ZBH Financial Analysis

Analysis Date: 1/24/2025

Business Model

Zimmer Biomet generates revenue primarily through sales of orthopedic medical devices and solutions

Revenue Sources

• Knees (40.8% of Q3 2024 revenue)
• Hips (26.4% of Q3 2024 revenue)
• S.E.T. (Sports Medicine, Extremities, Trauma) (24.9% of Q3 2024 revenue)
• Other (7.9% of Q3 2024 revenue)

Income Statement Analysis

• Revenue increased 4.0% year-over-year to $1.824B
• Operating profit margin remained stable at 15.3% vs 15.2% in prior year
• Net earnings increased significantly by 53.1% to $249.1M

Balance Sheet Analysis

• Strong cash position with 36.8% increase in cash and equivalents
• Total assets remained relatively stable with 1% increase

Cash Flow Analysis

• Strong improvement in free cash flow generation, up 64.3% YoY
• Operating cash flow increased 17.2% to $395.7M

Capital Allocation

Company continues to balance investments in growth with shareholder returns through dividends and share repurchases. Completed $795.8M in share repurchases YTD and paid $148.0M in dividends. Also investing in strategic acquisitions like OrthoGrid Systems Inc.

Management Commentary

Strong performance delivered in Q3 despite ERP implementation challenges

Successfully managed ERP issues and mitigated negative impact

Updated guidance reducing and narrowing full year outlook

Overall Sentiment: Cautiously optimistic, focused on managing near-term challenges while advancing strategic priorities

Recommendation

Rating: Hold

Reason for Rating: Solid execution but reduced guidance warrants caution

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 4:51:53 AM