The orthopedic device behemoth increased fourth-quarter sales by 3 percent and full-year proceeds 1.8 percent, according to the company's latest earnings report.
Sales for the three-month period ending Dec. 31, 2017, were $2.074 billion. Diluted earnings per share for Q4 were $6.16, and include a one-time tax benefit of approximately $6.40 resulting from the recently enacted U.S. tax reform legislation. Fourth quarter adjusted diluted earnings per share were $2.10, a decrease of 1.9 percent from the prior year period.
Zimmer Biomet reported increases in all of its product categories, with SET (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) sales jumping nearly 6 percent to $454 million. Hip revenue rose 3.5 percent to $499 million, and dental proceeds climbed 2.1 percent to $108 million. Knee sales rose 1.4 percent to $731 million, while Spine/Craniomaxillofacial revenue increased 1.5 percent to $194 million.
Full-year 2017 net sales were $7.824 billion, an increase of 1.8 percent over the prior year, on both a reported and constant currency basis. Full-year revenues increased by 0.5 percent over the prior year on a constant currency basis, excluding approximately 130 basis points of contribution from the LDR Holding Corporation acquisition. Diluted earnings per share for the full year were $9.03. Adjusted diluted earnings per share for the full year were $8.03, an increase of 0.9 percent over the prior year.
North and South American sales totaled $4.86 billion in 2017, a 1.3 percent increase over the prior year. Proceeds in Europe, the Middle East and Africa essentially remained flat (a 0.9 percent increase) at $1.74 billion, and Asia-Pacific revenue swelled 5.4 percent to $1.21 billion.
The company grew sales in every product category last year except Knees, which experienced a 0.6 percent revenue decline (to $2.73 billion). Hip proceeds barely rose, climbing 0.6 percent to $1.87 billion. SET sales increased 3.9 percent to $1.7 billion, and dental revenue jumped 2.2 percent to $419 million. Spine/Craniomaxilofacial proceeds secured the largest increase, ballooning 14.7 percent to $759 million.
"Since joining the company last month, I have been performing a thorough review of the business. My immediate priorities are to improve Zimmer Biomet’s execution and address a number of near-term challenges that have impacted, and will continue to impact, our performance," said Bryan Hanson, president and CEO of Zimmer Biomet. "With that said, I fully believe in the power of the Zimmer Biomet global brand and portfolio of products, and I am confident that with sound strategy and enhanced execution we can drive sustained shareholder value.”
Net earnings for the fourth quarter were $1.257 billion, and $428.5 million on an adjusted basis. Operating cash flow for the fourth quarter was $402.9 million. Net earnings for full-year 2017 were $1.84 billion, and $1.636 billion on an adjusted basis.
In the quarter, the company paid $48.6 million in dividends and declared a fourth quarter dividend of 24 cents per share. The company also repaid $300 million of debt during the quarter. For full-year 2017, the company paid $193.6 millionin dividends and repaid approximately $1.25 billion of debt.
U.S. tax reform legislation resulted in a net favorable provisional adjustment due to the reduction of certain deferred tax liabilities which were partially offset by provisional tax charges related to the toll tax provision of U.S. tax reform. The amount recognized is a provisional estimate and subject to change, possibly materially, due to, among other things, refinements of the company’s calculations, changes in interpretations and assumptions the company has made or additional guidance issued by the U.S. Treasury, Securities and Exchange Commission or Financial Accounting Standards Board.
For the first quarter of 2018, the company expects revenue in the range of $1.955 billion to $1.995 billion, representing a change of negative 1 percent to positive 1 percent compared to the prior year period, and negative 4 percent to negative 2 percent on a constant currency basis compared to the prior year period, inclusive of negative impact related to approximately one less billing day compared to the prior year period. Additionally, the company expects its diluted earnings per share for the first quarter of 2018 to be in a range of 73 cents to 88 cents, and in a range of $1.84 to $1.91 on an adjusted basis.
Founded in 1927 and headquartered in Warsaw, Ind., Zimmer Biomet is a global leader in musculoskeletal healthcare. The company designs, manufactures and markets orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products. Zimmer Biomet products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. The company has operations in more than 25 countries around the world and sell products in more than 100 countries.