Zimmer Biomet scores a big earnings beat in Q2

Zimmer Biomet logoZimmer Biomet (NYSE and SIX: ZBH) today reported second-quarter results that handily beat the consensus forecast on Wall Street, upping its full-year forecast for 2022.

Investors reacted by sending ZBH shares up more than 5% to $115.93 apiece in morning trading. MassDevice‘s MedTech 100 Indexwhich includes stocks of the world’s largest medical device companies, was up slightly.

The good news comes as a host of US companies in medtech and other industries are reporting macroeconomic headwinds related to foreign exchange rates, inflation, supply chain challenges and more. ZB officials, however, are betting that they can innovate their way out of rough economic seas. In May, the company introduced new AI capabilities for its Omni Suite intelligent operating room — part of its ZBEdge connected intelligence suite for orthopedic surgery that also includes surgical robotics. It’s also the first to offer smart knee implants.

“We believe our focus on innovation and the transformation of our business continues to position us well for long-term growth and continued delivery for our shareholders,” Zimmer Biomet CEO Bryan Hanson said in a news release.

The Warsaw, Indiana–based orthopedic device company — the third largest in the world — earned $153.7 million, or 73¢ per share, off $1.78 billion in sales for the quarter ended June 30, 2022, for bottom-line and top-line gains of 8% and 1%, respectively.

Adjusted to exclude one-time items, ZB had earnings per share of $1.82, 17¢ ahead of The Street, where analysts on average expected EPS of $1.65 on $1.72 billion in sales.

Zimmer Biomet now expects 2022 revenue growth of -1% to 1%, versus a previous range of -1.5% to 0.5%. It’s projecting adjusted EPS of $6.70 to $6.90, up from $6.65 to $6.85.

Truist analysts were not surprised by ZB’s raised revenue guidance, saying the company’s sales guidance has universally been considered conservative. The EPS raise, however, was a different story.

“While not huge on the surface, the fact the EPS guidance increased (and [revenue] upside flowed through to EPS) is impressive in this environment. Not many companies in medtech have managed to absorb these headwinds and actually raise EPS guides. So this should stand out (positively),” said Richard Newitter, Samuel Brodovsky, David Rescott and Lin Zhang at Truist.

BTIG analyst Ryan Zimmerman meanwhile kept a Neutral rating on Zimmer Biomet’s stock: “All told, while we’re not ready to jump back into ZBH shares head first, we think results in 2Q were a good step to recovery.”

Last week, one of Zimmer Biomet’s top competitors — Stryker — also upped its 2022 revenue forecast, but it lowered its EPS guidance. Stryker’s Q2 results also came in shy of the consensus forecast.

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