Omicron Weighs On Zimmer Biomet As Q4 Earnings Lag Consensus, Issues FY22 Guidance

Zimmer Biomet Holdings Inc's ZBH Q4 sales decreased by 2.3% Y/Y to $2.04 billion (down 0.8% on a constant currency basis), missing the Street estimate of $2.07 billion.

• The Company reported a 1.6% increase in volume/mix and a 2.4% decline in prices.
• Adjusted EPS were $1.95, came in below the consensus of $1.98.
• The Company said that both net sales and earnings metrics were negatively impacted by China volume-based procurement (VBP) in our Knees, Hips, and S.E.T. product categories due to a combination of variables in advance of VBP implementation. 
• The negative impact was in line with expectations in the Knees and Hips segments but was not anticipated in the S.E.T. product category.
• "As we expected, the ongoing COVID pandemic continued to pressure our business in Q4. The quarter was particularly impacted throughout December due to hospital staffing shortages and the omicron variant surge worldwide," said Bryan Hanson, Chairman, President, and CEO.
• Divestiture: Zimmer Biomet previously announced its intent to spin off its Dental and Spine businesses into a standalone, publicly-traded company, ZimVie. The transaction is expected to close on March 1.
• Guidance: Zimmer Biomet expects FY22 sales of (excluding ZimVie) $6.827 billion, based on total Company net sales of $7.836 billion less the Dental & Spine product sales of $1.009 billion.
• The Company expects an adjusted operating profit margin of 26.5% - 27.5%. It expects to log adjusted EPS of $6.40 - $6.80 (consensus $7.92). 
• Price Action: ZBH shares are trading 6.74% lower at $114.55 premarket on the last check Monday.