Zimmer Biomet CEO David Dvorak told investors that the company will build on gains achieved during the first quarter as the company ramps up production in its Warsaw facility, which is subject to ongoing remediation activities.
The orthopedic and joint replacement product manufacturer reported that first quarter net sales rose 3.8 percent to $1.98 billion, while net earnings grew to $299.4 million, an increase of 175.2 percent over the same period last year, and figures that were in line with expectations.
Manufacturing issues and lowered production output dampened growth in the period, but Dvorak said the company is addressing the matter. FDA investigators at the company's Warsaw, Indiana facility in January cited 14 observations in a Form 483.
"We've developed a comprehensive remediation plan to fully address the issues cited by the FDA, and we're going to continue to communicate with the agency as we execute that plan. We're going to take the necessary steps to address these gaps in that operation. And I would tell you we also would express that we remain confident in the quality and safety efficacy of these products," said Dvorak.
"In the past couple of weeks, we've seen throughput out of the facility at the levels necessary to clear back orders, to meet existing customer demand, replenish those safety stocks and then get back on offense," company CFO Daniel Florin added.
Dvorak said that, as the company progresses with its remediation plan, it expects to be able to meet customer demand fully by the end of the second quarter, and to carry momentum over to the second half of the year with the company's other growth-drivers, including 40 new product launches within fiscal year 2017.
He said Zimmer's industry-leading musculoskeletal portfolio continued to demonstrate stable growth in the first quarter, with knee sales and hip sales increasing 0.6 percent and 2.4 percent, respectively. Dental sales were flat, but the spine, craniomaxillofacial, and thoracic category grew 32.1 percent on strong adoption of the company's Mobi-C Cervical Disc prosthesis. The sports medicine, surgical, extremities, and trauma (S.E.T.) business delivered a 6.5 percent increase in sales.
Dvorak said the company has received great feedback for its Signature Solutions, a suite of end-to-end clinical services and digital technologies for musculoskeletal practices in a value-based care environment. He also is upbeat on future commercial opportunities offered by Zimmer’s ROSA robotic surgery platform, which the company plans to have in surgeons’ hands for total knee procedures by the second half of 2018.
He believes surgical robotics, tightly integrated into intelligent instrumentation, will be "the predominant way, ultimately, that these procedures are done and, frankly, the standard of care."