Medical technology company Zimmer Biomet Holdings (ZBH) provides musculoskeletal healthcare products and solutions across the globe. Its products and portfolio of integrated digital and robotic technologies utilize data, data analytics, and artificial intelligence to improve patients’ mobility and health.
Recently, the company posted better-than-expected Q2 results. Let’s take a look at the financial performance of the company and see what has changed in its key risk factors that investors should be aware of.
On the back of robust sales growth across geographies and product categories, Zimmer Biomet’s Q2 revenue surged 65.3% year-over-year to $2.03 billion, beating analysts’ estimates by $48.9 million.
The Chairman, President and CEO of Zimmer Biomet, Bryan Hanson, said, “Our performance in the second quarter improved meaningfully from the first quarter of 2021 across all regions and product categories as recovery from the global pandemic continued to take hold. While we anticipate some ongoing COVID-19 pressure, we expect continued improvement in procedure volume recovery through the second half of 2021.”
Earnings per share of $1.90 beat the Street’s estimates by $0.04 per share. (See Zimmer Biomet stock chart on TipRanks)
Additionally, Zimmer Biomet expects 2021 revenue growth between 14.5% and 16.5%, compared to its previous guidance of 14% and 17%. The company expects its EPS to be in the range of $7.65 to $7.95 against the previous guidance of $7.60 to $8.
On August 4, in response to the earnings beat, Oppenheimer analyst Steven Lichtman reiterated a Buy rating on the stock and decreased the price target to $190 from $195. Lichtman noted that the Q2 numbers were better than expectations and point to sequential improvement, though the recovery in the knee/hip product categories lagged.
Based on 14 unanimous Buys, consensus on the Street is a Strong Buy. The average Zimmer Biomet price target of $192.86 implies 30.8% upside potential. Shares are down 3.7% so far this year.
Now, let’s look at what has changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Zimmer Biomet’s main risk category is Finance & Corporate, which accounts for 27% of the total 30 risks identified. Since June, the company has changed one key risk factor.
Under the Ability to Sell category, the company highlights that if third-party payors or key participants of the government healthcare system reduce reimbursement rates or decline to reimburse for Zimmer’s products then the demand for the company’s products may take a hit and its ability to sell may be adversely impacted.
Zimmer Biomet acknowledges that third-party payors are looking to contain healthcare costs by limiting coverage as also the level of reimbursement for medical products and services. In international markets, Zimmer Biomet has experienced downward pressure on product pricing and other effects of healthcare reforms.
In China, the government has implemented a volume-based procurement process that decreases prices for medical devices and other products. These dynamics could affect Zimmer Biomet’s profitability.
The Macro & Political risk factor’s sector average is at 6%, compared to Zimmer Biomet’s 13%.
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