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Key Updates on ZBH Stock for Investors

PART:
1 2 3 4 5
Part 4
Key Updates on ZBH Stock for Investors PART 4 OF 5

How Does ZBH Plan to Revive Growth Momentum in Dental Business?

Overview

In 2Q17, Zimmer Biomet Holdings (ZBH) registered a decline of ~5.7% in YoY (year-over-year) operational sales in its dental business. Around 6% of the total revenues of the company come from the dental segment sales. The below diagram shows the various business segments of Zimmer Biomet Holdings. The decline in sales in 2Q17 was mainly due to the company’s ongoing reorganization of its dental business in some European countries. In the United States, Zimmer Biomet Holdings registered positive sales growth in its dental business.

How Does ZBH Plan to Revive Growth Momentum in Dental Business?

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Also, there was a recent change in the management of Zimmer Biomet Holdings’ dental business. Pedro Malha was appointed as the general manager of the dental division of Zimmer Biomet Holdings. He served as the head of the global strategic efforts, Abbott Vision Care, before joining Zimmer Biomet Holdings. Abbott Vision Care’s business was recently acquired by Johnson & Johnson (JNJ).

However, there are some discussions around Zimmer Biomet Holdings divesting its dental business and focusing on the company’s core competencies.

Growth potential and initiatives

Zimmer Biomet Holdings finds the dental market to be an attractive segment that is growing at 3% to 5% and estimates an attractive ROIC (return on invested capital) in the dental business.

As per the company, “Together with our focus on enhanced product positioning, targeted commercial strategies and strong execution, we believe that we will be better positioned for improved performance in this attractive market.”

In April 2017, Zimmer Biomet Holdings entered a distribution agreement with NovaBone Products for the sale of NovaBone Dental Putty & Morsel Devices. The collaboration enables Zimmer Biomet Holdings to offer an innovative portfolio of bone grafting solutions.

Major competitors of Zimmer Biomet Holdings in the dental market include Danaher (DHR) and Dentsply Sirona (XRAY). Investors can consider investing in the Vanguard S&P 500 ETF (VOO) for exposure to Zimmer Biomet Holdings. VOO holds ~0.11% of its total holdings in ZBH.

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