Zimmer’s 2014 Sales Notch 1 Percent Increase

Zimmer Holdings Inc. reported a 1.1 percent rise in sales last year, fueled by solid gains in knee and extremities revenue. But earnings fell 5 percent as hip and trauma proceeds flatlined and surgical sales took a nosedive. The company posted 2014 earnings of $720 million, or $4.19 per diluted common share, on sales of $4.67 billion—a 5 percent dropoff from its 2013 earnings of $761 million, or $4.43 a share, on sales of $4.62 billion.

Zimmer’s Reconstructive portfolio performed well last year, generating $3.49 billion in sales, or 2 percent better than its 2013 production. Extremities led growth, rising 5 percent to $204 million, though knees turned in a solid performance as well, climbing 3 percent to $1.96 billion. Hip sales remained flat at $1.32 billion, according to the company’s latest earnings report.

Dental sales rose 1 percent to $243 million, and spinal revenue edged up 2 percent to $207 million, but neither gain could offset flat trauma sales ($317 million) or the 5 percent decrease in surgical/other proceeds ($410 million).

Trauma and dental sales both jumped 9 percent in the fourth quarter, bolstered by a mix of new product launches and old favorites. “Zimmer spine business delivered 9.1 percent growth in the fourth quarter, a performance which was accelerated by a cadence of innovative new product launches throughout 2014,” CEO David C. Dvorak told investors on a conference call. “In the fourth quarter, the Virage OCT spinal fixation system and the Optio-C interior cervical system continued to expand our customer base in the global spine market while driving volume and mix growth.”

Zimmer’s P-I Branemark philosophy offerings were popular with European dental customers during the last quarter of 2014, while Trabecular Metal Dental implants and custom-milled Zfx CAD/CAM digital density solutions sold well globally, Dvorak added.
The Warsaw, Ind.-based orthopedic device manufacturer posted fourth-quarter earnings of $157 million, or 91 cents per diluted common share, on sales of $1.22 billion. That’s a 34 percent drop from the $236 million, or $1.36 a share, on sales of $1.24 billion reported for the prior year’s fourth quarter.

During his discussion with analysts, Dvorak also highlighted fourth-quarter growth in the company’s Asia Pacific and Europe, Mideast and Africa sales regions. For the year, Zimmer’s European sales increased 5 percent to $1.26 billion, while Asia-Pacific proceeds climbed 2 percent to $810 million. Americas sales slipped 1 percent to $2.5 billion.

Company executives expect first-quarter 2015 revenues to increase between 1.5 percent and 2.5 percent on a billing day and constant currency basis over the prior year period. Foreign currency translation most likely will decrease revenues by approximately 6 percent for the first quarter; diluted earnings per share are projected to range from $1.12 to $1.14 on a reported basis and $1.58 to $1.60 on an adjusted cash basis.

Zimmer is still trying to close its $13.35 billion acquisition of rival Biomet Inc. Executives with both companies continue to plan an integration strategy while they await approval from U.S. and foreign regulators.