Privately held orthopedics giant Biomet’s 1st quarter earnings were weaker than expected, boding ill for fellow device makers who saw the backlash on Wall Street today.
Biomet saw a modest increase in revenues and a significant narrowing of losses, but weakness in hip and knee sales had analysts urging caution for the market.
The Warsaw, Ind.-based device maker is the 5th largest player on the orthopedics market, and its quarterly reports, which run about a month earlier than many of its peers, are considered a bellwether of sorts for larger trends in the industry.
Biomet narrowed Q1 2013 losses to $31.5 million, nearly 20% less than the $39 million in losses reported during Q1 2012.
The ortho devices maker further reported $707.4 million in sales during the 3 months ended August 31, 2012, a 6.4% increase from sales of $664.6 million during the same period last year. U.S. sales increased 9% and international revenues grew 11% during the quarter, according to a company statement.
The biggest bump in sales was in the company’s sports, extremities and trauma division, which jumped 56% worldwide, amounting to $127.3 million during the most recent quarter.
Large joint reconstructive device sales grew 2% on a constant currency basis, but excluding currency impacts revenues for that unit slid 1%, deceleration that may signal a "a negative read-through for ortho recon companies’ 3Q results," according to Leerink Swann analysts Richard Newitter and Kathleen McGrath.
"Overall, I’m generally pleased with our results for the first quarter of fiscal year 2013," Biomet president & CEO Jeffrey Binder said in prepared remarks. "We did experience some deceleration in growth for our hip and knee business, but until others report their results we won’t know whether market growth has slowed or our growth has come back to market."
"As usual, we would remind folks that Biomet’s results are not always the best read-through, given its small market share and a quarter that ends in August vs. September for peers," the analysts wrote. "Also, it’s always possible there are some Biomet specific trends at play here vs. pure industry takeaways."
Orthopedic stocks were under pressure today, with Zimmer (NYSE:ZMH) shares down 1.8%, Stryker (NYSE:SYK) shares down 1.1% and Smith & Nephew (FTSE:SN, NYSE:SNN) shares down 1.5% as of about 12:45 p.m.