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Product / Company Performance

Zimmer Biomet Gains Momentum on ROSA Knee and Increased Supply -

Zimmer Biomet reported 3Q19 orthopedic revenue of USD $1,686.8MM, +3% vs. 3Q18.

 

  • Leadership is pleased with supply chain improvements that have reduced complexity and allowed sales teams to meet customer demand
  • Company has retained a third party to conduct comprehensive mock audits of the Warsaw North Campus as the company continues its path to full remediation there
  • Focusing heavily on enabling technology innovation, including the ROSA Knee, mymobility app, Walter mini robotic platform and Signature ONE Planner for upper extremities; has added an additional 60 sales reps dedicated to capital sales
  • Both EMEA and Asia Pacific regions grew in the high single digits before the impact of currency exchange
  • Leadership characterized ROSA knee sales as “strong” and implied its revenue contribution to knee replacement in the quarter was somewhere in the $10MM-$15MM range; total cases performed with ROSA knee is “well more than 1,000”
  • Persona Revision system received FDA clearance, rounding out the flagship Persona Personalized Knee offering
  • Spine sales improved over 2Q19 but remain below market, with real momentum not expected until sometime in 2020 as the sales channel continues to consolidate and new products like the TrellOss 3D printed interbody and ROSA spine become commercially available. Additionally, the Tether system for treating scoliosis was recently approved, representing the first approval for a humanitarian use device in spinal pediatrics in the last 15 years
  • Per leadership, Zimmer Biomet sees a path to topline growth beyond 2%-3% without the need for acquisitions
  • Leadership may accelerate its investment in its specialized extremity salesforce or consider tuck-in acquisitions to take advantage of the disruption that will occur in the segment stemming from Stryker’s purchase of Wright Medical
  • ORTHOWORLD projects Zimmer Biomet full year 2019 orthopedic revenue of $7.1 billion, +0.6% vs. 2018

 

“Our innovation focus has shifted, moving much more aggressively toward enabling technology around the implant, such as robotics, mini robotics, informatics and operating room efficiency. Although the implant will always be at the center of what we do, our goal is to provide a complete ecosystem that is both customer- and patient-centric.” – Zimmer Biomet President and CEO Bryan Hanson on the company’s product development focus

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

  3Q19 3Q18 $ Chg % Chg
Joint Replacement $1,218.2 $1,170.1 $48.1 4.1%
   Knees $652.0 $627.9 $24.1 3.8%
   Hips $460.0 $444.8 $15.2 3.4%
   Extremities $106.2 $97.4 $8.8 9.0%
Spine $105.1 $109.2 -$4.2 -3.8%
Trauma $144.8 $137.0 $7.7 5.7%
Sports Medicine $33.4 $31.5 $1.9 6.0%
Orthobiologics $67.5 $67.2 $0.3 0.4%
Other * $117.9 $122.3 -$4.4 -3.6%
Total $1,686.8 $1,637.4 $49.4 3.0%
  9Mo 19 9Mo 18 $ Chg % Chg
Joint Replacement $3,788.5 $3,774.3 $14.2 0.4%
   Knees $2,049.6 $2,044.2 $5.4 0.3%
   Hips $1,423.6 $1,423.7 -$0.1 0.0%
   Extremities $315.3 $306.4 $8.9 2.9%
Spine $318.2 $338.4 -$20.2 -6.0%
Trauma $437.9 $428.0 $10.0 2.3%
Sports Medicine $102.4 $99.1 $3.3 3.3%
Orthobiologics $208.6 $212.8 -$4.1 -1.9%
Other * $360.0 $379.5 -$19.5 -5.1%
Total $5,215.6 $5,232.0 -$16.4 -0.3%

*CMF, Bone Healing, Forgings, Accelero

ORTHOWORLD estimates sales by geographic region as follows ($MM).

  3Q19 3Q18 $ Chg % Chg
US $1,051.1 $1,028.6 $22.5 2.2%
Ex-US $635.7 $608.8 $26.9 4.4%
   EMEA $334.3 $331.6 $2.7 0.8%
   Asia Pacific $301.3 $277.2 $24.1 8.7%
Total $1,686.8 $1,637.4 $49.4 3.0%

Net earnings, inclusive of all revenue, are as follows ($MM).

  Amt % of Sales
Sales $1,892.4  
   Cost of Sales -$535.7 28.3%
   Selling and Admin -$830.1 43.9%
   R & D -$114.4 6.0%
   Other $18.9 1.0%
Net Earnings $431.1 22.8%

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

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