Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to ZimVie's First Quarter and 2023 Earnings Conference Call. Currently, all participants are in listen-only mode.

We will be facilitating a question-and-answer session toward the end of today's call.

As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych, Gilmartin Group, for introductory disclosures.

Marissa Bych

today's joining for you call. Thank released Earlier ended for quarter results XX, today, XXXX. ZimVie March the financial A the sec.gov. website, zimvie.com, copy the as on of well press release as on available is company's

SEC you Before I'd due during call indicated differ include we that by may will statements. results from the most risks like for remind this subsequent Actual begin, a Please company's forward-looking report uncertainties. materially discussion of detailed make that these filings the and and to the recent variety SEC comments management those statements filed of with to to refer periodic uncertainties. forward-looking and a risks

only to In future as obligation, with by of statements, these information, broadcast required because website. XXXX. otherwise. and X, or are Officer turn the any on earnings addition, of certain of as measures except intention include to deck will Vafa release May and/or the ZimVie. law the disclaims of whether today, any President that, section included to and or projections company's ZimVie I Jamali, or or within the comparable call revise is new on time-sensitive supplemental accurate financial call found the conference measures forward-looking today of this investor slides most issued And will the events, call update financial the live over the Chief Reconciliations non-GAAP Executive information financial with Relations contains measures. directly This Investor discussion GAAP

Vafa Jamali

Financial providing to our XX, XXXX. towards execution. on progress our thank and turn Then for innovation call to you off joining for the update all us. Thank the the by Chief call like you, kick of March Rich making Marissa. over our to afternoon, I'll ended I'd our performance financial ZimVie is objectives most review quarter and commercial Good Heppenstall, an Officer, vital

ahead still of us, work XXXX the to the like the organizational beyond. will us, commercial the said of into company of thank ultimately spend we'll execution have work separation as I bulk growth I'd our large for have on and part stand-alone XXXX done and Understanding business behind a and innovation. the position a This employees. also we immense we focused with previously,

critical ensuring of long-term health to we by -- most as our In and that clinical our Our we on the portfolio, is the platform. build path product finds that cadence the first imperative outcomes In to of the success benefits. actively continued differentiated drive future active of reshape innovation an supported ongoing launches. workflow dedicated remain growth we into better the products dental, quarter,

a we time launched was dental Since the and then, implant we've next-generation first new the products. years XX XXXX in to market. reminder, six new a had As

computer-aided our our complete procedures sophisticated detailed year, restoration we the For full-suite dentistry seamless allow workflow platform. These offerings modules digital RealGUIDE and with launched throughout implant tooth procedure. within example, this software and design physicians to and

crown software and same only and as restorative for our denture market design customers. guide platform now offering the including is allowing within in efficiency the planning care, with Our greater module design, substantially the implant

launches of extraction Allograft a variety is size More foundation filling presence products for broaden placement, These Plug. for suitable recently, bone to easy-to-use these comprehensive suite our grafting Graft and RegenerOss Both premium in and launches of used biomaterials be can selection particulate. our that providing allograft the an particles portfolio, expand a essentially reconstruct for dental a market our graft fill alternative and dental product periodontal Bone voids ZimVie's Particulate the the procedures jaw the and and the and RegenerOss Puros applications. bone value bone Plug Graft implant And offerings. The new we to bony defects. increasing population. cancellous CC implant are Allograft done in are blend sockets and RegenerOss enhancing Bone the a launched in to Dental natural our solution RegenerOss the provide two Bone cortical of of of repair Particulate patient customers dental Solutions Graft CC graft can is

dental lifelike latest patient mouth to and models, management mill. current all the freeze-dried XD & is clinical summary, and We institute offering the the allograft training supports support with whole. Speaking and as feet workflow and to these way well-positioned reconstructions. ability an we at all concluded week. in aspects the and what implant of institute of are dental to in here The were generate is our of ZimVie a integrated We're procedure flow important RealGUIDE and cadaver higher from The equipped dental features International space, share is Puros than South, as and remains are October. needed on to adoption as particulate, institute a this professionals everything as practice our our for dental excited a last lab, spaces The procedure grow pleased business market-leading of institute our journal our highlighted portfolio to pleased bone it, customers booked Puros capabilities, to square software, our formation most state-of-the-art opening and bone complex dental launches and call now Gardens exciting Journal train our Dental over that Palm a really cash see education fully business sessions at we with that the XX,XXX product workflow to the through has training it. of the featured allografts. Implants. recent Institute full that digital competitive host educational, science, a stimulated This as also only prospective strong Oral support printing Maxillofacial dedicated In Beach to

Outside Tether, idiopathic These for differentiated Cross came coverage spinal X vertebral seeing pleased North North also procedure members body Dakota. Blue from the of BCBS Shield see under decisions Expanding recently portfolio. We and and tethering device We're successes Blue non-fusion in coming positive Highmark the covered we're within the our incremental for million-plus two Dakota. APAC. of to decisions XXX,XXX received and the Tether scoliosis. growth for Highmark -- policy U.S., by spine to our reviewed Europe lives treatment

Shifting to Mobi-C.

for the first highest We replacement. British underpenetrated, disc historically These from within French Mobi-C of are in received ODEP, clinical aiding building on and of both decades cervical region are adoption patient of reimbursement a for cervical having already and panel, at quarter. rating levels, Mobi-C penetration and discs developments the disc implanted. in surpassed impact two XXX,XXX Europe, greater reconstruction also data one the quality the government under-adopted recently

to we Brainlab our continue progress Finally, make through partnership.

agreement and with portfolio for As spine we and a imaging, provide ZimVie Brainlab's spinal-enabling robotic-assisted patients a of planning, global announced in between solutions. our to reminder, the deepest with navigation, industry-leading integration Brainlab and customers products development technologies level March, of

spine We to radiation intraoperative navigation workflow are allowing to achieve in enhance and now operating us in compatibility the room accuracy working and between and X-rays trauma impact reducing spinal exposure. systems, Brainlab's our while

we're to our on optimize forward, position surgeon engage markets ultimately positioned our where to solutions, around existing will key with Looking our win. and customers, and in innovate we continue

profitability changes activities efficiency to our and the particular, and levels. we are the understanding the recent and overall with are organizational organization of to regions, across portfolio in and to we and size drive all to business continuing time are reduce in business, bases global the increase actions at with functions, enterprise global the These accordance with streamline weeks, an structure Turning the laid out right improvement these in market objective in markets. spine of completed to and wide within performance. cost operational executed aimed, our restructure our we conditions plan spin project We of our

detail to issued is in will Rich the As reduction in March. with expense as these associated XXXX approach financial shortly, our included actions guidance

to outline and I'll Before quarters our progress our financial the call look our to highlight, I forward and I business in Rich the turning years. turn performance, to to want to with over the coming am I that, progress With making across over call pleased sharing Rich. we're the

Richard J. Heppenstall

in and the XXXX. our decrease Thanks, to commentary consolidated day quarter selling first Vafa of X.X% begin currency. Please everyone. and of were good XXXX X.X% during a X.X% million, our year growth. by sales XXXX constant updated afternoon, Total close impact note, additional third-party equating on the net to XXXX, for providing the on of positive first first quarter a a prior-year results of will decrease reported period, an quarter approximately one $XXX.X basis for and outlook full had I'll versus reviewing we by the

segments. Shifting two to our

X.X% reported in sales First-quarter $XXX.X were global on and the prior-year to dental period. when million, net basis currency compared constant increased a effectively third-party flat

we strong. preliminary is during of acceptance market U.S. continued the in just launched offerings. with Europe TSX in indication been product new pleased well. although the quarter, has first Performance are We performing our is implant And the the

we strength our growing to are double-digits. Additionally, which continue digital see offerings, in

sales U.S., sales net reported by net X.X%, in In decreased additional dental of a dental but the of U.S., basis of X.X% versus day constant currency. million $XX.X increased of XXXX. Outside by selling inclusive million third-party one X.X% third-party increased the $XX.X on

Biomet by third-party were to our that year last by decrease previously The are reported a the ZimVie which decision was market. sales spine and driven X.X% the First by competition offset and constant compared to basis sales, period. sales exit million, quarter procurement, China currency continued recognized following prior-year net spine X.X% $XXX.X on when competitive decrease Zimmer volume-based in were global is that a in now decrease an

impact inclusive and decreased are one of third-party constant is additional of net third-party million is and $XX.X year basis X.X%, Outside X.X by sales growth to spine our XX.X% The XX.X% a U.S., as mentioned. on Biomet $X.X or by U.S., the of In sales points the the prior of $XX decision by Zimmer decreased consolidated million now versus selling in sales, of reported China estimated ZimVie net be previously the offset currency. recognized just million that spine to by day. percentage exit sales spine of

to period. resulting basis XX.X%, initiatives a in reduction compared by in margin manage when is operational inventory prior points gross $XXX of better compared The quarter QX of was driven adjusted profit Adjusted was charges substantial First-quarter our to XXXX. margin increase in year million the the XXX an inventory. in versus $XXX.X from gross in XX.X% gross to million increase prior-year

a encouraged carve far layers, lower sign. is inventory We with we to versus be seen of encouraging into thus we although net starting continue have inventory reserved are levels, end on previously XXXX, progress we gross the have that And the this front. to an in inventory meaning decrease marginally made

administrative and million expenses period. million adjusted as sales or basis decrease selling, of a sales, and was expenses third-party third-party the points XX.X% QX points $XXX.X prior-year X.X% XXXX which still of increase the of timing as time development a QX that our infrastructure XXXX XXX as period. than of net corporate of was adjusted percentage research general, prior-year XX to $XX we a higher public last spun and basis subsequent a to compared that was were of due newly QX newly and increased independent net This XXXX. this a ZimVie less to Recall company. year, new our company company, infrastructure sales or building

SG&A higher continue expect we prior well. than as such, XXXX for As and year be QX to QX to

to of discussed, sales points sales EBITDA decrease was prior-year decline EBITDA the shares. reflects XXXX in million previously XX the and earnings net by fully XX.X% as adjusted share in $X.XX in margin $XX.X count higher third-party diluted of quarter in per higher XX.X a of quarter as first due The or net previously weighted basis XX.X% of on first share Adjusted of lower average million Adjusted period. costs, is the from gross SG&A mentioned. offset primarily margin a

Touching sheet make balance on on our capitalize debt working assets application framework. and continue our capital, we in initiatives on QX, the of liquidity, the progress on disciplined strength financial and of to to our

and million operational ended at Our first needs the efforts for our million additional We approximately the equivalents of down have to inventory since year-over-year spending $X.X debt. resulted of and $XX.X reduction cash XXXX net capital to tighten in with cash quarter in opportunities December a continue reduction of a focus look million. in $X paying and with

This paying transfer continue that Consistent equity first from with down priority holders term and principal quarter QX our capital financial to XXXX to of in required payments $XX.X to I'm represents reduce pleased million debt over our leverage announce allocation by debt. profile of to debt debt. value and prepaying we our flexibility holders the time, QX on our loan of increasing

now amortization ahead are our We quarters five principal schedule. of

remains undrawn. $XXX As a million revolver reminder, our

Starting forward, $XXX XXXX. previous with full-year million. I'll our be our million net we turn outlook be sales. revenue, in to now range going are of note, dollars sales $XXX $XXX expected revenue guidance the million all million, up revised our range net of to XXXX $XXX third-party from for revising Please will to to

receive We no sales. any will longer related-party

Our guidance reflects this.

segments, our expect we low the single dental in to to at flat digits. continue Looking to grow

We inclusive decision three one teens expect to spine and market of exit impact to impact of the unfavorable China spine to an decline percentage a in percentage approximately point business from our our foreign exchange. point the

the with part to adjusted Vafa effort original Moving the XXXX guidance, more contemplated To to as our and are guidance our undertaken, expect which of to intact. margin, emphasize net XX.X% financial leaving color we range initiatives full-year pleased EBITDA to in we guidance. want around choppy to spin-offs sales margin that of operational in workforce, We QX our a as our previously our EBITDA benefit are reflects and of including continue initiatives continued EBITDA XX.X% as provide adjusted XXXX resizing were performance, a This guided. full-year be recent are mentioned. we we in some from turnarounds margin have range

sequentially teens. low EBITDA expect the lower in we QX, For adjusted

with per guidance per our $X.XX change fully adjusted revenue shares, million in share revising on we and earnings from to per previous share diluted the expectations, $X.XX XX.X up a per $X.XX guidance of $X.XX are to share. range Commensurate of range our count share share

investor call is over that, zimvie.com. As to a available reminder, back on With Vafa. the our located turn guidance I'll in supplemental presentation

Vafa Jamali

you, Rich. Thank

In experience CEO execution Dr. & their a Jose, our ability and and Paul Oral practice As we at their higher-quality Sanju commercial highlight implant owner employ lift as time Dr. the & growth, programs focus for heavy Atlanta Dr. Center like our and Columbia staff hosted Schaner on while to wind a from across and well to an team. patient turn with toward digital their down and and effectively the physicians customer recent we takeaways ZimVie on training themselves our open experience. Periodontics; Facial operational March, resources a Both and for I'd save as periodontist, for Jose platform, their dentistry offerings with Schaner, our Surgery. few Dr. support and contributing dialogue and Implants commented to seamlessly substantial of digital our to conversation

we KOL address efficiency introduce that, and dental outcomes, contribute our it continue With solutions to year. unmet to to continuing is Both our doctors patient questions. commentary Please also with investor Again, noted up series full a optimize Their for expand improved terrific both a patients education by and we'll later we saving believe stay a to that the providers, in this to and markets. as further to opportunity the offers spine Encode receive their traditional customers impression. innovation speaks market. that patients Emergence trip open office to commitment implant Abutment to tuned that additional around plan needs conversations workflow solutions our

Operator

Instructions]. [Operator you. Thank

comes with J.P. Marcus from Robert Our first Morgan. question

Robert Marcus

taking Congrats for good Thanks the quarter. Yeah. a on question.

Vafa Jamali

Thanks, Robbie.

Robert Marcus

to on Maybe the but street and you guys either guidance much by beat the the to guide, by quite revenues amount as start raise EBITDA as a didn't beat. the seem on good on

there, the for I was going to of what year? on and rest So, what's implies as the your it wondering thoughts

Richard J. Heppenstall

again. you good Thanks, to Yeah, to talk Yeah. Robbie.

in performance the So, really we're But early we're year. pleased QX. still in with our on

And approach so, and -- conservative we're still somewhat kind of a the yes, the of potentially balance for maintaining year. conservative prudent

exogenous often we've factors that business a our sometimes. that control our there number beyond are talked As previously, are of impact about

we really we're move prudent forward. so, being And as just

Robert Marcus

it. Got

dental the are in think because and exit. low to the for of to from and rest about decent to spine out backing amount get what a down even cadence of seems year, to sales help it implies that spine quarter for that sales, year imply the dental the So, teens on similar both that me step first going for

it quarter about think I first to how third, the of second, cadence quarter? sort just So, relative and fourth

Richard J. Heppenstall

Yeah.

QX, we we year think should think the probably I I way pretty if balance QX. about that So, I believe look you is strong you of at the think a think had -- the

kind be whether And of itself, to it so, repeats seen. remains QX

is balance apply the what the think kind year of you increase And I the the you of and so, quarter. you give should that of midpoint ratably considered of reasonable -- That take of our gains. guide, looking in at revenue just can towards balance the I the depiction a

Robert Marcus

and as better the a guiding the definitely margin what with in up Is at started where SG&A probably up implying, with you better you're you line in you're saw year-over-year, of first more end at gets progressively And see it. in quarter imagine there to? sales. a stepping quarter, Got the first offset I percentage EBITDA we gross levels it levels to

Richard J. Heppenstall

Yeah.

time remember, this last a year, newly you company. ramping were spun if Robbie up So, we expenses. were We corporate

year-over-year is what last us in of time kind up couple because revenue of of quarters as took QX the year. probably frame to a a so, it on And percentage the parity SG&A ramp

And so, coming as we in that is the margin balance of largely expansion gross guided margin, from to out evidenced QX. the also

Robert Marcus

Great. EPS. finer me, And put maybe point last the just a to for on

relative You year. $X.XX are realize the But $X.XX about you the had where if a for and thinking we're of Thanks the thinking rest in the the year? how EPS I the conservatism to beat quarter, first about balance The may a for come of Street out those lot.

Richard J. Heppenstall

problem. No Yeah.

our adjusted expense. it that margin revenue It range. interest the the guiding and we're share-based here, take the guidance rate. also will expense, and roll guiding flow We're tax XX% still to So, XX% that similar of and in an through somewhere XX.X% similar EPS, QX compensation right, you still midpoint to revised you EPS if number, to through apply take you you to

bottom, top flow to through it So, Robbie. should

Robert Marcus

Okay, Good quarter great. again. Thanks.

Richard J. Heppenstall

you. Thank Alright.

Operator

hold Please next our for question.

question next from open. from Matt is comes Matt, Barclays. line Our Miksic your

Unidentified Analyst

more give is David Hey, Matt. him five just you please? on for seconds, about this Can

Matthew Miksic

Yes.

having was up I getting just guys. trouble Sorry, here.

So, sort upside that on sort -- great in And have distributor the the stage of has of of and if see and lot been been describing. want year, least to be cross-currents, the be guess going? the cost-cutting there's to this that's how see, at start stabilization sort I changes sense what making jump point of I to to this of a stabilization the like organization of that point but to efforts sort maybe But I'm the of wondering between our you we don't upside you some could estimates there I spine. the Vafa, that intrigued at that that to like sequential working I'm of would a want get and some you're -- conservative love I your to conclusions, -- imagine, improvement,

Vafa Jamali

Sure. Hi, Matt.

far impacted get always manage through, to caused factors So, year or -- difficult about And frankly, year, or I us for really they separation that's much, end business. was sales of point. innovation or like rather more year than speaking. through a -- so And get the a with much the reps. take the relief fresh commercially that's and like collection general fixing that naturally really, two disruption that spine into changes. our this for the we whether moves last we of we off we're years quarter. think primarily our through And us think some system And every had This could getting internal more to about be the ERP of last big would here stabilization of the start I'd said the much I lot I a us, more with that the just feel pushed that situations changes turnaround it I for needed better are we I operational feel talk external just fully, year. we focused, to fully

Matt. feel So, do there. yet, don't we're completely think I we're that I there

much bottom last being we're in we feel like that do a and So, commercially. better cadence it. I terms are the turning events enough had I much, year of happen calling careful think we But in

with news spine. how And and It's they making dental they that price, they how grow really think good I is they market, really, what really with I market, doing well really fluid. think really, how business. we're

is I think partnership Brainlab big accounts. big with time help going the to us

commercially I we KOLs, focused involved and think frankly, and, is part with speaking, focusing operational were good important which of I spine are us also we moves, we're that issues. team. get to something an we're really getting more the as see unable making to on really, much

making for terms I our think look of So, in still giving the how making that quarters. to we're the again, implies truly But turn. overall, corner. cautious we I positive three guidance go. the would We're next I -- we're news really forward

see I way the that's now. So, it right

Matthew Miksic

alright. Okay,

So, growth in I to to we And but few hear. get don't gotten in quite devices, all think, some on side, weeks. that's the that on dental then encouraging rates, you mean, we've pretty I dental a ahead med of front, high accustomed last But different that's place. the in

-- context and see devices, sorts you're device of other in taking a feel So, contrasting and kind as sort maybe which, you're in the of saw been how put share, you first of all you're single-digit performance affecting it doing some I that with what you are weren't of of the dental? mix, that of frame if it the nominal is maybe to quarter -- means figure there driving that off the that market issues think we was competitors your low prior that -- your growth not kind rate, mentioned, you of extent about you the dental But has this what against putting you growth that maybe in could charts.

Vafa Jamali

Sure.

quarter big, really a for last big So, QX of dental. year was

a beat on were the quarter, we and premium the that competitive concerned have that okay. we dental that excellent We We are sort splurge be supportive all focus this think a on around focused of again, that I into the peers, growth. to happened. going implant of actually, Relative of the I really or our And -- but really benefited we kind is did met about implants. we will business it implants, was really businesses So, providing post-COVID players. and that then around workflow we how really, premium And implants. think

we digital in And implants. dental adoption surrounds the we we energy that greater around that's innovations really really emphasize that. the and to then and workflow really, dentist So, why needed the visits less while made implant most growth. our more spent to the doing chair of And I patient an enables time

we've largely it. So, in really, really that's really about how differentiated our market, and good we feel

So, dental a at of I really filled for digital I part better would large say dental what that is to we around or market team a premium lot managed just implants. success of done gaps. platform attribute then also we've And than will we've the perform a implant. the commercial And that that's

shop no ZimVie to outside kind we're you're of at. our of there's So, real I where portfolio go think reason a when customer. Overall, that's

some whether around think was felt it resilient pretty quite than premium would not yes, implant other -- like concern sort also we think resilient market but I that, There think some of anyways. a be there a or were impact, been recessionary the I it's market. I -- the

Matthew Miksic

certainly some ask -- really know Right. wasn't been Yeah. months, what's making about although a have folks in we call next for there. store the that, but XXX% to X going don't XX I know to

But front. we'll I come on sequential maybe down EBITDA. on to back I progression could you, that one and question So, if on last tuned the quarter after just stay guess, next

through, third back direction to walk on on that turns the is moving the in gets already, of hit an quarter I second half, or the quarter direction EBITDA? quarter guess sort you this. might based have you're on cost-cutting the projections, think EBITDA, I is down it's again, is fourth you right that what some of I program, if -- the sort if of of in it in maybe sort restructuring Robbie your it did, it the tide you whether the opportunity But haven't there the so, apologize, dynamic of in to momentum and is in

Richard J. Heppenstall

Yeah. Hey, Matt. good Rich. Yeah. afternoon, It's

So, happy to expound of that. kind on

pleased mentioned our obviously. with performance, I So, like to we're Robbie, QX

based course, charges so, margin of leads the to lower gross margin. lot And a on gross And uplift inventory of that, was year-over-year.

Now, are kind of course, right, somewhat inventory formulaic. and episodic, of charges

not consistent. So, they're necessarily

want so, operationalization basis to go-forward and inventory management. And is a we kind on what really long-term see of sustainable

see so, And progress optimistic cautiously we sustainable. but of to there, making it good we're kind want that we're

so, kind part. the And of first that's

is very that sustainability. the minor second to in mentioned up kind see very, which the is I back had of year, restructuring of margin quarter, we'll think some you very, of where that the The part half the ramp a to start benefit the I start but toward

So, I think we call, EBITDA of gave bit perspective. a an we QX in the around I where think color guided little margin -- from

sequentially we to be down. so, And expect probably that

half I year. of we but the in think of said teens, low then in the back you kind get it the back

Matthew Miksic

a nice for congrats quarter. color, the and on you thank Well,

Vafa Jamali

Thanks, Matt.

Operator

your like back to Jamali, for turn I now CEO, to remarks. closing Vafa would for questions. you Thank it

Vafa Jamali

three your this, you talking very we We to Thanks. further Thank ones attended you engagement, call. appreciate much who you look and months. to in look again forward questions. the we to forward like to Again, all of your

Operator

you today's conclude in This does your conference. participation the program. for Thank

disconnect. now may You

ZimVie (ZIMV) 3 May 232023 Q1 Earnings call transcript