Zimmer Biomet reported lower-than-expected sales on Wednesday, following a confluence of factors that emerged late in the quarter.
The orthopedic company’s revenue of $2 billion came in $10 million below Wall Street’s expectations, J.P. Morgan analyst Robbie Marcus wrote in a research note. While the company’s knee sales outperformed expectations, sales in hips and the sports medicine, extremities and trauma, or SET, business were lower than expected.
The result sent Zimmer’s stock down more than 15% to $86.92 in Wednesday morning trading.
CEO Ivan Tornos addressed the sales shortfall on a third-quarter earnings call, saying he was “very, very surprised.”
He added that three factors emerged late in the quarter that contributed to the miss. The company saw a last-minute cancellation of distributor orders, mostly from the Middle East and Eastern Europe. The company also ran into problems with its restorative therapies business, which is part of the SET segment. And in Latin America, Zimmer missed its sales forecast by more than 15%, with distributor challenges in the region that happened late in the quarter.
“In any given quarter, you can have a variety of these things happen,” Tornos said. “But to see all of these events happen at the same time is unique to say the least.”
Tornos said he would provide more measured guidance going forward.
Zimmer maintained its forecast of 6.7% to 7.7% revenue growth for 2025, but lowered its expectations for growth excluding the impact of foreign exchange rates.
CFO Suketu Upadhyay said the updated range considers continued weakness in restorative therapies, a more measured outlook for certain international markets, and a slowdown in the U.S. revision market for hips and knees continuing through the rest of the year.
