Amid a year of acquisitions, Warsaw, Ind.-based Zimmer Biomet lowered the high end of its forecasted profits and cut its sales guidance, wreaking havoc on the company's share price on Monday, according to The Wall Street Journal.
The company reported net sales at $183 billion, a 4 percent increase over the same period last year, and net earnings jumped 612.5 percent to $158.8 million. These results came after acquiring spinal disc replacement company LDR, robotic technology company Medtech and CD Diagnostics earlier this year.
However, the full-year revenue guidance was updated to between $7.63 billion and $7.65 billion with the full year growth estimated at 1.65 percent to 1.9 percent instead of the previously expected 2.5 percent to 3 percent; the new earnings per share estimation was revised to $1.50 to $1.60, compared to $1.50 to $1.75 that was previously reported.
As a result, Zimmer Biomet's share price fell 13.5 percent to $106 early Monday. It was the worst day for the company's stock since October 2007, according to a CNBC report.
Here are six key notes from the conference call with CFO Dan Florin to discuss the financial report:
1. The company is having trouble with supply chain integration since the $13.35 billion merger of Zimmer and Biomet last year. Some of their product portfolio and customers overlap.
2. Mr. Florin reported the supply chain issues will likely continue into at least the first quarter of next year.
3. Zimmer Biomet's knee implant revenue dropped 0.1 percent, with the final revenue of $631 million for the quarter well below the $649 million analysts forecasted. However, hip sales increased and met expectations.
4. In the quarter, Zimmer Biomet repaid $200 million on an outstanding term loan and borrowed $750 million under a new term loan to repay borrowings under its revolving credit facility.
5. The company's spine sales hit $183.6 million, a 24.3 percent increase over the same period last year.
6. In the third quarter, Zimmer Biomet net sales grew 3.7 percent in the Americas to $41.1 billion and 13.7 percent in the Asia Pacific to $288.1 million.