ZimVie Inc. (Nasdaq: ZIMV), a global life sciences leader in the
dental and spine markets, today reported financial results for the
second quarter ended June 30, 2023. Management will host a
corresponding conference call today, August 2, 2023, at 4:30 p.m.
Eastern Time.
“I am pleased with our solid second quarter performance and
remain optimistic about the underappreciated, significant
opportunities in our portfolio and end markets,” said Vafa Jamali,
President and Chief Executive Officer of ZimVie. “We continue to
strengthen the foundation for long-term growth in both business
segments.”
Second Quarter 2023 Financial Results
Third party net sales for the second quarter of 2023 were $224.9
million, a decrease of (3.6%) on a reported basis and (3.4%) on a
constant currency[1] basis, versus the second quarter of 2022.
Third party dental sales of $118.7 million increased by $0.5
million, or 0.4% on both a reported basis and a constant
currency[1] basis, driven by increased demand for our digital
dentistry offerings. Third party spine sales of $106.2 million
decreased by ($9.0) million, or (7.8%) on a reported basis and
(7.2%) on a constant currency[1] basis, driven by continued
competitive pressures in the spine market and lower net sales due
to our exit of spine products activities in China, partially offset
by spine product net sales retained by Zimmer Biomet in the same
period in 2022 in certain geographies where our separation and
transition activities extended beyond the date of spin.
Net loss for the second quarter of 2023 was ($23.4) million, an
increase of ($14.7) million versus the net loss of ($8.7) million
in the second quarter of 2022, and as a percentage of third party
net sales was (10.4%). The increase in net loss was primarily due
to lower net sales, higher cost of products sold in the dental
category from a change in mix to higher cost products due to our
growing digital dentistry portfolio, increased general and
administrative costs due to the ramp-up of corporate activities
subsequent to the spin and more marketing and medical education
events, higher restructuring costs, and a lower income tax benefit
in the current quarter due to an increase in valuation allowances
compared to the second quarter of 2022. These items were partially
offset by lower cost of products sold in the spine category due to
reduced inventory charges, lower selling, general, administrative
and research and development costs due to our restructuring
initiatives and cost containment measures.
Adjusted net income[1] for the second quarter of 2023 was $4.3
million, a decrease of $13.3 million versus the same prior year
period.
Basic and diluted EPS were ($0.89) and adjusted diluted EPS[1]
was $0.17 for the second quarter of 2023. Weighted average shares
outstanding for basic and diluted EPS was 26.3 million.
Adjusted EBITDA[1] for the second quarter of 2023 was $29.7
million, or 13.2% of third party net sales, a decrease of ($1.5)
million and 20-basis points, respectively, from the second quarter
of 2022, and was primarily driven by lower third party net
sales.
Cash and cash equivalents at the end of the second quarter of
2023 were $66.2 million and reflect the prepayment of principal
debt payments through the second quarter of 2024.
Full Year 2023 Financial
Guidance:
Projected Year Ending December 31, 2023 |
Prior Guidance |
Updated Guidance |
Net sales |
$835M to $860M |
$850M to $870M |
Adjusted EBITDA margin[2] |
13.5% - 14.0% |
13.5% - 14.0% |
Adjusted EPS[2] |
$0.40 to $0.60 |
$0.50 to $0.70 |
[1] This is a non-GAAP financial measure. Refer to “Note on
Non-GAAP Financial Measures” and the reconciliations in this
release for further information.
[2] This is a non-GAAP financial measure for which a
reconciliation to the most directly comparable GAAP financial
measure is not available without unreasonable efforts. Refer to
“Forward-Looking Non-GAAP Financial Measures” in this release,
which identifies the information that is unavailable without
unreasonable efforts and provides additional information. It is
probable that this forward-looking non-GAAP financial measure may
be materially different from the corresponding GAAP financial
measure.
Financial Information
The financial information included in this release for periods
prior to March 1, 2022 is derived from the financial statements and
records of the dental and spine businesses of Zimmer Biomet due to
the fact that during such periods, ZimVie was still a wholly-owned
subsidiary of, and operated under those businesses of, Zimmer
Biomet.
Conference Call
ZimVie will host a conference call today, August 2, 2023, at
4:30 p.m. ET to discuss its second quarter 2023 financial results.
To access the call, please register online at
https://investor.zimvie.com/events-presentations/event-calendar. A
live and archived audio webcast will also be available on this
site.
About ZimVie
ZimVie is a global life sciences leader in the dental and spine
markets that develops, manufactures, and delivers a comprehensive
portfolio of products and solutions designed to support dental
tooth replacement and restoration procedures and treat a wide range
of spine pathologies. In March 2022, the company became an
independent, publicly traded spin-off of the dental and spine
business units of Zimmer Biomet to breathe new life, dedicated
energy, and strategic focus to its portfolio of trusted brands and
products. From its headquarters in Westminster, Colorado, and
additional facilities around the globe, the company serves
customers in over 70 countries worldwide with a robust offering of
dental and spine solutions including differentiated product
platforms supported by extensive clinical evidence. For more
information about ZimVie, please visit us at www.ZimVie.com. Follow
@ZimVie on Twitter, Facebook, LinkedIn, or Instagram.
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.
Adjusted EBITDA is a non-GAAP financial measure provided in this
release for certain periods, and is calculated by excluding certain
items from net loss on a GAAP basis, as detailed in the
reconciliations presented later in this press release. Adjusted
EBITDA margin is Adjusted EBITDA divided by third party net sales
for the applicable period.
Sales change information in this release is 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 loss and diluted loss per share in this release are
presented on a GAAP (reported) basis and on an adjusted basis.
Adjusted net income and adjusted diluted earnings per share exclude
the effects of certain items, which are detailed in the
reconciliations of these non-GAAP financial measures to
the most directly comparable GAAP financial measures presented
later in this press release.
Reconciliations of these non-GAAP measures to the most directly
comparable GAAP financial measures are included in this press
release.
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.
Forward-Looking Non-GAAP Financial Measures
This press release also includes certain forward-looking
non-GAAP financial measures for the year ending December 31, 2023.
We calculate forward-looking non-GAAP financial measures based on
internal forecasts that omit certain amounts that would be included
in GAAP financial measures. 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. For example, the
timing of certain transactions is difficult to predict because
management’s plans may change. In addition, the company believes
such reconciliations would imply a degree of precision and
certainty that could be confusing to investors. It is probable that
these forward-looking non-GAAP financial measures may be materially
different from the corresponding GAAP financial measures.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of federal securities laws, including, among others,
any statements about our expectations, plans, intentions,
strategies, or prospects. We generally use the words “may,” “will,”
“expects,” “believes,” “anticipates,” “plans,” “estimates,”
“projects,” “assumes,” “guides,” “targets,” “forecasts,” “sees,”
“seeks,” “should,” “could,” “would,” “predicts,” “potential,”
“strategy,” “future,” “opportunity,” “work toward,” “intends,”
“guidance,” “confidence,” “positioned,” “design,” “strive,”
“continue,” “track,” “look forward to,” “optimistic” 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, expectations, and assumptions of
management and are subject to significant risks, uncertainties, and
changes in circumstances that could cause actual outcomes and
results to differ materially from the forward-looking statements.
These risks, uncertainties and changes in circumstances include,
but are not limited to: 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; pricing pressures from
competitors, customers, dental practices and insurance providers;
changes in customer demand for our products and services caused by
demographic changes or other factors; 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 and foreign
government regulators, such as more stringent requirements for
regulatory clearance of products; competition; the impact of
healthcare reform measures; reductions in reimbursement levels by
third-party payors; cost containment efforts sponsored by
government agencies, legislative bodies, the private sector and
healthcare group purchasing organizations, including the
volume-based procurement process in China; control of costs and
expenses; dependence on a limited number of suppliers for key raw
materials and outsourced activities; the ability to obtain and
maintain adequate intellectual property protection; breaches or
failures of our information technology systems or products,
including by cyberattack, unauthorized access or theft; the ability
to retain the independent agents and distributors who market our
products; our ability to attract, retain and develop the highly
skilled employees we need to support our business; the effect of
mergers and acquisitions on our relationships with customers,
suppliers and lenders and on our operating results and businesses
generally; a determination by the Internal Revenue Service that the
distribution or certain related transactions should be treated as
taxable transactions; financing transactions undertaken in
connection with the separation and risks associated with additional
indebtedness; the impact of the separation on our businesses and
the risk that the separation and the results thereof may be more
difficult, time-consuming and/or costly than expected, which could
impact our relationships with customers, suppliers, employees and
other business counterparties; restrictions on activities following
the distribution in order to preserve the tax-free treatment of the
distribution; 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, intellectual property and
commercial litigation losses; changes in general industry and
market conditions, including domestic and international growth
rates; changes in general domestic and international economic
conditions, including inflation and interest rate and currency
exchange rate fluctuations; the effects of the COVID-19 global
pandemic and other adverse public health developments on the global
economy, our business and operations and the business and
operations of our suppliers and customers, including the deferral
of elective procedures and our ability to collect accounts
receivable; 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. You 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. Forward-looking statements speak only as of the date they
are made, and we expressly disclaim any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
Media Contact Information:
ZimVieLaura Driscoll •
Laura.Driscoll@ZimVie.com(774) 284-1606
Investor Contact Information:
Gilmartin Group LLCMarissa Bych •
Marissa@gilmartinir.com
ZIMVIE INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share data) |
Unaudited |
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net Sales |
|
|
|
|
|
|
|
Third Party, net |
$ |
224,896 |
|
|
$ |
233,367 |
|
|
$ |
449,984 |
|
|
$ |
468,049 |
|
Related Party, net |
|
— |
|
|
|
1,197 |
|
|
|
339 |
|
|
|
2,116 |
|
Total Net
Sales |
|
224,896 |
|
|
|
234,564 |
|
|
|
450,323 |
|
|
|
470,165 |
|
Cost of products sold, excluding intangible asset amortization |
|
(74,500 |
) |
|
|
(80,011 |
) |
|
|
(145,217 |
) |
|
|
(165,021 |
) |
Related party cost of products sold, excluding intangible asset
amortization |
|
— |
|
|
|
(1,061 |
) |
|
|
(328 |
) |
|
|
(1,858 |
) |
Intangible asset amortization |
|
(20,663 |
) |
|
|
(19,916 |
) |
|
|
(41,172 |
) |
|
|
(40,821 |
) |
Research and development |
|
(13,231 |
) |
|
|
(15,282 |
) |
|
|
(28,604 |
) |
|
|
(32,935 |
) |
Selling, general and administrative |
|
(128,480 |
) |
|
|
(126,052 |
) |
|
|
(256,448 |
) |
|
|
(260,164 |
) |
Restructuring and other cost reduction initiatives |
|
(8,445 |
) |
|
|
(5,055 |
) |
|
|
(13,420 |
) |
|
|
(5,797 |
) |
Acquisition, integration, divestiture and related |
|
(1,396 |
) |
|
|
(8,723 |
) |
|
|
(3,079 |
) |
|
|
(17,728 |
) |
Operating Expenses |
|
(246,715 |
) |
|
|
(256,100 |
) |
|
|
(488,268 |
) |
|
|
(524,324 |
) |
Operating
Loss |
|
(21,819 |
) |
|
|
(21,536 |
) |
|
|
(37,945 |
) |
|
|
(54,159 |
) |
Other income (expense), net |
|
598 |
|
|
|
107 |
|
|
|
(308 |
) |
|
|
362 |
|
Interest expense, net |
|
(9,005 |
) |
|
|
(4,894 |
) |
|
|
(17,971 |
) |
|
|
(5,605 |
) |
Loss Before Income Taxes |
|
(30,226 |
) |
|
|
(26,323 |
) |
|
|
(56,224 |
) |
|
|
(59,402 |
) |
Income tax benefit |
|
6,853 |
|
|
|
17,611 |
|
|
|
2,883 |
|
|
|
25,034 |
|
Net Loss |
$ |
(23,373 |
) |
|
$ |
(8,712 |
) |
|
$ |
(53,341 |
) |
|
$ |
(34,368 |
) |
Loss Per Common Share
- Basic |
$ |
(0.89 |
) |
|
$ |
(0.33 |
) |
|
$ |
(2.02 |
) |
|
$ |
(1.32 |
) |
Loss Per Common Share
- Diluted |
|
(0.89 |
) |
|
|
(0.33 |
) |
|
|
(2.02 |
) |
|
|
(1.32 |
) |
ZIMVIE INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share data) |
Unaudited |
|
|
As of |
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
66,212 |
|
|
$ |
89,601 |
|
Accounts receivable, net of
allowance for credit losses of $14,546 and $15,026,
respectively |
|
168,121 |
|
|
|
168,961 |
|
Related party receivable |
|
— |
|
|
|
8,483 |
|
Inventories |
|
227,532 |
|
|
|
233,854 |
|
Prepaid expenses and other
current assets |
|
45,514 |
|
|
|
36,964 |
|
Total Current Assets |
|
507,379 |
|
|
|
537,863 |
|
Property, plant and equipment,
net of accumulated depreciation of $393,422 and $392,888,
respectively |
|
129,671 |
|
|
|
148,439 |
|
Goodwill |
|
261,211 |
|
|
|
259,999 |
|
Intangible assets, net |
|
624,614 |
|
|
|
654,965 |
|
Other assets |
|
37,664 |
|
|
|
40,790 |
|
Total
Assets |
$ |
1,560,539 |
|
|
$ |
1,642,056 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable |
$ |
59,418 |
|
|
$ |
43,998 |
|
Related party payable |
|
— |
|
|
|
13,176 |
|
Income taxes payable |
|
4,544 |
|
|
|
14,356 |
|
Other current liabilities |
|
125,778 |
|
|
|
145,779 |
|
Total Current Liabilities |
|
189,740 |
|
|
|
217,309 |
|
Deferred income taxes |
|
92,773 |
|
|
|
98,062 |
|
Lease liability |
|
17,583 |
|
|
|
22,287 |
|
Other long-term
liabilities |
|
10,334 |
|
|
|
13,561 |
|
Non-current portion of
debt |
|
522,267 |
|
|
|
532,233 |
|
Total
Liabilities |
|
832,697 |
|
|
|
883,452 |
|
|
|
|
|
Stockholders'
Equity: |
|
|
|
Common stock, $0.01 par value,
150,000 shares authorized |
|
|
|
|
|
|
|
Shares, issued and outstanding, of 26,530 and 26,222,
respectively |
|
265 |
|
|
|
262 |
|
Preferred stock, $0.01 par
value, 15,000 shares authorized, 0 shares issued and
outstanding |
|
— |
|
|
|
— |
|
Additional paid in
capital |
|
908,507 |
|
|
|
897,028 |
|
Accumulated deficit |
|
(100,873 |
) |
|
|
(47,532 |
) |
Accumulated other
comprehensive loss |
|
(80,057 |
) |
|
|
(91,154 |
) |
Total Stockholders'
Equity |
|
727,842 |
|
|
|
758,604 |
|
Total Liabilities and
Stockholders' Equity |
$ |
1,560,539 |
|
|
$ |
1,642,056 |
|
ZIMVIE INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
Unaudited |
|
|
For the Six Months Ended June 30, |
|
2023 |
|
2022 |
Cash flows (used in) provided
by operating activities: |
|
|
|
Net loss |
$ |
(53,341 |
) |
|
$ |
(34,368 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
Depreciation and amortization |
|
64,588 |
|
|
|
62,267 |
|
Share-based compensation |
|
10,656 |
|
|
|
19,694 |
|
Deferred income tax provision |
|
(7,935 |
) |
|
|
(32,817 |
) |
Loss on disposal of fixed assets |
|
1,129 |
|
|
|
— |
|
Other non-cash items |
|
1,380 |
|
|
|
590 |
|
Changes in operating assets and liabilities |
|
|
|
Income taxes |
|
(16,023 |
) |
|
|
11,333 |
|
Accounts receivable |
|
1,271 |
|
|
|
(25,371 |
) |
Related party receivable |
|
8,483 |
|
|
|
(22,367 |
) |
Inventories |
|
8,401 |
|
|
|
11,765 |
|
Prepaid expenses and other current assets |
|
(2,097 |
) |
|
|
(18,381 |
) |
Accounts payable and accrued liabilities |
|
(4,825 |
) |
|
|
8,556 |
|
Related party payable |
|
(13,177 |
) |
|
|
45,536 |
|
Other assets and liabilities |
|
(5,450 |
) |
|
|
4,240 |
|
Net cash (used in) provided by operating activities |
|
(6,940 |
) |
|
|
30,677 |
|
Cash flows used in investing
activities: |
|
|
|
Additions to instruments |
|
(1,951 |
) |
|
|
(6,089 |
) |
Additions to other property, plant and equipment |
|
(3,154 |
) |
|
|
(6,165 |
) |
Other investing activities |
|
(1,994 |
) |
|
|
(1,949 |
) |
Net cash used in investing activities |
|
(7,099 |
) |
|
|
(14,203 |
) |
Cash flows (used in) provided
by financing activities: |
|
|
|
Net transactions with Zimmer Biomet |
|
— |
|
|
|
6,920 |
|
Dividend paid to Zimmer Biomet |
|
— |
|
|
|
(540,567 |
) |
Proceeds from debt |
|
4,760 |
|
|
|
595,000 |
|
Payments on debt |
|
(15,279 |
) |
|
|
(37,506 |
) |
Debt issuance costs |
|
— |
|
|
|
(5,170 |
) |
Payments related to tax withholding for share-based
compensation |
|
(419 |
) |
|
|
— |
|
Proceeds from stock option activity |
|
1,167 |
|
|
|
51 |
|
Net cash (used in) provided by financing activities |
|
(9,771 |
) |
|
|
18,728 |
|
Effect of exchange rates on
cash and cash equivalents |
|
421 |
|
|
|
(5,549 |
) |
(Decrease) increase in cash and cash equivalents |
|
(23,389 |
) |
|
|
29,653 |
|
Cash and cash equivalents,
beginning of year |
|
89,601 |
|
|
|
100,399 |
|
Cash and cash equivalents, end
of period |
$ |
66,212 |
|
|
$ |
130,052 |
|
Supplemental cash flow
information: |
|
|
|
Income taxes paid, net |
$ |
18,755 |
|
|
$ |
5,204 |
|
Interest paid |
|
17,452 |
|
|
|
3,939 |
|
SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP FINANCIAL
MEASURES |
|
Total Net Sales by Segment and Region (in
thousands) |
Unaudited |
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
2023 |
|
2022 |
|
Change (%) |
|
Foreign Exchange Impact |
Constant Currency % Change |
United States |
$ |
69,264 |
|
$ |
70,164 |
|
-1.3 |
% |
|
- |
|
-1.3 |
% |
International |
|
49,385 |
|
|
47,985 |
|
2.9 |
% |
|
0.1 |
% |
2.8 |
% |
Total Dental Net
Sales |
|
118,649 |
|
|
118,149 |
|
0.4 |
% |
|
0.0 |
% |
0.4 |
% |
United States |
|
84,504 |
|
|
92,826 |
|
-9.0 |
% |
|
- |
|
-9.0 |
% |
International |
|
21,743 |
|
|
22,392 |
|
-2.9 |
% |
|
-3.0 |
% |
0.1 |
% |
Total Spine Net
Sales |
|
106,247 |
|
|
115,218 |
|
-7.8 |
% |
|
-0.6 |
% |
-7.2 |
% |
Total Third Party Net
Sales |
|
224,896 |
|
|
233,367 |
|
-3.6 |
% |
|
-0.2 |
% |
-3.4 |
% |
Related Party Net Sales |
|
— |
|
|
1,197 |
|
-100.0 |
% |
|
- |
|
- |
|
Total Net
Sales |
$ |
224,896 |
|
$ |
234,564 |
|
-4.1 |
% |
|
-0.7 |
% |
-3.4 |
% |
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
2023 |
|
2022 |
|
Change (%) |
|
Foreign Exchange Impact |
Constant Currency % Change |
United States |
$ |
139,171 |
|
$ |
138,492 |
|
0.5 |
% |
|
- |
|
0.5 |
% |
International |
|
99,648 |
|
|
100,226 |
|
-0.6 |
% |
|
-2.8 |
% |
2.2 |
% |
Total Dental Net
Sales |
|
238,819 |
|
|
238,718 |
|
0.0 |
% |
|
-1.2 |
% |
1.2 |
% |
United States |
|
167,518 |
|
|
179,369 |
|
-6.6 |
% |
|
- |
|
-6.6 |
% |
International |
|
43,647 |
|
|
49,963 |
|
-12.6 |
% |
|
-1.7 |
% |
-10.9 |
% |
Total Spine Net
Sales |
|
211,165 |
|
|
229,331 |
|
-7.9 |
% |
|
-0.4 |
% |
-7.5 |
% |
Total Third Party Net
Sales |
|
449,984 |
|
|
468,049 |
|
-3.9 |
% |
|
-0.8 |
% |
-3.1 |
% |
Related Party Net Sales |
|
339 |
|
|
2,116 |
|
-84.0 |
% |
|
- |
|
- |
|
Total Net
Sales |
$ |
450,323 |
|
$ |
470,165 |
|
-4.2 |
% |
|
-1.1 |
% |
-3.1 |
% |
Reconciliation of Adjusted Net Income and Adjusted EPS (in
thousands, except per share data) |
|
|
|
For the Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
Net Sales |
Cost of products sold, excluding intangible asset
amortization |
Operating expenses, excluding cost of products
sold |
Operating Loss |
Net Loss |
Diluted EPS |
Reported |
$ |
224,896 |
|
$ |
(74,500 |
) |
$ |
(172,215 |
) |
$ |
(21,819 |
) |
$ |
(23,373 |
) |
$ |
(0.89 |
) |
Restructuring and other cost
reduction initiatives[1] |
|
- |
|
|
- |
|
|
8,445 |
|
|
8,445 |
|
|
8,445 |
|
$ |
0.32 |
|
Acquisition, integration,
divestiture and related[2] |
|
- |
|
|
- |
|
|
1,396 |
|
|
1,396 |
|
|
1,396 |
|
$ |
0.05 |
|
European medical device
regulation[3] |
|
- |
|
|
- |
|
|
1,586 |
|
|
1,586 |
|
|
1,586 |
|
$ |
0.06 |
|
One-time carve-out allocations
and other one-time costs[4] |
|
- |
|
|
960 |
|
|
780 |
|
|
1,740 |
|
|
1,740 |
|
$ |
0.07 |
|
Intangible asset
amortization |
|
- |
|
|
- |
|
|
20,663 |
|
|
20,663 |
|
|
20,663 |
|
$ |
0.79 |
|
Related party |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
$ |
- |
|
One-time share-based compensation
expense[5] |
|
- |
|
|
- |
|
|
1,000 |
|
|
1,000 |
|
|
1,000 |
|
$ |
0.04 |
|
Tax effect of above adjustments
& other[6] |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(8,372 |
) |
$ |
(0.32 |
) |
China VBP asset write-offs and
spin-related step-up amortization |
|
- |
|
|
- |
|
|
1,237 |
|
|
1,237 |
|
|
1,237 |
|
$ |
0.05 |
|
Adjusted |
$ |
224,896 |
|
$ |
(73,540 |
) |
$ |
(137,108 |
) |
$ |
14,248 |
|
$ |
4,322 |
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
Net Sales |
Cost of products sold, excluding intangible asset
amortization |
Operating expenses, excluding cost of products
sold |
Operating Loss |
Net Loss |
Diluted EPS |
Reported |
$ |
234,564 |
|
$ |
(81,072 |
) |
$ |
(175,028 |
) |
$ |
(21,536 |
) |
$ |
(8,712 |
) |
$ |
(0.33 |
) |
Restructuring and other cost
reduction initiatives[1] |
|
- |
|
|
- |
|
|
5,055 |
|
|
5,055 |
|
|
5,055 |
|
$ |
0.19 |
|
Acquisition, integration,
divestiture and related[2] |
|
- |
|
|
- |
|
|
8,723 |
|
|
8,723 |
|
|
8,723 |
|
$ |
0.33 |
|
European medical device
regulation[3] |
|
- |
|
|
- |
|
|
2,418 |
|
|
2,418 |
|
|
2,418 |
|
$ |
0.09 |
|
One-time carve-out allocations
and other one-time costs[4] |
|
- |
|
|
- |
|
|
699 |
|
|
699 |
|
|
699 |
|
$ |
0.03 |
|
Intangible asset
amortization |
|
- |
|
|
- |
|
|
19,916 |
|
|
19,916 |
|
|
19,916 |
|
$ |
0.76 |
|
Related party |
|
(1,197 |
) |
|
1,061 |
|
|
- |
|
|
(136 |
) |
|
(136 |
) |
$ |
(0.01 |
) |
One-time share-based
compensation expense[5] |
|
- |
|
|
- |
|
|
1,000 |
|
|
1,000 |
|
|
1,000 |
|
$ |
0.04 |
|
Tax effect of above
adjustments & other[6] |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(11,336 |
) |
$ |
(0.43 |
) |
China VBP asset write-offs and
spin-related step-up amortization |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
$ |
- |
|
Adjusted |
$ |
233,367 |
|
$ |
(80,011 |
) |
$ |
(137,217 |
) |
$ |
16,139 |
|
$ |
17,627 |
|
$ |
0.67 |
|
[1] In April 2023, we instituted restructuring activities to
better position our organization for future success based on the
current business environment, and the expenses incurred under this
plan were primarily related to severance and professional fees. In
June 2022 and November 2022, we instituted restructuring plans and
the expenses incurred under these plans were primarily related to
employee termination benefits and the exit of our spine products
operations in China because of an unsuccessful volume-based
procurement program bid. We also incurred expenses in 2022 from the
Zimmer Biomet instituted restructuring plans in the fourth quarters
of 2019 and 2021 and the restructuring costs we incurred under
those plans were primarily related to employee termination
benefits, contract terminations and retention period compensation
and benefits. [2] Acquisition, integration, divestiture, and
related costs are limited to a specific period and related to
ZimVie being established as a standalone public company.[3]
Expenses incurred for initial compliance with the European Union
("EU") Medical Device Regulation ("MDR") for previously-approved
products. [4] The 2022 amounts represent one-time expenses captured
through allocations made for purposes of the GAAP carve-out
financial statement results. The 2023 amounts represent non-cash
step-up amortization related to the spin from Zimmer Biomet.[5]
One-time share-based compensation expense due to replacement awards
provided in connection with the separation from Zimmer Biomet.[6]
Reflects the tax effect of the adjustments from reported to
adjusted, as well as an adjustment for management’s expectation of
ZimVie’s statutory tax rate based on current tax law and adjusted
pre-tax income.
Reconciliation of Adjusted EBITDA (in
thousands) |
|
|
|
|
|
For the Three Months EndedJune 30, |
|
For the Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net Sales |
|
|
|
|
|
|
|
Third Party, net |
$ |
224,896 |
|
|
$ |
233,367 |
|
|
$ |
449,984 |
|
|
$ |
468,049 |
|
Related Party, net |
|
- |
|
|
|
1,197 |
|
|
|
339 |
|
|
|
2,116 |
|
Total Net
Sales |
$ |
224,896 |
|
|
$ |
234,564 |
|
|
$ |
450,323 |
|
|
$ |
470,165 |
|
|
|
|
|
|
|
|
|
Net Loss |
$ |
(23,373 |
) |
|
$ |
(8,712 |
) |
|
$ |
(53,341 |
) |
|
$ |
(34,368 |
) |
Interest expense, net |
|
9,005 |
|
|
|
4,894 |
|
|
|
17,971 |
|
|
|
5,605 |
|
Income tax benefit |
|
(6,853 |
) |
|
|
(17,611 |
) |
|
|
(2,883 |
) |
|
|
(25,034 |
) |
Depreciation and amortization |
|
31,957 |
|
|
|
29,713 |
|
|
|
64,588 |
|
|
|
62,267 |
|
EBITDA |
|
10,736 |
|
|
|
8,284 |
|
|
|
26,335 |
|
|
|
8,470 |
|
Share-based compensation |
|
5,815 |
|
|
|
6,222 |
|
|
|
10,656 |
|
|
|
20,629 |
|
Restructuring and other cost reduction initiatives[1] |
|
8,445 |
|
|
|
5,055 |
|
|
|
13,420 |
|
|
|
5,797 |
|
Acquisition, integration, divestiture and related[2] |
|
1,396 |
|
|
|
8,723 |
|
|
|
3,079 |
|
|
|
17,728 |
|
Related party income |
|
- |
|
|
|
(136 |
) |
|
|
(11 |
) |
|
|
(258 |
) |
European medical device regulation[3] |
|
1,586 |
|
|
|
2,418 |
|
|
|
4,854 |
|
|
|
4,275 |
|
Pre vs. post-spin cost structure differences[4] |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,271 |
|
One-time carve-out allocations and other one-time costs[5] |
|
1,740 |
|
|
|
699 |
|
|
|
3,462 |
|
|
|
3,200 |
|
Adjusted
EBITDA |
$ |
29,718 |
|
|
$ |
31,265 |
|
|
$ |
61,795 |
|
|
$ |
65,112 |
|
Net Loss Margin[6] |
|
-10.4 |
% |
|
|
-3.7 |
% |
|
|
-11.9 |
% |
|
|
-7.3 |
% |
Adjusted EBITDA Margin[7] |
|
13.2 |
% |
|
|
13.4 |
% |
|
|
13.7 |
% |
|
|
13.9 |
% |
[1] In April 2023, we instituted restructuring activities to
better position our organization for future success based on the
current business environment, and the expenses incurred under this
plan were primarily related to severance and professional fees. In
June 2022 and November 2022, we instituted restructuring plans and
the expenses incurred under these plans were primarily related to
employee termination benefits and the exit of our spine products
operations in China because of an unsuccessful volume-based
procurement program bid. We also incurred expenses in 2022 from the
Zimmer Biomet instituted restructuring plans in the fourth quarters
of 2019 and 2021 and the restructuring costs we incurred under
those plans were primarily related to employee termination
benefits, contract terminations and retention period compensation
and benefits. [2] Acquisition, integration, divestiture, and
related costs are limited to a specific period and related to
ZimVie being established as a standalone public company.[3]
Expenses incurred for initial compliance with the EU MDR for
previously-approved products.[4] Reflects certain items captured in
the GAAP carve-out financial statements that have not continued
post-spin, including, but not limited to, facilities that did not
convey with ZimVie in the spin, redundant personnel costs incurred
as a result of the spin, and the difference between the pre-spin
allocations of Zimmer Biomet’s corporate costs in accordance with
GAAP, versus the expected post-spin corporate costs for ZimVie.[5]
The 2022 amounts represent one-time expenses captured through
allocations made for purposes of the GAAP carve-out financial
statement results. The 2023 amounts represent non-cash step-up
amortization related to the separation from Zimmer Biomet. [6] Net
Loss Margin is calculated as Net Loss divided by third party net
sales for the applicable period. [7] Adjusted EBITDA Margin is
Adjusted EBITDA divided by third party net sales for the applicable
period.
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