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Home » Zimmer beats The Street, alters 2014 forecast on Biomet buy

Zimmer beats The Street, alters 2014 forecast on Biomet buy

April 24, 2014 By Arezu Sarvestani

Zimmer beats The Street, lowers forecast on Biomet buy

Zimmer (NYSE:ZMH) turned a lot of heads today with news of its $13.35 billion mega-offer for fellow orthopedics giant Biomet, with little love lost over a lowered per-share forecast for the rest of the year.

The company announced the Biomet buy in parallel with news of its latest quarter, in which sales rose 2% and profits gained about 1.3%. Zimmer’s adjusted Q1 earnings amounted to $1.50 per share, beating expectations by about 3¢.

Zimmer saw the strongest growth in its extremities division, with a 9% increase in sales year-over-year. Its 2nd-greatest increase came in knee revenues, an area that the company hopes to boost nearly 50% with the Biomet buy.

In total, Zimmer posted profits of $221.5 million, or $1.29 per diluted share, on sales of $1.16 billion during the 3 months ended March 31. That compared with profits of $218.6 million, or $1.28 per share, on sales of $1.14 billion during the same period last year.

The orthopedics giant saw gains in most of its geographic regions and its product categories, but hips and trauma products took a hit during the quarter. European revenues gained 6%, especially in knee sales. U.S. sales rose 1% during the quarter, and Asia Pacific remained flat.

In documents released alongside the merger news, Zimmer said that it hopes its knee sales, worth about $1.9 billion in 2013, could jump to $2.8 billion by adding Biomet. Hips could jump from $1.3 billion in annual sales to $2 billion through the merger. Zimmer expects the deal to help it jump from 4th place in the global musculoskeletal market to 2nd, the company reported.

Zimmer also lowered its full-year, per-share earnings forecast to account for an increase in shares associated with its Biomet purchase. The company is expecting adjusted per-share earnings in the range of $6.00 to $6.20, down from previous guidance of $6.10 to $6.30 per share.

Wall Street showed Zimmer a lot of love today, sending shares up 17% to $107 per share before the market opened today. Shares dimmed throughout the morning but were still trading at $102.81 as of about 11:20 a.m. EST, a 12.4% increase over last night’s close at $91.45.

Filed Under: MassDevice Earnings Roundup, Mergers & Acquisitions, News Well, Orthopedics, Wall Street Beat Tagged With: 2014, Biomet, Q1, Zimmer Biomet

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