Zimmer ($ZMH) ended its 2012 third quarter with $1 billion in net sales, which may sound like a lot, but the number is essentially flat compared to last year. Net earnings for the orthopedics device maker grew modestly, reaching $178.1 million. That's up 2.5% over the same period in 2011. Investors were happy and sent shares up more than 3% in late morning trading.
Like many device companies, Zimmer's earnings potential during the quarter confronted challenging economic conditions. Net sales in Europe, for example, dipped 3% as the continent faces continued austerity, and they remained static in the Americas and the Asia-Pacific regions. When factoring in exchange rates, however, the European and Asia-Pacific numbers showcase modest growth.
That said, Zimmer faced mixed results with its individual product sales. Knee implant sales hit $244 million in the Americas region, a 4% decline. They grew 2%, however, in the Asia-Pacific region, hitting $75 million. Hip implant sales dropped 8% in Europe, to $96 million, and 4% in the Asia-Pacific region, reaching $67 million. But they grew 2% in the Americas, to $145 million. Zimmer also lowered its full year earnings per share guidance for 2012, to a 2% increase from a previously expected 2.5% to 3.5% jump.
Zimmer president and CEO David Dvorak said his company's third quarter results represented strong operating margins, plus "above-market sales growth" in Europe, the Middle East and Africa.
Among the quarter's highlights: Zimmer spent nearly $98 million to acquire 1.56 million shares in a buyback program, and finalized an acquisition of Dornoch Medical Systems, a major of medical waste fluid management and disposal products.
Zimmer landed among the largest medical device layoffs so far in 2012, with plans to cut 450 jobs from the payroll. Zimmer said it is slashing jobs to offset a $60 million annual charge from the looming 2.3% medical device industry tax in the U.S, which kicks in this January.
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