Full-Year Sales Down 12 Percent at Zimmer Biomet

Zimmer Biomet Holdings Inc. is feeling the (financial) pain from the coronavirus pandemic. 

The company is reporting losses in both its fourth-quarter and full-year sales due primarily to COVID-19-related shutdowns and the postponement/cancellations of elective surgeries.  

“The fourth quarter saw continued pressure from COVID and its impact on the recovery of elective procedures, yet our core business remained strong as did our operational execution to close out 2020,” said Bryan Hanson, president and CEO of Zimmer Biomet. “Against that backdrop, we continue the transformation of our business in order to drive growth and increase shareholder value, as underscored by the announcement that we intend to spin off our Spine and Dental businesses. This transaction will position us to prioritize resources, simplify our operating models and deliver greater value through two independent publicly traded companies. Our team remains confident and focused as we continue to deliver on our mission and serve patients, providers and our customers.”

The company’s fourth-quarter net sales slid 1.9 percent to $2.085 billion, a decrease of 3.7 percent on a constant currency basis. Net earnings for the fourth quarter were $333.7 million, or $440.7 million on an adjusted basis. Diluted earnings per share were $1.59 for the fourth quarter, an increase of 3.2 percent over Q4 2019, and adjusted diluted earnings per share were $2.11 for the fourth quarter, a decrease of 8.3 percent from the prior year period.

Knee sales slipped 3.1 percent to $737.1 million in the final three months of 2020, and hip proceeds fell 1.3 percent to $504.1 million. None of the company’s other product categories fared much better: SET (Sports Medicine, Extremities, and Trauma) revenue decreased 1.5 percent in Q4 to $375.9 million, and “Other” sales dropped 7.5 percent to $154.2 million. Only Dental, Spine, and CMFT (Craniomaxillofacial and Thoracic) made a profit in the fourth quarter, generating a 2.6 percent sales increase ($314 million).

Full-year revenue losses were much more dramatic. Sales nosedived 12 percent to $7.025 billion, a decrease of 12.4 percent on a constant currency basis. 2020 net loss was $138.9 million and net earnings on an adjusted basis were $1.181 billion. Full-year diluted loss per share was $0.67 and full-year adjusted diluted earnings per share were $5.67, a 28 percent decrease from 2019.

Knee proceeds plummeted 15 percent last year to $2.38 billion, while hip sales fell 9.4 percent to $1.75 billion. SET revenue tanked 8.4 percent to $1.32 billion, Dental, Spine and CMFT sales plunged 10.1 percent to $1.04 billion, and “Other” product proceeds fell 18.4 percent to $518.5 million.  
 
Recent Highlights
Aligned with Zimmer Biomet’s active portfolio management strategy and the ongoing transformation of the business, key recent highlights include:

• Acquisition of A&E Medical Corp., a privately-held company that manufactures and sells innovative and differentiated products in the sternal closure market; expanded Zimmer Biomet’s sternal closure portfolio to be one of the most comprehensive in a space growing at a high single digit percentage rate annually; revenues are recorded in the company’s Dental, Spine and CMFT segment.
• Launch of a large-scale, multimedia, direct-to-patient campaign, “Don’t Let Pain Gain on You“, in the United States, focused on education and support for patients around elective procedures like joint replacement surgery, especially during the COVID pandemic.
• Partnership with Hospital for Special Surgery (HSS) to advance innovation on the mymobility with Apple Watch remote care management system that will enable patients and practices around the world to leverage HSS’ expertise in orthopedic patient care through Zimmer Biomet’s platform.
• Formal launch of the Zimmer Biomet Foundation, a philanthropic 501(c)(3) organization that further strengthens the Company’s ongoing commitment to empowering diverse and underserved communities, supporting STEM education, enabling community health and providing disaster relief; launch included announcement of a partnership with the National Association for the Advancement of Colored People (NAACP) Empowerment Programs, Inc., with a commitment of $2 million over the next three years to support partnered efforts with NAACP to end racial injustice and advance diversity and equality.