Zimmer Biomet, one of the world’s largest orthopedics companies by market share, said its net loss widened in the fourth quarter, hurt by staffing shortages and supply chain woes.
The net loss deepened to $130.5 million from an $84 million net loss in the year-earlier quarter, Warsaw, Indiana-based Zimmer said in a statement on Friday. Revenue climbed 2.7% to $1.83 billion, helped in part by better-than-expected foreign-exchange rates.
Stifel analyst Rick Wise wrote in a research note on Friday that “irrespective of these easing macro pressures,” revenue would have beat his own estimate of $1.75 billion.
U.S. knee procedures in the fourth quarter increased 11% from a year earlier and accounted for about 26% of total sales. Compared to 2019 results before the COVID-19 pandemic disrupted orthopedic procedures, Zimmer’s knee business was the “second-fastest grower among the ‘big 3’ orthopedic companies,” Wise wrote.
Zimmer’s full-year revenue rose 1.6% to $6.94 billion, while 2022 net income fell 42% to $231.4 million.
Zimmer CEO Bryan Hanson said the company is looking to acquire smaller and mid-size companies as part of an effort to increase revenue and enter higher-growth markets.
“The fact is, as our balance sheet continues to strengthen our strategic flexibility goes up,” Hanson said on an earnings call on Friday, adding that the company is interested in firms working in reconstruction, including robotics, data or the ambulatory surgical center setting, as well as fast-growing segments like sports or extremities.
“Those things that might be outside of orthopedics that will help us diversify the business away from elective procedures, but also in fast-growth markets, all those things are on the table right now,” the CEO said. “We're going to stay disciplined, there's no question about it, but we are clearly on the hunt for targets that make sense in those ways.”
Zimmer COO Ivan Tornos said that the company expects to install 300 of its Rosa surgical robots each year. Although he didn’t provide a number, he said last year was no exception.
The company faces competition from Stryker, which said earlier this week that it expects to launch a shoulder surgery feature for its surgical robot by the end of 2024.
In response to an analyst’s question about how Zimmer views the competition as it plans its own robotic shoulder surgery launch, Tornos said, “We don't pay attention to where competitors are. We pay attention to where we are in the process. Frankly, I'll be very surprised if we're not first to market, even when we are in the development cycle.”
Zimmer expects its 2023 revenue to increase by 1.5% to 3.5% compared to 2022. That includes an estimated 1.5% impact from foreign-exchange rates on sales. The company also forecasts adjusted diluted earnings per share of $6.95 to $7.15. That sets a “reasonable bar” for 2023, Wise wrote.
“As we enter 2023, we expect macro pressures to continue, but also to stabilize, setting up ZB to achieve attractive growth and mark another key milestone in our transformation journey,” Hanson said in a statement on Friday.
Shares of Zimmer climbed 2%, or $2.53, to $129.94 in midday trading on the Nasdaq.