UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the Registrant’s Common Stock outstanding as of October 27, 2023 was
ZIMVIE INC.
QUARTERLY REPORT
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of federal securities laws, including, among others, any statements about our expectations, plans, intentions, strategies or prospects. We generally use the words “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “sees,” “seeks,” “should,” “could,” “would,” “predicts,” “potential,” “strategy,” “future,” “opportunity,” “work toward,” “intends,” “guidance,” “confidence,” “positioned,” “design,” “strive,” “continue,” “track,” “look forward to” and similar expressions to identify forward-looking statements. All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements. Such statements are based upon the current beliefs, expectations and assumptions of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially from the forward-looking statements. These risks, uncertainties and changes in circumstances include, but are not limited to: dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; pricing pressures from competitors, customers, dental practices and insurance providers; changes in customer demand for our products and services caused by demographic changes or other factors; challenges relating to changes in and compliance with governmental laws and regulations affecting our United States (“U.S.”) and international businesses, including regulations of the U.S. Food and Drug Administration and foreign government regulators, such as more stringent requirements for regulatory clearance of products; competition; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors; cost containment efforts sponsored by government agencies, legislative bodies, the private sector and healthcare group purchasing organizations, including the volume-based procurement process in China; control of costs and expenses; dependence on a limited number of suppliers for key raw materials and outsourced activities; the ability to obtain and maintain adequate intellectual property protection; breaches or failures of our information technology systems or products, including by cyberattack, unauthorized access or theft; the ability to retain the independent agents and distributors who market our products; our ability to attract, retain and develop the highly skilled employees we need to support our business; the effect of mergers and acquisitions on our relationships with customers, suppliers and lenders and on our operating results and businesses generally; a determination by the Internal Revenue Service that the distribution or certain related transactions should be treated as taxable transactions; financing transactions undertaken in connection with the separation and risks associated with additional indebtedness; the impact of the separation on our businesses and the risk that the separation and the results thereof may be more difficult, time consuming and/or costly than expected, which could impact our relationships with customers, suppliers, employees and other business counterparties; restrictions on activities following the distribution in order to preserve the tax-free treatment of the distribution; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability, intellectual property and commercial litigation losses; changes in general industry and market conditions, including domestic and international growth rates; changes in general domestic and international economic conditions, including inflation and interest rate and currency exchange rate fluctuations; the effects of the COVID-19 global pandemic and other adverse public health developments on the global economy, our business and operations and the business and operations of our suppliers and customers, including the deferral of elective procedures and our ability to collect accounts receivable; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries.
See also Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion of certain risks and uncertainties that could cause actual results and events to differ materially from the forward-looking statements. Readers of this Quarterly Report are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For additional information concerning factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Form 10-K, 10-Q and 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) from time to time.
i
Table of Contents
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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4 |
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5 |
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6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 |
Item 3. |
24 |
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Item 4. |
25 |
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PART II. |
26 |
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Item 1. |
26 |
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Item 1A. |
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Item 5. |
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Item 6. |
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27 |
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ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
ZIMVIE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Net Sales |
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Third party, net |
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$ |
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$ |
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$ |
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Related party, net |
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Total Net Sales |
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Cost of products sold, excluding intangible asset amortization |
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Related party cost of products sold, excluding intangible asset amortization |
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( |
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Intangible asset amortization |
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( |
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Research and development |
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Selling, general and administrative |
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Restructuring and other cost reduction initiatives |
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( |
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( |
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Acquisition, integration, divestiture and related |
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( |
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( |
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( |
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( |
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Operating Expenses |
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( |
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( |
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Operating Loss |
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( |
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( |
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( |
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( |
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Other (expense) income, net |
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( |
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( |
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Interest expense, net |
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Loss Before Income Taxes |
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( |
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Income tax benefit |
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Net (Loss) Income |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
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Net (Loss) Income Per Common Share - Basic |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
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Net (Loss) Income Per Common Share - Diluted |
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( |
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( |
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( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ZIMVIE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(in thousands)
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Net (Loss) Income |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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Other Comprehensive Loss: |
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Foreign currency cumulative translation adjustments, net of tax |
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( |
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( |
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( |
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( |
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Total Other Comprehensive Loss |
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( |
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( |
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( |
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( |
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Comprehensive Loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ZIMVIE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
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As of |
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September 30, 2023 |
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December 31, 2022 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for credit losses of $ |
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Related party receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Property, plant and equipment, net of accumulated depreciation of $ |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Related party payable |
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Income taxes payable |
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Other current liabilities |
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Total Current Liabilities |
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Deferred income taxes |
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Lease liability |
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Other long-term liabilities |
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Non-current portion of debt |
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Total Liabilities |
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Stockholders' Equity: |
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Common stock, $ |
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Preferred stock, $ |
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Additional paid in capital |
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Accumulated deficit |
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( |
) |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
) |
Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ZIMVIE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands)
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Accumulated |
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Additional |
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Net Parent |
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Other |
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Common |
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Paid-In |
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Accumulated |
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Company |
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Comprehensive |
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Total |
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Stock |
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Capital |
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Deficit |
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Investment |
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Loss |
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Equity |
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Balance June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Net loss |
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( |
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( |
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Share-based compensation expense |
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Employee stock purchase plan |
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Other comprehensive loss |
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( |
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( |
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Balance September 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Balance June 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Net income |
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Stock activity under stock plans |
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Share-based compensation expense |
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Other comprehensive loss |
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( |
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( |
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Balance September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Accumulated |
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Additional |
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Net Parent |
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Other |
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Common |
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Paid-In |
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Accumulated |
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Company |
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Comprehensive |
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Total |
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Stock |
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Capital |
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Deficit |
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Investment |
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Loss |
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Equity |
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Balance December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Net loss |
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( |
) |
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( |
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Stock activity under stock plans |
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( |
) |
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( |
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Share-based compensation expense |
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Employee stock purchase plan |
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Other comprehensive loss |
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( |
) |
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( |
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Balance September 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Balance December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Net loss |
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( |
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( |
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( |
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Net transactions with Zimmer Biomet Holdings, Inc., including separation adjustments |
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( |
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( |
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Net consideration paid to Zimmer Biomet Holdings, Inc. in connection with distribution |
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( |
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( |
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Reclassification of net parent company investment to additional paid-in capital |
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( |
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Stock activity under stock plans |
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Share-based compensation expense |
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Other comprehensive loss |
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( |
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( |
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Balance September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ZIMVIE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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For the Nine Months Ended September 30, |
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|||||
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2023 |
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2022 |
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||
Cash flows provided by operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Deferred income tax provision |
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( |
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( |
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Loss on disposal of fixed assets |
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Other non-cash items |
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Changes in operating assets and liabilities |
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Income taxes |
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( |
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( |
) |
Accounts receivable |
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( |
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Related party receivable |
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( |
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Inventories |
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Prepaid expenses and other current assets |
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( |
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Accounts payable and accrued liabilities |
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( |
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Related party payable |
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( |
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Other assets and liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Cash flows used in investing activities: |
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Additions to instruments |
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( |
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( |
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Additions to other property, plant and equipment |
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( |
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( |
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Other investing activities |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
) |
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( |
) |
Cash flows (used in) provided by financing activities: |
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Net transactions with Zimmer Biomet |
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