Zimmer Biomet Holdings, Inc. ZBH posted third-quarter 2022 adjusted earnings per share (EPS) of $1.58, beating the Zacks Consensus Estimate by 1.3%. The adjusted figure however declined 7.6% year over year.
The quarter’s adjustments included certain amortization, restructuring and quality remediation-related charges, among others.
On a reported basis, the company registered earnings of 92 cents per share, a 19.4% rise from a year ago.
Third-quarter net sales of $1.67 billion dropped 0.9% (up 5% at constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate by 2.5%.
During the third quarter, sales generated in the United States totaled $973 million (up 3.2% year over year at CER) while the same in International grossed $696.8 million (up 7.3% year over year at CER).
In terms of product categories, post the dental and spine arm sell-off, the company continues to report through the remaining four product categories.
Sales in the Knees unit improved 7.2% year over year at CER to $657 million. Hips recorded a 10.5% rise at CER to $468 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit declined 2.1% year over year to $409.4 million.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote
Other revenues fell 0.4% to $135.4 million.
Earlier the company noted that its CMFT (Craniomaxillofacial and Thoracic) products, previously reported in the Dental, Spine & CMFT category, are now included in the S.E.T. category.
Gross margin, after excluding intangible asset amortization, was 70.8%, reflecting a contraction of 8 basis points (bps) in the third quarter. Selling, general and administrative expenses were down 4.3% to $654.9 million. Research and development expenses rose 8.4% to $101.7 million. Adjusted operating margin expanded 78 bps to 25.5% in the quarter.
Zimmer Biomet exited the third quarter of 2022 with cash and cash equivalents of $545.4 million compared with $386.4 million at the end of the second quarter of 2022.
Cumulative net cash provided by operating activities at the end of the second quarter was $1.11 billion compared with $1.07 billion in the year-ago period.
Zimmer Biomet updated its financial guidance for 2022.
Revenues are expected to be flat to up 1% (an improvement from the earlier band of down 1% to up 1%) compared with 2021.
Adjusted EPS guidance for the full year was narrowed to the range of $6.80-$6.90 (from the projection of $6.70-$6.90 earlier).
The Zacks Consensus Estimate for 2022 adjusted earnings is pegged at $6.79 on revenues of $6.84 billion.
Zimmer Biomet ended the third quarter of 2022 with better-than-expected earnings and revenues. Each of the company’s geographic segments and product divisions, barring S.E.T. and “Other” recorded year-over-year sales growth at CER. An updated adjusted EPS guidance above the Zacks Consensus Estimate buoys optimism.
Yet, amid the challenging macroeconomic condition, reported revenues and adjusted EPS dropped on a year-over-year basis. However, a contraction in the company’s gross margins is concerning.
Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. ELV, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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