Zimmer Biomet (ZBH) Q2 Earnings Top Estimates, 2022 View Up
Zimmer Biomet Holdings, Inc. ZBH posted second-quarter 2022 adjusted earnings per share (EPS) of $1.82, beating the Zacks Consensus Estimate by 11.7%. The adjusted figure also rose a significant 20.5% 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 earnings of 73 cents per share, a 7.4% rise from earnings a year ago.
Revenue Details
Second-quarter net sales of $1.78 billion increased 1% (up 6% at constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate by 3.5%.
Geographic Details
Zimmer Biomet updated its geographic sales reporting with two segments: United States and International.
During the second quarter, sales generated in the United States totaled $1.02 billion (up 1.3% year over year at CER) while the same in International grossed $764 million (up 12.2% year over year at CER).
Segments
In terms of product categories, post the dental and spine arm sell-off, the company continues to report through the remaining four product categories.
Sales in the Knees unit improved 11.2% year over year at CER to $704.9 million. Hips recorded an 8.6% rise at CER to $487.2 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit increased 0.1% year over year to $446.4 million.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote
Other revenues fell 6.1% to $143.3 million.
Earlier the company noted that its CMFT (Craniomaxillofacial and Thoracic) products, previously reported in the Dental, Spine & CMFT category, are now included in the S.E.T. category.
Margins
Gross margin, after excluding intangible asset amortization, was 71.3%, reflecting a contraction of 54 basis points (bps) in the second quarter. Selling, general and administrative expenses were down 0.2% to $695.2 million. Research and development expenses rose 39.8% to $99.4 million. Adjusted operating margin expanded 374 bps to 26.7% in the quarter.
Cash Position
Zimmer Biomet exited the second quarter of 2022 with cash and cash equivalents of $386.4 million compared with $435.8 million at the end of the first quarter of 2022.
Cumulative net cash provided by operating activities at the end of the second quarter was $661.2 million compared with $642.5 million in the year-ago period.
2022 Guidance
Zimmer Biomet updated its financial guidance for 2022.
Revenues are expected to be down 1% to up 1% (an improvement from the earlier band of down 1.5% to up 0.5%) compared with 2021.
Adjusted EPS for the full year is expected in the range of $6.70-$6.90 (a rise from the projection of $6.65-$6.85 earlier).
The Zacks Consensus Estimate for 2022 adjusted earnings is pegged at $6.80 on revenues of $6.69 billion.
Our Take
Zimmer Biomet ended the second quarter of 2022 with better-than-expected earnings and revenues. Each of the company’s geographic segments and product divisions barring “other” recorded year-over-year sales growth at CER. A raised 2022 guidance is indicative of this improving trend to continue for the rest of the year. However, a contraction in the company’s gross margins is concerning. A significant reduction in R&D expenses too increases concern about pipeline-related progress.
Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Humana Inc. HUM and Alkermes plc ALKS.
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 7.1% compared with the industry’s 3.3%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
Humana, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $8.67, which beat the Zacks Consensus Estimate by 13%. Revenues of $23.7 billion outpaced the consensus mark by 1.2%.
Humana has an estimated long-term growth rate of 13.5%. HUM’s earnings surpassed estimates in all the trailing four quarters, the average being 9.1%.
Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.
Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alkermes plc (ALKS) : Free Stock Analysis Report
Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
To read this article on Zacks.com click here.
