On May 11, 2020 Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) reported financial results for the quarter ended March 31, 2020 (Press release, Zimmer Holdings, MAY 11, 2020, View Source [SID1234557544]). The Company reported first quarter net sales of $1.784 billion, a decrease of 9.7% from the prior year period, and a decrease of 8.9% on a constant currency basis – both consistent with the preliminary results disclosed in the Company’s press release on April 6, 2020. Net loss for the first quarter was $509 million, including goodwill impairment. Net earnings on an adjusted basis were $354 million.
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Diluted loss per share was $2.46 for the first quarter. Adjusted diluted earnings per share were $1.70 for the first quarter, a decrease of 9.1% from the prior year period.
"While our full first quarter results have been impacted by the global spread of COVID-19 and the deferral of elective procedures, our operational performance prior to the COVID-19 disruption was trending ahead of our expectations," said Bryan Hanson, President and CEO of Zimmer Biomet. "Over the past two years, we have made significant strides in reshaping and evolving Zimmer Biomet. This progress has better positioned us to address the COVID-19 challenge. We have an innovative and mobilized team, operational scale and increased financial flexibility – all of which we are using to support healthcare professionals and patients. I continue to be so proud of our global team and our collective, unyielding commitment to the ZB mission to better the lives of people around the world."
First quarter performance was negatively impacted by COVID-19, which reached a pandemic level in March and resulted in a significant and sudden global decline in elective procedure volumes.
Please see the attached schedules accompanying this press release for additional details on performance in the quarter, including sales by Zimmer Biomet’s three geographies and five product categories.
Geographic and Product Category Sales
The following sales table provides results by geography and product category for the three-month period ended March 31, 2020, as well as the percentage change compared to the prior year period, on both a reported basis and a constant currency basis.
Cash Flow and Balance Sheet
Operating cash flow for the first quarter was $451 million and free cash flow was $325 million. In the first quarter, the Company paid $50 million in dividends and declared a dividend of $0.24 per share. The Company also recently refinanced $1.5 billion in debt that came due April 1, 2020, renegotiated the terms of its $1.5 billion revolver and secured an additional $1.0 billion credit facility.
Financial Guidance
Zimmer Biomet expects the decline in elective procedure volumes observed in the final weeks of the first quarter to continue to have a significant negative impact in the second quarter of 2020. Given the uncertainty around the scope and duration of COVID-19 and its ongoing impact on the deferral of elective procedures, the Company is currently unable to quantify the expected impact on its results of operations, financial condition and cash flows, which could be material, for 2020 and is therefore not providing full-year financial guidance.
Conference Call
The Company will conduct its first quarter 2020 investor conference call today, May 11, 2020, at 8:30 a.m. Eastern Time. The audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at https://investor.zimmerbiomet.com. It will be archived for replay following the conference call.