Wright Medical Group, Inc. Reaches Agreements with U.S. Attorney’s Office and OIG (EON)
Wright Medical Group plans to cut 80 workers (Huffington Post)
- 6% of workforce cut across all functions (30-40 in Memphis, 60-70 in ROW)
- European operations are scaled back to basic sales and distribution
- Restructuring will cost $25M – $30M
- DOJ monitoring will be extended for another year (until Sept 2012)
- As a result of the monitoring extention, the USAO agreed not to take any additional action at this time
- Corporate Integrity Agreement (CIA) will stay in place until Sept 2015
“Wright Medical and our Board of Directors have taken significant steps to enhance the Company’s compliance”
Under its agreement with the USAO, WMT has voluntarily agreed to extend the term of its DPA for 12 months; the DPA will now expire on September 29, 2012. The USAO has agreed not to take any additional action regarding any breach of the DPA referenced in the aforementioned May 5, 2011 letter from the USAO unless it finds, prior to September 29, 2012, that WMT has committed a knowing, willful and uncured breach of a material provision of the DPA by its conduct after September 15, 2011 or by conduct before September 15, 2011 of which the independent monitor was not aware on that date. WMT also agreed with the OIG to an amendment to the Corporate Integrity Agreement (CIA) under which certain of WMT’s substantive obligations under the CIA will now begin on September 29, 2012, when the amended DPA monitoring period expires. The term of the CIA has not changed, and will expire as previously provided on September 29, 2015. In connection with such amendment, the OIG has informed WMT that it has no present intention, based on the information now known to it, to exercise its authority under Paragraph 51 of the DPA to exclude Wright from participation in federal healthcare programs based on any breach referenced in the May 5 letter unless the USAO were to take further action related to an alleged breach of the DPA by WMT.
“Wright Medical and our Board of Directors have taken significant steps to enhance the Company’s compliance,” said David D. Stevens, Chairman of the Board and interim Chief Executive Officer. “We believe that voluntarily extending the term of the DPA will provide the Company with an opportunity to further demonstrate its commitment to the highest standards of ethical conduct. We will continue to work closely with the Monitor, the USAO, the OIG and other regulators to ensure that the Company complies with all laws and regulations that govern our business practices.”
“As a direct result of the federal monitorship, Wright has made significant and wide-ranging changes in corporate culture and tone at the top,” First Assistant U.S. Attorney J. Gilmore Childers said. “Our Office is pleased with the extensive cooperation from the newly appointed interim senior management team. Today’s extension will allow Wright to make the transition from interim to permanent senior management while still under the terms of the DPA and the surveillance of the federal monitor.”
Wright Medical Group plans to cut 80 workers (Huffington Post)
ARLINGTON, Tenn. — Orthopedic device maker Wright Medical Group Inc. said Thursday it plans to cut 80 employees, or about 6 percent of its work force, as part of a restructuring plan designed to boost growth and profitability.
The Arlington, Tenn., company said it is reducing the size of its international product portfolio and adjusting plant operations among other measures.
It expects pretax charges of about $25 million to $30 million tied to this restructuring plan, with most of that being recorded in this year’s final two quarters.
Wright Medical also expects a gain of about 5 cents to 6 cents per share for adjusted earnings next year, and a favorable annual impact of about 8 cents per share after that.
The company also said federal and New Jersey state regulators agreed not to prosecute the company for violations of a previous agreement with the government unless additional violations are discovered. The agreement expires Sept. 29, 2012. The government will also not move to block the company from participating in federal health programs for those violations.
A year ago, Wright Medical agreed to pay $7.9 million to resolve a government investigation into its consulting agreements with orthopedic surgeons. The government agreed to defer prosecution of Wright Medical, and the company agreed to allow the government to monitor its operations until September 2015.
In May, the company said it conducted an internal investigation of its compliance and took actions to improve its regulatory compliance, and it notified the government of the results of its investigation. The company also announced the departure of three executives. President and CEO Gary Henley resigned in April before a board meeting where Wright planned to discuss regulatory compliance issues.
As part of Thursday’s announcement, the Office of the Inspector General of the U.S. Department of Health and Human Services and the U.S. Attorney’s Office for the District of New Jersey agreed not to take any additional action against Wright Medical unless it violates the deferred prosecution agreement.
Wright Medical shares rose 32 cents, or 2.2 percent, to $14.96 on Thursday. The stock lost a penny to $14.95 in aftermarket trading.