Zimmer Biomet 2025 Q1 Earnings EPS Rises Amid Stock Decline

Zimmer Biomet (ZBH) reported its fiscal 2025 Q1 earnings on May 05, 2025. The company saw a slight revenue increase of 1.1%, reaching $1.91 billion compared to $1.89 billion in the same quarter last year. However, despite a 9.5% rise in EPS, Zimmer Biomet's full-year adjusted EPS guidance was lowered due to the Paragon 28 acquisition and tariff impacts. This adjustment appears to have contributed to a significant decline in Zimmer Biomet's stock price, which dropped 19.57% month-to-date. The company is still optimistic about its strategic priorities and expects moderate revenue growth.

Revenue

Zimmer Biomet's revenue for Q1 2025 rose by 1.1% to $1.91 billion, compared to the previous year's $1.89 billion. The knees segment generated $792.90 million, while hips contributed $495.80 million. The S.E.T. segment accounted for $470.50 million, and the combined Technology & Data, Bone Cement, and Surgical division added $149.90 million to the total revenue.

Earnings/Net Income

Zimmer Biomet's earnings per share (EPS) increased by 9.5% to $0.92 in Q1 2025 from $0.84 in Q1 2024. This growth reflects the company's strengthened profitability, with net income rising by 5.7% to $182.60 million compared to $172.80 million in the previous year. Overall, the EPS results indicate a positive financial performance for the period.

Price Action

The stock price of Zimmer Biomet has tumbled 9.15% during the latest trading day, has tumbled 11.08% during the most recent full trading week, and has plummeted 19.57% month-to-date.

Post-Earnings Price Action Review

Following the earnings report, Zimmer Biomet's stock experienced short-term volatility, as indicated by a 3-Day win rate below 50%. However, the 10-Day and 30-Day win rates suggest more stable trends over longer periods. Historical data reveals that maximum returns following an earnings release are relatively modest, peaking at 1.51%. This analysis highlights the potential for limited price appreciation despite the initial fluctuations. Investors may find reassurance in the longer-term stability, but immediate reactions to the earnings data reflect the stock's inherent volatility.

CEO Commentary

Ivan Tornos, President and CEO, expressed gratitude for the Zimmer Biomet team, emphasizing the company's growth drivers, including a 2.3% sales increase in Q1 against a backdrop of one less selling day. He highlighted standout performances in U.S. hips, with nearly 4% growth, and mid-single-digit growth in S.E.T. Tornos outlined strategic priorities: focusing on people and culture, operational excellence, and innovation. He mentioned leadership changes aimed at enhancing U.S. performance and emphasized the importance of new product launches, particularly in hips and knees, to drive future growth. Overall, Tornos maintained an optimistic outlook regarding the company’s trajectory.

Guidance

Zimmer Biomet anticipates full-year organic constant currency revenue growth of 3% to 5%, excluding the impact of the Paragon 28 acquisition, which is expected to contribute approximately 270 basis points to sales growth. The adjusted EPS guidance has been updated to a range of $7.90 to $8.10, down from $8.15 to $8.35, accounting for tariff impacts and dilution from the Paragon 28 acquisition. The company projects free cash flow for 2025 to be between $750 million and $850 million, reflecting challenges from tariffs and one-time costs associated with the acquisition.

Additional News

Zimmer Biomet recently completed the acquisition of Paragon 28, Inc., a leading medical device company in the foot and ankle orthopedic segment, enhancing its position in this high-growth area. The company also announced significant C-level changes, with Ivan Tornos set to assume the role of Chairman of the Board upon the retirement of Non-Executive Chairman Christopher Begley. Michael Farrell will serve as Lead Independent Director. Additionally, Zimmer Biomet launched the "You'll Be Back" campaign with Chief Movement Officer Arnold Schwarzenegger, aiming to empower individuals with joint pain. The campaign provides an online community offering resources for informed mobility choices. The company continues to progress in its innovation and diversification strategy, focusing on expanding its portfolio and market presence.