Zimmer Steady in 4Q – New Knee Arriving

Zimmer Holding Inc.’s fourth quarter revenue came in at $1.18 billion, up 2.1% on a constant currency basis over the previous year’s quarter.

Hips and knees came in down 1% and up 1%, respectively. The company likely lost some market share during the quarter.

Based on results from Biomet, Inc., Johnson & Johnson’s DePuy Synthes Companies, Stryker Corporation, Zimmer and estimates for other companies, Mizuho Securities USA analyst Mike Matson estimates that, on a constant currency basis, global knee growth was 2% and hip growth was 1% during the fourth quarter. Wells Fargo’s Larry Biegelsen believes that the hip and knee markets, on a constant currency basis, grew 2.2% and 2.8%.

Persona Knee – “Largest Launch Ever”

Company officials told Wall Street analysts on January 31, 2013 that the company began to expand the release of its new knee, Persona, “The Personalized Knee System.” Dave Dvorak, company CEO and president said the new knee builds on the clinical legacy of the NexGen and Natural-Knee systems and provides surgeons with “unprecedented options to personalize each patient’s treatment.”

“It’s going to be the company’s largest launch ever, ” said Dvorak. He added that launching a system of this magnitude will involve multiple stages over the next several years. Also in the quarter, iASSIST Knee, the personalized guidance system, received FDA clearance.

Hip sales grew in the Americas by 1.8%, but declined 5.2% in Europe, Middle East and Africa.

Extremities sales improved 7.5%. “We continue to generate strong sales of our Trabecular Metal Reverse Shoulder System, Trabecular Metal Humeral Stem and our recently introduced Sidus Stem-Free Shoulder System, ” said Dvorak.

Zimmer Spine’s $96 Million Goodwill Charge

The spine franchise continued to be a challenge as Dvorak announced that the company would be taking a $96 million goodwill impairment charge against the value of the business. He said the change in outlook for the U.S. spine market, together with ongoing company-specific challenges, contributed to the decrease in the implied fair value of the U.S. spine business.

Joint Preservation

Forecasting that the joint replacement industry is moving towards becoming a joint preservation business, Dvorak said the company was continuing to make progress building out early intervention portfolio of products. “These products extend our reach into joint preservation earlier in the continuum of care for arthritis and specifically, knee arthritis. In the fourth quarter, we began the broader introduction of our Gel-One hyaluronic acid injection product to promising early feedback.”

The company expects full year revenues in 2013 to increase between 2.5% and 4.5% in constant currency when compared to 2012.