Investors sent shares of Zimmer (NYSE:ZMH) down 5% this morning in pre-market trading after the orthopedic device maker reported sales and earnings in-line with Wall Street’s expectations, but lackluster sales of hip and knee implants.
The Warsaw, Ind.-based company posted profits of $209.6 million, or $1.17 per diluted share, on sales of $1.14 billion for the 3 months ended March 31.
That’s a bottom-line gain of less than 1% and a top-line addition of 2.2%, compared with profits of $208.9 million, or $1.08 diluted EPS, on sales of $1.12 billion during Q1 2011. Diluted EPS rose 8.3% year-over-year.
"Zimmer delivered year-over-year sales growth in all geographic segments and in most product categories in the quarter," president & CEO David Dvorak said in prepared remarks. "Looking forward, our new product introductions and progress in our transformation programs will enable the Company to generate increased value to stockholders."
Overall sales of joint reconstruction products rose 2% to $860 million, with most of that growth coming from the Asia-Pacific region. U.S. recon sales growth was flat, as were the revenue figures for domestic sales of knee and hip implants, at $468 million, $279 million and $154 million, respectively.
"We think some may be a bit disappointed that US hip/knee growth did not show as much of a sequential y/y growth acceleration this quarter as some may have been expecting, especially in knees,” wrote Leerink Swann analyst Richard Newitter in a note to investors this morning. “This reinforces our view that US ortho recon markets have likely bottomed and remain stable, possibly even beginning to show some early signs of improvement. However, we still think it’s too early to call an inflection point for a procedure volume recovery.”
Zimmer lowered its 2012 sales guidance to growth of between 0% and 2.5%, saying it expects foreign exchange rates to cut the top line by between 1.5% and 2%. Its prior guidance predicted FX to cut about 1% from revenues.
Diluted EPS are forecast to run between $4.70 and $4.90, down from $4.75 to $4.95.
ZMH shares opened today at $61.20, down 3.5% from yesterday’s $63.43 close. Shares were trading up slightly at $61.35 as of about 9:45 this morning.