UPDATE: Feb. 8, 2024: Zimmer Biomet will cut about 3% of its global workforce, a company spokesperson said in an email. That’s the equivalent of about 540 positions from more than 18,000 total employees.
“We will be reallocating investments and resources to best position the Company for long-term growth,” the spokesperson said.
In addition to the current restructuring, Zimmer had had global restructuring programs in 2019 and 2021.
By the numbers
Q4 revenue: $1.94 billion
6.3% increase year over year
Q4 net income: $419.2 million
Compared to a net loss of $130.5 million in Q4 2022
2023 revenue: $7.39 billion
6.5% increase year over year
Zimmer Biomet began a restructuring strategy in late 2023 that includes job cuts and other cost-reduction measures to improve its margins, company executives told investors on Thursday.
The Warsaw, Indiana-based orthopedics company did not confirm how many positions would be affected by the plan. It paid $61.3 million in the fourth quarter for restructuring-related costs, including severance and contract terminations. Most of the affected positions are in back office roles, not customer-facing positions, CEO Ivan Tornos said during the company’s fourth-quarter earnings call.
“It is tough to restructure a company. It is certainly something that we don’t take lightly,” he said. “We had to do it.”
Tornos expects the changes will simplify Zimmer’s structure and allow it to invest in areas closer to the customer. The company expects about $200 million in run rate savings through 2025 as a result of the restructuring.
The CEO also announced other cost-saving measures during the call, including plans to “drastically” reduce inventory levels, which will be targeted at non-critical areas. Zimmer aims to drive “more durable pricing dynamics” and improve operations around new product launches to drive better free cash flow.
The company also bought back $500 million in shares in January.
Zimmer expects to launch 40 new products in the next two years, Tornos said.
One area of focus is in hip procedures, where the company has lost market share in recent years as it lacked certain product categories, such as surgical impactors, he added. The company announced an automated hip impaction system called Hammr, to prepare bone and help with placement during hip replacement surgery.
Tornos continues to expect to be the first to market with a surgical robot for shoulder procedures. He declined to share an exact timeline but expects that the launch will come before late 2024.
The company also plans to move from a limited launch to a full launch this year of its Persona IQ system, a knee replacement with embedded sensors that can record gait, range of motion, steps and other metrics.