Argus analyst David Toung moved ZBH shares from a “buy” to a “hold” rating based on the company’s estimate that it would be the second quarter before it returned to full inventory levels. But the FDA in February released a Form 483 sent to Zimmer Biomet that flagged issues found during an inspection of a former Biomet plant in Warsaw, Ind., last year, laying out eight observations it determined need correction at the facility. The federal safety watchdog’s 12-page document covered a number of issues the agency had noted during prior inspections.
And although the company managed to beat both the consensus forecast and its own guidance with its first-quarter results, it also posted a more than 40% profit slide.
Profits were $174.7 million, or 85¢ per share, on sales of $2.02 billion for the three months ended March 31, for a bottom-line slide of -41.6% on sales growth of 2.3%.
Adjusted to exclude one-time items, earnings per share were $1.91, 2¢ ahead of Wall Street, where analysts were looking for revenues of $1.98 billion; Zimmer’s own guidance had called for adjusted EPS of $1.84 to $1.91 on sales of $1.96 billion to $2.0 billion.
“We are concerned that customers, who are typically orthopedic surgeons and the hospitals they work at, are feeling less confidence in Zimmer Biomet’s assurances to restore full inventory and are switching to other orthopedic suppliers,” Toung wrote, according to Benzinga.
ZBH shares were trading at $112.27 apiece today in mid-afternoon trading, up 0.7%.
Steve MacMillan took over as CEO of Hologic in 2013, drawing on his experience at medtech titans like Stryker and Johnson & Johnson. Since then, Hologic has grown into a $3 billion business.
At DeviceTalks Boston, MacMillan will provide exclusive insights into the Massachusetts-based company and its evolving definition of women's healthcare. You don't want to miss it!
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