ZimVie Inc (ZIMV) Q2 2024 Earnings Call Highlights: Navigating Market Challenges with Strategic ...
Revenue: $116.8 million, a decrease of 1.5% in reported rates and 0.4% in constant currency.
U.S. Sales: $69.3 million, increased by 0.1%.
International Sales: $47.5 million, decreased 3.8% on a reported basis and 1.2% in constant currency.
Adjusted Cost of Products Sold: 37.0%, roughly flat compared to 37.2% in the prior year period.
Adjusted R&D Expense: $6.3 million or 5.4% of sales.
Adjusted SG&A Expense: $62.4 million.
Adjusted EBITDA: $16.1 million or a 13.8% margin.
Adjusted EPS: $0.13 per share on a fully diluted share count of 27.4 million shares.
Cash: $78.6 million.
Gross Debt: Approximately $235 million.
Net Debt: Approximately $156 million.
Full Year Revenue Guidance: $450 million to $460 million.
Full Year Adjusted EBITDA Guidance: $60 million to $65 million, with a margin of 13.3% to 14.1% of sales.
Interest Expense: Expected to be approximately $13 million for 2024.
Share-Based Compensation Expense: Expected to be in the range of $17 million to $17.5 million for the full year.
Adjusted EPS Guidance: $0.55 to $0.7 per share for the year.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
ZimVie Inc (NASDAQ:ZIMV) achieved a revenue of $117 million in Q2 2024, showcasing strong execution and innovation across its portfolio.
The company launched new dental implant products, TSX and T3 PRO, and gained FDA clearance for GenTek Restorative Components in the U.S., expanding its prosthetic offerings.
ZimVie Inc (NASDAQ:ZIMV) reported over 20% growth in its Implant Concierge service and surgical guide sales with RealGUIDE software, enhancing efficiency and safety in dental procedures.
The company formed a new scanner partnership with Medit, expanding its digital solutions suite and offering a broader range of scanner price points.
ZimVie Inc (NASDAQ:ZIMV) reaffirmed its full-year revenue guidance of $450 million to $460 million and remains committed to achieving a 15% plus EBITDA margin by April 2025.
Negative Points
Total third-party net sales for Q2 2024 decreased by 1.5% in reported rates and 0.4% in constant currency, indicating a slight decline in sales performance.
U.S. implant sales were weaker, and there was pressure on capital sales, particularly oral scanners, impacting overall sales growth.
The company expects Q3 2024 revenue to be sequentially lower and down 3% to 4% year-over-year due to seasonal impacts and market challenges.
ZimVie Inc (NASDAQ:ZIMV) experienced a decline in sales outside the U.S. by 3.8% on a reported basis and 1.2% in constant currency, reflecting international market pressures.
The company faces ongoing challenges in the dental market, with underlying market issues not fully subsided, necessitating a prudent approach to future quarters.
Q & A Highlights
Q: Can you discuss your strategy for expanding the dental implants portfolio and whether you plan to build it organically or through acquisitions? A: Vafa Jamali, President and CEO, explained that ZimVie is focusing on its unique assets in the premium dental implant market, maintaining excellent gross profit margins and price stability. The company is expanding its digital offerings, such as Implant Concierge, and may explore other markets that could benefit from technological advancements.
Q: How has the delay in Lumina's restorative launch affected your 2024 outlook, and what role does the Medit partnership play in your strategy? A: Vafa Jamali noted that the delay in Lumina's launch has impacted scanner sales, but the new partnership with Medit provides a rich offering with different price points, helping to advance customers to a digital platform. Richard Heppenstall, CFO, added that the lower equipment sales were already factored into their full-year guidance.
Q: What are your expectations for the third quarter, and how do you view patient demand and market conditions? A: Richard Heppenstall stated that the third quarter is expected to be seasonally lower, with a 3% to 4% year-over-year decline. The market challenges have not fully subsided, so the company is being prudent in its outlook. They expect an adjusted EBITDA margin of approximately 12% for Q3.
Q: Can you provide insights into the potential strategic interest in ZimVie and how you view the company's future? A: Vafa Jamali emphasized that ZimVie is running the company with a long-term perspective, focusing on maintaining differentiation and participating in the premium segment. The digital platform remains open, and any strategic decisions will be considered with an open mind.
Q: How is ZimVie performing in the Asia Pacific region, and what is your exposure to China? A: Richard Heppenstall highlighted that ZimVie's exposure to China is minimal, and the company is performing well in the Asia Pacific region, particularly in Japan, India, and Australia. Despite currency fluctuations, the business grew 1.1% in constant currency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.