Zimmer Biomet Holdings, Inc. ZBH posted first-quarter 2025 adjusted earnings per share (EPS) of $1.81, which beat the Zacks Consensus Estimate by 2.3%. The adjusted figure, however, declined 6.7% year over year.
The quarter’s adjustments included certain amortization, restructuring and other cost reduction initiatives, inventory and manufacturing-related charges and European Union Medical Device Regulation-related charges, among others.
On a reported basis, the company registered earnings of 91 cents per share, up 8.3% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar).
Following the announcement, shares of ZBH edged down 1.8% in pre-market trading today.
ZBH's Q1 Revenues
First-quarter net sales of $1.91 billion increased 1.1% (up 2.3% at constant exchange rate or CER) year over year. The figure exceeded the Zacks Consensus Estimate by 1%.
ZBH's Revenues by Geography
During the first quarter, sales generated in the United States totaled $1.11 billion (up 1.3% year over year), while International sales grossed $795.5 million (up 0.7% year over year and 3.7% at CER).
Our model projected first-quarter revenues in the United States to be $1.09 billion and International sales to be $793.8 million.
Segmental Analysis of ZBH's Revenues
The company currently reports through four product categories — Knees, Hips, S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) and Technology & Data, Bone Cement and Surgical.
Sales in the Knees unit improved 1.9% year over year at CER to $792.9 million. Our model estimate was pegged at $806 million.
Hips recorded 2.4% growth in the first quarter at CER to reach $495.8 million. Our model estimate was $486.1 million for the same.
Revenues in the S.E.T. unit were up 4.9% year over year at CER to $470.5 million. Our model estimate was $454.1 million.
Technology & Data, Bone Cement and Surgical (historically referred to as "Other") revenues decreased 3.5% to $149.9 million at CER in the first quarter. Our model estimate was $146 million.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote
ZBH's Margin Performance
Adjusted gross margin, after excluding the impact of intangible asset amortization, was 71.2%, reflecting a contraction of 168 basis points (bps) in the first quarter. Selling, general and administrative expenses rose 3.1% to $758.8 million. Research and development expenses rose 2.5% to $110.6 million. Adjusted operating margin contracted 254 bps to 25.7% in the quarter.
ZBH's Cash Position
Zimmer Biomet exited the first quarter with cash and cash equivalents of $1.38 billion compared with $525.5 million at the end of the fourth quarter of 2024.
Cumulative net cash provided by operating activities at the end of the first quarter was $382.8 billion compared with $228 billion in the year-ago period.
An Updated 2025 Outlook From ZBH
Zimmer Biomet provided its financial guidance for 2025 to include Paragon 28, currency and the impact from current tariff proposals.
Reported revenue growth is expected to be in the band of 5.7%-8.2% year over year (earlier guidance was 1%-3.5%). The company currently expects foreign exchange to have an adverse impact of 0%-0.5% on revenues (1.5%-2%).
Adjusted EPS for the full year is expected in the range of $7.90-$8.10 ($8.15-$8.35).
The Zacks Consensus Estimate for 2025 adjusted EPS is pegged at $8.22 on revenues of $7.88 billion.
Our Take on ZBH
Zimmer Biomet ended the first quarter of 2025 with earnings and revenues exceeding the respective Zacks Consensus Estimate. However, the year-over-year decline in adjusted earnings was disappointing.
The quarter’s performance benefited from ZBH’s diversified portfolio outside of core orthopedics and the company’s strategic investments in attractive, higher-growth segments. Barring the Technology & Data, Bone Cement and Surgical segment, all other business divisions reported year-over-year CER growth. Performance across the geographic regions was solid as well. However, contraction in the operating margins was discouraging.
The company is gaining momentum in U.S. Hips, supported by its enhanced portfolio, including the Z1 Triple-Taper Femoral Hip System, HAMMR Automated Impactor and navigation capabilities. Strong early surgeon interest in the new Oxford Cementless Partial Knee positions the business for accelerated growth in the second half of the year. The recent acquisition of Paragon 28 is expected to drive innovation and diversification, expanding the S.E.T. business into the high-growth foot and ankle segment with advanced technologies and a dedicated commercial channel.
ZBH's Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are AngioDynamics ANGO, Veeva Systems VEEV and Masimo MASI.
AngioDynamics, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter fiscal 2025 adjusted EPS of 3 cents in contrast to the Zacks Consensus Estimate of a loss of 13 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.
Revenues of $72 million beat the Zacks Consensus Estimate by 2%. ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared with the S&P 500 composite’s 10.5%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 70.9%.
Veeva Systems, sporting a Zacks Rank #1 at present, posted fourth-quarter fiscal 2025 adjusted EPS of $1.75, which exceeded the Zacks Consensus Estimate by 10.1%. Revenues of $720.9 million surpassed the Zacks Consensus Estimate by 3.2%.
VEEV has an estimated long-term earnings growth rate of 26.6% compared with the industry’s 20.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.9%.
Masimo, currently sporting a Zacks Rank #1, is scheduled to report first-quarter 2025 earnings on May 6.
MASI has an estimated earnings yield of 3.5% for fiscal 2025 compared with the industry’s 3.6%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.4%.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
