Zimmer Biomet Holdings said profit rose 33% in the third quarter on higher sales of artificial knee and hip joints.
The company posted a 7.2% increase in knee-joint sales and growth of 11% in hip joints, it said in a statement on Wednesday.
Sales of the company's sports medicine, extremities, trauma, craniomaxillofacial and thoracic products fell 6.4%, largely because of new procurement policies in China and a slowdown in procedures there amid COVID-19 restrictions. Net sales from continuing operations in the quarter reached $1.67 billion, up 5% on a constant currency basis, while they were little changed after calculating the impact of the stronger dollar.
"We believe that our strategy is working and our innovation pipeline and product portfolio position Zimmer Biomet to serve our customers and patients and deliver growth and value for our shareholders," CEO Bryan Hanson said in the statement.
Notable Q3 events:
Warsaw, Indiana-based Zimmer, the 19th-largest medtech firm by revenue, cited three events in the quarter that it expects to boost future earnings:
- A three-year agreement with New York’s Hospital for Special Surgery to create the HSS/Zimmer Biomet Innovation Center for Artificial Intelligence in Robotic Joint Replacement, aimed at helping surgeons.
- A multi-year co-marketing agreement with Surgical Planning Associates, Inc. to commercialize HipInsight, the first FDA-cleared mixed reality navigation system for total hip replacement.
- U.S. Food and Drug Administration 510(k) clearance of the Identity Shoulder System for anatomic, reverse and revision shoulder replacement.
Zimmer’s knee and hip-joint sales beat estimates by Goldman Sachs analysts, who said in a note to clients that the company’s market share for devices is growing by about 0.7 percentage point a year.
“[Zimmer] ranks the highest on our recovery index, with their exposure to Knees, Hips, Spine and Dental (combined 69% of sales) suggesting much of the revenue lost in 2020 relative to pre-COVID trends could be recaptured over the next 2-3 years,” Goldman analysts wrote.
Forecast: The company raised its guidance for full-year results and now expects sales growth in a band of 0% to +1% from a prior forecast of -1% to +1%. Zimmer’s adjusted operating profit margin forecast remains between 26.75% and 27.75%, while expectations for adjusted diluted earnings per share from continuing operations were revised to between $6.80 and $6.90, from between $6.70 and $6.90.
