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Zimmer Biomet reported 3Q21 orthopedic revenue of $1,720 million, -0.5% vs. 3Q20. Compared to the same period in 2019, the company’s orthopedic revenue grew by +0.9%. Because of worse-than-expected market conditions, Zimmer Biomet lowered its 2021 revenue guidance from reported growth of 14.5% to 16.5% to a range of 11.3% to 12.5%.
Procedure deferrals due to the Delta variant, hospital staffing shortages and greater than expected impact from China’s volume-based procurement changes drove the guidance changes. Zimmer Biomet has more exposure in the Chinese market than its peers and anticipates volume-based procurement to have a negative impact of about 1% of total consolidated revenue in 2022. However, the impact at the end of 2021 will be greater as distributors make price concessions on existing inventory and patients defer procedures to decrease out-of-pocket expenses.
The company is taking a conservative approach in its view of market recovery. It is prepared for the conditions present in September, the third-quarter low point, to persist throughout 2021 and into the next year. Despite anecdotal reports of improving trends in October, company leadership is taking a “prove it” stance in terms of the market’s realities.
Zimmer Biomet announced the acceleration of transformation efforts to reduce costs and achieve above-market growth in its key businesses by 2023. However, company leaders offered few details at this time beyond more closely aligning regional profitability with growth opportunities and eliminating higher-cost outliers in the organization structure. In late October, the company acknowledged reducing its Warsaw-based manufacturing and quality workforce and cited the ongoing COVID challenge.
When procedure volumes do stabilize, Zimmer Biomet will have a host of innovative new products waiting. The company said it has 20 products in its pipeline for launch in the next two years that will bolster recent products like ROSA Partial Knee, ROSA Hip and the Persona IQ smart implant.
“A lot of indicators would say it’s going to get better. The combination of COVID pressure and staffing. But, here’s what we’ve learned. Every time I try to use an external view of when COVID is going to get better, we seem to be wrong. And so I’m not going to go with that. I’m going to go with what we’re actually seeing in the marketplace, and that is consistency. Not always the same mix of pressures between COVID and staffing, but consistency in the overall pressure in October that we saw in September. I’ve learned my lesson; I’m not going to try to predict this anymore until I actually see proof in the marketplace that we’re seeing firsthand that we’re bending that curve.” – Zimmer Biomet CEO Bryan Hanson
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 3Q21 | 3Q20 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $1,244.7 | $1,257.0 | ($12.3) | (1%) |
| Knees | $665.4 | $656.1 | $9.4 | 1.4% |
| Hips | $456.7 | $484.1 | ($27.4) | (5.7%) |
| Extremities | $122.5 | $116.8 | $5.7 | 4.9% |
| Spine | $98.5 | $105.5 | ($7.0) | (6.7%) |
| Trauma | $173.1 | $166.6 | $6.5 | 3.9% |
| Sports Medicine | $44.1 | $42.3 | $1.8 | 4.2% |
| Orthobiologics | $59.3 | $60.0 | ($0.7) | (1.1%) |
| Other (CMF) | $100.3 | $96.5 | $3.8 | 4% |
| Total | $1,720.0 | $1,727.9 | ($7.9) | (0.5%) |
| 9m21 | 9m20 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $3,724.5 | $3,217.2 | $507.3 | 15.8% |
| Knees | $1,976.9 | $1,665.3 | $311.6 | 18.7% |
| Hips | $1,378.3 | $1,246.4 | $131.9 | 10.6% |
| Extremities | $369.3 | $305.5 | $63.8 | 20.9% |
| Spine | $312.0 | $265.4 | $46.6 | 17.6% |
| Trauma | $526.7 | $433.9 | $92.9 | 21.4% |
| Sports Medicine | $134.5 | $111.0 | $23.5 | 21.2% |
| Orthobiologics | $188.7 | $159.6 | $29.2 | 18.3% |
| Other (CMF) | $311.3 | $253.9 | $57.4 | 22.6% |
| Total | $5,197.7 | $4,440.8 | $756.9 | 17% |
Geographic Sales
| 3Q21 | 3Q20 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,055.3 | $1,089.5 | ($34.2) | (3.1%) |
| OUS | $664.7 | $638.4 | $26.3 | 4.1% |
| EMEA | $351.4 | $328.0 | $23.5 | 7.2% |
| Asia Pacific | $313.2 | $310.4 | $2.8 | 0.9% |
| Total | $1,720.0 | $1,727.9 | ($7.9) | (0.5%) |
| 9m20 | 9m19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $3,168.9 | $2,743.4 | $425.4 | 15.5% |
| OUS | $2,028.9 | $1,697.4 | $331.5 | 19.5% |
| EMEA | $1,082.1 | $884.1 | $197.9 | 22.4% |
| Asia Pacific | $946.8 | $813.3 | $133.5 | 16.4% |
| Total | $5,197.7 | $4,440.8 | $756.9 | 17% |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $1,924.0 | |
| Cost of Sales | $581.5 | 30.2% |
| Selling and Admin | $802.4 | 41.7% |
| R & D | $108.9 | 5.7% |
| Other | $285.6 | 14.8% |
| Net Earnings | $145.6 | 7.6% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
Zimmer Biomet reported 3Q21 orthopedic revenue of $1,720 million, -0.5% vs. 3Q20. Compared to the same period in 2019, the company's orthopedic revenue grew by +0.9%. Because of worse-than-expected market conditions, Zimmer Biomet lowered its 2021 revenue guidance from reported growth of 14.5% to 16.5% to a range of 11.3% to 12.5%.
Procedure...
Zimmer Biomet reported 3Q21 orthopedic revenue of $1,720 million, -0.5% vs. 3Q20. Compared to the same period in 2019, the company’s orthopedic revenue grew by +0.9%. Because of worse-than-expected market conditions, Zimmer Biomet lowered its 2021 revenue guidance from reported growth of 14.5% to 16.5% to a range of 11.3% to 12.5%.
Procedure deferrals due to the Delta variant, hospital staffing shortages and greater than expected impact from China’s volume-based procurement changes drove the guidance changes. Zimmer Biomet has more exposure in the Chinese market than its peers and anticipates volume-based procurement to have a negative impact of about 1% of total consolidated revenue in 2022. However, the impact at the end of 2021 will be greater as distributors make price concessions on existing inventory and patients defer procedures to decrease out-of-pocket expenses.
The company is taking a conservative approach in its view of market recovery. It is prepared for the conditions present in September, the third-quarter low point, to persist throughout 2021 and into the next year. Despite anecdotal reports of improving trends in October, company leadership is taking a “prove it” stance in terms of the market’s realities.
Zimmer Biomet announced the acceleration of transformation efforts to reduce costs and achieve above-market growth in its key businesses by 2023. However, company leaders offered few details at this time beyond more closely aligning regional profitability with growth opportunities and eliminating higher-cost outliers in the organization structure. In late October, the company acknowledged reducing its Warsaw-based manufacturing and quality workforce and cited the ongoing COVID challenge.
When procedure volumes do stabilize, Zimmer Biomet will have a host of innovative new products waiting. The company said it has 20 products in its pipeline for launch in the next two years that will bolster recent products like ROSA Partial Knee, ROSA Hip and the Persona IQ smart implant.
“A lot of indicators would say it’s going to get better. The combination of COVID pressure and staffing. But, here’s what we’ve learned. Every time I try to use an external view of when COVID is going to get better, we seem to be wrong. And so I’m not going to go with that. I’m going to go with what we’re actually seeing in the marketplace, and that is consistency. Not always the same mix of pressures between COVID and staffing, but consistency in the overall pressure in October that we saw in September. I’ve learned my lesson; I’m not going to try to predict this anymore until I actually see proof in the marketplace that we’re seeing firsthand that we’re bending that curve.” – Zimmer Biomet CEO Bryan Hanson
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 3Q21 | 3Q20 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $1,244.7 | $1,257.0 | ($12.3) | (1%) |
| Knees | $665.4 | $656.1 | $9.4 | 1.4% |
| Hips | $456.7 | $484.1 | ($27.4) | (5.7%) |
| Extremities | $122.5 | $116.8 | $5.7 | 4.9% |
| Spine | $98.5 | $105.5 | ($7.0) | (6.7%) |
| Trauma | $173.1 | $166.6 | $6.5 | 3.9% |
| Sports Medicine | $44.1 | $42.3 | $1.8 | 4.2% |
| Orthobiologics | $59.3 | $60.0 | ($0.7) | (1.1%) |
| Other (CMF) | $100.3 | $96.5 | $3.8 | 4% |
| Total | $1,720.0 | $1,727.9 | ($7.9) | (0.5%) |
| 9m21 | 9m20 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $3,724.5 | $3,217.2 | $507.3 | 15.8% |
| Knees | $1,976.9 | $1,665.3 | $311.6 | 18.7% |
| Hips | $1,378.3 | $1,246.4 | $131.9 | 10.6% |
| Extremities | $369.3 | $305.5 | $63.8 | 20.9% |
| Spine | $312.0 | $265.4 | $46.6 | 17.6% |
| Trauma | $526.7 | $433.9 | $92.9 | 21.4% |
| Sports Medicine | $134.5 | $111.0 | $23.5 | 21.2% |
| Orthobiologics | $188.7 | $159.6 | $29.2 | 18.3% |
| Other (CMF) | $311.3 | $253.9 | $57.4 | 22.6% |
| Total | $5,197.7 | $4,440.8 | $756.9 | 17% |
Geographic Sales
| 3Q21 | 3Q20 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,055.3 | $1,089.5 | ($34.2) | (3.1%) |
| OUS | $664.7 | $638.4 | $26.3 | 4.1% |
| EMEA | $351.4 | $328.0 | $23.5 | 7.2% |
| Asia Pacific | $313.2 | $310.4 | $2.8 | 0.9% |
| Total | $1,720.0 | $1,727.9 | ($7.9) | (0.5%) |
| 9m20 | 9m19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $3,168.9 | $2,743.4 | $425.4 | 15.5% |
| OUS | $2,028.9 | $1,697.4 | $331.5 | 19.5% |
| EMEA | $1,082.1 | $884.1 | $197.9 | 22.4% |
| Asia Pacific | $946.8 | $813.3 | $133.5 | 16.4% |
| Total | $5,197.7 | $4,440.8 | $756.9 | 17% |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $1,924.0 | |
| Cost of Sales | $581.5 | 30.2% |
| Selling and Admin | $802.4 | 41.7% |
| R & D | $108.9 | 5.7% |
| Other | $285.6 | 14.8% |
| Net Earnings | $145.6 | 7.6% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
