Zimmer Biomet announces financial results for Q2 2015

Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended June 30, 2015. The Company reported second quarter net sales of $1.17 billion, a decrease of 1.3% reported and an increase of 5.7% constant currency compared to the second quarter of 2014. Acquired revenue from Biomet amounted to $60 million, a contribution of 5.0% of the constant currency growth rate. Standalone Zimmer recorded constant currency growth in the quarter of 0.7%. Reported net loss per share for the quarter was $(0.91) and adjusted earnings per share were $1.59, an increase of 0.6% over the prior year period.

“During the quarter, we completed our landmark combination to create Zimmer Biomet, marking a new era for our company and an unprecedented opportunity to drive our growth and value creation strategies,” said David Dvorak, President and CEO of Zimmer Biomet. “With a broad and diversified musculoskeletal portfolio, Zimmer Biomet is well positioned to reach new heights of commercial and operational excellence, and to accelerate the pace of our innovation for the evolving healthcare landscape.”

Net loss for the second quarter was $(158.0) million on a reported basis. On an adjusted basis, net earnings increased 2.8% over the prior year period, to $278.7 million. Operating cash flow for the second quarter was $186.8 million.

During the quarter, the Company recorded certain non-recurring, pre-tax expenses, including $465.0 million of charges relating to the Biomet merger and $89.6 million of special items and certain claims. Additionally, pre-tax amortization expense in the quarter was $34.9 million.

Also in the quarter, the Company paid $37.4 million in dividends and declared a second quarter dividend of $0.22 per share, consistent with the dividend declared for the prior year period.

Guidance

The Company updated its full-year 2015 reported sales and adjusted earnings per share guidance, and reaffirmed constant currency sales growth for 2015 for the combined entity. Full-year 2015 constant currency revenue, compared to pro forma 2014 revenue, is still expected to increase between 1.5% and 2.0%. The pro forma adjustments to the prior year reflect the inclusion of Biomet revenue for the comparable post-merger closing period in the prior year and the impact of the previously announced divestiture remedies. The Company expects foreign currency translation to decrease revenues approximately 6.0% for the full year, resulting in reported revenue decreasing between 4.0% and 4.5% when compared to pro forma 2014 revenue.

The Company now expects full-year 2015 diluted earnings per share to be in a range of $6.65 to $6.80 on an adjusted basis. Previously, the Company estimated fully diluted adjusted earnings per share to be in a range of $6.60 to $6.80. The Company also continues to project $350 million in pre-tax, net synergies by the end of the third year following the merger closing. Additionally, within the first twelve months post-closing, the Company continues to expect to realize earnings per share accretion in a range of $0.95 to $1.05 relating to the Biomet merger, with $135 million of pre-tax, net synergy savings.

Conference Call

The Company will conduct its second quarter 2015 investor conference call today, July 30, 2015, at 8:00 a.m. Eastern Time. The live audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at http://investor.zimmerbiomet.com. It will be archived for replay following the conference call.

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (877) 941-1227 and entering conference ID 4696682. For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com. A digital recording will be available 24 hours after the completion of the conference call, from August 1, 2015 to August 30, 2015. To access the recording, U.S. and Canada callers should dial (800) 406-7325 and international callers should dial +1 (303) 590-3030, and enter the Access Code ID 4696670.

Sales Tables

The following sales tables provide results by geographic segment and product category, as well as the percentage change compared to the prior year quarter and six months, on both a reported and constant currency basis.

Zimmer Biomet Holdings, Inc.