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Zimmer Biomet (ZBH) Q4 Earnings Beat Estimates, Margins Up

Zimmer Biomet Holdings, Inc. ZBH posted fourth-quarter 2022 adjusted earnings per share (EPS) of $1.88, beating the Zacks Consensus Estimate by 2.7%. The adjusted figure improved 5% year over year.

The quarter’s adjustments included certain amortization, restructuring and quality remediation-related charges, among others.

On a reported basis, the company registered a loss of 62 cents per share, wider than the year-ago loss of 26 cents.

For the full year, adjusted earnings were $6.89 per share, up 5% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.7%.

Revenue Details

Fourth-quarter net sales of $1.83 billion increased 2.7% (up 8.3% at constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate by 3.9%.

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Total revenues for 2022 were $6.94 billion, reflecting a 1.6% rise (up 6.6% at CER)  from the year-ago period. The figure beat the Zacks Consensus Estimate by 1.5%.

Geographic Details

During the fourth quarter, sales generated in the United States totaled $1.08 billion (up 6.2% year over year at CER), while the same in International grossed $744.5 million (up 11.1% year over year at CER).

Segments

In terms of product categories, post the dental and spine arm sell-off, the company reports through the remaining four product categories.

Sales in the Knees unit improved 10.2% year over year at CER to $753.6 million. Hips recorded an 8.4% rise at CER to $488.7 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit rose 7.6% year over year to $424.1 million.

Other revenues increased 1.3% to $158.7 million at CER.

Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise

Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise

Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote

Margins

Adjusted gross margin, after excluding intangible asset amortization, was 71.5%, reflecting an expansion of 168 basis points (bps) in the fourth quarter. Selling, general and administrative expenses were down 9.7% to $727.1 million. Research and development expenses rose 12.5% to $108 million. Adjusted operating margin expanded 663 bps to 25.7% in the quarter.

Cash Position

Zimmer Biomet exited 2022 with cash and cash equivalents of $375.7 million compared with $378.1 million at the end of 2021.

Cumulative net cash provided by operating activities at the end of the fourth quarter was $1.36 billion compared with $1.4 billion in the year-ago period.

2023 Guidance

Zimmer Biomet initiated its financial guidance for 2023.

Revenue growth is expected to be in the band of 1.5% - 3.5% compared with 2022.

Adjusted EPS for the full year is expected in the range of $6.95 - $7.15.

The Zacks Consensus Estimate for 2023 adjusted earnings is pegged at $6.96 on revenues of $7.01 billion.

Our Take

Zimmer Biomet ended the fourth quarter of 2022 with better-than-expected earnings and revenues. Each of the company’s geographic segments and product divisions recorded year-over-year sales growth at CER. Even amid the challenging macroeconomic conditions, expansion in the company’s adjusted gross and operating margins is encouraging.

Zacks Rank and Key Picks

Zimmer Biomet currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation NEOG, McKesson Corporation MCK and Hologic, Inc. HOLX.

Neogen, carrying a Zacks Rank #2, reported second-quarter fiscal 2023 adjusted EPS of 15 cents in contrast to Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Neogen has an earnings yield of 2.5% compared with the industry’s 0.2%. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 70.11%.

McKesson, having a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.

McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 4.79%.

Hologic reported first-quarter 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.

Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 46.08%.

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Hologic, Inc. (HOLX) : Free Stock Analysis Report

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Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report

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