For Wright Medical ( WMGI), a niche player in the joint reconstruction business, things have gone terribly wrong. The company's CEO, Laurence Fairey, has flown off to "pursue other interests" after warning of a huge profit shortfall on Tuesday. He lasted just 15 months on the job. Fairey's exit comes at a time when even much larger orthopedic device makers, including industry giant Zimmer ( ZMH), have found themselves struggling to obtain the price increases that boosted their profitability in the past. But Fairey wound up doomed by other problems -- outside the domestic reconstructive business -- in the end. "In what is becoming a familiar theme at Wright, the biologics and international divisions led the shortfall," noted Piper Jaffray analyst Raj Denhoy when downgrading Wright from outperform to market-perform on Wednesday. "The company believes the overall business tone is improving in these divisions, but the quarter was the fourth in a row of lackluster results, and we have little confidence in a quick turnaround." In one of his last public comments as CEO, Fairey said that the company would fall short of its expectations due to a 10% dive in domestic biologics sales and ongoing challenges in both Italy and southern France. As a result, the company said it would post third-quarter revenue of $73.4 million -- up just 6% from a year ago -- and a profit of between 10 cents and 11 cents a share instead of the 17 cents Wall Street was anticipating. After plunging 20% Wednesday, Wright gave up 6 cents Thursday to $19.14.
From the Hip
Still, Wright tried to serve up some good news along with the bad. Notably, the company said that its domestic reconstructive joint business -- a major focus for most industry investors -- continues to perform quite well. Specifically, it said that third-quarter sales of hips and knees rose by 15% and 13%, respectively.