Biomet Sales Show Steady Market

Biomet, Inc.’s sales increased 9% on a reported basis to $772 million during the first quarter (Biomet’s third fiscal quarter) of the year. Excluding the DePuy trauma acquisition, sales were flat, according an April 9, 2013 press release.

On a reported basis, knees and hips were flat, spine declined 4% and sports, extremities, trauma (S.E.T.) excluding the trauma acquisition was up 8%. Extremity sales grew 18%, with 26% growth in the U.S.

Sales
($ in millions)

% Change 

$771.5

0%*

423.9

0%

0%

0%

161.4

8%*

72.1

down 4%

64.4

down 2%

49.7

down 3%

Better Than Expected

Excluding the impact of currency adjustments, BMO Capital Market analyst Joanne Wuensch said knees were slightly better than she expected, indicating that Biomet likely held and possibly gained a bit of share. Hip sales were in line with expectations. She noted the company has been taking incremental share in hips for the past several quarters and that the trend looks to continue.

Stable Market

Larry Biegelsen of Wells Fargo pointed out that there were two less selling days during quarter, which he estimates negatively affected growth by about 3%. He believes Biomet’s results show a stable large joint market and are a slightly positive read-through for Zimmer Holdings, Inc., which has the most exposure to hips and knees.

Joining the Wall Street analyst choir was Mizuho Securities USA’s Mike Matson who said, “Adjusting for selling days, Biomet’s U.S. growth improved, European growth was stable, other international growth slowed from [the previous quarter]. We believe that Biomet’s results are generally indicative of stability in the ortho markets.”

Losses Widen

Reported operating loss during the quarter was $237.4 million, compared to operating income of $108.1 million during the same quarter of 2012. Reported net loss during the quarter was $304.5 million, compared to $16.5 million last year.

Free cash flow was $102.4 million, which reflected $97.5 million of cash interest paid in the quarter, compared to free cash flow of $116.0 million in 2012, which reflected $47.3 million of cash interest paid. Net debt is $5, 761.0 million.

Biomet President and CEO Jeff Binder commented, “We performed very well during our fiscal third quarter, with 9% net sales growth on both a reported and a constant currency basis, and 6% Adjusted EBITDA growth. Despite two fewer selling days in our fiscal third quarter compared to our prior year quarter, our large joint reconstructive sales increased 1% on a constant currency basis, while our sports, extremities and trauma (S.E.T.) sales, excluding our trauma acquisition, grew at a constant currency rate of 9%.”