Zimmer Biomet's profits were 16 times greater in Q1

May 2, 2023 By Chris Newmarker

Zimmer Biomet (NYSE: PHG) + "}" data-sheets-userformat="{"2":769,"3":{"1":0},"11":3,"12":0}"> (NYSE: ZBH) + saw its stock rise today on Street-beating first-quarter results and raised guidance that analysts described as impressive.

ZBH shares were up more than 3% to $143.68 by late morning. MassDevice‘s MedTech 100 Index, which includes stocks of the world's largest medical device companies, was up slightly.

News of the strong Q1 comes a day after Zimmer Biomet announced its latest acquisition — Ossis, a maker of personalized 3D-printed implants.

ZB's results should add to the case that this could be a boom year for the orthopedic device market. The space is benefitting from a bounce-back of procedures as the COVID-19 situation normalizes.

BTIG analysts’ note had the headline, "Orthopedics is having its moment, and ZBH is benefiting." Along with the backlog of patients, there are easy comps and multiple technologies that provide faster recovery, according to BTIG's Ryan Zimmerman, Sam Durno and Iseult McMahon. They kept their Neutral rating on ZBH shares: "All players are showing outsized growth, some more than others though."

The Warsaw, Indiana–based orthopedic device company earned $232.5 million, or $1.11 per share, off of $1.831 billion in sales for the quarter ended March 31, 2023. Profits were more than 16 times greater than what they were in the same quarter a year ago. Sales were up more than 10%.

Adjusted to exclude one-time items, ZB's earnings per share were $1.89. The result was 25¢ above the consensus of Wall Street analysts, who expected $1.64 EPS and $1.7 billion in sales.

"Our strong performance in Q1 outpaced our internal growth expectations, driven by continued procedure recovery, solid execution and increasing traction around ZB innovation," CEO Bryan Hanson said in a news release. "I’m proud of how our team continues to successfully navigate and manage the broader market challenges posed by inflation and the supply chain and how we are driving positive momentum as we deliver on our mission and bring value to our patients, customers and shareholders."

Unlike major competitor Stryker — which appeared to underwhelm investors with its guidance increase — Zimmer Biomet boosted its full-year guidance enough to impress.

ZB now expects full-year revenue growth of 5–6% and adjusted EPS of $7.40–7.50, versus the previous guidance of 1.5–3.5% and adjusted EPS of $6.95–7.15.

"We were impressed," said Truist analysts Richard Newitter, Samuel Brodovsky and Lin Zhang. They noted that revenue growth not only beat the "whisper" on The Street but more impressively surpassed expectations on adjusted EPS as ZB realized significant operating leverage in the quarter.

News of the strong Q1 comes a day after Zimmer Biomet announced its latest acquisition — Ossis, a maker of personalized 3D-printed implants.

Filed Under: Business/Financial News, Featured, MassDevice Earnings Roundup, News Well, Orthopedics, Wall Street Beat Tagged With: Zimmer Biomet