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.
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