Zimmer Biomet Reports Second Quarter 2016 Financial Results

WARSAW, Ind., July 28, 2016 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended June 30, 2016.  The Company reported second quarter net sales of $1.93 billion, an increase of 65.6% and an increase of 4.5% on an adjusted pro forma, constant currency basis, compared to the second quarter of 2015.  Diluted net loss per share for the quarter was $(0.16), compared to a net loss per share of $(1.00) for the prior year period, and adjusted diluted earnings per share for the quarter were $2.02, an increase of 27.8% adjusted over the prior year period.

"In the second quarter, Zimmer Biomet accelerated revenue growth above the top end of our expectations, highlighted by the results of our S.E.T. category and our ongoing strength in the Asia Pacific region," said David Dvorak, President and CEO of Zimmer Biomet.  "Our top line performance, coupled with the ongoing capture of operational synergies, supported investments into strategic growth drivers, while delivering adjusted earnings per share above our guidance range.  We will continue to execute on commercial opportunities across our broad portfolio in the second half of the year, as well as expand our clinical offerings with differentiated new technologies, services and solutions."

Net loss for the second quarter was $(31.3) million, an increase from a net loss of $(173.6) million from the prior year period.  On an adjusted basis, net earnings increased 47.0% over the prior year period, to $407.1 million.  Operating cash flow for the second quarter was $379.6 million.

In the quarter, the Company paid $47.8 million in dividends and declared a second quarter dividend of $0.24 per share.  The Company also repaid $100.0 million on its outstanding term loan during the quarter.

Guidance
The Company updated its full-year 2016 constant currency revenue and adjusted earnings per share guidance.  The Company now estimates full-year revenue to be in a range of $7.680 billion to $7.715 billion, or an increase of approximately 28% and 3.00% to 3.50% on an adjusted pro forma basis, in each case, as compared to the prior year.  The adjusted pro forma revenue guidance range is inclusive of approximately 100 basis points of contribution related to the LDR Spine transaction.  The Company also now expects foreign currency translation to decrease revenues in the full-year 2016 by approximately 0.50%, compared to its previous estimate of 1.0%.  Organic revenue growth, on a constant currency adjusted pro forma basis, is now expected to be in a range of 2.5% to 3.0%.  Previously, the Company estimated full-year revenue growth to be in a range of 2.0% to 3.0% on a similar basis.

Additionally, the Company now expects its full-year 2016 diluted earnings per share to be in a range of $1.50 to $1.75 and $7.90 to $8.00 on an adjusted basis.  Previously, the Company estimated diluted earnings per share to be in a range of $7.85 to $8.00 on an adjusted basis. 

Conference Call
The Company will conduct its second quarter 2016 investor conference call today, July 28, 2016, at 8:00 a.m. Eastern Time.  The live audio webcast can be accessed via Zimmer Biomet's Investor Relations website at http://investor.zimmerbiomet.com.  It will be archived for replay following the conference call.

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (877) 941-1227 and entering conference ID 4721888.  For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com.  A digital recording will be available 24 hours after the completion of the conference call, from July 29, 2016 to August 28, 2016.  To access the recording, U.S. and Canada callers should dial (800) 406-7325 and international callers should dial +1 (303) 590-3030, and enter the Access Code ID 4696670.

Sales Tables
The following sales tables provide results by geography and product category, as well as the percentage change compared to the prior year quarter on a reported basis, a pro forma basis, and an adjusted pro forma constant currency basis.  The percentage change for results for the six months ended June 30, 2016 are compared to the prior year six-month period on a reported basis.

About the Company
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare.  We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation.  Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues.  Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries.  For more information, visit www.zimmerbiomet.com, or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.

Website Information
We routinely post important information for investors on our website, www.zimmerbiomet.com, in the "Investor Relations" section.  We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.  Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.  The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Note on Non-GAAP Financial Measures
Adjusted earnings per share and adjusted net earnings exclude the effect of inventory step-up and other inventory and manufacturing related charges, certain claims, special items, intangible asset amortization, financing and other expenses related to the Biomet and Cayenne mergers, the tax effects of these expenses and other certain tax adjustments.  Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges and other items.  Other certain tax adjustments primarily include internal restructuring transactions that provide the Company access to offshore funds in a tax efficient manner.  "Pro forma" revenue refers to revenue for prior year periods adjusted to reflect the inclusion of Biomet revenue on a GAAP (reported) basis.  "Adjusted pro forma" revenue or net sales refers to pro forma revenue adjusted to reflect the impact of the previously announced divestiture remedies.  "Constant currency" refers to any financial measure that excludes the effect of changes in foreign currency exchange rates.  Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are included in this press release. 

Cautionary Statement Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by the use of forward-looking terms such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," "sees" and "seeks" or the negative of such terms or other variations on such terms or comparable terminology.  All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements.  Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially.  These risks and uncertainties include, but are not limited to: the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; Biomet's compliance with its Deferred Prosecution Agreement, as extended; the outcome of government investigations; price and product competition; the success of our quality and operational excellence initiatives; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; challenges relating to changes in and compliance with governmental laws and regulations, including regulations of the U.S. Food and Drug Administration (the "FDA") and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA; changes in tax obligations arising from tax reform measures or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates and general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing economic uncertainty affecting countries in the Euro zone on the ability to collect accounts receivable in affected countries.  For a further list and description of such risks and uncertainties, see our periodic reports filed with the U.S. Securities and Exchange Commission.  Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us.  We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in our periodic reports.  Readers of this communication are cautioned not to place undue reliance on these forward-looking statements, since, while management believes the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate.  This cautionary statement is applicable to all forward-looking statements contained in this communication.

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SOURCE Zimmer Biomet Holdings, Inc.

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