Zimmer Holdings Inc. (NYSE:ZMH) flexed its muscles in the hip business, riding strong sales in one of its key markets to a 5 percent jump in overall sales during the first quarter.
The Warsaw, Ind.-based orthopedic maker posted a $209 million profit on $1.11 billion in sales during the three months ended March 31, a 2 percent increase over the $205 million in net income on $1.06 billion in sales posted during the same period last year.
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Sales were primarily driven by a 7 percent increase in Zimmer’s hip business and a 16 percent increase for its trauma unit. Those results more than overcame essentially flat knee business and a 5 percent drop in spine business, due to challenges in reimbursement and pricing.
Zimmer posted $337 million in hip implant and associated product sales, compared to $315.7 million during Q1 2010. The increase was driven by strong domestic and Asia-Pacific performance. The company’s knee business posted $462 million in sales, compared to $460 million during the same period last year.
Company officials also addressed the new 800-pound-gorilla in the orthopedics market, the recently announced $21.3 billion Johnson & Johnson (NYSE:JNJ)/Synthes (SWX:SYST.VX) merger.
Zimmer CEO David Dvorak told analysts in a conference call this morning that the company would consider bolstering its trauma and spine business through targeted acquisitions in order to compete with J&J’s new stronghold in those markets, but that it wouldn’t break the bank in order to keep up with the Johnsons.
“We wouldn’t do it at the cost of an overly dilutive transaction,” Dvorak said.
A combined Synthes/JNJ would create the largest player in the orthopedics game, should the merger close as expected by mid-2012. J&J CEO William Weldon has said that Synthes will be run under the DePuy Orthopedics umbrella.
Zimmer officials said they expect to see sales rise 2 to 4 percent over the course of 2011. ZMH shares were up nearly 5 percent to $65.96 in mid-day trading.
