Zimmer Biomet Holdings, Inc. reported financial results for the quarter ended March 31, 2021. The Company reported first quarter net sales of $1.847 billion, an increase of 3.6% over the prior year period, and an increase of 0.8% on a constant currency basis. Net earnings for the first quarter were $198.1 million, or $359.1 million on an adjusted basis.
Diluted earnings per share were $0.94 for the first quarter. Adjusted diluted earnings per share were $1.71 for the first quarter, an increase of 0.6% over the prior year period.
“Our performance was stronger than we anticipated in the first quarter, as we saw signs of the pandemic beginning to subside across many regions toward the end of the quarter driven by acceleration of vaccine rollout. As we move into the second quarter, we expect that momentum to continue and believe we are well-positioned to meet the needs of our customers as elective procedures return,” said Bryan Hanson, President and CEO of Zimmer Biomet. “Despite the challenges of COVID-19, the transformation of our business has continued over the past year. We are proud of the milestones Zimmer Biomet has already accomplished in 2021 and we have confidence that we can drive significant value for our key stakeholders as we move our Mission forward.”
Please see the attached schedules accompanying this press release for additional details on performance in the quarter, including sales by Zimmer Biomet’s three geographies and five product categories.
Recent Highlights
Aligned with Zimmer Biomet’s active portfolio management strategy and the ongoing transformation of the business, key recent highlights include:
Geographic and Product Category Sales
In the three-month period ended March 31, 2021, the Company updated its product category sales reporting. Product category sales include the following changes:
Prior period product category sales have been reclassified to conform to the current presentation. The Company has posted updated sales tables for fiscal 2020 and 2019 reflecting these changes on the Investor Relations section of its website, https://investor.zimmerbiomet.com. These changes have no impact on the Company’s consolidated results of operations.
The following sales table provides results by geography and product category for the three-month period ended March 31, 2021, as well as the percentage change compared to the prior year period, on both a reported basis and a constant currency basis.
NET SALES – THREE MONTHS ENDED MARCH 31, 2021 (in millions, unaudited) |
||||||||||
Constant |
||||||||||
Net |
Currency |
|||||||||
Sales |
% Change |
% Change |
||||||||
Geographic Results |
||||||||||
Americas |
$ |
1,115.0 |
1.2 |
% |
1.0 |
% |
||||
EMEA |
384.2 |
(3.5) |
(10.3) |
|||||||
Asia Pacific |
348.2 |
22.4 |
15.5 |
|||||||
Total |
$ |
1,847.4 |
3.6 |
% |
0.8 |
% |
||||
Product Categories |
||||||||||
Knees |
||||||||||
Americas |
$ |
358.8 |
(5.1) |
% |
(5.4) |
% |
||||
EMEA |
131.3 |
(14.0) |
(19.8) |
|||||||
Asia Pacific |
124.2 |
26.9 |
18.5 |
|||||||
Total |
614.3 |
(2.3) |
(5.2) |
|||||||
Hips |
||||||||||
Americas |
235.2 |
1.1 |
0.9 |
|||||||
EMEA |
107.7 |
(3.2) |
(9.5) |
|||||||
Asia Pacific |
104.1 |
17.3 |
11.2 |
|||||||
Total |
447.0 |
3.3 |
0.3 |
|||||||
S.E.T. * |
417.6 |
9.6 |
7.2 |
|||||||
Dental & Spine |
246.0 |
12.1 |
9.6 |
|||||||
Other |
122.5 |
0.3 |
(2.5) |
|||||||
Total |
$ |
1,847.4 |
3.6 |
% |
0.8 |
% |
||||
* Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic |
Financial Guidance
The Company is providing the following full-year 2021 financial guidance:
Projected Year Ending December 31, 2021 |
||
2021 reported revenue growth |
14% – 17% |
|
Foreign Currency Exchange Impact |
1.5% |
|
Adjusted Operating Profit Margin(1) |
26.5% – 27.5% |
|
Adjusted Tax Rate(1) |
16.0% – 16.5% |
|
Adjusted Diluted EPS(1) |
$7.60 – $8.00 |
(1) |
These measures are non-GAAP financial measures for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts. See “Forward-Looking Non-GAAP Financial Measures.” |
Conference Call
The Company will conduct its first quarter investor conference call today, May 4, 2021, at 8:30 a.m. ET. The audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at https://investor.zimmerbiomet.com. It will be archived for replay following the conference call.
About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.
We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.
Website Information
We routinely post important information for investors on our website, www.zimmerbiomet.com, in the “Investor Relations” section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website or any other website referenced herein is not incorporated by reference into, and is not a part of, this document.
Note on Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.
Sales change information for the three-month period ended March 31, 2021 is presented on a GAAP (reported) basis and on a constant currency basis. Constant currency percentage changes exclude the effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or decreases.
Net earnings and diluted earnings per share for the three-month period ended March 31, 2021 are presented on a GAAP (reported) basis and on an adjusted basis. Adjusted earnings and adjusted diluted earnings per share exclude the effects of certain items, which are detailed in the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures presented later in this press release.
Free cash flow is an additional non-GAAP measure that is presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.
Management uses non-GAAP financial measures internally to evaluate the performance of the business. Additionally, management believes these non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company. Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported income but that do not impact the fundamentals of our operations. The non-GAAP measures enable the evaluation of operating results and trend analysis by allowing a reader to better identify operating trends that may otherwise be masked or distorted by these types of items that are excluded from the non-GAAP measures. In addition, constant currency sales changes, adjusted operating profit, adjusted diluted earnings per share and free cash flow are used as performance metrics in our incentive compensation programs.