ZimVie (US:ZIMV)2025-05-08 20:15PART I. FINANCIAL INFORMATION Item 1. Financial Statements ZimVie Inc. presents its unaudited condensed consolidated financial statements for Q1 2025, with the spine segment sale now reported as discontinued operations Condensed Consolidated Statements of Operations Q1 2025 net sales from continuing operations decreased to $112.0 million, while operating profit improved to $0.8 million and net loss narrowed Q1 2025 vs. Q1 2024 Statement of Operations Highlights (Continuing Operations) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net sales | $111,997 | $118,195 | -5.2% | | Operating Profit (Loss) | $780 | $(2,732) | Improved | | Net Loss from Continuing Operations | $(2,625) | $(11,483) | Narrowed | | Net Loss of ZimVie Inc. | $(1,471) | $(7,761) | Narrowed | | Diluted EPS (Net Loss) | $(0.05) | $(0.29) | Improved | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $745.8 million, cash decreased to $66.8 million, and stockholders' equity increased to $395.1 million Balance Sheet Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $66,750 | $74,974 | | Total Current Assets | $250,658 | $257,285 | | Total Assets | $745,782 | $753,674 | | Total Current Liabilities | $117,144 | $133,944 | | Total Liabilities | $350,659 | $371,967 | | Total Stockholders' Equity | $395,123 | $381,707 | Condensed Consolidated Statements of Cash Flows Q1 2025 saw $13.9 million cash used in operating activities, with total cash and equivalents decreasing by $9.8 million Q1 2025 vs. Q1 2024 Cash Flow Summary | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,911) | $(11,511) | | Net cash used in investing activities | $(1,947) | $(4,138) | | Net cash used in financing activities | $(1,135) | $(1,437) | | Decrease in cash and cash equivalents | $(9,822) | $(19,184) | Notes to Financial Statements Notes detail the $377.0 million spine segment sale, its classification as discontinued operations, debt prepayment, and a new restructuring plan - On April 1, 2024, ZimVie completed the sale of its spine segment for a total purchase price of $377.0 million, consisting of $315 million in cash (subject to adjustments) and a $60 million promissory note2032 - The historical financial results of the spine segment are now classified as discontinued operations, representing a strategic shift for the company2431 - A restructuring plan was initiated in January 2024 to optimize the organization following the spine segment disposal, with $1.4 million in charges recorded in Q1 202570 - As of March 31, 2025, $221.9 million was outstanding on the Term Loan. A prepayment of $275.0 million was made on April 1, 2024, using proceeds from the spine segment sale58 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, noting a 5.2% net sales decline, improved gross margin, and sufficient liquidity for the next 12 months Results of Operations Q1 2025 net sales decreased 5.2% to $112.0 million due to volume, price, and FX, while gross margin improved from manufacturing efficiencies Net Sales Percentage Change Components (Q1 2025 vs Q1 2024) | Component | Percentage Change | | :--- | :--- | | Total Change | (5.2)% | | Volume/Mix | (3.3)% | | Price | (0.8)% | | Foreign Exchange | (1.1)% | - The decrease in cost of products sold as a percentage of sales was primarily due to manufacturing efficiencies and the exit of a transition manufacturing agreement with the former parent company84 - R&D expenses decreased due to lower share-based compensation, reduced headcount, and lower professional fees87 - SG&A expenses decreased in dollar terms but increased as a percentage of net sales due to the decline in sales88 Liquidity and Capital Resources As of March 31, 2025, cash and equivalents were $66.8 million, with $13.9 million cash used in operations, but liquidity remains sufficient - Cash used in operating activities was $13.9 million in Q1 2025, compared to $11.5 million in Q1 202497 - The company believes that available cash, cash flows from operations, and its revolving credit facility will be sufficient to meet liquidity needs for at least the next 12 months101 Item 3. Quantitative and Qualitative Disclosures About Market Risk ZimVie faces foreign currency and interest rate risks, using forward contracts for FX, and a 100 bps SOFR increase would cost $2.2 million annually - The company is primarily exposed to foreign currency exchange risk related to the Euro and Japanese Yen and uses forward contracts to manage this exposure106 - The company has $221.9 million of floating rate debt subject to the SOFR. A 100 basis point increase in SOFR would raise annual interest expense by $2.2 million108 - Credit risk is concentrated in the healthcare industry, particularly with public hospitals in Europe, but is managed through credit limits and monitoring, with no significant exposure to any single customer110111 Item 4. Controls and Procedures Management, including CEO and CFO, concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the quarter112 - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls113 PART II. OTHER INFORMATION Item 1. Legal Proceedings ZimVie is involved in various legal proceedings, but management does not anticipate a material adverse impact on its financials - ZimVie is involved in various claims and legal proceedings but does not anticipate a material adverse impact from their outcomes115 Item 1A. Risk Factors A new risk factor highlights potential adverse impacts from changes in U.S. trade policy and tariffs, especially for products from Spain - A new risk factor has been added regarding the potential adverse impact of changes in U.S. trade policy and tariffs117118 - Tariffs on imports from the European Union could make procuring products manufactured in Spain more costly, potentially reducing margins or demand118 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans for company securities during Q1 2025 - No directors or officers adopted or terminated any contract, instruction, or written plan for trading company securities under Rule 10b5-1(c) during Q1 2025120 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key agreements and officer certifications - Lists all exhibits filed with the quarterly report, such as the Equity Purchase Agreement for the spine segment sale and officer certifications122