Zimmer earnings slip in 4th quarter on write-down

Associated Press

WARSAW, Ind. (AP) -- Orthopedic maker Zimmer Holdings Inc. reported Thursday that its profit fell slightly in the fourth quarter as the company wrote off nearly $100 million in goodwill value of its spine unit.

Zimmer also said it will continue a cost-savings program and will post restructuring charges of about $125 million pretax this year.

The company's net income fell 2 percent to $152.8 million, or 88 cents per share, from $156.6 million, or 87 cents per share, in the prior-year period. Sales inched up 1 percent to $1.18 billion. Adjusted for one-time charges, the company would have earned $1.51 per share.

Analysts polled by FactSet predicted net income of $1.49 per share on revenue of $1.18 billion.

Zimmer's results were hurt by a goodwill impairment charge of $96 million, or 55 cents per share, to write down the value of its spinal implants unit. The company said sales of spinal implants face a number of headwinds "including pressure from payers on utilization of certain types of procedures and on reimbursement rates and prices generally."

2012 net income fell 1 percent to $755 million, or $4.29 per share, from $760.8 million, or $4.03 per share in 2011. Annual sales were flat at $4.47 billion.

Looking ahead, for 2013 the company expects adjusted earnings per share in the range of $5.65 to $5.85. Analysts predict $5.73 per share, on average.

The company said it will continue recent efforts to streamline operations and reduce costs, which are expected to generate $80 million in savings before taxes. Zimmer expects to record pretax charges between $120 and $130 million connected with the restructuring.