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Zimmer Biomet (ZBH) Procedure Volume Gain Aids Amid FX Hurdles
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Zimmer Biomet's (ZBH - Free Report) strategic spin-off of the non-core dental and spine business, focus on emerging markets and stabilizing market trends bolster our confidence in this stock. Yet, factors like macroeconomic uncertainties, pricing pressure and unfavorable currency fluctuations continue to adversely impact Zimmer Biomet's sales. The company carries a Zacks Rank #3 (Hold).
In the past year, Zimmer Biomet has outperformed its industry. The stock has lost 3.8% compared with a 44% decline of the industry.
Zimmer Biomet, in spite of a difficult macroeconomic scenario in the third quarter, posted 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.
Despite procedure cancellations due to a choppy market situation, strategic execution and business recovery occurred in all the company’s regions, especially in the OUS regions, with both EMEA and APAC performing better than expectations. The Knee franchise grew in high single digits while the hip business grew just above 10%.
Revenues were driven by continued execution along with strong COVID recovery across most markets. According to the company, strong procedure volume recovery extended from the first quarter, especially as Zimmer Biomet moved into April and May, with a moderation of recovery in June. U.S. sales grew 1.3% driven by a strong recovery in execution as COVID cases subsided and elective procedures returned, especially in Knee and Hips.
An updated adjusted EPS guidance above the Zacks Consensus Estimate buoys optimism.
On the flip side, amid the challenging macroeconomic condition, Zimmer Biomet’s reported revenues and adjusted EPS dropped on a year-over-year basis in Q3. The company continued to face significant challenges in terms of unfavorable foreign exchange, supply, inflation and staffing shortage.
Net sales in the third quarter dropped 0.9% on a reported basis. U.S. sales growth was partially offset by expected declines in S.E.T. and other categories, impacted by tough comparisons in 2021 and pressure around China volume-based procurement, which is expected to reverse in Q4. Further, reimbursement headwinds in the United States and restorative therapies dented revenue growth. A contraction in the company’s gross margin is concerning.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
AMN Healthcare has gained 7% against the industry’s 28.4% decline in the past year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 28.3% against the industry’s 23.1% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 70.3% against the industry’s 7.8% decline over the past year.
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Zimmer Biomet (ZBH) Procedure Volume Gain Aids Amid FX Hurdles
Zimmer Biomet's (ZBH - Free Report) strategic spin-off of the non-core dental and spine business, focus on emerging markets and stabilizing market trends bolster our confidence in this stock. Yet, factors like macroeconomic uncertainties, pricing pressure and unfavorable currency fluctuations continue to adversely impact Zimmer Biomet's sales. The company carries a Zacks Rank #3 (Hold).
In the past year, Zimmer Biomet has outperformed its industry. The stock has lost 3.8% compared with a 44% decline of the industry.
Zimmer Biomet, in spite of a difficult macroeconomic scenario in the third quarter, posted 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.
Despite procedure cancellations due to a choppy market situation, strategic execution and business recovery occurred in all the company’s regions, especially in the OUS regions, with both EMEA and APAC performing better than expectations. The Knee franchise grew in high single digits while the hip business grew just above 10%.
Zimmer Biomet Holdings, Inc. Price
Zimmer Biomet Holdings, Inc. price | Zimmer Biomet Holdings, Inc. Quote
Revenues were driven by continued execution along with strong COVID recovery across most markets. According to the company, strong procedure volume recovery extended from the first quarter, especially as Zimmer Biomet moved into April and May, with a moderation of recovery in June. U.S. sales grew 1.3% driven by a strong recovery in execution as COVID cases subsided and elective procedures returned, especially in Knee and Hips.
An updated adjusted EPS guidance above the Zacks Consensus Estimate buoys optimism.
On the flip side, amid the challenging macroeconomic condition, Zimmer Biomet’s reported revenues and adjusted EPS dropped on a year-over-year basis in Q3. The company continued to face significant challenges in terms of unfavorable foreign exchange, supply, inflation and staffing shortage.
Net sales in the third quarter dropped 0.9% on a reported basis. U.S. sales growth was partially offset by expected declines in S.E.T. and other categories, impacted by tough comparisons in 2021 and pressure around China volume-based procurement, which is expected to reverse in Q4. Further, reimbursement headwinds in the United States and restorative therapies dented revenue growth. A contraction in the company’s gross margin is concerning.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has gained 7% against the industry’s 28.4% decline in the past year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 28.3% against the industry’s 23.1% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 70.3% against the industry’s 7.8% decline over the past year.