UPDATE 2-Zimmer first-quarter earnings, sales rise

* Q1 net EPS $1.01/shr; $1.02/shr adjusted

* Affirms full-year sales, EPS forecast

* Sees 2010 adjusted EPS between $4.15 and $4.35/shr

* Shares fall 2.1 percent in early trading

(Adds comments from analyst, CEO, share price)

By Toni Clarke

BOSTON, April 22 (BestGrowthStock) – Zimmer Holdings Inc (ZMH.N: )
said on Thursday its first-quarter earnings rose 1.6 percent on
higher sales of its products for elective procedures such as
hip and knee replacements and dental implants.

The company also reaffirmed its 2010 outlook.

Still, some investors were disappointed in the performance
of the company’s core knee and hip business, and its shares
fell 2.1 percent in early trading.

“We believe that these reconstructive results will be
viewed as mildly disappointing, as performance from the
company’s competitors this quarter has been better,” said Ben
Andrew, an analyst at William Blair & Co, in a research note.

Net earnings rose to $205.4 million, or $1.01 per share,
from $202.2 million, or 91 cents per share, a year earlier.

Excluding one-time items, the company reported earnings of
$1.02 a share. Analysts on average were expecting $1.01,
according to Thomson Reuters I/B/E/S.

Zimmer, whose shares have advanced more than 60 percent in
the past year, said first-quarter sales rose to $1.06 billion
from $992.6 million.

Reconstructive implant sales, which include hip and knee
surgery products, were up about 3 percent on a constant
currency basis. The company hopes to boost sales growth with
the introduction of new products.

“We’re looking to make material improvements in the
performance of those two franchises, and a lot of this does
relate to new product launches,” said David Dvorak, the
company’s chief executive officer, on a conference call with
analysts.

The company recently launched an instrument system for knee
replacement surgery, and it expects to launch additional new
products in the middle of this year.

“This is really a second half of the year productivity
story for us,” Dvorak said. “I would expect this year that we
would be back to market growth rates in both those
franchises.”

Softer reconstructive implant sales were offset to some
extent by better-than-expected sales of dental implant
products. Dental implants, which are mostly paid for by private
insurance or out of a patient’s own pocket, was one of the
businesses hardest hit by the economic downturn.

Now volume is beginning to pick up as the economy improves,
the company said. Dental implant sales rose 6 percent on a
constant currency basis.

About 40 percent of Zimmer’s business comes from outside
the United States.

Zimmer affirmed its full-year 2010 outlook, saying it
expects revenue to rise between 3.5 percent and 5.5 percent,
with adjusted earnings of between $4.15 and $4.35 a share.

Zimmer’s shares fell 2.1 percent to $58.89 on the New York
Stock Exchange.

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(Reporting by Toni Clarke; Editing by Lisa Von Ahn, Dave
Zimmerman)

UPDATE 2-Zimmer first-quarter earnings, sales rise