Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ZimVie Inc (ZIMV, Financial) achieved a significant improvement in adjusted EBITDA margin, reaching 15.7%, which is over 500 basis points higher than the first quarter of 2024.
- The company successfully reduced the adjusted total cost of products sold by over 350 basis points, enhancing profitability.
- ZimVie Inc (ZIMV) launched a new immediate molar implant system, which exceeded internal growth expectations and is expected to drive growth for the remainder of the year.
- The digital dentistry business, excluding scanner sales, grew by high single digits, with the implant concierge service growing 11% year-over-year.
- The acquisition of a distributor partner in Costa Rica is expected to provide immediate benefits to the company's margin profile by leveraging local infrastructure and customer relationships.
Negative Points
- Net sales for the first quarter decreased by 5.2% in reported rates and 4.1% in constant currency, indicating a decline in top-line performance.
- The US market saw a 2.8% decline in net sales, driven by lower implant sales and the impact of one less selling day.
- International sales decreased by 8.5% on a reported basis, with significant headwinds from the expiration of a transition manufacturing agreement and lower China sales.
- The dental implant sales declined in low single digits due to continued macroeconomic pressures.
- The company faces potential tariff-related costs estimated at $3 million per year, primarily due to EU-USA tariff rates, which could impact profitability.
Q & A Highlights
Q: Can you provide more details on the uptick in implant units sold in April? Is this due to higher utilization, same-store sales, or new accounts?
A: Vafa Jamali, President and CEO, explained that while Q1 was similar to Q4, March showed improvement, and April demonstrated resilience. The increase is primarily due to improved same-store sales. The new immediate molar implant launch is performing better than expected, contributing to the growth in implant units.
Q: How is pricing trending in the dental implant market, and can you offset tariff impacts with price increases?
A: Vafa Jamali noted that the premium implant market is less price-competitive compared to value lines. While there are competitive pricing situations, especially with larger deals, the company aims to package deals beneficial for both customers and ZimVie. They plan to be selective with price increases, relying on accurate market segmentation to avoid competitive disadvantages.
Q: What accounts for the greater decline in international sales compared to the US?
A: Richard Heppenstall, CFO, highlighted several headwinds affecting international sales, including FX impacts, termination of a low-margin manufacturing agreement, fewer selling days, and reduced focus on China. When normalized for these factors, international sales declined modestly by 1.6%.
Q: Can you discuss your position in the Japanese market and the potential impact of the Implant Concierge launch?
A: Vafa Jamali stated that ZimVie's market position in Japan is similar to the US, with good pricing for premium implants. The Implant Concierge service could significantly boost business by improving workflow, which is a barrier to adoption. Richard Heppenstall added that Japan showed mid-single-digit growth in Q1, and the new service is expected to accelerate momentum.
Q: How confident are you in your supply chain and manufacturing capabilities amid economic and logistical challenges?
A: Vafa Jamali expressed strong confidence in ZimVie's manufacturing capabilities, citing flexibility with sites in Florida and Valencia. The company has moved distribution nodes to avoid US tariffs and has largely exited China, reducing risk. They have in-sourced manufacturing from China to Valencia, improving margins and avoiding tariffs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
