Zimmer beat expectations for fourth quarter profit, but net sales decreased 1.4 percent over the previous year.
This announcement comes just weeks before the company is expected to finalize it's acquisition of Biomet. Zimmer made plans to acquire Biomet last year and the company has been clearing regulatory hurdles ever since to ensure the deal goes through while also focusing on current core business lines.
"In the fourth quarter, Zimmer delivered solid growth across several of our product categories, with impressive contributions from our Asia Pacific and Europe, Middle East and African sales regions," said President and CEO David Dvorak. "Our commitments to innovation and focused execution have positioned Zimmer to act on the transformational opportunity to combine with Biomet. The combined entity will offer a more comprehensive diversified musculoskeletal portfolio for our customers, as well as create synergies that will enhance value for our stockholders."
Here are 10 things to know about the financial report:
1. While net sales were down 1.4 percent to $1.22 billion in the fourth quarter, full year net sales increased by nearly the same amount — 1.1 percent.
2. Net earnings for the fourth quarter hit $156.6 million. Operating cash flow in the quarter was $354.7 million.
3. Throughout the fourth quarter, the company paid $37.2 million in dividends and declared a fourth quarter dividend of $0.22. This is a 10 percent increase over the same period last year.
4. Zimmer expects revenue to increase 1.5 percent to 2.5 percent in the first quarter of 2015. However, foreign currency is expected to decrease revenues by around 6 percent for the quarter.
5. Diluted earnings per share for the first quarter are projected as $1.12 to $1.14 on a reported basis.
6. The company expects to complete its Biomet merger during the first quarter of 2015. The merger is expected to have an impact on full-year guidance, and the company elected to wait until after the merger is final to announce full-year guidance.
7. Net sales in the Americas for 2014 dropped 1 percent while Europe saw a 5 percent growth and the Asia Pacific saw 2 percent growth.
8. The full-year breakdown of nets sales is:
• Reconstructive: 2 percent to $3.4 billion
• Knee: 3 percent to $3.5 billion
• Hips: Flat at $1.3 billion
• Spine: $207 million
9. For the fourth quarter of 2014, knee sales were down 1 percent and hip sales were down 4 percent. However, spine sales were up 6 percent.
10. Diluted earnings per share for 2014 were $4.19 reported and $6.04 adjusted, which is a 5.4 percent increase over last year.