Zimmer Biomet is one of the top medical equipment stocks in the healthcare sector. The company has a dominant market position in the orthopedic reconstruction market. Zimmer Biomet designs, manufactures, and markets implants and other surgical equipment. The company has a strong relationship with surgeons who invest considerable time and resources in learning about Zimmer’s products. Therefore, there is a high switching cost for surgeons to shift to a competing product, and that competitive advantage works out very well for Zimmer Biomet Holdings.
Zimmer Announces Its Q32020 Earnings Results
Zimmer recently announced its third-quarter 2020 earnings results. Revenues grew 2% year-on-year to $1.93 billion while earnings per share were down from $2.1 per share in Q32019 to $1.16 in Q32020. The Americas regional sales saw a growth of 3.2% while Asia-Pacific saw a growth of 2.3% on a year-on-year basis. The EMEA saw a revenue fall of 2.3%.
According to CEO Bryan Hanson, “On the positive side, which would be pretty obvious, we have the new patient volume and in the backlog of patients that have deferred treatment during the pandemic for whatever reason. On the negative side, we have the effects from economic downturn, but most importantly, surges in the virus that can drive negative policy decisions and/or increased patient fear.” He further added, “So overall, the full quarter was stronger than expected, and we actually returned to growth over 2019 faster than we thought we would. And this is driven again by these COVID recovery dynamics.”
Zimmer Biomet’s stock has gained about 77% since the March market crash. It is up 44% in the last 5 years. Stryker Corporation, a competitor of Zimmer Biomet, is up 82% since hitting a low in March. The stock has gained 153% in the last 5 years. For comparison, Smith and Nephew, another medical equipment company listed in the UK, is up 30% since the March market crash and up 30% in the last 5 years.