- Zimmer Biomet on Tuesday reported net sales climbed to $2.03 billion in the second quarter, up 65.3% from the same period a year ago when elective procedures ground to a halt due to the emergence of COVID-19.
- The device maker's sports medicine, upper extremities, trauma, dental and robotic surgery businesses all helped fuel the surge, but large joint procedures lagged. "The path back to normalized market growth is taking a bit longer than expected," CFO Suketu Upadhyay said during Tuesday's call with analysts.
- Zimmer expects the sales recovery to continue in the second half of the year, even as the virus remains a global threat. "The recovery from COVID is moving in the right direction. It's definitely not happening the way we anticipated, I don't think it is for anybody, but it is happening," CEO Bryan Hanson said during an investor call.
Like its peers across the medtech sector, Zimmer Biomet is seeing sales continue to build on the first quarter's momentum. However, demand for hip and knee procedures has been slower to materialize.
On Tuesday's call, Hanson said the company is not seeing a big backlog of deferred procedures. "It's likely going to be a slower roll with that deferred patient base coming in," the CEO said.
Still, Zimmer is encouraged that sales will continue to grow over the next two quarters despite ongoing pressures from the coronavirus.
"COVID is still very much with us, and we're watching it very closely, as you might imagine," Hanson said.
Zimmer has an "outsized dependence on elective procedures," according to Hanson. But the challenges from the pandemic are manageable, because hospitals have learned how to handle COVID-19 caseloads better. Hanson also predicted more people may be motivated to get vaccinated as they learn more about the delta variant.
"Even with virus surges all over the news … it doesn't seem to be translating into the same revenue disruptions we've seen in the past," Hanson added.
Zimmer narrowed its full-year earnings forecast to a range of 14.5% to 16.5%, from 14% to 17% previously. J.P. Morgan analysts observed that the company's updated guidance "reflects only a narrowing of previous ranges on the top and bottom" despite the stronger quarter.
Jefferies analysts wrote in a note to clients that "the comps and peers point toward a still gradual recovery from pre-pandemic levels, with ZBH stacking at upper end of the pack in knees but lagging in hips."
Zimmer executives said the planned spinoff of the company's spine and dental business remains on track. The company also remains on the hunt for tuck-in acquisitions to enhance its growth, they told investors.