|Zimmer Biomet CEO David Dvorak|
Zimmer Biomet officials spent the newly combined company's Q2 2015 earnings call describing the company's sales and marketing strategy as it seeks to ramp up growth in 2016 following ongoing integration efforts. The company reiterated its pledge to retain sales reps rather than cut them in an effort to achieve synergies.
Instead, Zimmer Biomet aims to appoint 2,000 specialized sales reps in the non-large joints (or non-hip and knee) arena by the end of the year, "a number that we aim to further expand significantly throughout this decade," according to CEO David Dvorak.
"Our vision is to build the most highly specialized and effective musculoskeletal commercial team in the industry. Consistent with that goal, we've selected sales leaders with proven track records and design compensation plans that reward growth. We expect to begin realizing the benefits of our integrated sales channel, as well as these commercial opportunities in the form of sequentially accelerating revenue growth as we exit 2015 and progress through 2016," he added.
Dvorak also touted cross-selling opportunities, saying, "We're bullish on the union of complementary extremities portfolios, highlighted by the cross-selling opportunities represented by the comprehensive total shoulder system, which commands a wide clinical audience and rapidly growing market, and the Nexel total elbow."
Other growth opportunities are sports medicine and foot and ankle implants, he said.
Hip and knee implants continue to constitute a good chunk of the company's net sales: $783 million, out of a total of $1.17 billion. Overall, reconstructive implants, including those for the extremities, experienced a revenue increase of 0.7% during the quarter, excluding the effects of exchange rate fluctuations. The spine unit led the way in growth, earning $52 million during the quarter, an increase of 4.7% at constant currencies.
Zimmer Biomet projected synergies from the $13.4 billion deal of $135 million in the new company's first year and $350 million by the third year.
Although sales reps appear safe, FierceMedicalDevices broke news of the closure of Zimmer's Carlsbad, CA, dental headquarters. The new company's dental headquarters will be consolidated into Biomet's dental headquarters in Palm Beach Gardens, FL, resulting in an unspecified number of layoffs.
Overall, Zimmer Biomet reported a net loss of $158 million during the quarter, on net sales of $1.17 billion, up 5.7% (but down 1.3% when currency fluctuations are taken into account). The addition of Biomet contributed $60 million in quarterly revenues, but it's only been a part of the new company for one month.
Wall Street analysts were worried about the company's low growth rate. The company said growth rates decelerated in late 2014 and 2015 due to a lack of investment and offensive measures by the sales team, but promised growth following the closure of the deal implementation of the integration plan.
Investors didn't respond too kindly to the company's message, however, pushing Zimmer Biomet's stock down by 2% in morning trading.
- read the earnings release
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