WARSAW, Ind., Oct. 31, 2016 /PRNewswire/ -- Zimmer Biomet
Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended September
30, 2016. The Company reported third quarter net sales of $1.83 billion, an increase
of 4.0% compared to the third quarter of 2015. On an adjusted constant currency basis, revenue increased 3.5% over the
prior year period, with the recently acquired LDR Holding Corporation contributing 190 basis points. Diluted earnings per
share for the quarter were $0.78, an increase of 609.1% over the prior year period, and adjusted
diluted earnings per share were $1.79, an increase of 9.1% over the prior year period.
"Zimmer Biomet's third quarter performance was highlighted by further acceleration of our global S.E.T. category, as well as
our continued strength in the Asia Pacific region," said David
Dvorak, President and CEO of Zimmer Biomet. "We believe that our comprehensive and expanding portfolio of
musculoskeletal solutions positions us extremely well to address the evolving needs of customers in the dynamic healthcare
environment in which they operate. Going forward, we will continue to focus on enhancements to our commercial and
operational execution to more fully leverage our opportunities to improve the quality of life for patients and create value for
our stockholders."
Net earnings for the third quarter were $158.8 million, an increase of 612.5% over the prior
year period, and $362.4 million on an adjusted basis, an increase of 7.1% over the prior year
period. Operating cash flow for the third quarter was $352.6 million.
In addition, during the quarter, Zimmer Biomet announced several strategic acquisitions to broaden and complement the
Company's musculoskeletal offerings. In July, the Company completed the acquisition of a market leader in cervical disc
replacement, LDR Holding Corporation. In August, Zimmer Biomet announced the acquisition of CD Diagnostics, a company
focused on developing immunoassays and biomarker testing to inform musculoskeletal treatment decisions that improve patient
outcomes. Earlier this month, the Company completed the acquisition of all outstanding shares of Medtech SA, developer of
the ROSA® robotics platform for a range of minimally invasive brain, neurological and spinal procedures.
In the quarter, the Company paid $47.9 million in dividends and declared a third quarter
dividend of $0.24 per share. The Company also repaid $200
million on its outstanding term loan during the quarter, and borrowed $750 million under a
new term loan to repay borrowings under its revolving credit facility.
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 $7.630 billion to $7.650 billion, an
increase of approximately 27% on a reported basis, or 2.4% to 2.7% on an adjusted pro forma basis, in each case as compared to
the prior year. The Company now expects foreign currency translation to decrease revenue for the full year by approximately 0.3%,
compared to its previous estimate of 0.5%. Revenue growth, excluding the contribution from LDR Holding Corporation, on a
constant currency adjusted pro forma basis, is now expected to be in a range of 1.65% to 1.90% for the full year 2016.
Previously, the Company estimated full-year revenue growth to be in a range of 2.5% 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 $1.60, and $7.90 to $7.95 on an adjusted basis. Previously, the
Company estimated diluted earnings per share to be in a range of $1.50 to $1.75 on a reported
basis, and $7.90 to $8.00 on an adjusted basis.
Conference Call
The Company will conduct its third quarter 2016 investor conference call today, October 31,
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 (888) 312-9837 and entering conference ID 8873986. 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 November 1, 2016 to November 30, 2016. To
access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820, and enter
the Access Code ID 8873986.
Sales Tables
The following sales tables provide results by geography and product category, as well as the percentage change compared
to the prior year period on a reported basis, and for the quarterly period, on an adjusted constant currency basis.
|
NET SALES - THREE MONTHS ENDED SEPTEMBER 30, 2016
|
|
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(in millions, unaudited)
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|
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|
|
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|
|
|
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|
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|
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|
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Adjusted
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|
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Constant
|
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Net
|
|
Reported
|
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Currency
|
|
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Sales
|
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% Change
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% Change
|
|
Geographic Results
|
|
|
|
|
|
|
|
|
Americas
|
$ 1,176
|
|
3.7
|
%
|
3.7
|
%
|
|
EMEA
|
369
|
|
(1.7)
|
|
|
0.9
|
|
|
Asia Pacific
|
288
|
|
13.7
|
|
|
6.4
|
|
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Total
|
$ 1,833
|
|
4.0
|
|
|
3.5
|
|
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Product Categories
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|
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|
|
|
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Knees
|
|
|
|
|
|
|
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Americas
|
$ 397
|
|
(0.9)
|
|
|
(0.9)
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EMEA
|
130
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|
(2.8)
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|
|
0.3
|
|
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Asia Pacific
|
104
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|
7.2
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|
|
2.6
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|
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Total
|
631
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|
(0.1)
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|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
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Hips
|
|
|
|
|
|
|
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|
Americas
|
239
|
|
(0.3)
|
|
|
(0.2)
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|
|
EMEA
|
112
|
|
(3.7)
|
|
|
(1.4)
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|
|
Asia Pacific
|
90
|
|
15.7
|
|
|
5.9
|
|
|
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Total
|
441
|
|
1.7
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|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
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S.E.T (1)
|
402
|
|
8.5
|
|
|
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental
|
96
|
|
(7.3)
|
|
|
(7.6)
|
|
|
|
|
|
|
|
|
|
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Spine & CMF
|
184
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|
24.3
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23.9
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|
|
|
|
|
|
|
|
|
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Other
|
79
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5.4
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|
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5.2
|
|
|
|
|
|
|
|
|
|
|
|
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Total
|
$ 1,833
|
|
4.0
|
|
|
3.5
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|
|
|
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|
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|
|
|
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(1) Surgical, Sports Medicine, Foot and Ankle, Extremities and
Trauma
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|
NET SALES - NINE MONTHS ENDED SEPTEMBER 30, 2016
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(in millions, unaudited)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net
|
|
|
|
|
|
Sales
|
|
% Change
|
|
Geographic Results
|
|
|
|
|
|
Americas
|
$ 3,534
|
|
43.8
|
%
|
|
EMEA
|
1,286
|
|
33.4
|
|
|
Asia Pacific
|
851
|
|
32.5
|
|
|
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Total
|
$ 5,671
|
|
39.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Product Categories
|
|
|
|
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|
Knees
|
|
|
|
|
|
Americas
|
$ 1,244
|
|
30.9
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EMEA
|
473
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|
28.3
|
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Asia Pacific
|
315
|
|
27.8
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|
|
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Total
|
2,032
|
|
29.8
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|
|
|
|
|
|
|
|
|
Hips
|
|
|
|
|
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Americas
|
733
|
|
35.9
|
|
|
EMEA
|
388
|
|
21.4
|
|
|
Asia Pacific
|
265
|
|
29.3
|
|
|
|
Total
|
1,386
|
|
30.3
|
|
|
|
|
|
|
|
|
|
S.E.T (1)
|
1,216
|
|
49.8
|
|
|
|
|
|
|
|
|
|
Dental
|
322
|
|
46.4
|
|
|
|
|
|
|
|
|
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Spine & CMF
|
470
|
|
83.7
|
|
|
|
|
|
|
|
|
|
Other
|
245
|
|
65.6
|
|
|
|
|
|
|
|
|
|
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Total
|
$ 5,671
|
|
39.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Surgical, Sports Medicine, Foot and Ankle, Extremities and
Trauma
|
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; office based technologies; spine, 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
This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance
with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures may not be comparable to
similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior
to, other measures prepared in accordance with GAAP.
Net earnings and diluted earnings per share for the three-month period ended September 30, 2016
and projected diluted earnings per share for the full-year 2016 are presented on a GAAP (reported) basis and an adjusted
basis. Adjusted earnings and earnings per share measures exclude the effects of inventory step-up and other inventory and
manufacturing related charges, certain claims, special items, intangible asset amortization, financing and other expenses/gains
related to the Biomet merger and other acquisitions, the tax effects of these items 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 and adjustments to deferred tax liabilities recognized as part of acquisition-related accounting.
Sales growth information for the three and nine month periods ended September 30, 2016 is
presented on a GAAP (reported) basis and, for the three-month period, on an adjusted constant currency basis. Adjusted
growth rates reflect the impact of the previously announced divesture remedies. Constant currency growth rates exclude the
effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same
predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or
decreases. Projected revenue growth information for the full-year 2016 is presented on a GAAP (reported) basis, an adjusted
pro forma basis, an adjusted pro forma constant currency basis and an adjusted pro forma constant currency basis excluding the
contribution from LDR Holding Corporation. Pro forma revenue growth refers to a comparison against revenue for the prior
year that has been adjusted to reflect the inclusion of Biomet revenue on a GAAP basis. Adjusted pro forma revenue growth
refers to a comparison against pro forma revenue for the prior year adjusted to reflect the impact of the previously announced
divestiture remedies. Adjusted pro forma constant currency revenue growth excludes the effects of changes in foreign
currency exchange rates in both years.
We use these non-GAAP financial measures internally to evaluate the performance of the business and believe they are useful
measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the
Company. We believe these measures offer the ability to make period-to-period comparisons that are not impacted by certain
items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating
trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain
items. In addition, certain of these non-GAAP financial measures are used as performance metrics in our incentive
compensation programs.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures 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, while continuing to satisfy the demand for our products; 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 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.
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
(in millions, except per share amounts,
unaudited)
|
|
|
|
|
|
2016
|
|
2015
|
|
Net Sales
|
$ 1,832.8
|
|
$ 1,762.2
|
|
|
|
|
|
Cost of products sold, excluding intangible asset
amortization
|
479.3
|
|
552.1
|
|
Intangible asset amortization
|
164.3
|
|
122.6
|
|
Research and development
|
95.6
|
|
83.3
|
|
Selling, general and administrative
|
727.7
|
|
692.3
|
|
Special items
|
170.4
|
|
195.9
|
|
Operating expenses
|
1,637.3
|
|
1,646.2
|
|
|
|
|
|
Operating Profit
|
195.5
|
|
116.0
|
|
|
|
|
|
Other (expense) income, net
|
(1.1)
|
|
4.3
|
|
Interest income
|
0.6
|
|
2.3
|
|
Interest expense
|
(91.5)
|
|
(90.8)
|
|
|
|
|
|
Earnings before income taxes
|
103.5
|
|
31.8
|
|
|
|
|
|
(Benefit) provision for income taxes
|
(54.4)
|
|
9.6
|
|
|
|
|
|
Net Earnings
|
157.9
|
|
22.2
|
|
|
|
|
|
Less: Net Loss attributable to noncontrolling
interest
|
(0.9)
|
|
-
|
|
|
|
|
|
Net Earnings of Zimmer Biomet Holdings, Inc.
|
$ 158.8
|
|
$ 22.2
|
|
|
|
|
|
Earnings Per Common Share
|
|
|
|
|
Basic
|
$ 0.79
|
|
$ 0.11
|
|
Diluted
|
$ 0.78
|
|
$ 0.11
|
|
|
|
|
|
Weighted Average Common Shares Outstanding
|
|
|
|
|
Basic
|
200.1
|
|
203.5
|
|
Diluted
|
202.9
|
|
205.7
|
|
|
|
|
|
Cash Dividends Declared Per Common Share
|
$ 0.24
|
|
$ 0.22
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
(in millions, except per share amounts,
unaudited)
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
Net Sales
|
$ 5,670.8
|
|
$ 4,064.2
|
|
|
|
|
|
|
|
Cost of products sold, excluding intangible asset
amortization
|
1,760.0
|
|
1,131.3
|
|
|
Intangible asset amortization
|
424.7
|
|
176.0
|
|
|
Research and development
|
269.9
|
|
182.9
|
|
|
Selling, general and administrative
|
2,176.6
|
|
1,560.6
|
|
|
Certain claims
|
-
|
|
7.7
|
|
|
Special items
|
397.0
|
|
751.9
|
|
|
Operating expenses
|
5,028.2
|
|
3,810.4
|
|
|
|
|
|
|
|
Operating Profit
|
642.6
|
|
253.8
|
|
|
|
|
|
|
|
Other expense, net
|
(8.7)
|
|
(44.6)
|
|
|
Interest income
|
2.7
|
|
7.4
|
|
|
Interest expense
|
(267.8)
|
|
(196.6)
|
|
|
|
|
|
|
|
Earnings before income taxes
|
368.8
|
|
20.0
|
|
|
|
|
|
|
|
Provision for income taxes
|
133.9
|
|
0.5
|
|
|
|
|
|
|
|
Net Earnings
|
234.9
|
|
19.5
|
|
|
|
|
|
|
|
Less: Net Loss attributable to noncontrolling
interest
|
(1.4)
|
|
(0.5)
|
|
|
|
|
|
|
|
Net Earnings of Zimmer Biomet Holdings, Inc.
|
$ 236.3
|
|
$ 20.0
|
|
|
|
|
|
|
|
Earnings Per Common Share
|
|
|
|
|
|
Basic
|
$ 1.18
|
|
$ 0.11
|
|
|
Diluted
|
$ 1.17
|
|
$ 0.11
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding
|
|
|
|
|
|
Basic
|
199.9
|
|
182.1
|
|
|
Diluted
|
202.3
|
|
184.7
|
|
|
|
|
|
|
|
Cash Dividends Declared Per Common Share
|
$ 0.72
|
|
$ 0.66
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(in millions, unaudited)
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2016
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$ 475.3
|
|
$ 1,459.3
|
|
Short-term investments
|
|
|
|
13.4
|
|
164.6
|
|
Receivables, net
|
|
|
|
1,603.6
|
|
1,446.5
|
|
Inventories
|
|
|
|
2,070.0
|
|
2,254.1
|
|
Other current assets
|
|
|
|
535.8
|
|
529.2
|
|
Total current assets
|
|
|
|
4,698.1
|
|
5,853.7
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
2,080.8
|
|
2,062.6
|
|
Goodwill
|
|
|
|
10,770.1
|
|
9,934.2
|
|
Intangible assets, net
|
|
|
|
9,001.1
|
|
8,746.3
|
|
Other assets
|
|
|
|
486.4
|
|
563.8
|
|
Total Assets
|
|
|
|
$ 27,036.5
|
|
$ 27,160.6
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
$ 2,312.1
|
|
$ 1,617.9
|
|
Other long-term liabilities
|
|
|
|
3,972.0
|
|
4,155.9
|
|
Long-term debt
|
|
|
|
11,006.2
|
|
11,497.4
|
|
Stockholders' equity
|
|
|
|
9,746.2
|
|
9,889.4
|
|
Total Liabilities and Stockholders' Equity
|
|
$ 27,036.5
|
|
$ 27,160.6
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) operating
activities
|
|
|
|
|
|
Net earnings
|
|
|
|
$ 234.9
|
|
$ 19.5
|
|
Depreciation and amortization
|
|
|
|
787.3
|
|
428.1
|
|
Share-based compensation
|
|
|
|
45.9
|
|
34.7
|
|
Biomet merger consideration compensation expense
|
|
-
|
|
164.1
|
|
Intangible asset impairment
|
|
|
|
28.0
|
|
-
|
|
Income tax benefit from stock option exercises
|
|
26.8
|
|
77.7
|
|
Excess income tax benefits from employee stock compensation
plans
|
|
-
|
|
(10.3)
|
|
Inventory step-up
|
|
|
|
300.9
|
|
137.1
|
|
Gain on divestiture of assets
|
|
|
|
-
|
|
(8.9)
|
|
Changes in operating assets and liabilities, net of acquired assets
and liabilities
|
|
|
|
|
Income taxes
|
|
|
|
(152.2)
|
|
29.9
|
|
Receivables
|
|
|
|
(80.3)
|
|
29.4
|
|
Inventories
|
|
|
|
44.2
|
|
(196.5)
|
|
Accounts payable and accrued
expenses
|
|
|
(76.0)
|
|
(293.8)
|
|
Other assets and liabilities
|
|
|
|
(154.5)
|
|
(23.7)
|
|
Net cash provided by operating activities
|
|
|
1,005.0
|
|
387.3
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) investing
activities
|
|
|
|
|
|
Additions to instruments
|
|
|
|
(251.3)
|
|
(186.0)
|
|
Additions to other property, plant and equipment
|
|
(130.1)
|
|
(118.6)
|
|
Purchases of investments
|
|
|
|
(1.4)
|
|
(179.0)
|
|
Sales of investments
|
|
|
|
273.3
|
|
578.8
|
|
Proceeds from divestiture of assets
|
|
|
-
|
|
57.9
|
|
Biomet acquisition, net of acquired cash
|
|
|
-
|
|
(7,760.1)
|
|
LDR acquisition, net of acquired cash
|
|
|
(1,021.1)
|
|
-
|
|
Other business combination investments, net of acquired
cash
|
|
(421.9)
|
|
-
|
|
Other investing activities
|
|
|
|
7.8
|
|
(19.6)
|
|
Net cash used in investing activities
|
|
|
(1,544.7)
|
|
(7,626.6)
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) financing
activities
|
|
|
|
|
|
Proceeds from senior notes
|
|
|
|
-
|
|
7,628.2
|
|
Proceeds from term loan
|
|
|
|
750.0
|
|
3,000.0
|
|
Redemption of senior notes
|
|
|
|
-
|
|
(2,740.0)
|
|
Payments on term loan
|
|
|
|
(700.0)
|
|
(150.0)
|
|
Net (payments) proceeds on other debt
|
|
|
(33.1)
|
|
0.8
|
|
Dividends paid to stockholders
|
|
|
(140.3)
|
|
(112.3)
|
|
Proceeds from employee stock compensation plans
|
|
113.5
|
|
77.0
|
|
Restricted stock witholdings
|
|
|
|
(5.3)
|
|
(10.5)
|
|
Excess income tax benefits from employee stock compensation
plans
|
|
-
|
|
10.3
|
|
Debt issuance costs
|
|
|
|
(3.4)
|
|
(58.4)
|
|
Repurchase of common stock
|
|
|
|
(415.5)
|
|
-
|
|
Net cash (used in) provided by financing activities
|
|
(434.1)
|
|
7,645.1
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash and cash
equivalents
|
|
(10.2)
|
|
(22.2)
|
|
|
|
|
|
|
|
-
|
|
(Decrease) increase in cash and cash equivalents
|
|
(984.0)
|
|
383.6
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,459.3
|
|
1,083.3
|
|
Cash and cash equivalents, end of period
|
|
|
$ 475.3
|
|
$ 1,466.9
|
|
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY GEOGRAPHY
FOR THE THREE and NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
(in millions, unaudited)
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2016
|
|
2015
|
|
% Inc / (Dec)
|
|
|
2016
|
|
2015
|
|
% Inc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$ 1,175.9
|
|
$ 1,133.5
|
|
3.7
|
%
|
|
$ 3,534.1
|
|
$ 2,458.2
|
|
43.8
|
%
|
|
EMEA
|
|
368.8
|
|
375.2
|
|
(1.7)
|
|
|
1,286.0
|
|
964.2
|
|
33.4
|
|
|
Asia Pacific
|
|
288.1
|
|
253.5
|
|
13.7
|
|
|
850.7
|
|
641.8
|
|
32.5
|
|
|
Total
|
|
$ 1,832.8
|
|
$ 1,762.2
|
|
4.0
|
|
|
$ 5,670.8
|
|
$ 4,064.2
|
|
39.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE and NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
(in millions, unaudited)
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2016
|
|
2015
|
|
% Inc / (Dec)
|
|
|
2016
|
|
2015
|
|
% Inc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Knees
|
|
$ 631.3
|
|
$ 632.0
|
|
(0.1)
|
%
|
|
$ 2,031.5
|
|
$ 1,564.8
|
|
29.8
|
%
|
|
Hips
|
|
440.6
|
|
433.5
|
|
1.7
|
|
|
1,385.7
|
|
1,063.9
|
|
30.3
|
|
|
S.E.T
|
|
402.1
|
|
370.4
|
|
8.5
|
|
|
1,215.6
|
|
811.3
|
|
49.8
|
|
|
Dental
|
|
95.9
|
|
103.4
|
|
(7.3)
|
|
|
322.5
|
|
220.2
|
|
46.4
|
|
|
Spine & CMF
|
|
183.6
|
|
147.7
|
|
24.3
|
|
|
470.6
|
|
256.1
|
|
83.7
|
|
|
Other
|
|
79.3
|
|
75.2
|
|
5.4
|
|
|
244.9
|
|
147.9
|
|
65.6
|
|
|
Total
|
|
$ 1,832.8
|
|
$ 1,762.2
|
|
4.0
|
|
|
$ 5,670.8
|
|
$ 4,064.2
|
|
39.5
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
RECONCILIATION OF REPORTED % CHANGE TO
|
|
ADJUSTED CONSTANT CURRENCY % CHANGE AND
|
|
% CHANGE EXCLUDING LDR HOLDING CORPORATION
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
Constant
|
|
|
|
|
|
|
Divestiture
|
|
|
Exchange
|
|
|
|
Currency
|
|
|
|
% Change
|
|
|
Impact
|
|
|
Impact
|
|
|
|
% Change
|
|
Geographic Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
3.7
|
%
|
-
|
%
|
|
|
-
|
%
|
|
|
|
3.7
|
%
|
|
EMEA
|
(1.7)
|
|
|
-
|
|
|
|
(2.6)
|
|
|
|
|
0.9
|
|
|
Asia Pacific
|
13.7
|
|
|
(0.9)
|
|
|
|
8.2
|
|
|
|
|
6.4
|
|
|
|
Total
|
4.0
|
|
|
(0.1)
|
|
|
|
0.6
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Categories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Knees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
(0.9)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(0.9)
|
|
|
|
EMEA
|
(2.8)
|
|
|
-
|
|
|
|
(3.1)
|
|
|
|
|
0.3
|
|
|
|
Asia Pacific
|
7.2
|
|
|
(1.9)
|
|
|
|
6.5
|
|
|
|
|
2.6
|
|
|
|
Total
|
(0.1)
|
|
|
(0.3)
|
|
|
|
0.3
|
|
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hips
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
(0.3)
|
|
|
-
|
|
|
|
(0.1)
|
|
|
|
|
(0.2)
|
|
|
|
EMEA
|
(3.7)
|
|
|
-
|
|
|
|
(2.3)
|
|
|
|
|
(1.4)
|
|
|
|
Asia Pacific
|
15.7
|
|
|
-
|
|
|
|
9.8
|
|
|
|
|
5.9
|
|
|
|
Total
|
1.7
|
|
|
-
|
|
|
|
1.1
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S.E.T
|
8.5
|
|
|
(0.1)
|
|
|
|
0.8
|
|
|
|
|
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental
|
(7.3)
|
|
|
-
|
|
|
|
0.3
|
|
|
|
|
(7.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spine & CMF
|
24.3
|
|
|
-
|
|
|
|
0.4
|
|
|
|
|
23.9
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Other
|
5.4
|
|
|
-
|
|
|
|
0.2
|
|
|
|
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4.0
|
|
|
(0.1)
|
|
|
|
0.6
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of LDR Holding Corporation
|
(1.9)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(1.9)
|
|
|
|
% Change excluding LDR Holding Corporation
|
2.1
|
|
|
(0.1)
|
|
|
|
0.6
|
|
|
|
|
1.6
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
RECONCILIATION OF NET EARNINGS AND ADJUSTED NET
EARNINGS
|
|
|
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
|
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
Ended September 30,
|
|
|
|
2016
|
|
2015
|
|
|
Net Earnings of Zimmer Biomet Holdings, Inc.
|
$ 158.8
|
|
$ 22.2
|
|
|
Inventory step-up and other inventory
|
|
|
|
|
|
and manufacturing-related charges
|
22.8
|
|
132.6
|
|
|
Intangible asset amortization
|
164.3
|
|
122.6
|
|
|
Special items
|
|
|
|
|
|
|
Biomet merger-related
|
|
113.8
|
|
146.6
|
|
|
Other special items
|
|
56.6
|
|
49.3
|
|
|
Merger-related income in other (expense) income, net
|
(2.6)
|
|
(11.9)
|
|
|
Taxes on above items (1)
|
|
(111.6)
|
|
(129.2)
|
|
|
Other certain tax adjustments(2)
|
(39.7)
|
|
6.2
|
|
|
Adjusted Net Earnings
|
|
$ 362.4
|
|
$ 338.4
|
|
|
|
|
|
|
|
|
(1) The tax effect for the U.S. jurisdiction is calculated
based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside
the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
|
|
|
|
|
|
|
|
(2) Other certain tax adjustments primarily include a
favorable adjustment to certain deferred tax liabilities recognized
as part of acquisition-related accounting partially by
internal restructuring transactions that provide the
Company access to offshore funds in a tax efficient
manner.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
RECONCILIATION OF NET EARNINGS AND ADJUSTED NET
EARNINGS
|
|
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
|
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
Ended September 30,
|
|
|
|
2016
|
|
2015
|
|
|
Net Earnings of Zimmer Biomet Holdings, Inc.
|
$ 236.3
|
|
$ 20.0
|
|
|
Inventory step-up and other inventory
|
|
|
|
|
|
and manufacturing-related charges
|
357.7
|
|
151.2
|
|
|
Certain claims
|
|
-
|
|
7.7
|
|
|
Intangible asset amortization
|
424.7
|
|
176.0
|
|
|
Special items
|
|
|
|
|
|
|
Biomet merger-related
|
|
313.5
|
|
563.0
|
|
|
Other special items
|
|
83.5
|
|
188.9
|
|
|
Merger-related (income) expense in other (expense) income, net
|
(1.1)
|
|
33.1
|
|
|
Interest expense on Biomet merger financing
|
-
|
|
70.0
|
|
|
Taxes on above items (1)
|
|
(297.0)
|
|
(363.6)
|
|
|
Biomet merger-related measurement period tax adjustments
(2)
|
52.7
|
|
-
|
|
|
Other certain tax adjustments(3)
|
6.4
|
|
35.9
|
|
|
Adjusted Net Earnings
|
|
$ 1,176.7
|
|
$ 882.2
|
|
|
|
|
|
|
|
|
(1) The tax effect for the U.S. jurisdiction is calculated
based on an effective rate considering federal and state taxes,
as well as permanent items. For jurisdictions outside
the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
|
|
|
|
|
|
|
|
(2) The 2016 period includes negative effects from
finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these measurement period
adjustments are recognized on a prospective basis
in the period of change.
|
|
|
|
|
|
|
|
|
(3) Other certain tax adjustments primarily include a
favorable adjustment to certain deferred tax liabilities recognized
as part of acquisition-related accounting offset by
internal restructuring transactions that provide the
Company access to offshore funds in a tax efficient
manner.
|
|
|
|
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
|
RECONCILIATION OF DILUTED EPS AND ADJUSTED DILUTED EPS
|
|
|
|
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
Ended September 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
Diluted EPS
|
$
0.78
|
|
$
0.11
|
|
|
|
Inventory step-up and other inventory
|
|
|
|
|
|
|
and manufacturing-related charges
|
0.11
|
|
0.64
|
|
|
|
Intangible asset amortization
|
0.81
|
|
0.60
|
|
|
|
Special items
|
|
|
|
|
|
|
Biomet merger-related
|
0.56
|
|
0.71
|
|
|
|
Other special items
|
0.28
|
|
0.24
|
|
|
|
Merger-related income in other (expense) income, net
|
(0.01)
|
|
(0.06)
|
|
|
|
Taxes on above items (1)
|
(0.55)
|
|
(0.64)
|
|
|
|
Other certain tax adjustments(2)
|
(0.19)
|
|
0.04
|
|
|
|
Adjusted Diluted EPS
|
$
1.79
|
|
$
1.64
|
|
|
|
|
|
|
|
|
|
(1) The tax effect for the U.S. jurisdiction is calculated
based on an effective rate considering federal and state taxes,
as well as permanent items. For
jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were incurred.
|
|
|
|
|
|
|
|
|
|
(2) Other certain tax adjustments primarily include a
favorable adjustment to certain deferred tax liabilities recognized
as part of acquisition-related accounting
partially offset by internal restructuring transactions that provide the
Company access to offshore funds in a tax
efficient manner.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
|
RECONCILIATION OF DILUTED EPS AND ADJUSTED DILUTED EPS
|
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
Ended September 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
Diluted EPS
|
$
1.17
|
|
$
0.11
|
|
|
|
Inventory step-up and other inventory
|
|
|
|
|
|
|
and manufacturing-related charges
|
1.77
|
|
0.82
|
|
|
|
Certain claims
|
-
|
|
0.04
|
|
|
|
Intangible asset amortization
|
2.10
|
|
0.95
|
|
|
|
Special items
|
|
|
|
|
|
|
Biomet merger-related
|
1.55
|
|
3.05
|
|
|
|
Other special items
|
0.41
|
|
1.02
|
|
|
|
Merger-related (income) expense in other (expense) income, net
|
(0.01)
|
|
0.18
|
|
|
|
Interest expense on Biomet merger financing
|
-
|
|
0.38
|
|
|
|
Taxes on above items (1)
|
(1.47)
|
|
(1.98)
|
|
|
|
Biomet merger-related measurement period tax adjustments
(2)
|
0.26
|
|
-
|
|
|
|
Other certain tax adjustments(3)
|
0.04
|
|
0.21
|
|
|
|
Adjusted Diluted EPS
|
$
5.82
|
|
$
4.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The tax effect for the U.S. jurisdiction is calculated
based on an effective rate considering federal and state taxes,
as well as permanent items. For
jurisdictions outside the U.S., the tax effect is calculated based upon the statutory
rates where the items were
incurred.
|
|
|
|
|
|
|
|
|
|
(2) The 2016 period includes negative effects from
finalizing the tax accounts for the Biomet merger. Under the
applicable U.S. GAAP rules, these
measurement period adjustments are recognized on a prospective basis
in the period of change.
|
|
|
|
|
|
|
|
|
|
(3) Other certain tax adjustments primarily include a
favorable adjustment to certain deferred tax liabilities recognized
as part of acquisition-related accounting
partially offset by internal restructuring transactions that provide the
Company access to offshore funds in a tax
efficient manner.
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
SUMMARY OF EXPENSES INCLUDED IN SPECIAL ITEMS
|
|
|
FOR THE THREE and NINE MONTHS ENDED SEPTEMBER 30, 2016 and
2015
|
|
|
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Nine Months
|
|
|
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Biomet-related
|
|
|
|
|
|
|
|
|
|
|
Merger consideration compensation expense
|
|
$ -
|
|
$ -
|
|
$ -
|
|
$ 164.1
|
|
|
Retention plans
|
|
-
|
|
-
|
|
-
|
|
73.0
|
|
|
Consulting and professional fees
|
|
59.0
|
|
28.0
|
|
138.4
|
|
114.6
|
|
|
Employee termination benefits
|
|
7.1
|
|
14.2
|
|
14.3
|
|
79.1
|
|
|
Dedicated project personnel
|
|
21.9
|
|
36.8
|
|
64.8
|
|
45.9
|
|
|
Relocated facilities
|
|
9.5
|
|
1.6
|
|
17.5
|
|
2.5
|
|
|
Contract terminations
|
|
3.5
|
|
59.2
|
|
28.8
|
|
75.1
|
|
|
Information technology integration
|
|
4.8
|
|
1.1
|
|
9.3
|
|
1.1
|
|
|
Intangible asset impairment
|
|
-
|
|
-
|
|
28.0
|
|
-
|
|
|
Other
|
|
8.0
|
|
5.7
|
|
12.4
|
|
7.6
|
|
|
|
Total Biomet-related
|
|
113.8
|
|
146.6
|
|
313.5
|
|
563.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
Consulting and professional fees
|
|
14.6
|
|
30.2
|
|
30.3
|
|
109.5
|
|
|
Employee termination benefits
|
|
3.2
|
|
1.1
|
|
3.2
|
|
1.9
|
|
|
Dedicated project personnel
|
|
8.2
|
|
6.4
|
|
11.5
|
|
28.9
|
|
|
Impairment/loss on disposal of assets
|
|
-
|
|
-
|
|
1.1
|
|
2.3
|
|
|
LDR merger consideration compensation expense
|
|
24.1
|
|
-
|
|
24.1
|
|
-
|
|
|
Relocated facilities
|
|
-
|
|
-
|
|
0.2
|
|
-
|
|
|
Certain litigation matters
|
|
3.7
|
|
-
|
|
3.7
|
|
20.3
|
|
|
Contract terminations
|
|
0.1
|
|
-
|
|
1.1
|
|
-
|
|
|
Information technology integration
|
|
0.8
|
|
1.8
|
|
1.1
|
|
1.8
|
|
|
Contingent consideration adjustments
|
|
-
|
|
0.1
|
|
-
|
|
2.4
|
|
|
Accelerated software amortization
|
|
-
|
|
-
|
|
-
|
|
1.5
|
|
|
Other
|
|
1.9
|
|
9.7
|
|
7.2
|
|
20.3
|
|
|
|
Total Other
|
|
56.6
|
|
49.3
|
|
83.5
|
|
188.9
|
|
|
Special items
|
|
$ 170.4
|
|
$ 195.9
|
|
$ 397.0
|
|
$ 751.9
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
|
RECONCILIATION OF 2016 PROJECTED REVENUE % GROWTH TO
|
|
|
2016 PROJECTED ADJUSTED PRO FORMA % GROWTH AND
|
|
|
2016 PROJECTED CONSTANT CURRENCY ADJUSTED PRO FORMA % GROWTH
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Year Ended December 31, 2016:
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
Revenue % growth
|
27.00
|
%
|
|
27.00
|
%
|
|
Effect from product divestitures
|
(0.90)
|
|
|
(0.90)
|
|
|
Effect from full year of Biomet revenue
|
(23.40)
|
|
|
(23.70)
|
|
|
Adjusted pro forma % growth
|
2.70
|
|
|
2.40
|
|
|
Effect of LDR revenue
|
(1.10)
|
|
|
(1.10)
|
|
|
Foreign exchange impact
|
0.30
|
|
|
0.35
|
|
|
Constant currency adjusted pro forma %
growth
|
1.90
|
%
|
|
1.65
|
%
|
|
|
|
|
|
|
|
ZIMMER BIOMET HOLDINGS, INC.
|
|
RECONCILIATION OF 2016 PROJECTED DILUTED EPS
|
|
AND PROJECTED ADJUSTED DILUTED EPS
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Year Ended December 31, 2016:
|
High
|
|
Low
|
|
|
|
|
|
Diluted EPS
|
$
1.60
|
|
$ 1.50
|
|
Inventory step-up and other inventory and manufacturing related
|
|
|
|
|
charges, intangible asset amortization, special items and
other expense
|
7.90
|
|
8.00
|
|
Taxes on above items(1) and other certain tax
adjustments
|
(1.55)
|
|
(1.60)
|
|
Adjusted Diluted EPS
|
$
7.95
|
|
$ 7.90
|
|
|
|
|
|
|
|
|
|
(1) The tax effect for the U.S. jurisdiction is estimated
based on an effective rate considering federal and state taxes,
as well as permanent items. For
jurisdictions outside the U.S., the tax effect is estimated based upon the statutory
rates where the items were or are projected to be
incurred.
|
|
|
|
|
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/zimmer-biomet-reports-third-quarter-2016-financial-results-300353898.html
SOURCE Zimmer Biomet Holdings, Inc.