim CEO David Stevens calls a "leaner, more cost efficient operation." The plan comprises a comprehensive overhaul of Wright's operational activities to enhance profitability and rejuvenate stagnant growth. Namely, the company intends to diminish its international exposure by streamlining its overseas distribution operations and product offerings. The restructuring will reduce Wright's workforce by 80 employees, or 6%, and will run up a pre-tax $25-$30 million charge in the coming quarters. Despite these charges, Stevens notes that Wright "continues to have a strong balance sheet and is positioned well for investments in acquisitions to drive future growth."
It has been a challenging year for Wright Medical. Former CEO Gary Henley resigned in April over issues relating to the company's compliance program, while former CTO Frank Bono was terminated in the same episode. These high level departures came during a 12-month DPA to settle a five year DOJ investigation into the company's consulting practices. To that end, Wright Medical also announced yesterday that the New Jersey State Attorney has agreed to Wright's voluntary extension of that DPA for another 12-month period, closing on September 29, 2012.
Wright Medical is generating public praise for its administrative overhaul. First Assistant US Attorney J. Gilmore Childers acknowledged Wright's recent progress in addressing its compliance issues, saying, "...Wright has made significant and wide-ranging changes in corporate culture and tone at the top. Our Office is pleased with the extensive cooperation from the newly appointed interim senior management team." Certain obligations under its current Corporate Integrity Agreement (CIA) with the OIG will now start in 2012 when the DPA ends, though the term of the CIA will still expire on September 29, 2015 as planned.
