Cut

Wright Medical Group plans to cut 80 workers

AP News
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Posted: Sep 15, 2011 6:13 PM
Wright Medical Group plans to cut 80 workers

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.