Revenue performance after the merger
Zimmer Biomet Holdings (ZBH) registered falling revenues after the merger announcement in 2014. However, the revenues started to improve by the end of fiscal 2015 and gained strong momentum in 2016.
The company witnessed strong top-line growth in 2Q16. Approximately 66% of its YoY (year-over-year) growth amounting to ~$1.9 billion was registered in 2Q16.
Peers Stryker (SYK), Medtronic (MDT), and the Medical Device segment of Johnson & Johnson (JNJ) generated revenues of $2.8 billion, $7.6 billion, and $6.4 billion, respectively, during the recent quarter.
For diversified exposure to Zimmer Biomet Holdings, investors can consider the iShares Core S&P 500 ETF (IVV), that holds ~0.14% of its total portfolio in ZBH.
Zimmer Biomet’s key revenue drivers
Zimmer Biomet’s (ZBH) leading market position in almost all of its business segments, with the highest market share in the Knee and Hip markets, have strengthened the company’s performance in the recent quarter. The merger has resulted in the expansion of the company’s breadth and depth of its product portfolio, which has positioned its Musculoskeletal portfolio as the most comprehensive one in the market.
So, the company has acquired the ability to leverage the single-vendor relationship opportunities with the hospitals, gaining traction in the industry amid pricing pressures and business model disruptions. Moreover, new product launches and cross-selling opportunities have driven the company’s top-line growth in recent quarters.
Zimmer Biomet’s consistent focus on delivering differentiated products, which has provided value to its customers, is the key fundamental of the company and has helped advance its revenue growth. Zimmer Biomet also undertook a number of acquisitions recently, which have helped it strengthen its position in the spine market and foray into the attractive robotic surgery segment.