UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 11, 2017
ZIMMER BIOMET HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-16407 | 13-4151777 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
345 East Main Street
Warsaw, Indiana 46580
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (574) 267-6131
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter) ☐
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(e) of the Exchange Act ☐
Item 2.02 | Results of Operations and Financial Condition. |
On July 11, 2017, Zimmer Biomet Holdings, Inc. (the Company) issued a press release announcing its preliminary second quarter 2017 sales and earnings results. The press release is attached hereto as Exhibit 99.1 and the information set forth therein is incorporated herein by reference and constitutes a part of this report.
The information contained in Item 2.02 of this report, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be filed with the Securities and Exchange Commission (SEC) for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
The Company issued a press release on July 11, 2017 announcing changes in its senior management and Board of Directors. The press release is attached hereto as Exhibit 99.2.
Effective July 11, 2017, David C. Dvorak stepped down as President and Chief Executive Officer and a member of the Board of Directors of the Company. Mr. Dvorak will remain with the Company as an employee in an advisory capacity for a period of time. The Company did not enter into, amend or modify any material compensatory plans or arrangements in connection with Mr. Dvoraks departure. Mr. Dvorak will be entitled to certain compensation and benefits following his departure under existing arrangements.
Also effective July 11, 2017, the Board appointed Daniel P. Florin, age 53, the Companys Senior Vice President and Chief Financial Officer, to serve in the additional role of Interim CEO until a permanent successor has been named, and elected Mr. Florin as a member of the Board of Directors to fill the vacancy resulting from Mr. Dvoraks departure from the Board. Mr. Florin is not expected to be appointed to any committees of the Board.
The Compensation and Management Development Committee of the Board approved changes to certain aspects of Mr. Florins compensation arrangements, effective July 11, 2017.
Mr. Florins base salary was increased to $1,153,188 for the period during which he serves as Interim CEO. The Committee also approved a one-time, time-based restricted stock unit (RSU) award to Mr. Florin under the Companys 2009 Stock Incentive Plan (the 2009 Plan) with a grant date of August 1, 2017 and a grant date fair value of approximately $1,000,000. Mr. Florins RSU award will be subject to the terms and conditions of the 2009 Plan and an applicable RSU award agreement under the 2009 Plan, the form of which is filed as Exhibit 10.1 to this report. The RSU award will vest ratably on the first and second anniversaries of the grant date. Vesting may be accelerated in the event of involuntary termination of employment without cause, death or Retirement (as that term is defined in the 2009 Plan).
Other aspects of Mr. Florins compensation arrangements as described in the Companys definitive proxy statement filed with the SEC on March 30, 2017 remain unchanged.
Mr. Florin has been the Senior Vice President and Chief Financial Officer of the Company since June 2015. He served as Senior Vice President and Chief Financial Officer of Biomet, Inc. from June 2007 to
June 2015. Prior to joining Biomet, Mr. Florin served as Vice President and Corporate Controller of Boston Scientific Corporation from 2001 through May 2007. Before being appointed Corporate Controller in 2001, Mr. Florin served in financial leadership positions within Boston Scientific Corporation and its various business units. Prior to joining Boston Scientific Corporation, Mr. Florin worked for C.R. Bard from October 1990 through June 1995.
There are no family relationships between Mr. Florin and any of the Companys directors or executive officers. There are no other arrangements or understandings between Mr. Florin and any other person pursuant to which Mr. Florin was selected as an officer or director of the Company. Mr. Florin is not a party to any transaction requiring disclosure under Item 404(a) of Regulation S-K.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit |
Description | |
10.1 | Form of RSU award agreement | |
99.1 | Press release announcing preliminary financial results issued on July 11, 2017 | |
99.2 | Press release announcing leadership transition issued on July 11, 2017 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 11, 2017
ZIMMER BIOMET HOLDINGS, INC. | ||
By: | /s/ Chad F. Phipps | |
Name: | Chad F. Phipps | |
Title: | Senior Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit |
Description | |
10.1 | Form of RSU award agreement | |
99.1 | Press release announcing preliminary financial results issued on July 11, 2017 | |
99.2 | Press release announcing leadership transition issued on July 11, 2017 |
Exhibit 10.1
ZIMMER BIOMET HOLDINGS, INC.
2009 STOCK INCENTIVE PLAN
TWO-YEAR RESTRICTED STOCK UNIT AWARD
2-Year RSU Award (Interim CEO) (2017) | ||
1 |
2-Year RSU Award (Interim CEO) (2017) | ||
2 |
2-Year RSU Award (Interim CEO) (2017) | ||
3 |
2-Year RSU Award (Interim CEO) (2017) | ||
4 |
2-Year RSU Award (Interim CEO) (2017) | ||
5 |
ZIMMER BIOMET HOLDINGS, INC. | ||
By: | ||
Chad F. Phipps | ||
Senior Vice President, | ||
General Counsel and Secretary |
2-Year RSU Award (Interim CEO) (2017) | ||
6 |
Exhibit 99.1
345 E. Main St.
Warsaw, IN 46580
www.zimmerbiomet.com
Contacts:
Monica Kendrick | Matt Abernethy | |||
574-372-4989 | 574-371-8042 | |||
monica.kendrick@zimmerbiomet.com | matt.abernethy@zimmerbiomet.com | |||
Barbara Goslee 574-371-9449 barb.goslee@zimmerbiomet.com |
Zimmer Biomet Reports Certain Preliminary Second Quarter 2017 Results
(WARSAW, IN) July 11, 2017 Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global leader in musculoskeletal healthcare, today announced that it expects second quarter revenues to be approximately $1.954 billion, which would be an increase of 1.1% over the prior year period, and an increase of 2.1% on a constant currency basis. The Company had previously anticipated second quarter revenues in the range of $1.940 billion to $1.960 billion, with constant currency growth to be in the range of 2.4% to 3.4%. The Company estimates that foreign exchange rates had a favorable impact of 120 basis points relative to what was assumed in second quarter guidance.
Excluding approximately 240 basis points of contribution from the LDR Holding Corporation acquisition, second quarter 2017 revenues are expected to decrease by 1.3%, or a decrease of 0.3% on a constant currency basis, from the second quarter of 2016. This expected constant currency revenue decrease is below the Companys previously stated guidance range of growth of 0.0% to 1.0% on a similar basis.
While production output increased at our legacy Biomet manufacturing site in Warsaw, Indiana during the second quarter, certain brands did not achieve targeted production levels as quickly as anticipated. We also experienced slower than expected sales recapture from previously affected customers in the United States, said Dan Florin, Interim Chief Executive Officer, Senior Vice President and Chief Financial Officer. As we look toward the second half of 2017, we are focused on restoring full product supply and improving customer engagement, while continuing to progress on our quality enhancement efforts.
The Company also expects adjusted diluted earnings per share for the second quarter to be at or near the bottom of its previously issued guidance range of $2.08 to $2.13. The Company is unable to provide estimated GAAP (reported) diluted earnings per share results for the second quarter 2017, without unreasonable efforts, as the Company is finalizing the tax accounting related to recently acquired businesses and other certain items that are excluded from the computation of adjusted diluted earnings per share.
Zimmer Biomet will provide further details regarding its second quarter performance and will update its 2017 sales and earnings guidance during the Companys second quarter earnings call scheduled on Thursday, July 27, 2017. All of the information in this press release is preliminary and subject to completion of quarter-end financial reporting processes and reviews.
About Zimmer Biomet
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.
We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com, or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.
Website Information
We routinely post important information for investors on our website, www.zimmerbiomet.com, in the Investor Relations section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this press release.
Note on Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.
Preliminary sales change information for the three-month period ended June 30, 2017 is presented on a GAAP (reported) basis and on a constant currency basis, as well as on a basis that excludes the contribution from the Companys acquisition of LDR Holding Corporation in July 2016. Constant currency rates exclude the effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or decreases. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release.
Projected diluted earnings per share for the three-month period ended June 30, 2017 is presented on an adjusted basis. Projected adjusted diluted earnings per share excludes the effects of inventory step-up; certain inventory and manufacturing-related charges connected to discontinuing certain product lines, quality enhancement and remediation efforts; special items; intangible asset amortization; any related
effects on our income tax provision associated with these items; and other certain tax adjustments. Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges and other items. Other certain tax adjustments include internal restructuring transactions that lower the tax rate on deferred tax liabilities recorded on intangible assets recognized as part of acquisition-related accounting or provide the Company access to offshore funds in a tax efficient manner. As noted above, the Company is unable to provide projected diluted earnings per share for the three-month period ended June 30, 2017 on a GAAP (reported) basis, or a reconciliation of such GAAP amount to projected adjusted diluted earnings per share, without unreasonable efforts, as it is finalizing the tax accounting related to recently acquired businesses and other certain items that are excluded from the computation of adjusted diluted earnings per share.
Management uses these non-GAAP financial measures internally to evaluate the performance of the business and believes they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company. Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items. In addition, certain of these non-GAAP financial measures are used as performance metrics in the Companys incentive compensation programs.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements that address expectations, plans or projections about the future, including statements about Zimmer Biomets expected financial results, growth prospects and business strategy, are forward-looking statements. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. For a list and description of some of such risks and uncertainties, see Zimmer Biomets periodic reports filed with the U.S. Securities and Exchange Commission (SEC). These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in Zimmer Biomets filings with the SEC. Zimmer Biomet disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in its periodic reports. Accordingly, such forward-looking statements speak only as of the date made. Readers of this news release are cautioned not to place undue reliance on these forward-looking statements, since, while management believes the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this news release.
###
ZIMMER BIOMET HOLDINGS, INC.
PRELIMINARY RECONCILIATION OF REPORTED NET SALES % CHANGE TO
CONSTANT CURRENCY % CHANGE AND
% CHANGE EXCLUDING LDR HOLDING CORPORATION
(unaudited)
For the Three Months Ended June 30, 2017 |
||||||||||||
% Change | Foreign Exchange Impact |
Constant Currency % Change |
||||||||||
Net Sales % Change |
1.1 | % | (1.0 | )% | 2.1 | % | ||||||
Impact of LDR Holding Corporation |
(2.4 | ) | | (2.4 | ) | |||||||
|
|
|
|
|
|
|||||||
% Change excluding LDR Holding Corporation |
(1.3 | )% | (1.0 | )% | (0.3 | )% |
Exhibit 99.2
345 E. Main St.
Warsaw, IN 46580
www.zimmerbiomet.com
Contacts:
Monica Kendrick | Matt Abernethy | |||
574-372-4989 | 574-371-8042 | |||
monica.kendrick@zimmerbiomet.com | matt.abernethy@zimmerbiomet.com | |||
Barbara Goslee 574-371-9449 barb.goslee@zimmerbiomet.com |
Zimmer Biomet Announces Leadership Transition
David C. Dvorak Steps Down as President and Chief Executive Officer; Chief Financial Officer Daniel P. Florin Appointed as Interim Chief Executive Officer
Board Conducting Search for Permanent CEO
(WARSAW, IN) July 11, 2017 Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global leader in musculoskeletal healthcare, announced that David C. Dvorak has stepped down as President and Chief Executive Officer and a member of the Board of Directors, effective today. To assist with the transition, Mr. Dvorak will serve in an advisory capacity to the Company for a period of time. The Board has appointed Daniel P. Florin, Senior Vice President and Chief Financial Officer, to serve in the additional role of Interim CEO and a member of the Board of Directors until a permanent successor has been named.
The Zimmer Biomet Board is retaining a leading executive search firm to identify and evaluate candidates for the permanent CEO role.
Mr. Dvorak said, Serving alongside Zimmer Biomets dedicated employees over the past 16 years and leading the Company as CEO for ten of those years has been a privilege and a highlight of my professional career. Our collective efforts grew employment from approximately 3,000 in 2001 to 18,000 today and built a Fortune 500 company. I am particularly proud of what we have accomplished working together with surgeons and clinicians to help millions of patients globally improve their quality of life.
Larry C. Glasscock, Chairman of the Board of Zimmer Biomet, commented, During Davids ten-year tenure as CEO, Zimmer Biomet has transformed into a truly global leader in musculoskeletal healthcare. Through a combination of organic growth and strategic acquisitions, Zimmer Biomets revenue has doubled and the Company has established a leading portfolio of technologies, solutions and personalized services. With this strong platform in place, there is tremendous opportunity for Zimmer Biomet. On behalf of the Board, I thank David for his many important contributions to our Company and industry over the years and wish him much success in the future.
Mr. Glasscock continued, We are fortunate to have a leader of Dans caliber and experience to step into the CEO role on an interim basis while the Board conducts its search process. Dans knowledge of Zimmer Biomet and his achievements here and at other medical device companies make him an excellent choice to support the Company through this interim period. We appreciate his willingness to take on this expanded role.
Mr. Florin said, Zimmer Biomet has a talented and dedicated team and an unmatched portfolio. I am honored to assume the Interim CEO role and I look forward to working closely with the Board, senior leadership team and our sales force as we strive to support our customers and enhance stockholder value.
About Dan Florin
Dan Florin was appointed Senior Vice President and Chief Financial Officer of Zimmer Biomet in June 2015 and has over 16 years of executive experience in the medical device industry. He previously served as Senior Vice President and Chief Financial Officer of Biomet from June 2007 to June 2015. Prior to joining Biomet, Mr. Florin served as Vice President and Corporate Controller of Boston Scientific Corporation from 2001 until 2007. Before being appointed Corporate Controller in 2001, Mr. Florin served in financial leadership positions within Boston Scientific Corporation and its various business units. Mr. Florin previously worked for C.R. Bard from October 1990 through June 1995, and Deloitte from September 1986 to October 1990. Mr. Florin holds a Bachelors degree in Business Administration with a concentration in Accounting from the University of Notre Dame and an Executive MBA from Boston University.
About Zimmer Biomet
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.
We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com, or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements that address expectations, plans or projections about the future, including statements about Zimmer Biomets management transition plans, growth prospects and business strategy, are forward-looking statements. Such statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties that could cause actual outcomes and results to differ materially. For a list and description of some of such risks and uncertainties, see Zimmer Biomets periodic reports filed with the U.S. Securities and Exchange Commission (SEC). These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in Zimmer Biomets filings with the SEC. Zimmer Biomet disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be set forth in its periodic reports. Accordingly, such forward-looking statements speak only as of the date made. Readers of this news release are cautioned not to place undue reliance on these forward-looking statements, since, while management believes the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this news release.