Biomet’s Q2 Net Sales Rise 2.2 Percent

Biomet Inc.’s earnings soared in its November-ended quarter, led by a double-digit sales increase in the spine and bone-healing division.

The manufacturer of artificial knees and hips, among other orthopedic devices, agreed in April to be acquired by rival Zimmer Holdings Inc. for about $13.35 billion in cash and stock, a bid to position the combined company as a leader in making products to repair muscles and bones. That move effectively ended Biomet’s plan for an initial public offering in 2014.

But in October, European Union regulators opened an in-depth probe into the deal, saying it could result in less innovation and higher prices. The decision raises a potential hurdle to the landmark deal, which has yet to be approved by U.S. regulators.

However, Zimmer said in November that the deal is still expected to close in the first few months of 2015.

For the quarter ended Nov. 30, Biomet posted a profit of $89.8 million, up from a profit of $4.9 million a year earlier. Excluding special items, earnings rose to $134 million from $118 million a year earlier.

Total sales climbed 2.2 percent to $844 million, led by a 19 percent increase in the spine and bone-healing division. However, sales in the dental department fell 4 percent.

Sales in the U.S. rose 3.9 percent to $512 million, and international sales rose 3.7 percent to $125 million. European revenue fell 2.7 percent to $206.1 million.

Meanwhile, research and development costs rose 3.6 percent in the quarter, while selling and administrative expenses rose 8 percent. The company saved itself $69.3 million by resolving legal claims with certain insurance carriers, and operating income rose $56 million, according to the firm’s latest earnings report. Excluding special items, adjusted operating income totaled $241.7 million during Q2 compared with $232.8 million during the same period in 2014.

Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the second quarter of fiscal year 2015 totaled $294.6 million, compared to $285.4 million for the second quarter of fiscal year 2014.

Reported cash flow from operations totaled $160.3 million during the second quarter of fiscal year 2015, compared to reported cash flow from operations of $120.1 million for the second quarter of fiscal year 2014. Free cash flow (operating cash flow minus capital expenditures) was $89 million, which included $61.7 million of cash interest paid in the quarter, compared to a free cash flow of $68.1 million during the second quarter of fiscal year 2014, including $85.3 million of cash interest paid.

The strong results come after a disappointing August quarter, when profit fell 77 percent due largely to high expenses.