Zimmer Biomet Announces 4Q and Full-Year Preliminary Sales Results

OREANDA-NEWS. Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today announced preliminary financial results for the fourth quarter and full year ended December 31, 2016.

Based on preliminary unaudited financial information, the Company expects fourth quarter net sales to be approximately $2.013 billion, an increase of 4.1% over the prior year period. On an adjusted, constant currency basis, revenue increased by 4.4% over the prior year period, with the recently acquired LDR Holding Corporation contributing approximately 230 basis points. Excluding the contribution from the LDR transaction and adjusting for one less billing day in the quarter, the Company estimates that revenues increased 3.5% over the fourth quarter of 2015. Previously, the Company had estimated fourth quarter revenue growth to be in a range of 1.0% to 2.0% on a similar basis.

Preliminary full year net sales are projected to be $7.684 billion, an increase of 28.1% over the prior year. On a constant currency, adjusted pro forma basis, the Company expects that full year revenue increased by 3.4% over the prior year, with the recently acquired LDR Holding Corporation contributing approximately 110 basis points. Therefore, full year revenues increased by 2.3% on a constant currency, adjusted pro forma basis, excluding the contribution from the LDR transaction.  Previously, the Company had estimated full year revenue growth to be in a range of 1.65% to 1.90% on a similar basis.

The Company is unable to provide updated GAAP (reported) guidance for full-year 2016 diluted earnings per share, without unreasonable efforts, as the Company is finalizing the accounting for certain integration-related items that are excluded from the computation of adjusted diluted earnings per share.  The Company now expects full year 2016 adjusted diluted earnings per share to be towards the upper end of the previously estimated range of $7.90 to $7.95.

"Zimmer Biomet's solid fourth quarter sales performance was driven by improved results in joint reconstruction and the continued strong momentum of our S.E.T. category and the Asia Pacific region," said David Dvorak, President and CEO of Zimmer Biomet.  "During the quarter, our commercial and operations teams around the world worked tirelessly to meet existing customer demand, as we continued to make progress towards harmonizing and optimizing our supply chain, manufacturing, and quality management systems. We look forward to sharing further highlights on our performance during our fourth quarter earnings call on January 31st."

All of the information in this press release is preliminary and subject to completion of year-end financial reporting processes, reviews and audit.

Sales Tables

The following fourth quarter sales table provides preliminary results by geography and product category, as well as the percentage change compared to the prior year quarter on a reported basis and an adjusted constant currency basis.  Additionally, the full year sales table provides results on a reported basis.

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

 

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Preliminary sales growth information for the three-month period ended December 31, 2016 is presented on a GAAP (reported) basis and on an adjusted constant currency basis.  Preliminary sales growth information for the year ended December 31, 2016 is presented on a GAAP (reported) basis and on a constant currency, adjusted pro forma basis.  Adjusted revenue growth refers to a comparison against revenue for the prior year period adjusted to reflect the impact of the previously announced divestiture remedies.  Constant currency growth rates exclude the effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or decreases.  Pro forma revenue growth refers to a comparison against revenue for the prior year that has been adjusted to reflect the inclusion of Biomet revenue on a GAAP basis.  Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release.

Projected diluted earnings per share for the full-year 2016 is presented on an adjusted basis.  Projected adjusted diluted earnings per share excludes the effects of inventory step-up and other inventory and manufacturing related charges, certain claims, special items, intangible asset amortization, financing and other expenses/gains related to the Biomet merger and other acquisitions, the tax effects of these items and other certain tax adjustments.  Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges and other items.  Other certain tax adjustments primarily include internal restructuring transactions that provide the Company access to offshore funds in a tax efficient manner and adjustments to deferred tax liabilities recognized as part of acquisition-related accounting.  As noted above, the Company is unable to provide updated projected diluted earnings per share for full-year 2016 on a GAAP (reported) basis, or a reconciliation of such GAAP guidance to full-year 2016 projected adjusted diluted earnings per share, without unreasonable efforts, as it is finalizing the accounting for certain integration-related items that are excluded from the computation of adjusted diluted earnings per share. 

We use these non-GAAP financial measures internally to evaluate the performance of the business and believe they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company.  We believe these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items.  In addition, certain of these non-GAAP financial measures are used as performance metrics in our incentive compensation programs.