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Product / Company Performance

Momentum for Zimmer Biomet Knee Franchise in 2Q19 -

By Mike Evers, ORTHOWORLD

 

Zimmer Biomet reports 2Q19 revenue of USD $1,769.4MM, -1.4% vs. 2Q18. Products like Persona and improved confidence in the supply chain helped Zimmer Biomet close the gap to market growth in the knee segment.

 

Quarterly Highlights

  • The company increased the bottom end of its 2019 guidance, providing a revised range of flat to +0.5% revenue growth.
  • Benefitted from improved U.S. knee performance, as well as strength in the APAC and EMEA regions before currency headwinds.
  • While ROSA unit placements did incrementally contribute to knee revenue, much of the growth in the segment was due to increased volume and improved product mix.
  • Leadership attributed positive knee performance to the salesforce’s increased confidence in the supply chain, with backorders being resolved in a day compared to the four days at the company’s low point.
  • The underperforming spine segment was impacted by difficult quarterly comps. Leadership is evaluating salesforce cohesion and selection of distribution partners.  

 

ROSA Updates

  • ROSA knee remains in limited launch with overall unit placements “relatively small.”
  • ROSA Spine development has been put on the “backburner” until early 2020 to assure that the ROSA Knee launch is executed well.
  • The company is committing more resources to robotics R&D as well as commercial infrastructure.
  • The company is excited about revenue annuities like disposables and service agreements through the ROSA platform.

 

Performance by Segment

ORTHOWORLD estimates segment sales and growth on an as-reported basis, as follows ($MM):

  2Q19 2Q18 $ Chg % Chg
Joint Replacement $1,288.0 $1,292.3 -$4.3 -0.3%
Knees $703.5 $703.0 $0.5 0.1%
Hips $479.4 $486.9 -$7.5 -1.5%
Extremities $105.1 $102.4 $2.7 2.6%
Spine $107.6 $118.7 -$11.1 -9.3%
Trauma $147.4 $144.9 $2.5 1.7%
Sports Medicine $34.7 $34.1 $0.7 1.9%
Orthobiologics $70.8 $73.6 -$2.8 -3.8%
Other * $121.0 $131.3 -$10.3 -7.8%
Total $1,769.4 $1,794.8 -$25.4 -1.4%
  1H19 1H18 $ Chg % Chg
Joint Replacement $2,570.2 $2,604.2 -$33.9 -1.3%
Knees $1,397.6 $1,416.3 -$18.7 -1.3%
Hips $963.6 $978.9 -$15.3 -1.6%
Extremities $209.0 $209.0 $0.1 0.0%
Spine $213.2 $229.2 -$16.0 -7.0%
Trauma $293.2 $290.9 $2.2 0.8%
Sports Medicine $69.0 $67.6 $1.4 2.1%
Orthobiologics $141.2 $145.6 -$4.4 -3.0%
Other $242.1 $257.2 -$15.1 -5.9%
Total $3,528.8 $3,594.6 -$65.8 -1.8%

*CMF, Bone Healing, Forgings, Accelero

 

Sales by Geographic Region

ORTHOWORLD estimates geographic sales and growth as follows ($MM):

  2Q19 2Q18 $ Chg % Chg
US $1,063.4 $1,069.7 -$6.3 -0.6%
Ex-US $706.6 $725.4 -$18.7 -2.6%
   EMEA $389.7 $409.2 -$19.5 -4.8%
   Asia Pacific $299.2 $298.2 $1.0 0.3%
   Other $17.7 $17.9 -$0.3 -1.4%
Total $1,769.4 $1,794.8 -$25.4 -1.4%

 

Net Earnings Data

Net earnings, inclusive for all Zimmer Biomet revenue, is as follows.

  Amt % of Sales
Sales $1,988.6  
   Cost of Sales -$581.3 29.2%
   Selling and Admin -$840.3 42.3%
   R & D -$112.1 5.6%
   Other -$323.0 16.2%
Net Earnings $131.9 6.6%

 

Sources: Zimmer Biomet; ORTHOWORLD estimates.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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