Zimmer (NYSE:ZMH) today cut its earnings outlook for the rest of 2015, citing the strong dollar and better-than-expected synergies from its pending merger with Biomet.
Warsaw, Ind.-based Zimmer also posted declines in 1st-quarter sales and earnings, missing Wall Street’s sales forecast but topping analysts’ earnings expectations. The company reported profits of $177.1 million, or $1.02 per share, on sales of $1.13 billion for the 3 months ended March 31, for a -20.0% bottom-line slide on a sales decline of -2.3% compared with the same period last year.
Adjusted to exclude 1-time items, earnings per share were $1.58, 7¢ ahead of The Street, where the consensus sales outlook was $1.15 billion.
"In the 1st quarter, Zimmer achieved steady sales growth in several geographies and product categories, while continuing to meet our financial commitments and deliver expanded operating margin leverage. Notably, we recently received approval from the European Commission and the Japan Fair Trade Commission for our pending combination with Biomet, which we now expect to close during the month of May, 2015. This historic merger will enhance our leadership in musculoskeletal healthcare by drawing upon the talent and capabilities that have enabled the extraordinary growth and sustained success of our 2 companies," president & CEO David Dvorak said in prepared remarks.
Zimmer said it now expects to log adjusted EPS of $6.30 to $6.40, down from prior guidance of $6.50 to $6.60. The $13.4 billion union with crosstown rival Biomet are now expected to hit $350 million, the company said, up from a prior estimate of $270 million, meaning Biomet is now forecast to contribute 95¢ to $1.05 in the 1st year. Zimmer previously guided to an adjusted EPS contribution of $1.05 to $1.15 from Biomet.
ZMH shares slid in pre-market trading today to $114.0 apiece, down -1.2%. The stock slipped another -4.0% to $110.64 in early trading.
