Full Press Release Details
| 345 E. Main St. | |
| Warsaw, IN 46580 | |
| www.zimmerbiomet.com | Exhibit 99.1 |
| Media | Investors |
| Monica Kendrick | Coleman Lannum |
| (574) 372-4989 | (574) 371-9480 |
| Monica.Kendrick@ZimmerBiomet.com | Cole.Lannum@ZimmerBiomet.com |
| Barb Goslee | |
| (574) 371-9449 | |
| Barb.Goslee@ZimmerBiomet.com |
Zimmer Biomet Announces
Fourth Quarter and Full-Year 2018 Financial Results
(WARSAW, IN) February 1, 2019 - Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter and full year ended December 31, 2018. The Company reported fourth quarter net sales of $2.071 billion, an increase of 0.1% over the prior year period, and an increase of 1.6% on a constant currency basis. Diluted loss per share for the fourth quarter was $4.42. The Company's diluted loss per share included goodwill impairment charges of $4.78 per share and legal charges of $0.59 per share primarily related to a previously disclosed patent litigation matter. Fourth quarter adjusted diluted earnings per share were $2.18, an increase of 3.8% over the prior year period.
Full-year 2018 net sales were $7.933 billion, an increase of 1.7% over the prior year, and an increase of 0.8% on a constant currency basis. Diluted loss per share for the full year was $1.86. Adjusted diluted earnings per share for the full year were $7.64, a decrease of 4.9% from the prior year.
"We are encouraged with the solid close to 2018, driven by strong fourth quarter performance in the Asia Pacific and Europe, Middle East and Africa regions, and in our Spine & CMF category," said Bryan Hanson, President and CEO of Zimmer Biomet. "Overall, our financial results for the full year were in-line with our expectations for the progress of the turnaround of the business, and increase our confidence in achieving our 2019 objectives. We look forward to delivering on our near-term commitments to transition to offense and drive enhanced shareholder value, including the launch of a number of exciting new products and platform technologies to expand our ecosystem of differentiated solutions."
Net loss for the fourth quarter was $901.1 million, including goodwill impairment and litigation charges. Net earnings on an adjusted basis were $447.9 million. Operating cash flows for the fourth quarter and full-year 2018 were $379.5 million and $1,747.4 million, respectively. Free cash flows in the fourth quarter and full-year 2018 were $259.4 million and $1,308.4 million, respectively.
In the quarter, the Company paid $49.0 million in dividends and declared a fourth quarter dividend of $0.24 per share.
The Company provided the following full-year 2019 financial guidance:
| Projected Year Ending December 31, 2019 | |
| 2019 Sales Growth vs Prior Year (1) | (0.5%) - 0.5% |
| Adjusted Operating Profit Margin (2) | 27.0% - 28.0% |
| Adjusted Tax Rate (2) | 17.0% - 18.0% |
| Adjusted Diluted EPS (2) | $7.70 - $7.90 |
| Free Cash Flow (3)(4) | $1.1 billion - $1.3 billion |
| (1) | 2019 sales growth vs prior year is provided on an as reported basis and includes 100 to 150 basis points of negative foreign exchange impact | |
| (2) | These measures are non-GAAP financial measures for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts. See "Forward-Looking Non-GAAP Financial Measures." | |
| (3) | The range includes a potential one-time payment of approximately $170 million for a previously disclosed patent litigation matter | |
| (4) | Reconciliation of Projected Free Cash Flow for the Year Ending December 31, 2019 | |
| ($ in millions) | Low | High |
| Net Cash Provided by Operating Activities | $1,580 | $1,730 |
| Additions to Instruments and Other Property, Plant and Equipment | (480) | (430) |
| Free Cash Flow | $1,100 | $1,300 |
The Company will conduct its fourth quarter and full-year 2018 investor conference call today, February 1, 2019, at 8:30 a.m. Eastern Time. The 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.
The following sales tables provide results by geography and product category, as well as the percentage change compared to the prior year quarter and year, on both a reported basis and a constant currency basis.
NET SALES - THREE MONTHS ENDED DECEMBER 31, 2018
(in millions, unaudited)
| Constant | |||||||||||||
| Net | Currency | ||||||||||||
| Sales | % Change | % Change | |||||||||||
| Geographic Results | |||||||||||||
| Americas | $ | 1,259 | (1.2 | ) | % | (1.0 | ) | % | |||||
| EMEA | 476 | 0.6 | 4.7 | ||||||||||
| Asia Pacific | 336 | 4.6 | 7.2 | ||||||||||
| Total | $ | 2,071 | 0.1 | % | 1.6 | % | |||||||
| Product Categories | |||||||||||||
| Knees | |||||||||||||
| Americas | $ | 433 | (2.0 | ) | % | (1.8 | ) | % | |||||
| EMEA | 178 | (1.8 | ) | 2.8 | |||||||||
| Asia Pacific | 118 | 10.6 | 14.1 | ||||||||||
| Total | 729 | (0.1 | ) | 1.6 | |||||||||
| Hips | |||||||||||||
| Americas | 259 | 1.6 | 1.9 | ||||||||||
| EMEA | 136 | (0.1 | ) | 4.0 | |||||||||
| Asia Pacific | 103 | (3.2 | ) | (1.2 | ) | ||||||||
| Total | 498 | 0.1 | 1.8 | ||||||||||
| S.E.T * | 461 | 1.9 | 3.1 | ||||||||||
| Dental | 104 | (3.0 | ) | (1.8 | ) | ||||||||
| Spine & CMF** | 198 | 2.1 | 3.1 | ||||||||||
| Other | 81 | (7.5 | ) | (6.4 | ) | ||||||||
| Total | $ | 2,071 | 0.1 | % | 1.6 | % |
* Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma
** Craniomaxillofacial
NET SALES - YEAR ENDED DECEMBER 31, 2018
(in millions, unaudited)
| Constant | ||||||||||||
| Net | Currency | |||||||||||
| Sales | % Change | % Change | ||||||||||
| Geographic Results | ||||||||||||
| Americas | $ | 4,837 | (0.2 | ) | % | (0.1 | ) | % | ||||
| EMEA | 1,802 | 3.2 | 0.1 | |||||||||
| Asia Pacific | 1,294 | 6.6 | 5.7 | |||||||||
| Total | $ | 7,933 | 1.7 | % | 0.8 | % | ||||||
| Product Categories | ||||||||||||
| Knees | ||||||||||||
| Americas | $ | 1,643 | (0.8 | ) | % | (0.8 | ) | % | ||||
| EMEA | 672 | 4.4 | 1.6 | |||||||||
| Asia Pacific | 459 | 5.9 | 5.4 | |||||||||
| Total | 2,774 | 1.5 | 0.7 | |||||||||
| Hips | ||||||||||||
| Americas | 996 | 2.8 | 2.8 | |||||||||
| EMEA | 520 | 0.3 | (2.8 | ) | ||||||||
| Asia Pacific | 405 | 5.4 | 4.2 | |||||||||
| Total | 1,921 | 2.6 | 1.5 | |||||||||
| S.E.T * | 1,752 | 2.9 | 2.1 | |||||||||
| Dental | 411 | (1.8 | ) | (3.2 | ) | |||||||
| Spine & CMF** | 764 | 0.8 | 0.4 | |||||||||
| Other | 311 | (2.6 | ) | (3.2 | ) | |||||||
| Total | $ | 7,933 | 1.7 | % | 0.8 | % |
* Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma
** Craniomaxillofacial
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.
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.
Beginning in the second quarter 2018, in our consolidated statements of earnings we have reclassified expenses that were previously recognized in a financial statement line item labeled, "Acquisition, quality remediation and other" (and prior to that, labeled "Special items") to the financial statement line items of "Research and development", "Selling, general and administrative", "Goodwill and intangible asset impairment", "Acquisition, integration and related", and "Quality remediation". Prior periods have been reclassified to conform to the current year presentation.
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.
Sales change information for the three-month period and the year ended December 31, 2018 are presented on a GAAP (reported) basis and on a constant currency basis. Constant currency percentage changes 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.
Net earnings (loss) and diluted earnings (loss) per share for the three-month period and year ended December 31, 2018 are presented on a GAAP (reported) basis and on an adjusted basis. Adjusted earnings and adjusted diluted earnings per share exclude the effects of inventory step-up; certain inventory and manufacturing-related charges, including charges to discontinue certain product lines; intangible asset amortization; goodwill and intangible asset impairment; acquisition, integration and related expenses; quality remediation expenses; certain litigation gains and charges; expenses to comply with the new European Union Medical Device Regulation; other charges; any related effects on our income tax provision associated with these items; the effect of U.S. tax reform; other certain tax adjustments; and provide for the effect of dilutive shares assuming net earnings in periods of a reported net loss.
Free cash flow is an additional non-GAAP measure that is presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.
Management uses non-GAAP financial measures internally to evaluate the performance of the business. Additionally, management believes these non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company. Management believes 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 income but that do not impact the fundamentals of our operations. The non-GAAP measures enable the evaluation of operating results and trend analysis by allowing a reader to better identify operating trends that may otherwise be masked or distorted by these types of items that are excluded from the non-GAAP measures. In addition, constant currency sales changes, adjusted operating profit, adjusted diluted
earnings per share and free cash flow are used as performance metrics in our incentive compensation programs.
Forward-Looking Non-GAAP Financial Measures
This press release also includes certain forward-looking non-GAAP financial measures for the year ending December 31, 2019. We calculate forward-looking non-GAAP financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, we exclude the impact of certain potential charges or gains connected to quality enhancement and remediation efforts and certain legal and tax matters. Other than projected free cash flow for the year ending December 31, 2019, for which a reconciliation is provided, we have not provided quantitative reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures because the excluded items are not available on a prospective basis without unreasonable efforts. It is probable that these forward-looking non-GAAP financial measures may be materially different from the corresponding GAAP financial measures.
Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects. We generally use the words "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," "sees," "seeks," "should," "could," "intends," "guidance," "confidence," "look forward to" and similar expressions to identify forward-looking statements. 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, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially. These risks, uncertainties and changes in circumstances 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; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality remediation
efforts at our Warsaw North Campus facility; challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration (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; the outcome of government investigations; competition; pricing pressures; 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; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, 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; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on 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 (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us. Forward-looking statements speak only as of the date they are made, and 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. Readers of this release are cautioned not to rely on these forward-looking statements, since 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 release.
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 and 2017
(in millions, except per share amounts, unaudited)
| 2018 | 2017 | ||||||
| Net Sales | $ | 2,071.0 | $ | 2,068.3 | |||
| Cost of products sold, excluding intangible asset amortization | 583.4 | 591.4 | |||||
| Intangible asset amortization | 148.0 | 151.5 | |||||
| Research and development | 101.2 | 95.0 | |||||
| Selling, general and administrative | 998.6 | 865.1 | |||||
| Goodwill and intangible asset impairment | 975.9 | 272.0 | |||||
| Acquisition, integration and related | 19.8 | 87.5 | |||||
| Quality remediation | 34.6 | 45.9 | |||||
| Operating expenses | 2,861.5 | 2,108.4 | |||||
| Operating Loss | (790.5 | ) | (40.1 | ) | |||
| Other expense, net | (6.9 | ) | (4.9 | ) | |||
| Interest income | 1.0 | 0.8 | |||||
| Interest expense | (69.5 | ) | (80.0 | ) | |||
| Loss before income taxes | (865.9 | ) | (124.2 | ) | |||
| Provision (benefit) for income taxes | 36.6 | (1,355.4 | ) | ||||
| Net (Loss) Earnings | (902.5 | ) | 1,231.2 | ||||
| Less: Net Loss attributable to noncontrolling interest | (1.4 | ) | (0.2 | ) | |||
| Net (Loss) Earnings of Zimmer Biomet Holdings, Inc. | $ | (901.1 | ) | $ | 1,231.4 | ||
| (Loss) Earnings Per Common Share | |||||||
| Basic | $ | (4.42 | ) | $ | 6.08 | ||
| Diluted | $ | (4.42 | ) | $ | 6.03 | ||
| Weighted Average Common Shares Outstanding | |||||||
| Basic | 204.0 | 202.5 | |||||
| Diluted | 204.0 | 204.1 | |||||
| Cash Dividends Declared Per Common Share | $ | 0.24 | $ | 0.24 |
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017
(in millions, except per share amounts, unaudited)
| 2018 | 2017 | ||||||
| Net Sales | $ | 7,932.9 | $ | 7,803.3 | |||
| Cost of products sold, excluding intangible asset amortization | 2,271.9 | 2,132.9 | |||||
| Intangible asset amortization | 595.9 | 603.9 | |||||
| Research and development | 391.7 | 369.9 | |||||
| Selling, general and administrative | 3,379.3 | 3,104.7 | |||||
| Goodwill and intangible asset impairment | 979.7 | 331.5 | |||||
| Acquisition, integration and related | 133.7 | 279.8 | |||||
| Quality remediation | 146.9 | 181.3 | |||||
| Operating expenses | 7,899.1 | 7,004.0 | |||||
| Operating Profit | 33.8 | 799.3 | |||||
| Other expense, net | (15.6 | ) | (9.4 | ) | |||
| Interest income | 3.3 | 2.2 | |||||
| Interest expense | (292.6 | ) | (327.5 | ) | |||
| (Loss) earnings before income taxes | (271.1 | ) | 464.6 | ||||
| Provision (benefit) for income taxes | 108.2 | (1,348.8 | ) | ||||
| Net (Loss) Earnings | (379.3 | ) | 1,813.4 | ||||
| Less: Net Loss attributable to noncontrolling interest | (0.1 | ) | (0.4 | ) | |||
| Net (Loss) Earnings of Zimmer Biomet Holdings, Inc. | $ | (379.2 | ) | $ | 1,813.8 | ||
| (Loss) Earnings Per Common Share | |||||||
| Basic | $ | (1.86 | ) | $ | 8.98 | ||
| Diluted | $ | (1.86 | ) | $ | 8.90 | ||
| Weighted Average Common Shares Outstanding | |||||||
| Basic | 203.5 | 201.9 | |||||
| Diluted | 203.5 | 203.7 | |||||
| Cash Dividends Declared Per Common Share | $ | 0.96 | $ | 0.96 |
ZIMMER BIOMET HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 542.8 | $ | 524.4 | ||||
| Receivables, net | 1,275.8 | 1,544.1 | ||||||
| Inventories | 2,256.5 | 2,068.3 | ||||||
| Other current assets | 352.3 | 428.0 | ||||||
| Total current assets | 4,427.4 | 4,564.8 | ||||||
| Property, plant and equipment, net | 2,015.4 | 2,038.6 | ||||||
| Goodwill | 9,594.4 | 10,668.4 | ||||||
| Intangible assets, net | 7,684.6 | 8,353.4 | ||||||
| Other assets | 405.0 | 388.8 | ||||||
| Total Assets | $ | 24,126.8 | $ | 26,014.0 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | $ | 1,896.3 | $ | 1,844.7 | ||||
| Current portion of long-term debt | 500.0 | 1,225.0 | ||||||
| Other long-term liabilities | 2,015.7 | 2,291.3 | ||||||
| Long-term debt | 8,438.7 | 8,917.5 | ||||||
| Stockholders' equity | 11,276.1 | 11,735.5 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 24,126.8 | $ | 26,014.0 |
ZIMMER BIOMET HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017
(in millions, unaudited)
| 2018 | 2017 | |||||||
| Cash flows provided by (used in) operating activities | ||||||||
| Net (loss) earnings | $ | (379.3 | ) | $ | 1,813.4 | |||
| Depreciation and amortization | 1,040.5 | 1,062.7 | ||||||
| Share-based compensation | 65.5 | 53.7 | ||||||
| Goodwill and intangible asset impairment | 979.7 | 331.5 | ||||||
| Inventory step-up | - | 32.8 | ||||||
| Changes in operating assets and liabilities, net of acquired assets and liabilities | ||||||||
| Income taxes | (137.4 | ) | (1,625.8 | ) | ||||
| Receivables | 213.6 | 161.7 | ||||||
| Inventories | (199.5 | ) | (120.1 | ) | ||||
| Accounts payable and accrued expenses | 155.9 | (133.3 | ) | |||||
| Other assets and liabilities | 8.4 | 5.7 | ||||||
| Net cash provided by operating activities | 1,747.4 | 1,582.3 | ||||||
| Cash flows provided by (used in) investing activities | ||||||||
| Additions to instruments | (276.3 | ) | (337.0 | ) | ||||
| Additions to other property, plant and equipment | (162.7 | ) | (156.0 | ) | ||||
| Net investment hedge settlements | 69.2 | - | ||||||
| Other investing activities | (46.8 | ) | (17.8 | ) | ||||
| Net cash used in investing activities | (416.6 | ) | (510.8 | ) | ||||
| Cash flows provided by (used in) financing activities | ||||||||
| Proceeds from senior notes | 749.5 | - | ||||||
| Proceeds from multicurrency revolving facility | 400.0 | 400.0 | ||||||
| Payments on multicurrency revolving facility | (400.0 | ) | (400.0 | ) | ||||
| Redemption of senior notes | (1,150.0 | ) | (500.0 | ) | ||||
| Proceeds from term loans | 675.0 | 192.7 | ||||||
| Payments on term loans | (1,425.0 | ) | (940.0 | ) | ||||
| Net payments on other debt | (3.9 | ) | (0.9 | ) | ||||
| Dividends paid to stockholders | (195.2 | ) | (193.6 | ) | ||||
| Proceeds from employee stock compensation plans | 107.9 | 145.5 | ||||||
| Net cash flows from unremitted collections from factoring programs | (36.7 | ) | 103.5 | |||||
| Business combination contingent consideration payments | (19.8 | ) | (9.1 | ) | ||||
| Other financing activities | (4.0 | ) | (8.6 | ) | ||||
| Net cash used in financing activities | (1,302.2 | ) | (1,210.5 | ) | ||||
| Effect of exchange rates on cash and cash equivalents | (10.2 | ) | 29.3 | |||||
| Increase (decrease) in cash and cash equivalents | 18.4 | (109.7 | ) | |||||
| Cash and cash equivalents, beginning of period | 524.4 | 634.1 | ||||||
| Cash and cash equivalents, end of period | $ | 542.8 | $ | 524.4 |
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY GEOGRAPHY
FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 and 2017
(in millions, unaudited)
| Three Months Ended December 31, | |||||||||||||||||||||||||
| 2018 | 2017 | % Inc / (Dec) | Volume / Mix | Price | Foreign Exchange | ||||||||||||||||||||
| Americas | $ | 1,259.2 | $ | 1,274.0 | (1.2 | ) | % | 1.5 | % | (2.5 | ) | % | (0.2 | ) | % | ||||||||||
| EMEA | 475.6 | 472.7 | 0.6 | 4.6 | 0.1 | (4.1 | ) | ||||||||||||||||||
| Asia Pacific | 336.2 | 321.6 | 4.6 | 10.7 | (3.5 | ) | (2.6 | ) | |||||||||||||||||
| Total | $ | 2,071.0 | $ | 2,068.3 | 0.1 | % | 3.6 | % | (2.0 | ) | % | (1.5 | ) | % |
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 and 2017
(in millions, unaudited)
| Three Months Ended December 31, | |||||||||||||||||||||||||
| 2018 | 2017 | % Inc / (Dec) | Volume / Mix | Price | Foreign Exchange | ||||||||||||||||||||
| Knees | $ | 729.5 | $ | 730.3 | (0.1 | ) | % | 4.3 | % | (2.7 | ) | % | (1.7 | ) | % | ||||||||||
| Hips | 497.7 | 497.2 | 0.1 | 4.2 | (2.4 | ) | (1.7 | ) | |||||||||||||||||
| S.E.T | 461.1 | 452.4 | 1.9 | 3.8 | (0.7 | ) | (1.2 | ) | |||||||||||||||||
| Dental | 104.4 | 107.5 | (3.0 | ) | 0.8 | (2.6 | ) | (1.2 | ) | ||||||||||||||||
| Spine & CMF | 197.7 | 193.8 | 2.1 | 4.6 | (1.5 | ) | (1.0 | ) | |||||||||||||||||
| Other | 80.6 | 87.1 | (7.5 | ) | (4.9 | ) | (1.5 | ) | (1.1 | ) | |||||||||||||||
| Total | $ | 2,071.0 | $ | 2,068.3 | 0.1 | % | 3.6 | % | (2.0 | ) | % | (1.5 | ) | % |
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY GEOGRAPHY
FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017
(in millions, unaudited)
| Years Ended December 31, | |||||||||||||||||||||||||
| 2018 | 2017 | % Inc / (Dec) | Volume / Mix | Price | Foreign Exchange | ||||||||||||||||||||
| Americas | $ | 4,837.2 | $ | 4,844.8 | (0.2 | ) | % | 2.3 | % | (2.4 | ) | % | (0.1 | ) | % | ||||||||||
| EMEA | 1,801.9 | 1,745.2 | 3.2 | 1.7 | (1.6 | ) | 3.1 | ||||||||||||||||||
| Asia Pacific | 1,293.8 | 1,213.3 | 6.6 | 9.2 | (3.5 | ) | 0.9 | ||||||||||||||||||
| Total | $ | 7,932.9 | $ | 7,803.3 | 1.7 | % | 3.2 | % | (2.4 | ) | % | 0.9 | % |
ZIMMER BIOMET HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017
(in millions, unaudited)
| Years Ended December 31, | |||||||||||||||||||||||||
| 2018 | 2017 | % Inc / (Dec) | Volume / Mix | Price | Foreign Exchange | ||||||||||||||||||||
| Knees | $ | 2,773.7 | $ | 2,734.0 | 1.5 | % | 3.6 | % | (2.9 | ) | % | 0.8 | % | ||||||||||||
| Hips | 1,921.4 | 1,871.8 | 2.6 | 4.3 | (2.8 | ) | 1.1 | ||||||||||||||||||
| S.E.T | 1,751.8 | 1,701.8 | 2.9 | 3.9 | (1.8 | ) | 0.8 | ||||||||||||||||||
| Dental | 411.2 | 418.6 | (1.8 | ) | (1.7 | ) | (1.5 | ) | 1.4 | ||||||||||||||||
| Spine & CMF | 763.9 | 757.9 | 0.8 | 2.1 | (1.7 | ) | 0.4 | ||||||||||||||||||
| Other | 310.9 | 319.2 | (2.6 | ) | (1.7 | ) | (1.5 | ) | 0.6 | ||||||||||||||||
| Total | $ | 7,932.9 | $ | 7,803.3 | 1.7 | % | 3.2 | % | (2.4 | ) | % | 0.9 | % |
RECONCILIATION OF REPORTED NET SALES % CHANGE TO
CONSTANT CURRENCY % CHANGE
| For the Three Months Ended | ||||||||||||||
| December 31, 2018 | ||||||||||||||
| Foreign | Constant | |||||||||||||
| Exchange | Currency | |||||||||||||
| % Change | Impact | % Change | ||||||||||||
| Geographic Results | ||||||||||||||
| Americas | (1.2 | ) | % | (0.2 | ) | % | (1.0 | ) | % | |||||
| EMEA | 0.6 | (4.1 | ) | 4.7 | ||||||||||
| Asia Pacific | 4.6 | (2.6 | ) | 7.2 | ||||||||||
| Total | 0.1 | % | (1.5 | ) | % | 1.6 | % | |||||||
| Product Categories | ||||||||||||||
| Knees | ||||||||||||||
| Americas | (2.0 | ) | % | (0.2 | ) | % | (1.8 | ) | % | |||||
| EMEA | (1.8 | ) | (4.6 | ) | 2.8 | |||||||||
| Asia Pacific | 10.6 | (3.5 | ) | 14.1 | ||||||||||
| Total | (0.1 | ) | (1.7 | ) | 1.6 | |||||||||
| Hips | ||||||||||||||
| Americas | 1.6 | (0.3 | ) | 1.9 | ||||||||||
| EMEA | (0.1 | ) | (4.1 | ) | 4.0 | |||||||||
| Asia Pacific | (3.2 | ) | (2.0 | ) | (1.2 | ) | ||||||||
| Total | 0.1 | (1.7 | ) | 1.8 | ||||||||||
| S.E.T | 1.9 | (1.2 | ) | 3.1 | ||||||||||
| Dental | (3.0 | ) | (1.2 | ) | (1.8 | ) | ||||||||
| Spine & CMF | 2.1 | (1.0 | ) | 3.1 | ||||||||||
| Other | (7.5 | ) | (1.1 | ) | (6.4 | ) | ||||||||
| Total | 0.1 | % | (1.5 | ) | % | 1.6 | % |
RECONCILIATION OF REPORTED NET SALES % CHANGE TO
CONSTANT CURRENCY % CHANGE
| For the Year Ended | ||||||||||||||
| December 31, 2018 | ||||||||||||||
| Foreign | Constant | |||||||||||||
| Exchange | Currency | |||||||||||||
| % Change | Impact | % Change | ||||||||||||
| Geographic Results | ||||||||||||||
| Americas | (0.2 | ) | % | (0.1 | ) | % | (0.1 | ) | % | |||||
| EMEA | 3.2 | 3.1 | 0.1 | |||||||||||
| Asia Pacific | 6.6 | 0.9 | 5.7 | |||||||||||
| Total | 1.7 | % | 0.9 | % | 0.8 | % | ||||||||
| Product Categories | ||||||||||||||
| Knees | ||||||||||||||
| Americas | (0.8 | ) | % | - | % | (0.8 | ) | % | ||||||
| EMEA | 4.4 | 2.8 | 1.6 | |||||||||||
| Asia Pacific | 5.9 | 0.5 | 5.4 | |||||||||||
| Total | 1.5 | 0.8 | 0.7 | |||||||||||
| Hips | ||||||||||||||
| Americas | 2.8 | - | 2.8 | |||||||||||
| EMEA | 0.3 | 3.1 | (2.8 | ) | ||||||||||
| Asia Pacific | 5.4 | 1.2 | 4.2 | |||||||||||
| Total | 2.6 | 1.1 | 1.5 | |||||||||||
| S.E.T | 2.9 | 0.8 | 2.1 | |||||||||||
| Dental | (1.8 | ) | 1.4 | (3.2 | ) | |||||||||
| Spine & CMF | 0.8 | 0.4 | 0.4 | |||||||||||
| Other | (2.6 | ) | 0.6 | (3.2 | ) | |||||||||
| Total | 1.7 | % | 0.9 | % | 0.8 | % |
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2018
(in millions, unaudited)
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 | ||||||||||||||||||||||||||||||||||||||||
| Cost of products sold, excluding intangible asset amortization | Intangible asset amortization | Selling, general and administrative | Goodwill and intangible asset impairment | Acquisition, integration and related | Quality remediation | Other expense, net | Provision (benefit) for income taxes | Net (Loss) Earnings of Zimmer Biomet Holdings, Inc. | Diluted (loss) earnings per common share | |||||||||||||||||||||||||||||||
| As Reported | $ | 583.4 | $ | 148.0 | $ | 998.6 | $ | 975.9 | $ | 19.8 | $ | 34.6 | $ | (6.9 | ) | $ | 36.6 | $ | (901.1 | ) | $ | (4.42 | ) | |||||||||||||||||
| Inventory and manufacturing-related charges (1) | (7.8 | ) | - | - | - | - | - | - | 5.1 | 2.7 | 0.01 | |||||||||||||||||||||||||||||
| Intangible asset amortization (2) | - | (148.0 | ) | - | - | - | - | - | 18.1 | 129.9 | 0.64 | |||||||||||||||||||||||||||||
| Goodwill impairment (3) | - | - | - | (975.9 | ) | - | - | - | - | 975.9 | 4.78 | |||||||||||||||||||||||||||||
| Acquisition, integration and related (4) | - | - | - | - | (19.8 | ) | - | - | 3.8 | 16.0 | 0.08 | |||||||||||||||||||||||||||||
| Quality remediation (5) | (5.0 | ) | - | - | - | - | (34.6 | ) | - | 10.3 | 29.3 | 0.15 | ||||||||||||||||||||||||||||
| Litigation (6) | - | - | (170.5 | ) | - | - | - | - | 50.0 | 120.5 | 0.59 | |||||||||||||||||||||||||||||
| European Union Medical Device Regulation (7) | - | - | (2.1 | ) | - | - | - | - | 0.3 | 1.8 | 0.01 | |||||||||||||||||||||||||||||
| Other charges (8) | - | - | (32.8 | ) | - | - | - | 3.9 | 2.5 | 34.2 | 0.17 | |||||||||||||||||||||||||||||
| U.S. tax reform (9) | - | - | - | - | - | - | - | (28.9 | ) | 28.9 | 0.14 | |||||||||||||||||||||||||||||
| Other certain tax adjustments (10) | - | - | - | - | - | - | - | (9.8 | ) | 9.8 | 0.05 | |||||||||||||||||||||||||||||
| Effect of dilutive shares assuming net earnings (11) | - | - | - | - | - | - | - | - | - | (0.02 | ) | |||||||||||||||||||||||||||||
| As Adjusted | $ | 570.6 | $ | - | $ | 793.2 | $ | - | $ | - | $ | - | $ | (3.0 | ) | $ | 88.0 | $ | 447.9 | $ | 2.18 |
| FOR THE YEAR ENDED DECEMBER 31, 2018 | ||||||||||||||||||||||||||||||||||||||||
| Cost of products sold, excluding intangible asset amortization | Intangible asset amortization | Selling, general and administrative | Goodwill and intangible asset impairment | Acquisition, integration and related | Quality remediation | Other expense, net | Provision (benefit) for income taxes | Net Earnings of Zimmer Biomet Holdings, Inc. | Diluted (loss) earnings per common share | |||||||||||||||||||||||||||||||
| As Reported | $ | 2,271.9 | $ | 595.9 | $ | 3,379.3 | $ | 979.7 | $ | 133.7 | $ | 146.9 | $ | (15.6 | ) | $ | 108.2 | $ | (379.2 | ) | $ | (1.86 | ) | |||||||||||||||||
| Inventory and manufacturing-related charges (1) | (32.5 | ) | - | - | - | - | - | - | 15.1 | 17.4 | 0.08 | |||||||||||||||||||||||||||||
| Intangible asset amortization (2) | - | (595.9 | ) | - | - | - | - | - | 98.2 | 497.7 | 2.45 | |||||||||||||||||||||||||||||
| Goodwill and intangible asset impairment (3) | - | - | - | (979.7 | ) | - | - | - | 0.9 | 978.8 | 4.81 | |||||||||||||||||||||||||||||
| Acquisition, integration and related (4) | - | - | - | - | (133.7 | ) | - | - | 28.0 | 105.7 | 0.52 | |||||||||||||||||||||||||||||
| Quality remediation (5) | (18.5 | ) | - | - | - | - | (146.9 | ) | - | 35.1 | 130.3 | 0.64 | ||||||||||||||||||||||||||||
| Litigation (6) | - | - | (186.0 | ) | - | - | - | - | 44.8 | 141.2 | 0.69 | |||||||||||||||||||||||||||||
| European Union Medical Device Regulation (7) | - | - | (3.7 | ) | - | - | - | - | 0.5 | 3.2 | 0.02 | |||||||||||||||||||||||||||||
| Other charges (8) | - | - | (79.6 | ) | - | - | - | 3.2 | 17.0 | 65.8 | 0.32 | |||||||||||||||||||||||||||||
| U.S. tax reform (9) | - | - | - | - | - | - | - | (28.9 | ) | 28.9 | 0.14 | |||||||||||||||||||||||||||||
| Other certain tax adjustments (10) | - | - | - | - | - | - | - | 24.4 | (24.4 | ) | (0.12 | ) | ||||||||||||||||||||||||||||
| Effect of dilutive shares assuming net earnings (11) | - | - | - | - | - | - | - | - | - | (0.05 | ) | |||||||||||||||||||||||||||||
| As Adjusted | $ | 2,220.9 | $ | - | $ | 3,110.0 | $ | - | $ | - | $ | - | $ | (12.4 | ) | $ | 343.3 | $ | 1,565.4 | $ | 7.64 |
| Three Months Ended | Year Ended | ||||||
| December 31, 2018 | December 31, 2018 | ||||||
| Diluted shares | 204.0 | 203.5 | |||||
| Dilutive shares assuming net earnings | 1.4 | 1.5 | |||||
| Adjusted diluted shares | 205.4 | 205.0 |
ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF REPORTED TO ADJUSTED RESULTS
FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2017
(in millions, unaudited)