Biomet‘s Last Financial Report – Ready for Zimmer

Biomet, Inc. likely reported its last quarterly financials to investors as a stand-alone company on April 9, 2015.

Reported revenue was down 2.6% to $809 million for the quarter that ended on February 28, 2015. But that wasn’t the important part of the story, says Wells Fargo analyst Larry Biegelsen.

Revenue Down – Margins and Cash Up

Biegelsen said the key takeaway from the quarter’s results was Biomet’s significant margin and cash flow improvement over the same period one year ago and that gives him more confidence that Zimmer Holdings Inc.’s earnings estimate is “attainable and could mean potential upside.”

All product groups, except Spine and Bone healing showed reported revenue declines. Knees were down 2.8%, hips down 1.7% and Sports, Extremities and Trauma was down 3.4%. A strong U.S. dollar impacted revenue by 4%. Spine climbed 1.2% with the Lanx acquisition now fully included in reports.

Binder’s $45 Million Payday

With European and Japanese approvals for the merger with Zimmer now granted, the new ZimmerBiomet combination is expected to be approved by U.S. regulators any day now. It will reportedly be a nice payday for Biomet CEO Jeff Binder. Binder, according to a November 21, 2014 AP report, will make $45 million. Nearly all the pay is in stock awards that he would have had to wait years to receive if the company wasn’t sold.

Recon Market Steady

Analysts are always reading the tea leaves of Biomet’s reports because they are the first big ortho company to report sales.

Joanne Wuensch of BMO Capital Markets estimates that based on Biomet’s results, the knee market increased 2.5% in the first three months of 2015 with Biomet losing a bit of market share to 13.8% from 14.2% year-over-year. She also estimates the hip market increased 2.4%, Biomet losing 0.1% share.

Biegelsen said his information suggest that the reconstructive market is stable and expects market growth in 2015 to be similar to 2014’s 3.3%. He added that he sees Biomet’s results as consistent with recent market results that show growth in the U.S. market, but international markets remain challenged.

Biomet’s growth slowed from the prior quarter in all of its three geographic regions and in four of its six product categories, said Mike Matson of Needham & Company. “While Biomet’s recon growth was stable with the prior quarter, we suspect that it was slower than market growth and that Biomet lost share in knees and maybe hips as well possibly due to disruption ahead of its merger with Zimmer.

Johnson & Johnson’s DePuy Synthes will be the next orthopedic company to report on April 14.

Dane’s Smilin’

So the company that Dane Miller built will leave the orthopedic playing field as a stand-alone company just as Miller passed away. He must be smiling as most of his old employees will likely get to remain in their beloved home town.

Good night Dane. Goodnight Biomet.