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ZBH Stock Up Despite Q3 Earnings Miss, 2024 View Narrowed
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) posted third-quarter 2024 adjusted earnings per share (EPS) of $1.74, missing the Zacks Consensus Estimate by 0.6%. However, the adjusted figure increased 5.5% year over year.
The quarter’s adjustments included certain amortization, restructuring and other cost reduction initiatives and European Union Medical Device Regulation-related charges, among others.
On a reported basis, the company registered earnings of $1.23 per share, compared to 77 cents in the year-ago period.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the announcement, shares of ZBH rose nearly 2% in the pre-market trading today.
ZBH’s Q3 Revenues
Third-quarter net sales of $1.82 billion increased 4% (up 4.1% at constant exchange rate or CER) year over year. The figure surpassed the Zacks Consensus Estimate by 1.1%.
ZBH’s Revenues by Geography
During the third quarter, sales generated in the United States totaled$1.05 billion (up 2% year over year), while International sales grossed $771.9 million (up 6.9% year over year and 7.1% at CER).
Our model projected revenues in the United States to be $1.07 billion and International sales to be $754.2 million.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
The company currently reports through four product categories — Knees, Hips, S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) and Other.
Sales in the Knees unit improved 5.5% year over year at CER (Constant Exchange Rate) to $745.1 million. Our model estimate was pegged at $746.9 million.
Hips recorded 3.7% growth in the third quarter at CER to reach $481.5 million. Our model estimate was $465.5 million for the same.
Revenues in the S.E.T. unit were up 7.3% year over year at CER to $454.2 million. Our model estimate was $455 million.
Other revenues decreased 9.5% to $143.4 million at CER in the third quarter. Our model estimate was $151.9 million.
ZBH’s Margin Performance
Adjusted gross margin, after excluding the impact of intangible asset amortization, was 70.5%, reflecting an expansion of 5 basis points (bps) in the third quarter. Selling, general and administrative expenses rose 5.2% to $710 million. Research and development expenses declined 4.5% to $111.6 million. Adjusted operating margin expanded 18 bps to 25.5% in the quarter.
ZBH’s Cash Position
Zimmer Biomet exited the third quarter with cash and cash equivalents of $569 million compared with $420.1 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $993.1 million compared with $993.2 million in the year-ago period.
An Updated 2024 Outlook From ZBH
Zimmer Biomet updated its financial guidance for 2024 to reduce and narrow its previous projected ranges for the top and bottom lines.
Reported revenue growth is expected to be in the band of 3.5%-4% year over year (previously 4%-5%). The company currently expects foreign exchange to have an adverse impact of 0.75% (earlier 1%) on revenues.
Adjusted EPS expectation for the full year is expected in the range of $7.95-$8.05 (previously $8.00-$8.15).
The Zacks Consensus Estimate for 2024 adjusted EPS is pegged at $7.97 on revenues of $7.67 billion.
Our Take on ZBH
Zimmer Biomet ended the third quarter of 2024 with an earnings miss and revenues beat. However, the bottom line increased on a year-over-year basis. The company delivered a strong quarterly performance despite the challenges of the ERP (Enterprise Resource Planning) implementation. Barring the Other segment, all other business divisions reported year-over-year CER growth. Performance across the geographic regions was solid as well. However, the trimmed revenue and EPS guidance for the full year is discouraging.
Meanwhile, Zimmer Biomet had some important developments recently. The company announced plans for a broad commercial launch of the Z1 Femoral Hip System for total hip arthroplasty at the upcoming 2024 annual meeting of the American Association of Hip and Knee Surgeons. It also completed the acquisition of OrthoGrid Systems Inc., expanding its hip portfolio with an artificial intelligence-driven surgical guidance system for total hip replacement. All these bode well for the stock.
ZBH’s Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Quest Diagnostics (DGX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%. DGX carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DGX’s 2024 earnings are expected to surge 2.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Intuitive Surgical, carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, topping the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.9%.
Boston Scientific Corporation, carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion topped the Zacks Consensus Estimate by 4.5%.
BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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ZBH Stock Up Despite Q3 Earnings Miss, 2024 View Narrowed
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) posted third-quarter 2024 adjusted earnings per share (EPS) of $1.74, missing the Zacks Consensus Estimate by 0.6%. However, the adjusted figure increased 5.5% year over year.
The quarter’s adjustments included certain amortization, restructuring and other cost reduction initiatives and European Union Medical Device Regulation-related charges, among others.
On a reported basis, the company registered earnings of $1.23 per share, compared to 77 cents in the year-ago period.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the announcement, shares of ZBH rose nearly 2% in the pre-market trading today.
ZBH’s Q3 Revenues
Third-quarter net sales of $1.82 billion increased 4% (up 4.1% at constant exchange rate or CER) year over year. The figure surpassed the Zacks Consensus Estimate by 1.1%.
ZBH’s Revenues by Geography
During the third quarter, sales generated in the United States totaled$1.05 billion (up 2% year over year), while International sales grossed $771.9 million (up 6.9% year over year and 7.1% at CER).
Our model projected revenues in the United States to be $1.07 billion and International sales to be $754.2 million.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote
Segmental Analysis of ZBH’s Revenues
The company currently reports through four product categories — Knees, Hips, S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) and Other.
Sales in the Knees unit improved 5.5% year over year at CER (Constant Exchange Rate) to $745.1 million. Our model estimate was pegged at $746.9 million.
Hips recorded 3.7% growth in the third quarter at CER to reach $481.5 million. Our model estimate was $465.5 million for the same.
Revenues in the S.E.T. unit were up 7.3% year over year at CER to $454.2 million. Our model estimate was $455 million.
Other revenues decreased 9.5% to $143.4 million at CER in the third quarter. Our model estimate was $151.9 million.
ZBH’s Margin Performance
Adjusted gross margin, after excluding the impact of intangible asset amortization, was 70.5%, reflecting an expansion of 5 basis points (bps) in the third quarter. Selling, general and administrative expenses rose 5.2% to $710 million. Research and development expenses declined 4.5% to $111.6 million. Adjusted operating margin expanded 18 bps to 25.5% in the quarter.
ZBH’s Cash Position
Zimmer Biomet exited the third quarter with cash and cash equivalents of $569 million compared with $420.1 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $993.1 million compared with $993.2 million in the year-ago period.
An Updated 2024 Outlook From ZBH
Zimmer Biomet updated its financial guidance for 2024 to reduce and narrow its previous projected ranges for the top and bottom lines.
Reported revenue growth is expected to be in the band of 3.5%-4% year over year (previously 4%-5%). The company currently expects foreign exchange to have an adverse impact of 0.75% (earlier 1%) on revenues.
Adjusted EPS expectation for the full year is expected in the range of $7.95-$8.05 (previously $8.00-$8.15).
The Zacks Consensus Estimate for 2024 adjusted EPS is pegged at $7.97 on revenues of $7.67 billion.
Our Take on ZBH
Zimmer Biomet ended the third quarter of 2024 with an earnings miss and revenues beat. However, the bottom line increased on a year-over-year basis. The company delivered a strong quarterly performance despite the challenges of the ERP (Enterprise Resource Planning) implementation. Barring the Other segment, all other business divisions reported year-over-year CER growth. Performance across the geographic regions was solid as well. However, the trimmed revenue and EPS guidance for the full year is discouraging.
Meanwhile, Zimmer Biomet had some important developments recently. The company announced plans for a broad commercial launch of the Z1 Femoral Hip System for total hip arthroplasty at the upcoming 2024 annual meeting of the American Association of Hip and Knee Surgeons. It also completed the acquisition of OrthoGrid Systems Inc., expanding its hip portfolio with an artificial intelligence-driven surgical guidance system for total hip replacement. All these bode well for the stock.
ZBH’s Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Quest Diagnostics (DGX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%. DGX carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DGX’s 2024 earnings are expected to surge 2.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
Intuitive Surgical, carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, topping the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.9%.
Boston Scientific Corporation, carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion topped the Zacks Consensus Estimate by 4.5%.
BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.