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| Zimmer CEO David Dvorak |
Zimmer Holdings ($ZMH) charted sizable sales gains for the second quarter with adjusted net earnings growing 4.6% from the prior year's period, but lowered its full-year estimates due to manufacturing expenses and costs associated with its pending Biomet merger.
The Indiana device giant reported net sales of $1.18 billion, a 1.2% jump over Q2 2013 numbers, and adjusted net earnings of $254.7 million, a 4.6% spike over the prior-year period. CEO David Dvorak pointed to the success of the company's orthopedic products in Asia Pacific and Europe as one reason behind the positive numbers, and emphasized Zimmer's growing presence in overseas market during Thursday's earnings call. But the company also cited $70 million in financing and fees associated with the Biomet deal and unrelated manufacturing fees as a drag on full-year earnings, lowering its full-year guidance from $4.90 to $5.10 per share to $4.65 to $4.75 a share.
Still, Dvorak emphasized that Zimmer would maintain strong momentum moving into the deal and had much to gain from the acquisition.
"We've got all the necessary ingredients: talent in the field, the right product offerings, a whole variety of terrific new products and innovative solutions that either are launched or in the process of being launched. So we're going to be in good shape as we consummate the combination and go forward," Dvorak said during Thursday's earnings call.
In April, Zimmer laid down $13.4 billion to join forces with Warsaw, IN-based Biomet and grab a bigger share of the $45 billion musculoskeletal industry. The companies had combined earnings of $7.8 billion in 2013, and Zimmer expects to achieve $270 million in synergies by the third year of the merger, Dvorak said during the company's Q1 2014 earnings call.
Zimmer plans to close the acquisition during the first quarter of 2015 but could face a couple of regulatory hurdles along the way. Earlier this month, the U.S. Federal Trade Commission (FTC) requested additional information from the two companies regarding their pending deal, extending the antitrust waiting period by 30 days until Zimmer and Biomet have "substantially complied" with regulators' appeals. Neither company spelled out what information the FTC was requesting, but Dvorak said during Thursday's earnings call that Zimmer was working closely with regulators to resolve the request.
The company's shares opened four cents below yesterday's closing price, trading at $99.37.
- read the earnings release