Zimmer Biomet(US:ZBH)2021-05-04 18:30Financial Data and Key Metrics Changes - Net sales in Q1 2021 were $1.847 billion, a reported increase of 3.6% and a constant currency increase of 0.8% compared to Q1 2020 [43] - GAAP diluted earnings per share were $0.94, significantly up from a loss of $2.46 in the previous year, while adjusted diluted earnings per share were $1.71, up about 60 basis points [53] - Operating cash flows were $247 million, and free cash flow totaled $137 million for the first quarter [55] Business Line Data and Key Metrics Changes - Global knee business declined by 5.2% year-over-year, impacted by COVID-19, but strong momentum was seen from Persona and ROSA Knee [49] - Global hip business increased by 0.3%, with growth in the Americas and Asia Pacific of 0.9% and 11.2% respectively [50] - Sports, extremity, and trauma segment grew by 7.2%, driven by strong growth in upper extremities and trauma [51] Market Data and Key Metrics Changes - Americas region saw a 1% increase, primarily due to a sharp rise in U.S. procedures in March [45] - EMEA region decreased by 10.3%, with all sub-markets in decline due to COVID-19 restrictions [45] - Asia Pacific grew by 15.5%, with solid year-over-year growth across major markets [46] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes mission-centric M&A to enhance market growth without disrupting margins [29] - A planned spin-off of the spine and dental business is underway, aimed at creating two independent companies to enhance focus and strategy [32] - The company aims to evolve from a traditional implant provider to a leading med tech innovator, with over 70% of R&D spending directed towards the ZBEdge ecosystem [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovering from COVID-19, anticipating a significant tailwind from the backlog of deferred elective procedures [12][66] - The company expects to return to normalized market growth in key markets within the year, with guidance for 2021 indicating revenue growth of 14% to 17% [56] - Management remains confident in achieving mid-single digit growth and a 30% operating margin by the end of 2023 [34] Other Important Information - The company has made leadership changes, including appointing a Chief Transformation Officer to drive ongoing transformation efforts [14] - The ROSA Robotics platform continues to see strong market demand, with recent FDA approval for a partial knee application [19] - The company is preparing for the launch of Persona-IQ and ROSA hip later in the year, with positive initial feedback from surgeons [23] Q&A Session Summary Question: Backlog and Capacity - Management indicated that while the backlog is significant, the speed of addressing it will vary globally, with an estimated 12 to 18 months to work through the backlog [66][68] Question: Q2 Performance - Management expects sequential improvement in growth rates in Q2, with Asia Pacific expected to perform above Q2 2019 levels [77] Question: Persona-IQ Launch Timing - The company is awaiting FDA approval for Persona-IQ, with a limited launch expected in 2021 and a full launch in 2022 [80][82] Question: Cervical Disc Market Outlook - Management views the entry of competitors into the cervical disc market positively, believing it will expand the market and provide conversion opportunities [103] Question: Remote Patient Monitoring Reimbursement - While reimbursement for remote patient monitoring is desirable, management believes the data capture aspect will drive uptake regardless of reimbursement status [110]