Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ZimVie Inc (ZIMV, Financial) reported a strong quarter with revenue of $103 million, driven by innovation across implants, biomaterials, and digital solutions.
- The company improved its manufacturing efficiency, reducing the cost of products sold both year-over-year and sequentially.
- ZimVie Inc (ZIMV) paid down $15 million in debt, reducing its gross debt to $220 million and net debt to $153 million.
- The digital portfolio, excluding iTero scanner sales, grew over 10% in the third quarter, with the RealGUIDE 5.4 software and Medit partnership driving growth.
- The Implant Concierge service grew 20% in the quarter, reflecting positive feedback and value provided to dentists by reducing labor and costs.
Negative Points
- Total third-party net sales decreased by 2% in reported rates and 2.2% in constant currency compared to the prior year period.
- Outside of the US, third-party net sales decreased by 6% on a reported basis, primarily due to timing of orders in Japan and Italy and a slower market in Spain.
- The company narrowed its full-year revenue guidance range to $450 million to $455 million, down from the previous range of $450 million to $460 million.
- SG&A expenses increased to $57.8 million from $55.8 million in the prior year, reflecting increased investment in the US direct sales force.
- The company faces macroeconomic pressures in Europe, impacting sales performance in the region.
Q & A Highlights
Q: How is ZimVie Inc. viewing the recovery in the US market, and what are the expectations for international markets in the fourth quarter?
A: Vafa Jamali, President and CEO, expressed optimism about growth returning in North America in the fourth quarter. Internationally, Japan is expected to resume growth, while Italy's decline was due to timing, and Spain faced macroeconomic pressures. Richard Heppenstall, CFO, added that the US business, which constitutes 60% of revenue, is performing well, and they expect continued growth in the fourth quarter.
Q: Is there any indication that patients are returning for implant procedures, and how does the company view the backlog of patients?
A: Vafa Jamali noted that while they haven't accurately sized the patient backlog, biomaterials are seen as a leading indicator of future implant procedures. They are seeing pockets of recovery in the US, which is their most profitable market.
Q: Can ZimVie sustain the current gross margin levels, and what are the expectations for SG&A expenses?
A: Richard Heppenstall stated that the company is pleased with the gross margin improvements and expects them to remain stable into the fourth quarter. They are investing in innovation and the US sales force to drive long-term growth. Vafa Jamali added that product mix, particularly implants, will also drive margin improvements.
Q: What is the outlook for ZimVie as it exits 2024 and enters 2025?
A: Vafa Jamali expressed confidence in the company's position, with the North American market returning to growth. Richard Heppenstall highlighted the stabilization of the business, improved gross margins, prudent SG&A investments, and a healthy balance sheet as positive indicators for entering 2025.
Q: How is the digital segment, particularly RealGUIDE and Implant Concierge, performing?
A: Vafa Jamali emphasized the digital segment as a growth enabler in underpenetrated markets. Richard Heppenstall reported that the digital business, excluding iTero, grew by 10%, with RealGUIDE software up over 30% year-over-year, indicating strong differentiation and stickiness in the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
