Zimmer Holdings, Inc. and Stryker Corporation reported first quarter revenue the week of April 22nd. The results were uneventful, expected and point to a happy recovery of the orthopedics markets.
Stryker’s total reconstructive sales of $969 million were up 1.2% on a reported basis. Hips, knees and spine were all down 1.2%, 2% and 3%, respectively. Trauma and extremities rose 9.3%.
| Stryker 1Q13 | Sales ($ in millions) |
% Change |
| Reported Reconstructive Sales | $969 | 1.2% |
| Â Â Â Â Hips | $308 | down 1.2% |
| Â Â Â Â Knees | $345 | down 2% |
| Â Â Â Â Trauma/Extremities | $266 | 9.3% |
| Â Â Â Â Spine | $176.0 | down 3% |
| Source: Stryker Corporation | ||
Zimmer’s reported sales of $1, 139 million were down 0.2%. Hips, knees and spine declined 4%, 1% and 10%, respectively, on a reported basis.
| Zimmer 4Q12 | Sales ($ in millions) |
% Change * |
| Total Sales | $1, 181 | 2.1% |
| Â Â Â Â Reconstructive | $872 | Flat |
| Â Â Â Â Â Â Â Â Â Knees | $476 | 1.0% |
| Â Â Â Â Â Â Â Â Â Hips | $349 | down 1% |
| Â Â Â Â Trauma | $84 | 10.0% |
| Â Â Â Â Spine | $54 | down 5% |
| Â Â Â Â Extremities | $47 | 7.0% |
| *constant currency | ||
| Source: Zimmer Holdings, Inc. |
However, due to two fewer selling days in this first quarter, analysts overwhelmingly declared the results as evidence that the orthopedic market has continued to stabilize.
Stable, Growing Ortho Market
Matt Miksic of Piper Jaffray said that with about 80% of the ortho market having now reported, first quarter revenue is up around 2-3% after adjusting for selling days, consistent with fourth quarter 2012 growth of 2.5%.
“If the remaining manufacturers report results in-line with our estimates, constant currency growth for the worldwide market on an ‘as reported’ basis will be down 0.2% (up 0.3% U.S., down 0.9% OUS), which includes a negative hit of around 2-2.5% due to fewer selling days in the quarter. On an apples-to-apples basis, we view steady sequential ortho revenue growth in a seasonally weak quarter as a positive indication that growth trends in the ortho market continue to improve after bottoming in 2011.”
Hips and Knees Growing
Wells Fargo’s Larry Biegelsen estimates that the worldwide hip and knee markets grew 2.7% and 2.3%, respectively, during the quarter on a constant currency basis.
Zimmer
For Zimmer the quarter’s big news was the introduction of the Persona knee. The company, according to Biegelsen, has lost 2-3% of market share in knees over the last five years.
“We achieved our financial commitments in the first quarter, including leveraged earnings per share growth, ” said David Dvorak, Zimmer president and CEO. “During the quarter, we continued to deliver value to stockholders through the introduction of significant new product offerings across the portfolio, as well as through an increased dividend and share repurchases. The foundational work completed in the quarter positions Zimmer for accelerated top-line growth for the balance of 2013.”
Bob Hopkins of Bank of America said the results were the best organic growth that Zimmer has seen in over two years
The company continues to expect full-year revenues for 2013 to increase between 2.5% and 4.5% on a constant currency basis from 2012.
Stryker
“We delivered solid sales and earnings performance, and expect this momentum to continue throughout 2013, ” commented Kevin A. Lobo, president and CEO. For the full year 2013, Stryker is projecting constant currency sales growth in a range of 4.0% to 6.5%.
In March 2013, Stryker completed its previously announced acquisition of Trauson Holdings Company Limited. The acquisition of Trauson will expand Stryker’s presence in a key emerging market with a product portfolio and pipeline that is targeted at the fast growing value segment of the Chinese orthopedic market, according to a company statement.
Nobody said stable was exciting.
