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Zimmer Biomet (ZBH) Unlocks Growth Plan for Future Success
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) recently held its 2024 Investor Day and outlined its exciting long-term growth and value-creation plan as well as its strategic targets. The company provides a path for compelling and long term top-line growth, improved operational profitability, and increased free cash flow generation.
In the past five years, Zimmer Biomet experienced a significant metamorphosis, emerging as a more robust enterprise with promising prospects. Being a provider of orthopedics and medical technology, the company is committed to offering customer-focused solutions that optimize performance, lower safety risks and produce the best possible clinical results.
Growth Plan Details
One of the key highlights of the event was Zimmer Biomet’s long-range plan for 2024 through 2027. The company targets to achieve mid-single-digit percentage constant currency consolidated revenue growth, with adjusted earnings per share (EPS) growing at least 1.5 times the revenue growth. ZBH intends to increase its free cash flow at a rate of at least 100 basis points faster than adjusted EPS.
The company also highlighted the drivers of Zimmer Biomet's value-enhancing opportunities, including delivering a new, compelling growth profile for driving above-market revenue growth.
To enhance shareholder value, Zimmer Biomet has also announced new capital allocation priorities. The company intends to return at least 65% of free cash flow to shareholders through dividends and share buybacks. Zimmer Biomet's board of directors also approved a new stock repurchase authorization that allows the company to repurchase up to $2 billion in ordinary stock.
Image Source: Zacks Investment Research
Zimmer Biomet has also formed a cooperation with CBRE Group, to build and outfit orthopedic ambulatory surgery centers (ASCs) in the United States. This strategic agreement will harness the firms' respective core capabilities as leaders in healthcare technology and commercial real estate services to bring cutting-edge medical technology to more patients across the country.
Bottom Line
The company is leveraging its strong M&A capabilities and financial flexibility to make further strategic acquisitions. By expanding into markets with faster growth rates, the company can boost its Weighted Average Market Growth Rate (WAMGR) and accelerate sales in these sectors.
With a solid growth plan in place and strategic partnerships to support its endeavors, Zimmer Biomet is optimistic that it will continue to innovate, execute and deploy capital to maximize shareholders’ value as it moves forward from this position of strength.
Market Opportunities
Zimmer Biomet is a musculoskeletal healthcare company that designs, manufactures and markets orthopedic reconstructive products, sports medicine, biologics, extremities and trauma products, spine, bone healing, craniomaxillofacial and thoracic products, dental implants and related surgical products.
Per the Grand View Research report, the global orthopedic implants market size was estimated at $25.2 billion in 2023 and is expected to witness a CAGR of 3.7% from 2024 to 2030. The market is driven by the growing prevalence of reduced bone density, weakened bones, and musculoskeletal disorders.
Progress in Zimmer Biomet Business
Zimmer Biomet is strategically expanding its global presence to address the huge demand in the musculoskeletal space. This market is growing rapidly due to favorable demographics and growing utilization of musculoskeletal healthcare in emerging markets and under-penetrated developed markets.
The company is diligently working to strengthen its foothold in internationally developed and emerging markets that provide long-term opportunities for growth. Its strategic investments in these regions in the past several quarters to improve operational and sales performance are yielding.
Price Performance
In the past year, the stock has declined 8.9% against the industry’s rise of 4.6%.
Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million improved 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #1, reported a first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared with the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
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Zimmer Biomet (ZBH) Unlocks Growth Plan for Future Success
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) recently held its 2024 Investor Day and outlined its exciting long-term growth and value-creation plan as well as its strategic targets. The company provides a path for compelling and long term top-line growth, improved operational profitability, and increased free cash flow generation.
In the past five years, Zimmer Biomet experienced a significant metamorphosis, emerging as a more robust enterprise with promising prospects. Being a provider of orthopedics and medical technology, the company is committed to offering customer-focused solutions that optimize performance, lower safety risks and produce the best possible clinical results.
Growth Plan Details
One of the key highlights of the event was Zimmer Biomet’s long-range plan for 2024 through 2027. The company targets to achieve mid-single-digit percentage constant currency consolidated revenue growth, with adjusted earnings per share (EPS) growing at least 1.5 times the revenue growth. ZBH intends to increase its free cash flow at a rate of at least 100 basis points faster than adjusted EPS.
The company also highlighted the drivers of Zimmer Biomet's value-enhancing opportunities, including delivering a new, compelling growth profile for driving above-market revenue growth.
To enhance shareholder value, Zimmer Biomet has also announced new capital allocation priorities. The company intends to return at least 65% of free cash flow to shareholders through dividends and share buybacks. Zimmer Biomet's board of directors also approved a new stock repurchase authorization that allows the company to repurchase up to $2 billion in ordinary stock.
Zimmer Biomet has also formed a cooperation with CBRE Group, to build and outfit orthopedic ambulatory surgery centers (ASCs) in the United States. This strategic agreement will harness the firms' respective core capabilities as leaders in healthcare technology and commercial real estate services to bring cutting-edge medical technology to more patients across the country.
Bottom Line
The company is leveraging its strong M&A capabilities and financial flexibility to make further strategic acquisitions. By expanding into markets with faster growth rates, the company can boost its Weighted Average Market Growth Rate (WAMGR) and accelerate sales in these sectors.
With a solid growth plan in place and strategic partnerships to support its endeavors, Zimmer Biomet is optimistic that it will continue to innovate, execute and deploy capital to maximize shareholders’ value as it moves forward from this position of strength.
Market Opportunities
Zimmer Biomet is a musculoskeletal healthcare company that designs, manufactures and markets orthopedic reconstructive products, sports medicine, biologics, extremities and trauma products, spine, bone healing, craniomaxillofacial and thoracic products, dental implants and related surgical products.
Per the Grand View Research report, the global orthopedic implants market size was estimated at $25.2 billion in 2023 and is expected to witness a CAGR of 3.7% from 2024 to 2030. The market is driven by the growing prevalence of reduced bone density, weakened bones, and musculoskeletal disorders.
Progress in Zimmer Biomet Business
Zimmer Biomet is strategically expanding its global presence to address the huge demand in the musculoskeletal space. This market is growing rapidly due to favorable demographics and growing utilization of musculoskeletal healthcare in emerging markets and under-penetrated developed markets.
The company is diligently working to strengthen its foothold in internationally developed and emerging markets that provide long-term opportunities for growth. Its strategic investments in these regions in the past several quarters to improve operational and sales performance are yielding.
Price Performance
In the past year, the stock has declined 8.9% against the industry’s rise of 4.6%.
Zacks Rank and Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million improved 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #1, reported a first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared with the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.