WESTMINSTER, Colo., Aug. 10, 2022 (GLOBE NEWSWIRE) — ZimVie Inc. (Nasdaq: ZIMV), a global life sciences leader in the dental and spine markets, today reported financial results for the quarter ended June 30, 2022. Management will host a corresponding conference call today, August 10, 2022, at 4:30 p.m. Eastern Time.
“We continue to make progress towards our most vital commercial initiatives in both our dental and spine segments. Within dental, we recently launched two highly innovative products: the T3® PRO Tapered Implant and the Encode® Emergence Healing Abutment. Within spine, we received a major positive insurance policy decision from Anthem Blue Cross Blue Shield for The Tether™, a device for treatment of pediatric scoliosis, expanding insurance coverage for up to 30 million lives,” said Vafa Jamali, President and Chief Executive Officer of ZimVie. “We are also tracking to our plan to improve the short- and long-term operational efficiency of our newly independent company.”
Second Quarter 2022 Financial Results
Third party net sales for the second quarter of 2022 were $233.4 million, a decrease of (11.5%) on a reported basis and (8.3%) on a constant currency[1] basis, versus the second quarter of 2021. Third party dental segment net sales of $118.2 million decreased by ($2.2) million, or (1.8%) on a reported basis but increased 2.9% on a constant currency[1] basis. Lower third party dental segment net sales were primarily driven by foreign currency headwinds, partially offset by implant and digital dentistry net sales growth and an extra selling day in Q2 2022. Third party spine segment net sales of $115.2 million decreased by ($28.1) million, or (19.6%) on a reported basis and (17.8%) on a constant currency[1] basis, driven by the exit of a number of unprofitable markets in late 2021, the discontinuation of certain products, the impact of the net sales retained by Zimmer Biomet until we complete our separation activities in certain markets, and continued competitive pressures in the spine market, partially offset by the benefit of an extra selling day in Q2 2022.
Net loss for the second quarter of 2022 was ($8.7) million, an increase of $4.0 million versus the net loss of ($4.7) million in the second quarter of 2021, and as a percentage of net sales was (3.7%). The increase in net loss was primarily due to the net sales decline in the spine business, partially offset by an income tax benefit from non-taxable profits on pre-spin inventory transactions with Zimmer Biomet. Adjusted net income[1] for the second quarter of 2022 was $17.6 million, a decline of ($1.0) million versus the same prior year period.
Diluted EPS was ($0.33) and adjusted diluted EPS[1] was $0.67. Basic and fully diluted weighted average shares outstanding were both 26.1 million.
Adjusted EBITDA[1] for the second quarter of 2022 was $31.3 million, or 13.4% of third-party sales, a decrease of ($6.9) million compared to the second quarter of 2021.
Cash and cash equivalents at the end of the second quarter of 2022 were $130.1 million, a sizable increase of $25.8 million from the end of the first quarter of 2022. By applying a disciplined financial framework and through better operational execution, the company has been able to monetize certain aspects of its balance sheet. This resulted in a reduction in net inventory of $20.3 million since December 31, 2021, and less capital outlay for spine instruments than originally planned.
Full-year 2022 financial guidance:
Inclusive of greater than anticipated foreign exchange headwinds, we are revising our guidance for net sales to $915 to $930 million versus our prior guidance of $1.0 billion. We expect our dental business to deliver near the lower end of our prior mid to high single digit growth in constant currency and expect our spine business to decline in the low double digits in constant currency.
We are reaffirming our original adjusted EBITDA margin[2] guidance of flat to 50bps improvement from prior year margin of 13.1% as a result of the momentum generated in our operational initiatives in the short time since spin.
We are also revising our adjusted EPS[2] guidance from a range of $2.10 to $2.30 to $1.80 to $2.00 due primarily to lower sales.
[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 for further information.
Continued uncertainty due to the ongoing COVID-19 pandemic could materially impact the company’s projections.
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 Holdings, Inc. (“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 10, 2022, at 4:30 p.m. ET to discuss its second quarter 2022 financial results. To dial into the conference call, please register at the link here.
Interested parties may also access the live and archived webcast of the event through the link at https://investor.zimvie.com/.
Further, an investor presentation containing additional business and financial information of the company is available at https://investor.zimvie.com/events-presentations/event-calendar.
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 income (loss) on a GAAP basis, as detailed in the reconciliations presented later in this press release. Adjusted EBITDA margin is Adjusted EBITDA divided by Adjusted Net Sales for the applicable period. Adjusted Net Sales is calculated by excluding certain items from net sales on a GAAP basis, as detailed in the reconciliations presented later in this press release.
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 income (loss) and diluted earnings (loss) per share in this release are presented on a GAAP (reported) basis and on an adjusted basis. Adjusted income (loss) 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, 2022. 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” 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: 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; 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 businesses will not be separated successfully or such separation 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 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. 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:
ZimVie
Laura Driscoll • [email protected]
(774) 284-1606
Investor Contact Information:
Gilmartin Group LLC
Marissa Bych • [email protected]