Biomet Reports 14% Sales Increase
BY EDITOR, DECEMBER 22, 2003
Biomet (BMET:NASDAQ) reported its 2Q:04 financials on Thursday. As a consequence of not reporting financials based on a calendar fiscal year, BMET is the earliest to report their quarter. Therefore, both analysts and orthopedic investors pay close attention to BMET financial reporting in order to try and gain an idea on how the rest of the companies in the sector will report. Well, we believe that the orthopedic fundamentals remain strong based on BMET financial report. The Company reported sales of $387.6 million during the 2Q:04, a 14% increase over the 2Q:03 and earnings per diluted share of $0.32 which is 19% higher than the same period last year and $0.01 better than analyst expectations. Reconstructive sales totaled $252.1 million, a 14% increase on a constant currency basis over the 2Q:04. Hips sales grew by 9% and knees increased 13% over the 2Q:03 on a constant currency basis. These are slightly below current market rates and we believe were negatively impacted by the introduction of ceramic-on-ceramic hips as well as a tougher comparison with the same quarter a year ago. However, extremity sales and spinal implants/orthobiological spine products, which increased respectively by 24% and 19% domestically during 2Q:04, helped to compensate for a slight slowdown in reconstructive sales. Look for a top-loading spinal system as well as the introduction of Palacos-G Antibiotic bone cement to drive growth during BMET's 2H:04.
Biomet announced it had purchased the remaining 50% of its European Joint Venture from Merck for $300 million in cash. Effectively, BMET is buying the remaining 50% of the $330 million in sales it doesn't own for $300 million, or 1.8X sales. With orthopedic stocks currently trading in excess of 4X sales, we believe this was a steal. The acquisition allows BMET to fully control its own destiny in Europe allowing the Company to pursue strategic acquisitions that don't require approval of a partner.
