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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Non-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 25, 2024 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 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; 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 global pandemics 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, 2023 and Part II, Item 1A, "Risk Factors" of this Quarterly Report 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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Page |
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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5 |
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6 |
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7 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
27 |
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Item 4. |
28 |
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PART II. |
29 |
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Item 1. |
29 |
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Item 1A. |
29 |
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Item 5. |
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Item 6. |
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31 |
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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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2024 |
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2023 |
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2024 |
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2023 |
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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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Intangible asset amortization |
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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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Acquisition, integration, divestiture and related |
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Operating Expenses |
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Operating Loss |
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Other income (expense), net |
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( |
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Interest income |
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Interest expense |
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Loss from continuing operations before income taxes |
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( |
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Benefit (provision) for income taxes from continuing operations |
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( |
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( |
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( |
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Net Loss from Continuing Operations of ZimVie Inc. |
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( |
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( |
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( |
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Earnings (loss) from discontinued operations, net of tax |
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Net Loss of ZimVie Inc. |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Basic (Loss) Earnings Per Common Share: |
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Continuing operations |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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Discontinued operations |
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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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$ |
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Diluted (Loss) Earnings Per Common Share: |
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Continuing operations |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Discontinued operations |
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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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$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ZIMVIE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (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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2024 |
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2023 |
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2024 |
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2023 |
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Net Loss of ZimVie Inc. |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other Comprehensive Income (Loss) |
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Foreign currency cumulative translation adjustments, net of tax |
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( |
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Total Other Comprehensive Income (Loss) |
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( |
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( |
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Comprehensive Income (Loss) |
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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.
4
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, 2024 |
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December 31, 2023 |
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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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Inventories |
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Prepaid expenses and other current assets |
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Current assets of discontinued operations |
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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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Note receivable |
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Other assets |
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Noncurrent assets of discontinued operations |
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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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Income taxes payable |
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Other current liabilities |
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Current liabilities of discontinued operations |
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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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Noncurrent liabilities of discontinued operations |
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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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( |
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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.
5
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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Other |
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Common |
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Paid-In |
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Accumulated |
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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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Income (Loss) |
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Equity |
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Balance June 30, 2024 |
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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 plan activity |
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( |
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( |
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Share-based compensation expense |
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Other comprehensive income |
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Balance September 30, 2024 |
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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, 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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Net loss |
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( |
) |
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( |
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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, 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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Accumulated |
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Additional |
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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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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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Income (Loss) |
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Equity |
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Balance December 31, 2023 |
|
$ |
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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 plan activity |
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( |
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( |
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Share-based compensation expense |
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Other comprehensive income |
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Balance September 30, 2024 |
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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, 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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Net loss |
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( |
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Stock plan activity |
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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, 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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|||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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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2024 |
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2023 |
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||
Cash flows (used in) provided by operating activities: |
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Net loss of ZimVie Inc. |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash (used in) 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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Gain on sale of spine disposal group (Note 2) |
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( |
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Changes in operating assets and liabilities |
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Income taxes |
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|
|
|
|
( |
) |
|
Accounts receivable |
|
|
( |
) |
|
|
|
|
Related party receivable |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
|
|
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
( |
) |
Related party payable |
|
|
|
|
|
( |
) |
|
Other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by operating activities |
|
|
( |
) |
|
|
|
|
Cash flows provided by (used in) investing activities: |
|
|
|
|
|
|
||
Additions to instruments |
|
|
( |
) |
|
|
( |
) |
Additions to other property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of spine disposal group, net of cash disposed |
|
|
|
|
|
|
||
Other investing activities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
|
|
|
|
( |
) |
|
Cash flows used in financing activities: |
|
|
|
|
|
|
||
Proceeds from debt |
|
|
|
|
|
|
||
Payments on debt |
|
|
( |
) |
|
|
( |
) |
Business combination contingent consideration payments |
|
|
( |
) |
|
|
|
|
Payments related to tax withholding for share-based compensation |
|
|
( |
) |
|
|
( |
) |
Proceeds from stock plan activity |
|
|
|
|
|
|
||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rates on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Decrease in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents, beginning of year |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
Presentation includes cash of both continuing and discontinued operations |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Income taxes paid, net |
|
$ |
|
|
$ |
|
||
Interest paid |
|
|
|
|
|
|
||
Promissory note receivable issued in connection with the sale of spine disposal group |
|
|
|
|
|
|
||
Interest received in-kind |
|
|
|
|
|
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
ZIMVIE INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Background, Nature of Business and Basis of Presentation
Background
On March 1, 2022, ZimVie Inc. ("ZimVie," "we," "us" and "our") and Zimmer Biomet Holdings, Inc. ("Zimmer Biomet") entered into a Separation and Distribution Agreement (the "Separation Agreement"), pursuant to which Zimmer Biomet agreed to spin off its spine and dental businesses into ZimVie. The distribution resulted in ZimVie becoming a standalone, publicly traded company. Following the distribution, Zimmer Biomet initially retained
On December 15, 2023, we entered into a definitive agreement to sell our spine segment to an affiliate of H.I.G. Capital (the "Buyer") for $
Nature of Business
ZimVie is a leading medical technology company dedicated to enhancing the quality of life for dental patients worldwide. We develop, manufacture and market a comprehensive portfolio of products and solutions designed to support dental tooth replacement and restoration procedures. We are well-positioned in the growing global dental implant, biomaterials and digital dentistry market with a strong presence in the tooth replacement market with market leading positions in certain geographies. Prior to the closing of the sale of our spine segment, our operations were principally managed on a products basis and included
Since the sale of our spine segment, our core services include designing, manufacturing and distributing dental implant systems. Dental reconstructive implants are for individuals who are totally without teeth or are missing one or more teeth, dental prosthetic products are aimed at providing a more natural restoration to resemble the original teeth, and dental regenerative products are for soft tissue and bone rehabilitation. Our key products include the T3® Implant, Tapered Screw-Vent® Implant System, Trabecular Metal®™ Dental Implant, BellaTek® Encode® Impression System and Puros® Allograft Particulate.
Prior to the sale of our spine segment, the core services of our spine segment included designing, manufacturing and distributing medical devices and surgical instruments to deliver comprehensive solutions for individuals with back or neck pain caused by degenerative conditions, deformities or traumatic injury of the spine. We also provided devices that promote bone healing. Other differentiated products in our spine portfolio included Mobi-C® Cervical Disc, a motion-preserving alternative to fusion for patients with cervical disc disease, and The Tether™, a novel non-fusion device for treatment of pediatric scoliosis.
Basis of Presentation
The accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, the condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, of ZimVie are unaudited. In management’s opinion, all adjustments comprising normal recurring adjustments necessary for the fair statement of such condensed consolidated financial statements have been made. The accompanying condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 ("Quarterly Report") are presented as permitted by Regulation S-X and do not contain certain information included in our annual financial statements and notes thereto. Accordingly, the accompanying condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements presented in our Annual Report. During the three months ended March 31, 2024, we recorded out of period adjustments that increased the Loss from continuing operations before income taxes and reduced Earnings from discontinued operations, net of tax, by $
8
consolidated financial statements for the three months ended March 31, 2024 or nine months ended September 30, 2024, nor were they material to previously issued interim and annual consolidated financial statements.
Restricted Cash - As of both September 30, 2024 and December 31, 2023, we had $
Sale of Spine Segment
The historical results of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements as the sale represented a strategic shift in our business that had a major effect on operations and financial results. The assets and liabilities associated with this segment are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets. The disclosures presented in the notes to the condensed consolidated financial statements are presented on a continuing operations basis, unless otherwise noted.
Accounting Pronouncements Recently Issued
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU amends the interim and annual disclosure requirements related to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. The guidance will be applied prospectively. The effective date for each amendment will be the date when the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. We are currently evaluating the effect of this ASU, but we do not expect it will have a material impact on our condensed consolidated financial statements or disclosures.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The key amendments require disclosure of significant segment expenses on an annual and interim basis that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, including other segment items by reportable segment and a description of their composition, and to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Topic 280, Segment Reporting, in interim periods as well. This ASU includes certain clarifications for measuring a segment's profit or loss in assessment by the CODM, disclosure of title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We do not expect the adoption of this ASU to affect our financial position or our results of operations, but expect it will result in additional disclosures.
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments included in the ASU related to rate reconciliation, income taxes paid disclosures and other disclosures requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2024. We are currently in the process of evaluating the effect of this ASU.
In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their consolidated financial statements. While the SEC voluntarily stayed the rules due to pending judicial review, the rules in their current form would be effective for accelerated filers for annual periods beginning after December 15, 2025. We are currently in the process of evaluating the effect of these final rules.
Other recently issued ASUs, excluding ASUs discussed above, were assessed and determined to be not applicable, or are not expected to have a material impact on our condensed consolidated financial statements or disclosures.
9
2. Discontinued Operations
As discussed in Note 1, on December 15, 2023, we entered into a definitive agreement to sell our spine segment. The historical financial condition and results of operations of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements. The assets and liabilities associated with this segment are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets.
On April 1, 2024, we completed the sale of our spine segment for a total purchase price of $
In conjunction with the sale of our spine segment, we entered into a Transition Services Agreement ("TSA") to provide certain support services for up to 12 months from the closing date of the sale. These services include, among others, accounting, information technology, human resources, quality assurance, regulatory affairs and customer support. Income recognized related to the TSA is recorded as Other income in our condensed consolidated statements of operations.
10
Details of earnings (loss) from discontinued operations included in our condensed consolidated statements of operations are as follows (in thousands):
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Third party, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Related party, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of products sold, excluding intangible asset amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Related party cost of products sold, excluding intangible asset amortization |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Intangible asset amortization |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Research and development |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Restructuring and other cost reduction initiatives |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Acquisition, integration, divestiture and related |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Other (expense) income, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Interest income (expense), net (1) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Earnings (loss) from discontinued operations before income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Adjustment of spine disposal group to fair value (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of spine disposal group |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit for income taxes from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) from discontinued operations, net of tax |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
11
Details of assets and liabilities of discontinued operations are as follows (in thousands):
|
|
As of |
|
|||||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, less allowance for credit losses |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total Current Assets of Discontinued Operations |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total Noncurrent Assets of Discontinued Operations |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
||
Other current liabilities (1) |
|
|
|
|
|
|
||
Total Current Liabilities of Discontinued Operations |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Lease liability |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total Noncurrent Liabilities of Discontinued Operations |
|
|
|
|
|
|
||
Adjustment of spine disposal group to fair value (2) |
|
|
|
|
|
( |
) |
|
(1)
(2)
Cash flows attributable to discontinued operations are included on our condensed consolidated statements of cash flows. Significant non-cash operating and investing activities attributable to discontinued operations consisted of the following (in thousands):
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Depreciation and amortization |
|
$ |
|
|
$ |
|
||
Share-based compensation |
|
|
|
|
|
|
||
Gain on sale of spine disposal group |
|
|
( |
) |
|
|
|
|
Additions to instruments |
|
|
|
|
|
|
||
Additions to other property, plant and equipment |
|
|
|
|
|
|
||
12
3. Goodwill and Other Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill (in thousands):
|
|
Total |
|
|
Balance at December 31, 2023 |
|
|
|
|
Goodwill, Gross |
|
$ |
|
|
Accumulated impairment losses |
|
|
( |
) |
Goodwill, Net |
|
|
|
|
Currency translation |
|
|
|
|
Balance at September 30, 2024 |
|
|
|
|
Goodwill, Gross |
|
|
|
|
Accumulated impairment losses |
|
|
( |
) |
Goodwill, Net |
|
$ |
|
|
The components of identifiable intangible assets were as follows (in thousands):
|
|
Technology |
|
|
Trademarks |
|
|
Customer Relationships |
|
|
Other |
|
|
Total(1) |
|
|||||
As of December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross carrying amount |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total identifiable intangible assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
As of September 30, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intangible assets subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross carrying amount |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total identifiable intangible assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
(1) During the quarter ended September 30, 2024, we wrote off all fully amortized intangible assets that are no longer in use.
Estimated annual amortization expense for the years ending December 31, 2024 through 2028 based on exchange rates in effect at December 31, 2023 is as follows (in millions):
For the Years Ending December 31, |
|
|
|
|
2024 (remaining) |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
4. Share-Based Compensation
Conversion Awards
At the time of separation, Zimmer Biomet had share-based compensation plans under which it granted stock options, restricted stock units ("RSUs") and performance-based RSUs. In connection with the distribution, ZimVie employees with outstanding Zimmer Biomet share-based awards received replacement share-based awards. The ratio used to convert the Zimmer Biomet share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the distribution when compared to the aggregate intrinsic value of the award immediately prior to the distribution. Outstanding RSUs and performance-based RSUs were converted into
13
ZimVie Awards
The ZimVie Inc. 2022 Stock Incentive Plan was established effective as of March 1, 2022, and was amended effective May 12, 2023 (as amended, the "2022 Plan"). A total of
Share-based compensation expense was as follows (in thousands):
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Share-based compensation expense recognized in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of products sold, excluding intangible asset amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tax benefit related to awards |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total expense, net of tax |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Share-based compensation expense related to discontinued operations is included in the table above and is disclosed in Note 2.
Stock option activity was as follows:
|
|
For the Nine Months Ended September 30, 2024 |
|
|||||||||||||
|
|
|
|
|
Weighted |
|
|
Weighted Average |
|
|
|
|
||||
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
||||
|
|
Number of |
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
||||
|
|
Stock Options |
|
|
Price |
|
|
Life (Years) |
|
|
Value (in Millions) |
|
||||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
We used a Black-Scholes option-pricing model to determine the fair value of our stock options. For awards granted shortly after the distribution: expected volatility of
Aggregate intrinsic value was negligible at September 30, 2024. At September 30, 2024, we had unrecognized share-based compensation cost related to unvested stock options of $
14
RSU activity was as follows:
|
|
For the Nine Months Ended September 30, 2024 |
|
|||||
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
Average |
|
||
|
|
Number of |
|
|
Grant Date |
|
||
|
|
RSUs |
|
|
Fair Value |
|
||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding at September 30, 2024 |
|
|
|
|
$ |
|
||
RSUs with performance-based vesting provisions ("PRSUs") declined to
15
5. Earnings Per Share
The calculation of weighted average shares for basic and diluted net loss per common share is as follows (in thousands, except per share data):
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net Loss from Continuing Operations of ZimVie Inc. |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Earnings (loss) from discontinued operations, net of tax |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net Loss of ZimVie Inc. |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding for basic net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive stock options and other equity awards (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding for diluted net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic (Loss) Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net Loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted (Loss) Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net Loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
6. Balance Sheet Details
Inventories consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Work-in-progress |
|
|
|
|
|
|
||
Raw materials |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
Amounts related to cost of products sold in the condensed consolidated statements of operations for excess and obsolete inventory were $
16
Other current liabilities consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Salaries, wages and benefits |
|
$ |
|
|
$ |
|
||
Lease liabilities |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
7. Fair Value Measurements of Assets and Liabilities
The fair value of foreign currency exchange forward contracts (see Note 9) is determined using Level 2 inputs. The carrying value of our debt (see Note 8) approximates fair value as it bears interest at floating rates. The carrying amounts of other financial instruments (i.e., cash and cash equivalents, restricted cash, bank time deposits, accounts receivable, net, and accounts payable) approximated their fair values at September 30, 2024 and December 31, 2023 due to their short-term nature.
As discussed in Notes 1 and 2, on April 1, 2024, we completed the sale of the spine segment. A portion of the consideration was in the form of a $
The fair values of acquisition-related contingent payments are estimated using Level 3 inputs. Contingent payments related to acquisitions consist of sales-based payments and are valued using discounted cash flow techniques. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases as revenue estimates increase.
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):
|
|
Level 3 - Liabilities |
|
|
Contingent payments related to acquisitions |
|
|
|
|
Balance December 31, 2023 |
|
$ |
|
|
Settlements |
|
|
( |
) |
Balance September 30, 2024 |
|
$ |
|
|
8. Debt
Our debt consisted of the following (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Term loan |
|
$ |
|
|
$ |
|
||
Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Total debt |
|
|
|
|
|
|
||
Less: current portion |
|
|
|
|
|
|
||
Total debt due after one year |
|
$ |
|
|
$ |
|
||
We entered into a Credit Agreement, dated as of December 17, 2021 (the “Credit Agreement”), with JP Morgan Chase Bank, N.A., as administrative agent and syndication agent, and the lenders and issuing banks named therein. The Credit Agreement provides for revolving loans of up to $
As of September 30, 2024, $
17
in Notes 1 and 2), and we wrote off $
Borrowings under the Credit Facility are collateralized by substantially all of our personal property, including intellectual property and certain real property, and we, along with our subsidiaries party to the Credit Facility, pledged our equity interests in our subsidiaries, subject to materiality thresholds and certain limitations with respect to foreign subsidiaries. The Credit Facility contains various covenants that restrict our ability to take certain actions, including incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, making certain investments, prepayments or redemptions of subordinated debt, or making certain restricted payments. In addition, the Credit Facility contains financial covenants that require us to maintain a maximum consolidated total net leverage ratio of
See Note 9 to our consolidated financial statements included in our Annual Report for additional information on our Credit Agreement.
In April 2023, we financed $
18
9. Derivatives
We enter into foreign currency exchange forward contracts with terms of to
of $
10. Income Taxes
Our effective tax rate (“ETR”) on loss before income taxes was
11. Segment Data
Our Chief Executive Officer is our Chief Operating Decision Maker. He allocates resources to achieve our operating profit goals and historically reviewed business performance through
We conduct business in the following countries that hold 10% or more of our total combined property, plant and equipment, net (in thousands):
|
|
As of |
|
|||||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Spain |
|
|
|
|
|
|
||
Other countries |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
19
U.S. and foreign sales (based on the location of the customer) are as follows (in thousands):
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Spain |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other countries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Third party sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales within any other individual country were less than
12. Commitments and Contingencies
We are subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial and other matters that arise in the normal course of business. On a quarterly and annual basis, we review relevant information with respect to loss contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews. We record liabilities for loss contingencies when it is probable that a loss has been incurred and the amount can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. The recorded accrual balance for loss contingencies was $
Subject to certain exceptions specified in the Separation Agreement, we assumed the liability for, and control of, all pending and threatened legal matters related to our business, including liabilities for any claims or legal proceedings related to products that had been part of our business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Zimmer Biomet for any liability arising out of or resulting from such assumed legal matters.
13. Restructuring and Other Cost Reduction Initiatives
In January 2024, we initiated restructuring activities to better structure the organization to support our dental segment after the disposal of the spine segment. During the three and nine months ended September 30, 2024, we recorded pre-tax charges of $
In April and July 2023, we initiated restructuring activities to better position our organization for future success based on the then-current business environment. These activities had the objective of reducing our global cost structure and streamlining our organizational infrastructure across all regions, functions and levels. During the three and nine months ended September 30, 2024, the charges recorded under this plan were negligible. During the three and nine months ended September 30, 2023, the pre-tax charges recorded under this plan were $
In June 2022, we initiated a restructuring plan with the objective of reducing costs and optimizing our global footprint. During the three and nine months ended September 30, 2024, the pre-tax charges recorded under this plan were negligible and $
20
The following table summarizes the liabilities directly attributable to us that were recognized under the plans discussed above and excludes non-cash charges (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
Employee |
|
|
Other |
|
|
Total |
|
|||
Balance, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. Certain percentages presented in this discussion and analysis are calculated from the underlying whole-dollar amounts and therefore may not recalculate from the rounded numbers used for disclosure purposes. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed in this Quarterly Report and in our Annual Report, particularly in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”
OVERVIEW
Our History
ZimVie was incorporated in 2021 as a wholly owned subsidiary of Zimmer Biomet for the sole purpose of holding directly or indirectly the assets and liabilities associated with the dental and spine businesses of Zimmer Biomet for distribution. The distribution of the dental and spine businesses was completed on March 1, 2022, and resulted in ZimVie becoming a standalone, publicly traded company. Following the distribution, Zimmer Biomet initially retained 19.7% of the outstanding shares of ZimVie common stock, and all transactions between ZimVie and Zimmer Biomet from the distribution to February 1, 2023 were reported as related party transactions. As of February 1, 2023, Zimmer Biomet had sold all of its 19.7% ownership in ZimVie and is no longer considered a related party. As such, transactions with Zimmer Biomet subsequent to February 1, 2023 are reported as third party transactions.
Sale of Spine Segment
On December 15, 2023, we entered into a definitive agreement to sell our spine segment to an affiliate of H.I.G. Capital. On April 1, 2024, we completed the sale of our spine segment for a total purchase price of $377.2 million (inclusive of $2.2 million in preliminary closing adjustments), subject to certain customary adjustments as set forth in the agreement, received proceeds of $311.8 million, excluding the promissory note and transaction costs, but including cash disposed of $26.1 million, and recorded a gain on the sale of $11.3 million. See additional information in Notes 1 and 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
Our Company
ZimVie is a leading medical technology company dedicated to enhancing the quality of life for dental patients worldwide. Prior to the closing of the sale of our spine segment, our operations were principally managed on a products basis and included two operating segments, 1) the dental products segment, and 2) the spine products segment. Following the sale of our spine segment on April 1, 2024, we operate as a single segment.
Since the sale of our spine segment, our core services include designing, manufacturing and distributing dental implant systems. We develop, manufacture and market a comprehensive portfolio of products and solutions designed to support dental tooth replacement and restoration procedures. Dental reconstructive implants are for individuals who are totally without teeth or are missing one or more teeth, dental prosthetic products are aimed at providing a more natural restoration to resemble the original teeth, and dental regenerative products are for soft tissue and bone rehabilitation.
Prior to the sale of our spine segment, the core services of our spine segment included designing, manufacturing and distributing medical devices and surgical instruments to deliver comprehensive solutions for individuals with back or neck pain caused by degenerative conditions, deformities or traumatic injury of the spine. Our broad portfolio addressed all areas of spine with market leadership in cervical disc replacement and vertebral body tethering to treat pediatric scoliosis. We also provided devices that promote bone healing.
RESTRUCTURING AND OTHER COST REDUCTION INITIATIVES
Below is a summary of our restructuring and other cost reduction initiatives. For further information, refer to our discussion of expenses below under “Results of Operations - Three and Nine Months Ended September 30, 2024 and 2023 - Operating Expenses” and in Note 13 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
2024 Program
In January 2024, we initiated restructuring activities to better structure the organization to support our dental segment following the disposal of the spine segment, as discussed in the "Overview - Sale of Spine Segment" above.
22
2023 Programs
In April and July 2023, we initiated restructuring activities to better position our organization for future success based on the then-current business environment. These activities had the objective of reducing our global cost structure and streamlining our organizational infrastructure across all regions, functions and levels. These programs were substantially complete as of March 31, 2024.
2022 Program
In June 2022, we initiated a restructuring plan with the objective of reducing costs and optimizing our global footprint. This program was substantially complete as of June 30, 2024.
RESULTS OF OPERATIONS
As discussed above in the "Overview," we entered into a definitive agreement in December 2023 to sell our spine segment, which closed on April 1, 2024. As such, the historical results of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report, and the following discussion is presented on a continuing operations basis. See Notes 1 and 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for details of the financial condition, results of operations and selected cash flows of our spine segment.
Three and Nine Months Ended September 30, 2024 and 2023
Net Sales
The following table presents net sales and the components of the percentage changes ($ in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
Foreign |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
% Inc/(Dec) |
|
|
Volume/Mix |
|
|
Price |
|
|
Exchange |
|
||||||
Third party, net |
|
$ |
103,222 |
|
|
$ |
105,311 |
|
|
|
(2.0 |
)% |
|
|
(1.3 |
)% |
|
|
(0.9 |
)% |
|
|
0.2 |
% |
Related party, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|||
Total Net Sales |
|
$ |
103,222 |
|
|
$ |
105,311 |
|
|
|
(2.0 |
)% |
|
|
(1.3 |
)% |
|
|
(0.9 |
)% |
|
|
0.2 |
% |
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
Foreign |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
% Inc/(Dec) |
|
|
Volume/Mix |
|
|
Price |
|
|
Exchange |
|
||||||
Third party, net |
|
$ |
338,228 |
|
|
$ |
344,131 |
|
|
|
(1.7 |
)% |
|
|
(0.2 |
)% |
|
|
(1.1 |
)% |
|
|
(0.4 |
)% |
Related party, net |
|
|
— |
|
|
|
236 |
|
|
|
(100.0 |
)% |
|
|
(100.0 |
)% |
|
N/A |
|
|
N/A |
|
||
Total Net Sales |
|
$ |
338,228 |
|
|
$ |
344,367 |
|
|
|
(1.8 |
)% |
|
|
(0.3 |
)% |
|
|
(1.1 |
)% |
|
|
(0.4 |
)% |
Volume/Mix Trends
Volume decreased in the three and nine months ended September 30, 2024 compared to the same prior year periods. Lower dental implant and capital equipment sales were partially offset by growth in digital dentistry and biomaterials sales during the three months ended September 30, 2024, as compared to the same prior year period. Lower capital equipment and dental implant sales were partially offset by growth in digital dentistry and biomaterials sales during the nine months ended September 30, 2024, as compared to the same prior year period.
Pricing Trends
We experienced a price decline in the three and nine months ended September 30, 2024 compared to the same prior year periods, primarily related to pricing pressures on premium dental implant system sales in North America, resulting from a customer mix shift and customer consolidation in the specialty segment, as well as declines in pricing in China resulting from volume-based pricing.
23
Foreign Currency Exchange Rates
In countries where we have a subsidiary, we sell to customers in their local currencies. Accordingly, our net sales as reported in U.S. Dollars are affected by changes in foreign currency exchange rates. We are primarily exposed to foreign currency exchange rate risk with respect to net sales denominated in Euros and Japanese Yen. For the three months ended September 30, 2024, foreign exchange fluctuations had a small positive effect on year-over-year sales, mainly due to the strengthening of the Euro against the U.S. Dollar, partially offset by the weakening of the Japanese Yen against the U.S. Dollar. For the nine months ended September 30, 2024, foreign exchange fluctuations had a negative effect on year-over-year sales, mainly due to the weakening of the Japanese Yen against the U.S. Dollar.
Expenses as a Percent of Net Sales
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 vs 2023 Inc/(Dec) |
|
|||
Cost of products sold including related party, excluding intangible asset amortization |
|
|
34.7 |
% |
|
|
35.0 |
% |
|
|
(0.3 |
)% |
Intangible asset amortization |
|
|
5.8 |
|
|
|
6.4 |
|
|
|
(0.6 |
) |
Research and development |
|
|
6.7 |
|
|
|
5.4 |
|
|
|
1.3 |
|
Selling, general and administrative |
|
|
55.5 |
|
|
|
53.7 |
|
|
|
1.8 |
|
Restructuring and other cost reduction initiatives |
|
|
0.7 |
|
|
|
1.3 |
|
|
|
(0.6 |
) |
Acquisition, integration, divestiture and related |
|
|
1.2 |
|
|
|
1.8 |
|
|
|
(0.6 |
) |
Operating Loss |
|
|
(4.7 |
) |
|
|
(3.7 |
) |
|
|
1.0 |
|
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 vs 2023 Inc/(Dec) |
|
|||
Cost of products sold including related party, excluding intangible asset amortization |
|
|
36.5 |
% |
|
|
36.2 |
% |
|
|
0.3 |
% |
Intangible asset amortization |
|
|
5.3 |
|
|
|
5.9 |
|
|
|
(0.6 |
) |
Research and development |
|
|
6.0 |
|
|
|
5.6 |
|
|
|
0.4 |
|
Selling, general and administrative |
|
|
53.2 |
|
|
|
54.0 |
|
|
|
(0.8 |
) |
Restructuring and other cost reduction initiatives |
|
|
1.1 |
|
|
|
1.1 |
|
|
|
- |
|
Acquisition, integration, divestiture and related |
|
|
2.1 |
|
|
|
1.3 |
|
|
|
0.8 |
|
Operating Loss |
|
|
(4.2 |
) |
|
|
(4.2 |
) |
|
|
- |
|
Cost of Products Sold and Intangible Asset Amortization
Cost of products sold in dollars declined in the three and nine months ended September 30, 2024 as compared to the same prior year periods, primarily due to the decline in sales as discussed above. Cost of products sold as a percentage of net sales in the three months ended September 30, 2024 decreased as compared to the same prior year period, primarily as a result of a mix shift to higher margin products. Cost of products sold as a percentage of net sales in the nine months ended September 30, 2024 increased as compared to the same prior year period primarily due to the negative impact of price declines on sales as discussed above in "Net Sales - Pricing Trends."
Intangible asset amortization decreased in dollars and as a percentage of net sales in the three and nine months ended September 30, 2024 as compared to the same prior year periods, primarily due to certain intangible assets becoming fully amortized in 2023.
Operating Expenses
Research and development ("R&D") expenses increased in dollars and as a percentage of net sales in the three and nine months ended September 30, 2024 as compared to the same prior year periods. The increases in the three-month period were primarily due to professional service fees related to new product development and launches ($0.6 million), compensation expense ($0.4 million) and supplies ($0.3 million). The increases in the nine-month period were primarily due to professional service fees related to new product development and launches ($0.4 million) and compensation expense ($0.2 million).
Selling, general and administrative (“SG&A”) expenses increased in dollars and as a percentage of sales in the three months ended September 30, 2024 as compared to the same prior year period. Increases in compensation expense ($1.1 million), travel and entertainment expense ($0.5 million) and marketing expense ($0.5 million) were partially offset by decreases in professional services fees ($1.1 million).
24
SG&A expenses decreased in dollars and as a percentage of net sales in the nine months ended September 30, 2024, as compared to the same prior year period, generally due to savings from our announced restructuring and other cost reduction initiatives. Specifically, the decline in SG&A was primarily attributable to decreases in compensation and recruiting expense ($1.7 million), professional services fees ($1.4 million) and TSA expenses related to our separation from Zimmer Biomet ($0.7 million).
Expenses resulting from restructuring and other cost reduction initiatives relate to various restructuring plans as discussed above. We recognized expense of $0.7 million and $1.4 million in the three months ended September 30, 2024 and 2023, respectively, primarily related to employee termination benefits. We recognized expense of $3.7 million and $3.9 million in the nine months ended September 30, 2024 and 2023, respectively, primarily related to employee termination benefits, as well as professional services fees. For more information regarding these expenses, see Note 13 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
Acquisition, integration, divestiture and related expenses include costs incurred to prepare for and complete the separation from Zimmer Biomet (such as professional fees, transition services agreements, costs to stand up our corporate organization and infrastructure), changes in the fair value of contingent consideration for acquisitions closed prior to the separation date and transaction costs related to the disposal of our spine segment. Acquisition, integration, divestiture and related expenses decreased by $0.7 million for the three months ended September 30, 2024, as compared to the same prior year period, due primarily to a fair value adjustment of the promissory note related to the sale of the spine segment ($1.2 million) and decreases in separation-related expenses ($0.5 million), partially offset by transaction costs related to the evaluation of strategic options for our portfolio, including costs incurred related to the disposal of the spine segment (see Notes 1 and 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report) ($1.1 million). Acquisition, integration, divestiture and related expenses increased by $2.3 million for the nine months ended September 30, 2024 as compared to the same prior year period, due primarily to transaction costs related to the evaluation of strategic options for our portfolio, including costs incurred related to the disposal of the spine segment (see Notes 1 and 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report) ($5.3 million), partially offset by decreases in separation-related expenses ($3.2 million).
Other Income (Expense), net, Interest Income, Interest Expense and Income Taxes
Our other income (expense), net, relates to TSA income, as well as the remeasurement of monetary assets and liabilities that are denominated in a currency other than the subsidiary’s functional currency. We recognized $3.2 million and $6.6 million of TSA income in the three and nine months ended September 30, 2024 and 2023, respectively, related to the sale of the spine segment. Income or expense related to the remeasurement of monetary assets and liabilities varies based upon the volatility of foreign currency exchange rates.
Interest income in the three and nine months ended September 30, 2024 increased compared to the same prior year periods, due primarily to interest income from the promissory note received as partial consideration for the sale of the spine segment (see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report).
Interest expense in the three and nine months ended September 30, 2024 decreased compared to the same prior year periods, due primarily to a reduction in outstanding debt (see Note 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report), as well as a reduction in interest rates.
Our ETR on loss before income taxes was 18.4% and (3.3%) for the three months ended September 30, 2024 and 2023, and (34.2%) and (5.0%), respectively, for the nine months ended September 30, 2024 and 2023, respectively. In the three and nine months ended September 30, 2024, the income tax rate was lower than the 21.0% statutory rate due to our mix of earnings and losses across jurisdictions and losses not benefited as a result of valuation allowances.
Our ETR in future periods could also potentially be impacted by: changes in our mix of pre-tax earnings; changes in tax rates, tax laws or their interpretation; the outcome of various federal, state and foreign audits; and the expiration of certain statutes of limitations. Currently, we cannot reasonably estimate the impact of these items on our financial results.
25
LIQUIDITY AND CAPITAL RESOURCES
The following discussion represents the combined liquidity and capital resources of continuing and discontinued operations.
As of September 30, 2024 and December 31, 2023, we had $68.1 million and $87.8 million, respectively, in cash and cash equivalents.
Sources of Liquidity
Cash flows (used in) provided by operating activities were $(7.3) million and $15.7 million in the nine months ended September 30, 2024 and 2023, respectively. Working capital for the nine months ended September 30, 2024 used cash of $4.8 million primarily due to cash used by accounts payable and accrued liabilities, accounts receivable and prepaid expenses and other current assets, partially offset by cash provided by inventories and income taxes. Working capital for the nine months ended September 30, 2023 used cash of $21.5 million due to cash used for income taxes, accounts payable and accrued liabilities and related party payables, partially offset by cash provided by inventories, accounts receivable, related party receivables and prepaid expenses and other current assets.
Cash flows provided by (used in) investing activities were $285.2 million and $(12.4) million in the nine months ended September 30, 2024 and 2023, respectively. In the current year period, we received proceeds of $291.1 million, net of cash disposed, from the sale of the spine segment (as discussed in Notes 1 and 2). Reductions in additions to instruments and other property, plant and equipment in the nine months ended September 30, 2024 compared to the same prior year period were primarily due to the sale of the spine segment.
Cash flows used in financing activities were $295.4 million and $16.8 million for the nine months ended September 30, 2024 and 2023, respectively. In the current year period, we prepaid $275.0 million on the Term Loan using proceeds from the sale of our spine segment (as discussed in Notes 1 and 2) and made optional prepayments on the Term Loan of $15.0 million. In the prior year period, we made optional prepayments on the Term Loan of $17.5 million, which represented the aggregate amount of the mandatory scheduled principal payments due in the first nine months of 2024.
Liquidity and Capital Resources
For additional information regarding our current debt arrangements, see Note 9 to our consolidated financial statements included in our Annual Report. In addition, for information regarding our other material estimated future cash requirements under our contractual obligations and certain other commitments, see “Material Cash Requirements” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report. There have been no material changes to such information except as set forth herein.
We believe that available cash and cash equivalents, cash flows generated through operations and cash available under our revolving credit facility will be sufficient to meet our liquidity needs, including capital expenditures, for at least the next 12 months. On April 1, 2024, we prepaid $275.0 million on the Term Loan using proceeds from the sale of our spine segment (as discussed in Notes 1 and 2), and we wrote off $0.9 million of debt issuance costs. As a result of this prepayment, we have no more scheduled quarterly amortization payments on the Term Loan, and the remaining balance is due at maturity on February 28, 2027.
CRITICAL ACCOUNTING ESTIMATES
Our financial results are affected by the selection and application of accounting policies and methods and require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. There were no changes in the three and nine months ended September 30, 2024 to the application of our critical accounting estimates as described in our Annual Report.
ACCOUNTING DEVELOPMENTS
See Note 1 to our condensed consolidated financial statements included in this Quarterly Report for information on how recent accounting pronouncements have affected or may affect our financial position, results of operations or cash flows.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market Risk
We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in foreign currency exchange rates, interest rates and commodity prices that could affect our financial condition, results of operations and cash flows.
Foreign Currency Exchange Risk
We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Japanese Yen, Canadian Dollars, British Pounds, and Swiss Francs. We manage our foreign currency exposure centrally, on a combined basis, which allows us to net exposures and to take advantage of any natural offsets. To reduce the uncertainty of foreign currency exchange rate movements on transactions denominated in foreign currencies, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions. These forward contracts are designed to reduce the foreign exchange impact monetary assets and liabilities in non-functional currencies have on our financial results. Realized and unrealized gains and losses on these contracts are recognized in other (expense) income, net.
Commodity Price Risk
We purchase raw material commodities such as cobalt chrome, titanium, tantalum, polymer and sterile packaging. We enter into supply contracts generally with terms of 12 to 24 months, where available, on these commodities to alleviate the effect of market fluctuations in prices. As part of our risk management program, we perform sensitivity analyses related to potential commodity price changes. A 10% price change across all these commodities would not have a material effect on our condensed consolidated financial position, results of operations or cash flows.
Interest Rate Risk
Our interest expense and related risks as reported in our condensed consolidated statements of operations are due to borrowings under our credit agreement. As of September 30, 2024, we had $221.9 million of floating rate debt subject to the adjusted term secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR to our floating rate debt would, among other things, decrease our annual pre-tax results of operations by $2.2 million.
Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, are primarily cash and cash equivalents, derivative instruments and accounts receivable.
We place our cash and cash equivalents with highly rated financial institutions and limit the amount of credit exposure to any one entity. We believe we do not have any significant credit risk on our cash and cash equivalents.
Our concentrations of credit risks with respect to trade accounts receivable are limited due to the large number of customers and their dispersion across a number of geographic areas and by frequent monitoring of the creditworthiness of the customers to whom credit is granted in the normal course of business. Substantially all of our trade receivables are concentrated in the public and private hospital and dental practices in the healthcare industry in the U.S. and internationally or with distributors or dealers who operate in international markets and, accordingly, are exposed to their respective business, economic and country-specific variables. Our ability to collect accounts receivable in some countries depends in part upon the financial stability of these hospital and healthcare sectors and the respective countries’ national economic and healthcare systems. Most notably, in Europe healthcare is typically sponsored by the government. Since we sell products to public hospitals in those countries, we are indirectly exposed to government budget constraints. To the extent the respective governments’ ability to fund their public hospital programs deteriorates, we may have to record significant bad debt expenses in the future.
While we are exposed to risks from the broader healthcare industry in Europe and around the world, there is no significant net exposure due to any individual customer. Exposure to credit risk is controlled through credit approvals, credit limits and monitoring procedures, and we believe that reserves for losses are adequate.
27
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act"). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024 to provide reasonable assurance that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are subject to various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial and other matters that arise in the normal course of business. We currently do not expect the outcome of these matters to have a material adverse impact on our results of operations, cash flows or financial position. However, the outcome of such matters is unpredictable, our assessment of them may change, and resolution of them could have a material adverse effect on our financial position, results of operations or cash flows.
For additional information related to our contingencies, see Note 12 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference.
Item 1A. Risk Factors.
Careful consideration should be given to the factors discussed in Part I, Item 1A, “Risk Factors” of our Annual Report, which could materially affect our business, financial condition and results of operations. Except as set forth below, there have been no material changes in those risk factors. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
Due to the completion of the sale of our spine segment on April 1, 2024, the risk factor in our Annual Report entitled “The pending sale of our spine business (the “Pending Transaction”) is subject to various risks, uncertainties and conditions and may not be completed on the terms or timeline currently contemplated, if at all.” no longer applies.
The risk factor in our Annual Report entitled “We may be unable to achieve some or all of the strategic and financial benefits that we expect to achieve from the Pending Transaction.” is replaced in its entirety by the following:
We may be unable to achieve some or all of the strategic and financial benefits that we expect to achieve from the sale of our spine segment (the “Transaction”).
We are using the net proceeds from the Transaction to repay debt and invest in our dental business. The anticipated operational, financial, strategic and other benefits from the Transaction may not be achieved and could have an adverse impact on our business, financial condition and results of operations. The anticipated benefits are based on a number of assumptions, some of which may prove incorrect, and could be affected by a number of factors beyond our control, including, without limitation, general economic conditions, increased operating costs, regulatory developments and the other risks described in these risk factors.
The risk factor in our Annual Report entitled “If the Pending Transaction is completed, we will be a smaller, less diversified company than as we exist today.” is replaced in its entirety by the following:
The Transaction has resulted in us being a smaller, less diversified company.
The Transaction has resulted in us being a smaller, less diversified company that is significantly more reliant on our remaining dental business. As a result, we may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, financial condition, and results of operations. The diversification of revenues, costs and cash flows has diminished as a result of the Transaction, such that our results of operations, cash flows, working capital, and effective tax rate may be subject to increased volatility and our ability to fund capital expenditures, investments and service debt may be diminished. As a result of the Transaction, we are incurring ongoing costs that were previously allocated to the spine segment. Those costs may exceed our estimates and could diminish the benefits we expect to realize from the Transaction.
Item 5. Other Information.
During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)
29
Item 6. Exhibits.
Exhibit Index
Exhibit Number |
|
Description |
2.1^ |
|
|
2.2^ |
|
|
3.1 |
|
|
3.2 |
|
|
21* |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
^ Schedules and exhibits to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. ZimVie hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the SEC.
30
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 thereunto duly authorized.
|
|
ZimVie Inc. |
|
|
|
|
|
Date: October 30, 2024 |
|
By: |
/s/ Richard Heppenstall |
|
|
|
Richard Heppenstall |
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
|
|
|
|
31
Exhibit 21
Subsidiaries of ZimVie Inc.
As of September 30, 2024
Name of Subsidiary |
Jurisdiction of Formation |
|
Domestic subsidiaries: |
|
|
|
Biomet 3i, LLC |
Florida |
|
dba ZimVie |
|
|
dba Zimmer Biomet Dental |
|
|
dba ZimVie Dental |
|
|
Implant Concierge, LLC |
Texas |
|
Zimmer Dental Inc. |
Delaware |
|
dba ZimVie Dental |
|
|
ZimVie Holdings US 1 LLC |
Delaware |
|
ZimVie Holdings US 2 LLC |
Delaware |
|
ZimVie US Corp LLC |
Delaware |
|
|
|
Foreign subsidiaries: |
|
|
|
Biomet 3i Australia Pty. Ltd. |
Australia |
|
ZimVie Austria GmbH |
Austria |
|
ZimVie Belgium N.V. |
Belgium |
|
ZimVie Brasil Comercio, Importacao e Exportacao de Produtos Medicos Ltda. |
Brazil |
|
Zimmer Biomet Dental Canada Inc. |
Canada |
|
ZimVie Chile Spa |
Chile |
|
ZimVie (Shanghai) Medical Device Co. Ltd. |
China |
|
IC Guided Surgery, SRL |
Costa Rica |
|
Zimmer Dental SAS |
France |
|
Zfx GmbH |
Germany |
|
ZimVie Germany GmbH |
Germany |
|
ZB Dental India Private Limited |
India |
|
Zimmer Dental Ltd. |
Israel |
|
3DIEMME Srl |
Italy |
|
Zfx Innovation Srl |
Italy |
|
Zimmer Dental Italy Srl |
Italy |
|
ZimVie Japan G.K. |
Japan |
|
JERDS Luxembourg Holding S.ar.l |
Luxembourg |
|
Biomet 3i Mexico S.A. de C.V. |
Mexico |
|
ZimVie Netherlands B.V. |
Netherlands |
|
ZimVie Netherlands Global Holding B.V. |
Netherlands |
|
ZimVie Netherlands Holding B.V. |
Netherlands |
|
ZimVie Portugal Unipessoal, Lda. |
Portugal |
|
Biomet 3i Dental Iberica SLU |
Spain |
|
Biomet 3i Switzerland GmbH (Biomet 3i Schweiz GmbH) |
Switzerland |
|
Biomet 3i UK Ltd. |
United Kingdom |
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Vafa Jamali, certify that:
Date: October 30, 2024 |
|
By: |
/s/ Vafa Jamali |
|
|
|
Vafa Jamali |
|
|
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Heppenstall, certify that:
Date: October 30, 2024 |
|
By: |
/s/ Richard Heppenstall |
|
|
|
Richard Heppenstall |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ZimVie Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: October 30, 2024 |
|
By: |
/s/ Vafa Jamali |
|
|
|
Vafa Jamali |
|
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ZimVie Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: October 30, 2024 |
|
By: |
/s/ Richard Heppenstall |
|
|
|
Richard Heppenstall |
|
|
|
Chief Financial Officer |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Net Sales | ||||
| Total Net Sales | $ 103,222 | $ 105,311 | $ 338,228 | $ 344,367 |
| Cost of products sold, excluding intangible asset amortization | (35,820) | (36,907) | (123,596) | (124,246) |
| Related party cost of products sold, excluding intangible asset amortization | 0 | 0 | 0 | (231) |
| Intangible asset amortization | (6,037) | (6,778) | (18,059) | (20,378) |
| Research and development | (6,926) | (5,677) | (20,285) | (19,365) |
| Selling, general and administrative | (57,313) | (56,505) | (180,024) | (186,054) |
| Restructuring and other cost reduction initiatives | (687) | (1,391) | (3,664) | (3,929) |
| Acquisition, integration, divestiture and related | (1,276) | (1,936) | (6,934) | (4,647) |
| Operating Expenses | (108,059) | (109,194) | (352,562) | (358,850) |
| Operating Loss | (4,837) | (3,883) | (14,334) | (14,483) |
| Other income (expense), net | 3,462 | (990) | 6,161 | (1,189) |
| Interest income | 2,466 | 569 | 4,938 | 1,929 |
| Interest expense | (4,827) | (5,553) | (14,766) | (17,187) |
| Loss from continuing operations before income taxes | (3,736) | (9,857) | (18,001) | (30,930) |
| Benefit (provision) for income taxes from continuing operations | 688 | (325) | (6,161) | (1,555) |
| Net Loss from Continuing Operations of ZimVie Inc. | (3,048) | (10,182) | (24,162) | (32,485) |
| Earnings (loss) from discontinued operations, net of tax | 764 | 5,093 | 10,103 | (25,945) |
| Net Loss of ZimVie Inc. | $ (2,284) | $ (5,089) | $ (14,059) | $ (58,430) |
| Basic (Loss) Earnings Per Common Share: | ||||
| Continuing operations | $ (0.11) | $ (0.38) | $ (0.88) | $ (1.23) |
| Discontinued operations | 0.03 | 0.19 | 0.37 | (0.98) |
| Net Loss | (0.08) | (0.19) | (0.51) | (2.21) |
| Diluted (Loss) Earnings Per Common Share: | ||||
| Continuing operations | (0.11) | (0.38) | (0.88) | (1.23) |
| Discontinued operations | 0.03 | 0.19 | 0.37 | (0.98) |
| Net Loss | $ (0.08) | $ (0.19) | $ (0.51) | $ (2.21) |
| Third Party Net [Member] | ||||
| Net Sales | ||||
| Total Net Sales | $ 103,222 | $ 105,311 | $ 338,228 | $ 344,131 |
| Related Party Net [Member] | ||||
| Net Sales | ||||
| Total Net Sales | $ 0 | $ 0 | $ 0 | $ 236 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Net Loss of ZimVie Inc. | $ (2,284) | $ (5,089) | $ (14,059) | $ (58,430) |
| Foreign currency cumulative translation adjustments, net of tax | 11,559 | (18,027) | 460 | (6,930) |
| Total Other Comprehensive Income (Loss) | 11,559 | (18,027) | 460 | (6,930) |
| Comprehensive Income (Loss) | $ 9,275 | $ (23,116) | $ (13,599) | $ (65,360) |
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Equity, Attributable to Parent [Abstract] | ||
| Accounts receivable, net of allowance for credit loss, current | $ 2,392 | $ 3,222 |
| Property, plant and equipment, net of accumulated depreciation | $ 131,717 | $ 126,624 |
| Common stock, par or stated value per share | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 150,000,000 | 150,000,000 |
| Common stock, shares issued | 27,587,000 | 27,076,000 |
| Common stock, shares outstanding | 27,587,000 | 27,076,000 |
| Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
|---|---|---|---|---|---|
| Beginning Balance at Dec. 31, 2022 | $ 758,604 | $ 262 | $ 897,028 | $ (47,532) | $ (91,154) |
| Net loss | (58,430) | 0 | 0 | (58,430) | 0 |
| Stock plan activity | 826 | 3 | 823 | 0 | 0 |
| Share-based compensation expense | 16,129 | 0 | 16,129 | 0 | 0 |
| Other comprehensive (loss) income | (6,930) | 0 | 0 | 0 | (6,930) |
| Ending Balance at Sep. 30, 2023 | 710,199 | 265 | 913,980 | (105,962) | (98,084) |
| Beginning Balance at Jun. 30, 2023 | 727,842 | 265 | 908,507 | (100,873) | (80,057) |
| Net loss | (5,089) | 0 | 0 | (5,089) | 0 |
| Share-based compensation expense | 5,473 | 0 | 5,473 | 0 | 0 |
| Other comprehensive (loss) income | (18,027) | 0 | 0 | 0 | (18,027) |
| Ending Balance at Sep. 30, 2023 | 710,199 | 265 | 913,980 | (105,962) | (98,084) |
| Beginning Balance at Dec. 31, 2023 | 409,493 | 271 | 922,996 | (440,814) | (72,960) |
| Net loss | (14,059) | 0 | 0 | (14,059) | 0 |
| Stock plan activity | (1,729) | 5 | (1,734) | 0 | 0 |
| Share-based compensation expense | 12,473 | 0 | 12,473 | 0 | 0 |
| Other comprehensive (loss) income | 460 | 0 | 0 | 0 | 460 |
| Ending Balance at Sep. 30, 2024 | 406,638 | 276 | 933,735 | (454,873) | (72,500) |
| Beginning Balance at Jun. 30, 2024 | 394,099 | 276 | 930,471 | (452,589) | (84,059) |
| Net loss | (2,284) | 0 | 0 | (2,284) | 0 |
| Stock plan activity | (59) | 0 | (59) | 0 | 0 |
| Share-based compensation expense | 3,323 | 0 | 3,323 | 0 | 0 |
| Other comprehensive (loss) income | 11,559 | 0 | 0 | 0 | 11,559 |
| Ending Balance at Sep. 30, 2024 | $ 406,638 | $ 276 | $ 933,735 | $ (454,873) | $ (72,500) |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Cash flows (used in) provided by operating activities: | ||
| Net Loss of ZimVie Inc. | $ (14,059) | $ (58,430) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
| Depreciation and amortization | 25,697 | 95,088 |
| Share-based compensation | 12,473 | 16,129 |
| Deferred income tax provision | (4,201) | (11,967) |
| Loss on disposal of fixed assets | 418 | 2,411 |
| Other non-cash items | 2,818 | 2,762 |
| Gain on sale of spine disposal group (Note 2) | (22,427) | 0 |
| Changes in operating assets and liabilities | ||
| Income taxes | 2,548 | (34,061) |
| Accounts receivable | (5,742) | 13,019 |
| Related party receivable | 0 | 8,483 |
| Inventories | 7,139 | 18,246 |
| Prepaid expenses and other current assets | (2,447) | 4,187 |
| Accounts payable and accrued liabilities | (6,314) | (18,216) |
| Related party payable | 0 | (13,177) |
| Other assets and liabilities | (3,179) | (8,780) |
| Net cash (used in) provided by operating activities | (7,276) | 15,694 |
| Cash flows provided by (used in) investing activities: | ||
| Additions to instruments | (1,316) | (4,341) |
| Additions to other property, plant and equipment | (2,677) | (5,340) |
| Proceeds from sale of spine disposal group, net of cash disposed | 291,123 | 0 |
| Other investing activities | (1,961) | (2,762) |
| Net cash provided by (used in) investing activities | 285,169 | (12,443) |
| Cash flows used in financing activities: | ||
| Proceeds from debt | 0 | 4,760 |
| Payments on debt | (290,000) | (22,291) |
| Business combination contingent consideration payments | (3,712) | 0 |
| Payments related to tax withholding for share-based compensation | (1,729) | (419) |
| Proceeds from stock plan activity | 0 | 1,167 |
| Net cash used in financing activities | (295,441) | (16,783) |
| Effect of exchange rates on cash and cash equivalents | (2,124) | (620) |
| Decrease in cash and cash equivalents | (19,672) | (14,152) |
| Cash and cash equivalents, beginning of year | 87,768 | 89,601 |
| Cash and cash equivalents, end of period | 68,096 | 75,449 |
| Supplemental cash flow information: | ||
| Income taxes paid, net | 5,232 | 19,090 |
| Interest paid | 19,080 | 26,198 |
| Promissory note receivable issued in connection with the sale of spine disposal group | 60,000 | 0 |
| Interest received-in-kind | $ 3,072 | $ 0 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Background, Nature of Business and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Background, Nature of Business and Basis of Presentation | 1. Background, Nature of Business and Basis of Presentation
Background
On March 1, 2022, ZimVie Inc. ("ZimVie," "we," "us" and "our") and Zimmer Biomet Holdings, Inc. ("Zimmer Biomet") entered into a Separation and Distribution Agreement (the "Separation Agreement"), pursuant to which Zimmer Biomet agreed to spin off its spine and dental businesses into ZimVie. The distribution resulted in ZimVie becoming a standalone, publicly traded company. Following the distribution, Zimmer Biomet initially retained 19.7% of the outstanding shares of ZimVie common stock, and all transactions between ZimVie and Zimmer Biomet from the distribution to February 1, 2023 were reported as related party transactions. As of February 1, 2023, Zimmer Biomet had sold all of its 19.7% ownership in ZimVie and is no longer considered a related party. As such, transactions with Zimmer Biomet subsequent to February 1, 2023 are reported as third party transactions. See Note 17 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 ("Annual Report") for further description of the impact of the distribution and post-spin activities with Zimmer Biomet.
On December 15, 2023, we entered into a definitive agreement to sell our spine segment to an affiliate of H.I.G. Capital (the "Buyer") for $375 million in total consideration, comprised of $315 million in cash, subject to certain customary adjustments as set forth in the agreement, and $60 million in the form of a promissory note that accrues interest at a rate of 10% per annum, compounded semi-annually, and interest is payable in kind. On April 1, 2024, we completed the sale of our spine segment for a total purchase price of $377.2 million (inclusive of $2.2 million in preliminary closing adjustments), subject to certain customary adjustments as set forth in the agreement, and received proceeds of $311.8 million, excluding the promissory note and transaction costs, but including cash disposed of $26.1 million. See Notes 2 and 7 for additional discussion.
Nature of Business
ZimVie is a leading medical technology company dedicated to enhancing the quality of life for dental patients worldwide. We develop, manufacture and market a comprehensive portfolio of products and solutions designed to support dental tooth replacement and restoration procedures. We are well-positioned in the growing global dental implant, biomaterials and digital dentistry market with a strong presence in the tooth replacement market with market leading positions in certain geographies. Prior to the closing of the sale of our spine segment, our operations were principally managed on a products basis and included two operating segments, 1) the dental products segment, and 2) the spine products segment.
Since the sale of our spine segment, our core services include designing, manufacturing and distributing dental implant systems. Dental reconstructive implants are for individuals who are totally without teeth or are missing one or more teeth, dental prosthetic products are aimed at providing a more natural restoration to resemble the original teeth, and dental regenerative products are for soft tissue and bone rehabilitation. Our key products include the T3® Implant, Tapered Screw-Vent® Implant System, Trabecular Metal®™ Dental Implant, BellaTek® Encode® Impression System and Puros® Allograft Particulate.
Prior to the sale of our spine segment, the core services of our spine segment included designing, manufacturing and distributing medical devices and surgical instruments to deliver comprehensive solutions for individuals with back or neck pain caused by degenerative conditions, deformities or traumatic injury of the spine. We also provided devices that promote bone healing. Other differentiated products in our spine portfolio included Mobi-C® Cervical Disc, a motion-preserving alternative to fusion for patients with cervical disc disease, and The Tether™, a novel non-fusion device for treatment of pediatric scoliosis.
Basis of Presentation
The accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, the condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, of ZimVie are unaudited. In management’s opinion, all adjustments comprising normal recurring adjustments necessary for the fair statement of such condensed consolidated financial statements have been made. The accompanying condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 ("Quarterly Report") are presented as permitted by Regulation S-X and do not contain certain information included in our annual financial statements and notes thereto. Accordingly, the accompanying condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements presented in our Annual Report. During the three months ended March 31, 2024, we recorded out of period adjustments that increased the Loss from continuing operations before income taxes and reduced Earnings from discontinued operations, net of tax, by $1.8 million and $0.7 million, respectively. We have concluded these out of period adjustments did not have a material impact on our interim condensed consolidated financial statements for the three months ended March 31, 2024 or nine months ended September 30, 2024, nor were they material to previously issued interim and annual consolidated financial statements.
Restricted Cash - As of both September 30, 2024 and December 31, 2023, we had $1.5 million in restricted cash. The restriction as of September 30, 2024 and December 31, 2023 is on cash held in China as a result of ongoing litigation with a spine products distributor in China related to our decision to exit our spine products business in China.
Sale of Spine Segment
The historical results of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements as the sale represented a strategic shift in our business that had a major effect on operations and financial results. The assets and liabilities associated with this segment are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets. The disclosures presented in the notes to the condensed consolidated financial statements are presented on a continuing operations basis, unless otherwise noted.
Accounting Pronouncements Recently Issued
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU amends the interim and annual disclosure requirements related to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. The guidance will be applied prospectively. The effective date for each amendment will be the date when the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. We are currently evaluating the effect of this ASU, but we do not expect it will have a material impact on our condensed consolidated financial statements or disclosures.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The key amendments require disclosure of significant segment expenses on an annual and interim basis that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, including other segment items by reportable segment and a description of their composition, and to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Topic 280, Segment Reporting, in interim periods as well. This ASU includes certain clarifications for measuring a segment's profit or loss in assessment by the CODM, disclosure of title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We do not expect the adoption of this ASU to affect our financial position or our results of operations, but expect it will result in additional disclosures.
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments included in the ASU related to rate reconciliation, income taxes paid disclosures and other disclosures requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2024. We are currently in the process of evaluating the effect of this ASU.
In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their consolidated financial statements. While the SEC voluntarily stayed the rules due to pending judicial review, the rules in their current form would be effective for accelerated filers for annual periods beginning after December 15, 2025. We are currently in the process of evaluating the effect of these final rules.
Other recently issued ASUs, excluding ASUs discussed above, were assessed and determined to be not applicable, or are not expected to have a material impact on our condensed consolidated financial statements or disclosures. |
Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | 2. Discontinued Operations
As discussed in Note 1, on December 15, 2023, we entered into a definitive agreement to sell our spine segment. The historical financial condition and results of operations of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements. The assets and liabilities associated with this segment are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets.
On April 1, 2024, we completed the sale of our spine segment for a total purchase price of $377.2 million (inclusive of $2.2 million in preliminary closing adjustments), subject to certain customary adjustments as set forth in the agreement, and received proceeds of $311.8 million, excluding the promissory note and transaction costs, but including cash disposed of $26.1 million. We recognized a gain on the sale of $11.3 million, which is included in Earnings (loss) from discontinued operations and primarily related to transaction costs incurred related to the sale. In accordance with the terms of the agreement, the closing adjustments were finalized with the Buyer in October 2024, resulting in an immaterial adjustment to the purchase price. The transfer of spine business activities in certain jurisdictions ("Deferred Transfer Locations") is deferred until the Buyer has met various legal and regulatory requirements in those jurisdictions. Until such transfer, we continue to control and operate these Deferred Transfer Locations and therefore we continue to consolidate the assets and liabilities and results of operations within discontinued operations in the condensed consolidated balance sheets and statements of operations. Details of the assets and liabilities and results of operations not transferred to the Buyer as of September 30, 2024 are included below. Net profit or loss of the Deferred Transfer Locations are transferred to the Buyer on a monthly basis. The net profit or loss to be transferred to the Buyer is included in Other expense, net within discontinued operations. We currently expect the Deferred Transfer Locations to be transferred within one year of the closing date of the sale. During the three and nine months ended September 30, 2024, one Deferred Transfer Location with an immaterial net asset balance was transferred to the Buyer, and two additional Deferred Transfer Locations with immaterial net asset balances were transferred to the Buyer in October 2024.
In conjunction with the sale of our spine segment, we entered into a Transition Services Agreement ("TSA") to provide certain support services for up to 12 months from the closing date of the sale. These services include, among others, accounting, information technology, human resources, quality assurance, regulatory affairs and customer support. Income recognized related to the TSA is recorded as Other income in our condensed consolidated statements of operations.
Details of earnings (loss) from discontinued operations included in our condensed consolidated statements of operations are as follows (in thousands):
(1) A portion of the interest on our Term Loan (as defined and described in Note 8) has been allocated to discontinued operations consistent with the amount of proceeds used to repay a portion of the amounts outstanding under our Term Loan in accordance with our Credit Agreement (as defined and described in Note 8). (2) We performed an impairment analysis of the spine segment in December 2023 on a held-for-sale basis. The fair value of consideration to be received upon closure of the transaction was less than the carrying value of the spine segment's net assets, resulting in a write-down of $289.5 million. We updated our analysis as of March 31, 2024, immediately prior to the sale, which resulted in a reduction of the December 2023 write-down of $11.1 million.
Details of assets and liabilities of discontinued operations are as follows (in thousands):
(1) Includes our non-cash liability of $40.5 million as of September 30, 2024 to transfer the net assets of the Deferred Transfer Locations to the Buyer. (2) This adjustment is reflected in Noncurrent assets of discontinued operations in the condensed consolidated balance sheets.
Cash flows attributable to discontinued operations are included on our condensed consolidated statements of cash flows. Significant non-cash operating and investing activities attributable to discontinued operations consisted of the following (in thousands):
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Goodwill and Other Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Other Intangible Assets | 3. Goodwill and Other Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill (in thousands):
The components of identifiable intangible assets were as follows (in thousands):
(1) During the quarter ended September 30, 2024, we wrote off all fully amortized intangible assets that are no longer in use.
Estimated annual amortization expense for the years ending December 31, 2024 through 2028 based on exchange rates in effect at December 31, 2023 is as follows (in millions):
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Share-Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation | 4. Share-Based Compensation
Conversion Awards
At the time of separation, Zimmer Biomet had share-based compensation plans under which it granted stock options, restricted stock units ("RSUs") and performance-based RSUs. In connection with the distribution, ZimVie employees with outstanding Zimmer Biomet share-based awards received replacement share-based awards. The ratio used to convert the Zimmer Biomet share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the distribution when compared to the aggregate intrinsic value of the award immediately prior to the distribution. Outstanding RSUs and performance-based RSUs were converted into 0.3 million ZimVie RSUs at a weighted average fair value of $31.55, and outstanding stock options were converted into 2.1 million ZimVie stock options at a weighted average fair value of $14.76. Due to the conversion, ZimVie incurred $21.3 million of incremental share-based compensation expense. Of this amount, $10.3 million was related to unvested and/or unexercised share-based awards and was recognized at the distribution date. The remaining $11.0 million is being recognized over the remainder of the share-based awards' weighted average vesting period of 2.5 years from the date of the distribution.
ZimVie Awards
The ZimVie Inc. 2022 Stock Incentive Plan was established effective as of March 1, 2022, and was amended effective May 12, 2023 (as amended, the "2022 Plan"). A total of 6.0 million shares of common stock are authorized for issuance under the 2022 Plan. Shares issued pursuant to converted Zimmer Biomet share-based awards do not count against this limit. At September 30, 2024, 3.7 million shares were available for future grants and awards under the 2022 Plan. The 2022 Plan provides for the grant of various types of awards including stock options, stock appreciation rights, performance shares, performance units, restricted stock and RSUs. Generally, awards have a three-year vesting period and stock options have a term of ten years. Vesting may accelerate upon retirement after the first anniversary date of the award if certain criteria are met. Additionally, in cases of special circumstances as determined by the Compensation Committee of the Board of Directors, the Compensation Committee may, in its sole discretion, accelerate vesting. We recognize expense on a straight-line basis over the requisite service period, less awards expected to be forfeited using estimated forfeiture rates. Stock options are granted with an exercise price equal to the market price of our common stock on the date of grant, except in limited circumstances where local law may dictate otherwise.
Share-based compensation expense was as follows (in thousands):
Share-based compensation expense related to discontinued operations is included in the table above and is disclosed in Note 2.
Stock option activity was as follows:
We used a Black-Scholes option-pricing model to determine the fair value of our stock options. For awards granted shortly after the distribution: expected volatility of 52.29% was derived from a peer group's combined historical volatility that was de-levered and re-levered for ZimVie as ZimVie did not have sufficient historical volatility based on the expected term of the underlying options; the expected term of the stock options of 6.0 years was determined using the simplified method; and the risk-free interest rate of 1.94% was determined using the implied yield then available for zero-coupon United States ("U.S.") government issues with a remaining term approximating the expected life of the options. The dividend yield was zero as ZimVie has no plans to pay a dividend for the foreseeable future.
Aggregate intrinsic value was negligible at September 30, 2024. At September 30, 2024, we had unrecognized share-based compensation cost related to unvested stock options of $1.9 million, which is expected to be amortized over the remaining weighted average vesting period of less than one year.
RSU activity was as follows:
RSUs with performance-based vesting provisions ("PRSUs") declined to zero at September 30, 2024. In September 2024, the Compensation Committee of the Board of Directors approved a modification of all 289,310 outstanding PRSUs. Prior to the modification, the PRSUs could have vested from 0-150% of target based on the level of cumulative achievement of pre-defined performance metrics based on the consolidated results of the dental and spine segments. The PRSUs were payable in common shares and did not have the right to vote until settled. Compensation expense related to the PRSUs was being recognized over a 36-month cliff vesting period, and adjusted as needed for changes in the projected level of achievement of the performance metrics. During the quarter ended September 30, 2024, the Compensation Committee approved a conversion of all outstanding PRSUs into time-based RSUs on a one-for-one basis. The converted awards will cliff-vest on the award's original vesting date. For PRSUs outstanding prior to the conversion that were expected to vest, we determined that there was no change in their fair value immediately after the conversion. For PRSUs outstanding prior to the conversion that were not expected to vest, the fair value of the awards immediately after the conversion increased due to becoming probable of vesting, resulting in $1.2 million of incremental compensation expense that will be recognized over the remaining vesting period of approximately 1.7 years. At September 30, 2024, we had unrecognized share-based compensation cost related to unvested RSUs of $15.7 million, which is expected to be amortized into earnings over the remaining weighted average vesting period of approximately 1.1 years. The total fair value of RSUs granted during the nine months ended September 30, 2024 and 2023 was $14.0 million and $15.8 million, respectively. The total fair value of RSUs that vested during the nine months ended September 30, 2024 and 2023 was $11.1 million and $6.4 million, respectively. |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | 5. Earnings Per Share
The calculation of weighted average shares for basic and diluted net loss per common share is as follows (in thousands, except per share data):
(1) Since we incurred a net loss in each of the three months ended September 30, 2024 and 2023 and the nine months ended September 30, 2024 and 2023, no dilutive stock options or other equity awards were included as diluted shares in those periods. For the three months ended September 30, 2024 and 2023, a weighted average of 1.8 million and 3.2 million, respectively, and for the nine months ended September 30, 2024 and 2023, a weighted average of 2.1 million and 3.3 million, respectively, options to purchase shares of common stock were not included in the computation of diluted net loss per share as the exercise prices of these options were greater than the average market price of the common stock. |
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Balance Sheet Details |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Details | 6. Balance Sheet Details
Inventories consisted of the following (in thousands):
Amounts related to cost of products sold in the condensed consolidated statements of operations for excess and obsolete inventory were $0.5 million and $0.6 million in the three months ended September 30, 2024 and 2023, respectively, and were $1.6 million and $1.5 million in the nine months ended September 30, 2024 and 2023, respectively.
Other current liabilities consisted of the following (in thousands):
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Fair Value Measurements of Assets and Liabilities |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||
| Fair Value Measurements of Assets and Liabilities | 7. Fair Value Measurements of Assets and Liabilities
The fair value of foreign currency exchange forward contracts (see Note 9) is determined using Level 2 inputs. The carrying value of our debt (see Note 8) approximates fair value as it bears interest at floating rates. The carrying amounts of other financial instruments (i.e., cash and cash equivalents, restricted cash, bank time deposits, accounts receivable, net, and accounts payable) approximated their fair values at September 30, 2024 and December 31, 2023 due to their short-term nature.
As discussed in Notes 1 and 2, on April 1, 2024, we completed the sale of the spine segment. A portion of the consideration was in the form of a $60.0 million promissory note that accrues interest at a rate of 10% per annum, compounded semi-annually and interest is payable in kind. The note matures on October 1, 2029, contains change of control provisions and allows for optional prepayment at any time. Including consideration of paid-in-kind interest, the fair value of the note was $63.1 million as of September 30, 2024, which was determined using a discounted cash flow analysis, where contractual cash flows were discounted to present value at a risk-adjusted rate of return. The fair value of the note is determined each period by applying the same approach, considering changes to the risk-adjusted rate of return given observed changes to the interest rate environment, market pricing of credit risk and issuer-specific credit risk.
The fair values of acquisition-related contingent payments are estimated using Level 3 inputs. Contingent payments related to acquisitions consist of sales-based payments and are valued using discounted cash flow techniques. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases as revenue estimates increase.
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):
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Debt |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 8. Debt
Our debt consisted of the following (in thousands):
We entered into a Credit Agreement, dated as of December 17, 2021 (the “Credit Agreement”), with JP Morgan Chase Bank, N.A., as administrative agent and syndication agent, and the lenders and issuing banks named therein. The Credit Agreement provides for revolving loans of up to $175.0 million (the “Revolver”) and term loan borrowings of up to $595.0 million (the “Term Loan” and, together with the Revolver, the “Credit Facility”).
As of September 30, 2024, $221.9 million was outstanding on the Term Loan, and there were no outstanding borrowings under the Revolver. On April 1, 2024, we prepaid $275.0 million on the Term Loan using proceeds from the sale of our spine segment (as discussed in Notes 1 and 2), and we wrote off $0.9 million of debt issuance costs. As a result of this prepayment, we have no more scheduled quarterly amortization payments on the Term Loan, and the remaining balance is due at maturity on February 28, 2027. On September 30, 2024, we made an optional prepayment on the Term Loan of $15.0 million.
As of September 30, 2024, our interest rate was the secured overnight financing rate plus the applicable margin of 1.50% for term benchmark borrowings. Commitments under the Revolver are subject to a commitment fee on the unused portion of the Revolver of 25 basis points.
Borrowings under the Credit Facility are collateralized by substantially all of our personal property, including intellectual property and certain real property, and we, along with our subsidiaries party to the Credit Facility, pledged our equity interests in our subsidiaries, subject to materiality thresholds and certain limitations with respect to foreign subsidiaries. The Credit Facility contains various covenants that restrict our ability to take certain actions, including incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, making certain investments, prepayments or redemptions of subordinated debt, or making certain restricted payments. In addition, the Credit Facility contains financial covenants that require us to maintain a maximum consolidated total net leverage ratio of 6.00 to 1.00. We were in compliance with all covenants as of September 30, 2024.
See Note 9 to our consolidated financial statements included in our Annual Report for additional information on our Credit Agreement.
In April 2023, we financed $4.8 million of our corporate insurance premium, all of which was repaid by June 30, 2023. |
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Derivatives |
9 Months Ended |
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Sep. 30, 2024 | |
| Derivatives [Abstract] | |
| Derivatives | 9. Derivatives
We enter into foreign currency exchange forward contracts with terms of to three months in order to manage currency exposures related to monetary assets and liabilities denominated in a currency other than an entity’s functional currency. Any foreign currency remeasurement gains or losses recognized in earnings are generally offset with gains or losses on the foreign currency exchange forward contracts in the same reporting period. Outstanding contracts are recorded in our condensed consolidated balance sheets at fair value as of the end of the reporting period. The aggregate notional amounts of these contracts were $20.7 million as of September 30, 2024 and $25.0 million as of December 31, 2023.
of $0.1 million and $0.4 million as of September 30, 2024 and December 31, 2023, respectively, were included in Prepaid expenses and other current assets on our condensed consolidated balance sheets. of $0 and $0.2 million as of September 30, 2024 and December 31, 2023, respectively, were included in Other current liabilities in our condensed consolidated balance sheets. Gains from these derivative instruments recognized in our condensed consolidated statements of operations in Other income (expense), were $0.9 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively, and were $0.5 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively. |
Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 10. Income Taxes
Our effective tax rate (“ETR”) on loss before income taxes was 18.4% and (3.3%) for the three months ended September 30, 2024 and 2023, respectively, and (34.2%) and (5.0%) for the nine months ended September 30, 2024 and 2023, respectively. In the three and nine months ended September 30, 2024 and 2023, the income tax rate was lower than the 21.0% statutory rate due to our mix of earnings and losses across jurisdictions and losses not benefited as a result of valuation allowances. |
Segment Data |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Data | 11. Segment Data
Our Chief Executive Officer is our Chief Operating Decision Maker. He allocates resources to achieve our operating profit goals and historically reviewed business performance through two operating segments, 1) the dental segment, and 2) the spine segment, which also represented our reportable segments. As discussed in Notes 1 and 2, the spine segment is presented as discontinued operations and is not required to be presented in the segment disclosures. Following the sale of our spine segment on April 1, 2024, we operate as a single segment.
We conduct business in the following countries that hold 10% or more of our total combined property, plant and equipment, net (in thousands):
U.S. and foreign sales (based on the location of the customer) are as follows (in thousands):
Sales within any other individual country were less than 10% of our combined sales in each of those periods. No single customer accounted for 10% or more of our sales in the three and nine months ended September 30, 2024 and 2023. |
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 12. Commitments and Contingencies
We are subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial and other matters that arise in the normal course of business. On a quarterly and annual basis, we review relevant information with respect to loss contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews. We record liabilities for loss contingencies when it is probable that a loss has been incurred and the amount can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable. The recorded accrual balance for loss contingencies was $1.3 million and $2.6 million as of September 30, 2024 and December 31, 2023, respectively. The decline in the balance was primarily due to loss contingencies that were transferred as part of the sale of the spine segment on April 1, 2024 discussed in Notes 1 and 2. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued.
Subject to certain exceptions specified in the Separation Agreement, we assumed the liability for, and control of, all pending and threatened legal matters related to our business, including liabilities for any claims or legal proceedings related to products that had been part of our business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Zimmer Biomet for any liability arising out of or resulting from such assumed legal matters. |
Restructuring and Other Cost Reduction Initiatives |
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| Restructuring and Other Cost Reduction Initiatives | 13. Restructuring and Other Cost Reduction Initiatives
In January 2024, we initiated restructuring activities to better structure the organization to support our dental segment after the disposal of the spine segment. During the three and nine months ended September 30, 2024, we recorded pre-tax charges of $0.7 million and $3.5 million, respectively, related to these activities. The restructuring charges incurred under this plan were primarily related to employee termination benefits. We anticipate total charges of approximately $4 to $5 million related to this plan.
In April and July 2023, we initiated restructuring activities to better position our organization for future success based on the then-current business environment. These activities had the objective of reducing our global cost structure and streamlining our organizational infrastructure across all regions, functions and levels. During the three and nine months ended September 30, 2024, the charges recorded under this plan were negligible. During the three and nine months ended September 30, 2023, the pre-tax charges recorded under this plan were $1.3 million and $3.8 million, respectively, primarily related to employee termination fees and professional fees. We have incurred pre-tax charges of $4.1 million from inception through September 30, 2024, and we do not expect to incur future charges under this plan.
In June 2022, we initiated a restructuring plan with the objective of reducing costs and optimizing our global footprint. During the three and nine months ended September 30, 2024, the pre-tax charges recorded under this plan were negligible and $0.2 million, respectively, primarily related to employee termination benefits. During the three and nine months ended September 30, 2023, actions under this plan resulted in pre-tax charges that were negligible. We have incurred pre-tax charges of $3.0 million from inception through September 30, 2024, and we do not expect to incur future charges under this plan.
The following table summarizes the liabilities directly attributable to us that were recognized under the plans discussed above and excludes non-cash charges (in thousands):
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Background, Nature of Business and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2024 | |
| Accounting Policies [Abstract] | |
| Nature of Business | Nature of Business
ZimVie is a leading medical technology company dedicated to enhancing the quality of life for dental patients worldwide. We develop, manufacture and market a comprehensive portfolio of products and solutions designed to support dental tooth replacement and restoration procedures. We are well-positioned in the growing global dental implant, biomaterials and digital dentistry market with a strong presence in the tooth replacement market with market leading positions in certain geographies. Prior to the closing of the sale of our spine segment, our operations were principally managed on a products basis and included two operating segments, 1) the dental products segment, and 2) the spine products segment.
Since the sale of our spine segment, our core services include designing, manufacturing and distributing dental implant systems. Dental reconstructive implants are for individuals who are totally without teeth or are missing one or more teeth, dental prosthetic products are aimed at providing a more natural restoration to resemble the original teeth, and dental regenerative products are for soft tissue and bone rehabilitation. Our key products include the T3® Implant, Tapered Screw-Vent® Implant System, Trabecular Metal®™ Dental Implant, BellaTek® Encode® Impression System and Puros® Allograft Particulate.
Prior to the sale of our spine segment, the core services of our spine segment included designing, manufacturing and distributing medical devices and surgical instruments to deliver comprehensive solutions for individuals with back or neck pain caused by degenerative conditions, deformities or traumatic injury of the spine. We also provided devices that promote bone healing. Other differentiated products in our spine portfolio included Mobi-C® Cervical Disc, a motion-preserving alternative to fusion for patients with cervical disc disease, and The Tether™, a novel non-fusion device for treatment of pediatric scoliosis. |
| Basis of Presentation | Basis of Presentation
The accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, the condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, of ZimVie are unaudited. In management’s opinion, all adjustments comprising normal recurring adjustments necessary for the fair statement of such condensed consolidated financial statements have been made. The accompanying condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 ("Quarterly Report") are presented as permitted by Regulation S-X and do not contain certain information included in our annual financial statements and notes thereto. Accordingly, the accompanying condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements presented in our Annual Report. During the three months ended March 31, 2024, we recorded out of period adjustments that increased the Loss from continuing operations before income taxes and reduced Earnings from discontinued operations, net of tax, by $1.8 million and $0.7 million, respectively. We have concluded these out of period adjustments did not have a material impact on our interim condensed consolidated financial statements for the three months ended March 31, 2024 or nine months ended September 30, 2024, nor were they material to previously issued interim and annual consolidated financial statements.
Restricted Cash - As of both September 30, 2024 and December 31, 2023, we had $1.5 million in restricted cash. The restriction as of September 30, 2024 and December 31, 2023 is on cash held in China as a result of ongoing litigation with a spine products distributor in China related to our decision to exit our spine products business in China.
Sale of Spine Segment
The historical results of our spine segment have been reflected as discontinued operations in our condensed consolidated financial statements as the sale represented a strategic shift in our business that had a major effect on operations and financial results. The assets and liabilities associated with this segment are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets. The disclosures presented in the notes to the condensed consolidated financial statements are presented on a continuing operations basis, unless otherwise noted. |
| Accounting Pronouncements Recently Issued | Accounting Pronouncements Recently Issued
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU amends the interim and annual disclosure requirements related to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. The guidance will be applied prospectively. The effective date for each amendment will be the date when the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. We are currently evaluating the effect of this ASU, but we do not expect it will have a material impact on our condensed consolidated financial statements or disclosures.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The key amendments require disclosure of significant segment expenses on an annual and interim basis that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, including other segment items by reportable segment and a description of their composition, and to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Topic 280, Segment Reporting, in interim periods as well. This ASU includes certain clarifications for measuring a segment's profit or loss in assessment by the CODM, disclosure of title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We do not expect the adoption of this ASU to affect our financial position or our results of operations, but expect it will result in additional disclosures.
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments included in the ASU related to rate reconciliation, income taxes paid disclosures and other disclosures requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2024. We are currently in the process of evaluating the effect of this ASU.
In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. As part of the disclosures, entities will be required to quantify certain effects of severe weather events and other natural conditions in a note to their consolidated financial statements. While the SEC voluntarily stayed the rules due to pending judicial review, the rules in their current form would be effective for accelerated filers for annual periods beginning after December 15, 2025. We are currently in the process of evaluating the effect of these final rules.
Other recently issued ASUs, excluding ASUs discussed above, were assessed and determined to be not applicable, or are not expected to have a material impact on our condensed consolidated financial statements or disclosures. |
Discontinued Operations (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Details of Earnings (Loss), Asset and Liabilities, Significant Non-Cash Operating Activities and Capital Expenditures from Discontinued Operations | Details of earnings (loss) from discontinued operations included in our condensed consolidated statements of operations are as follows (in thousands):
(1) A portion of the interest on our Term Loan (as defined and described in Note 8) has been allocated to discontinued operations consistent with the amount of proceeds used to repay a portion of the amounts outstanding under our Term Loan in accordance with our Credit Agreement (as defined and described in Note 8). (2) We performed an impairment analysis of the spine segment in December 2023 on a held-for-sale basis. The fair value of consideration to be received upon closure of the transaction was less than the carrying value of the spine segment's net assets, resulting in a write-down of $289.5 million. We updated our analysis as of March 31, 2024, immediately prior to the sale, which resulted in a reduction of the December 2023 write-down of $11.1 million.
Details of assets and liabilities of discontinued operations are as follows (in thousands):
(1) Includes our non-cash liability of $40.5 million as of September 30, 2024 to transfer the net assets of the Deferred Transfer Locations to the Buyer. (2) This adjustment is reflected in Noncurrent assets of discontinued operations in the condensed consolidated balance sheets.
Cash flows attributable to discontinued operations are included on our condensed consolidated statements of cash flows. Significant non-cash operating and investing activities attributable to discontinued operations consisted of the following (in thousands):
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Changes in Carrying Amount of Goodwill by Reportable Segment | The following table summarizes the changes in the carrying amount of goodwill (in thousands):
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| Summary of Identifiable Intangible Assets | The components of identifiable intangible assets were as follows (in thousands):
(1) During the quarter ended September 30, 2024, we wrote off all fully amortized intangible assets that are no longer in use. |
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| Summary of Estimated Annual Amortization Expense Based on Exchange Rates | Estimated annual amortization expense for the years ending December 31, 2024 through 2028 based on exchange rates in effect at December 31, 2023 is as follows (in millions):
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Share-Based Compensation (Tables) |
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Share-based Compensation | Share-based compensation expense was as follows (in thousands):
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| Summary of Stock Option Activity | Stock option activity was as follows:
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| Summary of Restricted Stock Unit Activity | RSU activity was as follows:
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Earnings Per Share (Tables) |
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Weighted Average Shares for Basic and Diluted Net Loss Per Common Share | The calculation of weighted average shares for basic and diluted net loss per common share is as follows (in thousands, except per share data):
(1) Since we incurred a net loss in each of the three months ended September 30, 2024 and 2023 and the nine months ended September 30, 2024 and 2023, no dilutive stock options or other equity awards were included as diluted shares in those periods. |
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Balance Sheet Details (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Inventories | Inventories consisted of the following (in thousands):
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| Schedule of Other Current Liabilities | Other current liabilities consisted of the following (in thousands):
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Fair Value Measurements of Assets and Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||
| Reconciliation of Items Measured at Fair Value on Recurring Basis with Significant Unobservable Inputs (Level 3) | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):
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Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Debt | Our debt consisted of the following (in thousands):
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Segment Data (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure on Geographic Areas, Long-Lived Assets | We conduct business in the following countries that hold 10% or more of our total combined property, plant and equipment, net (in thousands):
U.S. and foreign sales (based on the location of the customer) are as follows (in thousands):
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Restructuring and Other Cost Reduction Initiatives (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Restructuring Liabilities | The following table summarizes the liabilities directly attributable to us that were recognized under the plans discussed above and excludes non-cash charges (in thousands):
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Background, Nature of Business and Basis of Presentation - Additional Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 01, 2024
USD ($)
|
Dec. 15, 2023
USD ($)
|
Mar. 01, 2022 |
Sep. 30, 2024
USD ($)
|
Mar. 31, 2024
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2024
USD ($)
Segment
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
Feb. 01, 2023 |
|
| Number of operating segments | Segment | 2 | |||||||||
| Loss from continuing operations before income taxes | $ (3,736) | $ (9,857) | $ (18,001) | $ (30,930) | ||||||
| Earnings (loss) from discontinued operations, net of tax | 764 | $ 5,093 | 10,103 | $ (25,945) | ||||||
| Restricted cash | $ 1,500 | $ 1,500 | $ 1,500 | |||||||
| Consideration by Buyer HIG | $ 315,000 | |||||||||
| Consideration as promissory note | $ 60,000 | |||||||||
| Promissory note, interest rate | 10.00% | 10.00% | ||||||||
| Total purchase price | $ 377,200 | |||||||||
| Purchase price, inclusive of preliminary closing adjustments | 2,200 | |||||||||
| Proceeds received | 311,800 | |||||||||
| Cash disposed | $ 26,100 | |||||||||
| Affiliate of H.I.G. Capital | ||||||||||
| Total consideration | $ 375,000 | |||||||||
| Zim Vie Inc | ||||||||||
| Percentage of common stock shares outstanding | 19.70% | |||||||||
| Percentage of ownership sold | 19.70% | |||||||||
| Loss from continuing operations before income taxes | $ 1,800 | |||||||||
| Earnings (loss) from discontinued operations, net of tax | $ 700 | |||||||||
Discontinued Operations - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Apr. 01, 2024 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
| Total purchase price | $ 377,200 | ||||
| Purchase price, inclusive of preliminary closing adjustments | 2,200 | ||||
| Proceeds received | 311,800 | ||||
| Cash disposed | 26,100 | ||||
| Gain on sale included in earnings (loss) from discontinued operations | $ 11,300 | $ 0 | $ 0 | $ 11,284 | $ 0 |
Discontinued Operations - Summary of Earnings (Loss) from Discontinued Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 01, 2024 |
Sep. 30, 2024 |
Mar. 31, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|||||||||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||
| Total Net Sales | $ 13,244 | $ 97,561 | $ 121,642 | $ 308,828 | |||||||||||
| Cost of products sold, excluding intangible asset amortization | (5,866) | (28,341) | (40,360) | (86,220) | |||||||||||
| Related party cost of products sold, excluding intangible asset amortization | 0 | 0 | 0 | (97) | |||||||||||
| Intangible asset amortization | 0 | (13,837) | 0 | (41,409) | |||||||||||
| Research and development | (295) | (5,780) | (7,306) | (20,697) | |||||||||||
| Selling, general and administrative | (7,009) | (60,849) | (69,227) | (187,748) | |||||||||||
| Restructuring and other cost reduction initiatives | 228 | (1,041) | (1,666) | (11,922) | |||||||||||
| Acquisition, integration, divestiture and related | 0 | (9) | (11,770) | (377) | |||||||||||
| Other (expense) income, net | (123) | 925 | (768) | 817 | |||||||||||
| Interest income (expense), net | [1] | 37 | (4,224) | (6,245) | (11,922) | ||||||||||
| Earnings (loss) from discontinued operations before income taxes | 216 | (15,595) | (15,700) | (50,746) | |||||||||||
| Gain on sale of spine disposal group | $ 11,300 | 0 | 0 | 11,284 | 0 | ||||||||||
| Adjustment of spine disposal group to fair value | 0 | [2] | $ 11,100 | 0 | [2] | 11,143 | [2] | 0 | [2] | $ (289,500) | |||||
| Benefit for income taxes from discontinued operations | 548 | 20,688 | 3,376 | 24,801 | |||||||||||
| Earnings (loss) from discontinued operations, net of tax | 764 | 5,093 | 10,103 | (25,945) | |||||||||||
| Third Party Net [Member] | |||||||||||||||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||
| Total Net Sales | 13,244 | 97,561 | 121,642 | 308,725 | |||||||||||
| Related Party Net [Member] | |||||||||||||||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||
| Total Net Sales | $ 0 | $ 0 | $ 0 | $ 103 | |||||||||||
| |||||||||||||||
Discontinued Operations - Summary of Earnings (Loss) from Discontinued Operations (Parenthetical) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Mar. 31, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|||||||
| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||
| Adjustment of spine disposal group to fair value | $ 0 | [1] | $ (11,100) | $ 0 | [1] | $ (11,143) | [1] | $ 0 | [1] | $ 289,500 | ||
| ||||||||||||
Discontinued Operations - Summary of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
||||
|---|---|---|---|---|---|---|
| Discontinued Operations and Disposal Groups [Abstract] | ||||||
| Cash and cash equivalents | $ 1,288 | $ 16,257 | ||||
| Accounts receivable, less allowance for credit losses | 13,554 | 83,871 | ||||
| Inventories | 13,123 | 130,430 | ||||
| Prepaid expenses and other current assets | 71 | 12,215 | ||||
| Total Current Assets of Discontinued Operations | 28,036 | 242,773 | ||||
| Property, plant and equipment, net | 11,153 | 62,692 | ||||
| Intangible assets, net | 0 | 477,110 | ||||
| Other assets | 1,146 | 14,743 | ||||
| Total Noncurrent Assets of Discontinued Operations | 12,299 | 554,545 | ||||
| Accounts payable | 1,416 | 24,186 | ||||
| Income taxes payable | 49 | 410 | ||||
| Other current liabilities | [1] | 46,967 | 51,262 | |||
| Total Current Liabilities of Discontinued Operations | 48,432 | 75,858 | ||||
| Deferred income taxes | 0 | 86,037 | ||||
| Lease liability | 258 | 8,032 | ||||
| Other long-term liabilities | 111 | 972 | ||||
| Total Noncurrent Liabilities of Discontinued Operations | 369 | 95,041 | ||||
| Adjustment of spine disposal group to fair value | [2] | $ 0 | $ (289,456) | |||
| ||||||
Discontinued Operations - Summary of Assets and Liabilities of Discontinued Operations (Parenthetical) (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
| Non-cash liability | [1] | $ 46,967 | $ 51,262 | |
| Spine Segment [Member] | ||||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
| Non-cash liability | $ 40,500 | |||
| ||||
Discontinued Operations - Summary of Significant Non-Cash Operating Activities and Capital Expenditures (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Discontinued Operations and Disposal Groups [Abstract] | ||
| Depreciation and amortization | $ 27 | $ 68,738 |
| Share-based compensation | 712 | 1,969 |
| Gain on sale of spine disposal group | (22,427) | 0 |
| Additions to instruments | 1,316 | 4,341 |
| Additions to other property, plant and equipment | $ 88 | $ 447 |
Goodwill and Other Intangible Assets - Summary of Changes in Carrying Amount of Goodwill by Reportable Segment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Sep. 30, 2024 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Goodwill, Gross | $ 404,111 | $ 404,767 |
| Accumulated impairment losses | (142,000) | (142,000) |
| Goodwill, Net | 262,111 | $ 262,767 |
| Currency translation | $ 656 |
Goodwill and Other Intangible Assets - Summary of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||||
| Gross carrying amount | [1] | $ 305,736 | $ 397,132 | |
| Accumulated amortization | [1] | (207,485) | (282,778) | |
| Total identifiable intangible assets | [1] | 98,251 | 114,354 | |
| Technology [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Gross carrying amount | 126,478 | 168,841 | ||
| Accumulated amortization | (77,462) | (113,354) | ||
| Total identifiable intangible assets | 49,016 | 55,487 | ||
| Trademarks and Trade Names [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Gross carrying amount | 34,955 | 37,056 | ||
| Accumulated amortization | (23,418) | (23,393) | ||
| Total identifiable intangible assets | 11,537 | 13,663 | ||
| Customer Relationships [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Gross carrying amount | 142,271 | 143,565 | ||
| Accumulated amortization | (105,073) | (98,361) | ||
| Total identifiable intangible assets | 37,198 | 45,204 | ||
| Other [Member] | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Gross carrying amount | 2,032 | 47,670 | ||
| Accumulated amortization | (1,532) | (47,670) | ||
| Total identifiable intangible assets | $ 500 | $ 0 | ||
| ||||
Goodwill and Other Intangible Assets - Summary of Estimated Annual Amortization Expense Based on Exchange Rates (Details) $ in Millions |
Sep. 30, 2024
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2024 (remaining) | $ 6.1 |
| 2025 | 22.2 |
| 2026 | 22.2 |
| 2027 | 16.9 |
| 2028 | $ 11.8 |
Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
Mar. 31, 2022 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Share based compensation expense | $ 3,323 | $ 5,473 | $ 12,473 | $ 16,129 | ||
| Unexercised stock option | $ 10,300 | |||||
| Weighted average remaining vesting period | 2 years 6 months | |||||
| Vesting period | 3 years | |||||
| Expected Volatility | 52.29% | |||||
| Expected term | 6 years | |||||
| Risk-free interest rate | 1.94% | |||||
| Dividend yield | 0.00% | |||||
| Unrecognized share-based compensation cost related to unvested stock options | $ 1,900 | $ 1,900 | ||||
| 2022 Stock Incentive Plan | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Common stock shares authorized | 6,000,000 | |||||
| Shares available for future grants | 3,700,000 | 3,700,000 | ||||
| Maximum | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Weighted average vesting period of unrecognized share-based compensation costs | 1 year | |||||
| Zim Vie Inc | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Share based compensation expense | $ 21,300 | |||||
| Stock option not yet recognized | $ 11,000 | $ 11,000 | ||||
| Restricted Stock Units | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Weighted average fair value | $ 15.78 | $ 15.78 | $ 15.13 | |||
| Number of RSUs, Granted | 797,869 | |||||
| Number of RSUs outstanding | 1,750,950 | 1,750,950 | 1,942,210 | |||
| Unrecognized share-based compensation cost related to unvested stock options | $ 15,700 | $ 15,700 | ||||
| Weighted average vesting period of unrecognized share-based compensation costs | 1 year 1 month 6 days | |||||
| Total fair value of RSUs granted | $ 14,000 | 15,800 | ||||
| Total fair value of RSUs vested | $ 11,100 | $ 6,400 | ||||
| Restricted Stock Units | Zim Vie Inc | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Weighted average fair value | $ 31.55 | $ 31.55 | ||||
| Performance Restricted Stock Units and RSU | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Conversion of Shares | 300,000 | |||||
| Vesting period | 36 months | |||||
| Expected term | 1 year 8 months 12 days | |||||
| Number of RSUs outstanding | 0 | 0 | ||||
| Incremental compensation expense | $ 1,200 | |||||
| Performance Restricted Stock Units and RSU | Minimum | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Provision for Restricted stock unit vesting percentage | 0.00% | |||||
| Performance Restricted Stock Units and RSU | Maximum | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Provision for Restricted stock unit vesting percentage | 150.00% | |||||
| Performance Restricted Stock Units | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Number of RSUs outstanding | 289,310 | 289,310 | ||||
| Employee Stock Option | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Weighted average fair value | $ 14.76 | $ 14.76 | ||||
| Vesting period | 10 years | |||||
| Employee Stock Option | Zim Vie Inc | ||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
| Conversion of Shares | 2,100,000 | |||||
Share-Based Compensation - Schedule of Share-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total expense, pre-tax | $ 3,323 | $ 5,473 | $ 12,473 | $ 16,129 |
| Tax benefit related to awards | (831) | (1,374) | (3,143) | (4,053) |
| Total expense, net of tax | 2,492 | 4,099 | 9,330 | 12,076 |
| Cost of Products Sold, Excluding Intangible Asset Amortization [Member] | ||||
| Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total expense, pre-tax | 104 | 278 | 450 | 846 |
| Research and Development [Member] | ||||
| Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total expense, pre-tax | 182 | 334 | 1,017 | 1,139 |
| Selling, General and Administrative [Member] | ||||
| Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total expense, pre-tax | $ 3,037 | $ 4,861 | $ 11,006 | $ 14,144 |
Share-Based Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2024
USD ($)
$ / shares
shares
| |
| Share-Based Payment Arrangement [Abstract] | |
| Number of Stock Options, Outstanding, Beginning Balance | shares | 2,303,143 |
| Number of Stock Options, Exercised | shares | (1,117) |
| Number of Stock Options, Forfeited | shares | (572,188) |
| Number of Stock Options, Outstanding, Ending Balance | shares | 1,729,838 |
| Number of Stock Options, Exercisable | shares | 1,438,875 |
| Weighted Average Exercise Price, Outstanding, Beginning Balance | $ / shares | $ 26.83 |
| Weighted Average Exercise Price, Exercised | $ / shares | 18.58 |
| Weighted Average Exercise Price, Forfeited | $ / shares | 26.11 |
| Weighted Average Exercise Price, Outstanding, Ending Balance | $ / shares | 27.08 |
| Weighted Average Exercise Price, Exercisable | $ / shares | $ 26.88 |
| Weighted Average Remaining Contractual Life, Outstanding | 5 years 6 months |
| Weighted Average Remaining Contractual Life, Exercisable | 5 years 2 months 12 days |
| Aggregate Intrinsic Value, Outstanding | $ | $ 0 |
| Aggregate Intrinsic Value, Exercisable | $ | $ 0 |
Share-Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units |
9 Months Ended |
|---|---|
|
Sep. 30, 2024
$ / shares
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Number of RSUs, Outstanding, Beginning Balance | shares | 1,942,210 |
| Number of RSUs, Granted | shares | 797,869 |
| Number of RSUs, Vested | shares | (553,903) |
| Number of RSUs, Forfeited | shares | (435,226) |
| Number of RSUs, Outstanding, Ending balance | shares | 1,750,950 |
| Weighted Average Grant Date Fair Value, Outstanding, Beginning Balance | $ / shares | $ 15.13 |
| Weighted Average Grant Date Fair Value, Granted | $ / shares | 17.52 |
| Weighted Average Grant Date Fair Value, Vested | $ / shares | 20.12 |
| Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 13.29 |
| Weighted Average Grant Date Fair Value, Outstanding, Ending Balance | $ / shares | $ 15.78 |
Earnings Per Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Earnings Per Share [Abstract] | ||||
| Weighted average number of shares excluded from computation of diluted net loss per share | 1.8 | 3.2 | 2.1 | 3.3 |
Earnings Per Share - Summary of Weighted Average Shares for Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|||
| Earnings Per Share [Abstract] | ||||||
| Net Loss from Continuing Operations of ZimVie Inc. | $ (3,048) | $ (10,182) | $ (24,162) | $ (32,485) | ||
| Earnings (loss) from discontinued operations, net of tax | 764 | 5,093 | 10,103 | (25,945) | ||
| Net Loss of ZimVie Inc. | $ (2,284) | $ (5,089) | $ (14,059) | $ (58,430) | ||
| Weighted average shares outstanding for basic net loss per common share | 27,574 | 26,530 | 27,369 | 26,406 | ||
| Effect of dilutive stock options and other equity awards | [1] | 0 | 0 | 0 | 0 | |
| Weighted average shares outstanding for diluted net loss per common share | 27,574 | 26,530 | 27,369 | 26,406 | ||
| Basic (Loss) Earnings Per Common Share: | ||||||
| Continuing operations | $ (0.11) | $ (0.38) | $ (0.88) | $ (1.23) | ||
| Discontinued operations | 0.03 | 0.19 | 0.37 | (0.98) | ||
| Net Loss | (0.08) | (0.19) | (0.51) | (2.21) | ||
| Diluted (Loss) Earnings Per Common Share: | ||||||
| Continuing operations | (0.11) | (0.38) | (0.88) | (1.23) | ||
| Discontinued operations | 0.03 | 0.19 | 0.37 | (0.98) | ||
| Net Loss | $ (0.08) | $ (0.19) | $ (0.51) | $ (2.21) | ||
| ||||||
Balance Sheet Details - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Inventory Disclosure [Abstract] | ||||
| Expense (Benefit) charged to obsolete inventories | $ 0.5 | $ 0.6 | $ 1.6 | $ 1.5 |
Balance Sheet Details - Summary of Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Finished goods | $ 50,592 | $ 54,456 |
| Work in progress | 22,360 | 20,659 |
| Raw materials | 4,135 | 4,485 |
| Inventories | $ 77,087 | $ 79,600 |
Balance Sheet Details - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Other current liabilities: | ||
| Salaries, wages and benefits | $ 25,307 | $ 23,171 |
| Lease liabilities | 4,438 | 4,053 |
| Other liabilities | 28,618 | 39,884 |
| Total other current liabilities | $ 58,363 | $ 67,108 |
Fair Value Measurements of Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands |
9 Months Ended | ||||
|---|---|---|---|---|---|
Apr. 01, 2024 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
Dec. 15, 2023 |
|
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
| Consideration as promissory note | $ 60,000 | $ 60,000 | $ 0 | ||
| Promissory note, interest rate | 10.00% | 10.00% | |||
| Note receivable | $ 63,072 | $ 0 | |||
Fair Value Measurements of Assets and Liabilities - Reconciliation of Items Measured at Fair Value on Recurring Basis with Significant Unobservable Inputs (Level 3) (Details) - Contingent Consideration to Acquisitions [Member] - Significant Unobservable Inputs (Level 3) [Member] $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2024
USD ($)
| |
| Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
| Fair Value, Beginning Balance | $ 9,799 |
| Contingent payment related to prior acquisitions | (5,213) |
| Fair Value, Ending Balance | $ 4,586 |
Debt - Schedule of Debt Due to Parent (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Term loan | $ 221,913 | $ 511,912 |
| Debt issuance costs | (1,632) | (3,115) |
| Total debt | 220,281 | 508,797 |
| Less: current portion | 0 | 0 |
| Total debt due after one year | $ 220,281 | $ 508,797 |
Debt - Additional Information (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|---|
Apr. 01, 2024 |
Dec. 17, 2021 |
Apr. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2024 |
|
| Line of Credit Facility [Line Items] | |||||
| Scheduled repayments on the term loan | $ 0 | ||||
| Debt instrument description | As of September 30, 2024, our interest rate was the secured overnight financing rate plus the applicable margin of 1.50% for term benchmark borrowings. Commitments under the Revolver are subject to a commitment fee on the unused portion of the Revolver of 25 basis points. | ||||
| Corporate insurance premium finance amount | $ 4,800,000 | ||||
| Revolver | |||||
| Line of Credit Facility [Line Items] | |||||
| Credit facility outstanding | $ 0 | ||||
| Term Loan | |||||
| Line of Credit Facility [Line Items] | |||||
| Credit facility outstanding | 221,900,000 | ||||
| Prepayment of debt | $ 275,000,000 | ||||
| Wrote off of debt isuance cost | $ 900,000 | ||||
| Debt instrument periodic payment | $ 15,000,000 | ||||
| Maximum | |||||
| Line of Credit Facility [Line Items] | |||||
| Proceeds from revolving loans | $ 175,000,000 | ||||
| Borrowings under term loan credit agreements | $ 595,000,000 | ||||
| Borrowing interest Rate | 1.50% | 1.50% | |||
| Debt instrument total net leverage ratio | 6 | 6 | |||
| Minimum | |||||
| Line of Credit Facility [Line Items] | |||||
| Debt instrument total net leverage ratio | 1 | 1 |
Derivatives - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Derivatives, Fair Value [Line Items] | |||||
| Current derivative assets | $ 0.1 | $ 0.1 | $ 0.4 | ||
| Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Assets, Current | Assets, Current | Assets, Current | ||
| Current derivative liabilities | $ 0.0 | $ 0.0 | $ 0.2 | ||
| Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration] | Liabilities, Current | Liabilities, Current | Liabilities, Current | ||
| Derivative gains on derivative instrument | $ 0.9 | $ 0.6 | $ 0.5 | $ 0.2 | |
| Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other income (expense), net | Other income (expense), net | |||
| Derivative notional amount | $ 20.7 | $ 20.7 | $ 25.0 | ||
| Maximum [Member] | |||||
| Derivatives, Fair Value [Line Items] | |||||
| Foreign currency exchange forward contracts term | 3 months | ||||
| Minimum [Member] | |||||
| Derivatives, Fair Value [Line Items] | |||||
| Foreign currency exchange forward contracts term | 1 month | ||||
Income Taxes - Additional Information (Details) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Income Tax Disclosure [Abstract] | ||||
| Effective tax rate on loss before income taxes | 18.40% | (3.30%) | (34.20%) | (5.00%) |
| Statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
Segment Data - Additional Information (Details) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Sep. 30, 2024
Customer
|
Sep. 30, 2023
Customer
|
Sep. 30, 2024
Segment
Customer
|
Sep. 30, 2023
Customer
|
|
| Segment Reporting Information [Line Items] | ||||
| Number of operating segments | Segment | 2 | |||
| Revenue | ||||
| Segment Reporting Information [Line Items] | ||||
| Number of customers accounted for 10% or more | Customer | 0 | 0 | 0 | 0 |
| Geographic Concentration Rsk | Revenue | Dental | ||||
| Segment Reporting Information [Line Items] | ||||
| Revenue segment less than 10% | 10.00% | |||
Segment Data - Disclosure on Geographic Areas, Long-Lived Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
| Property, plant and equipment, net | $ 49,614 | $ 49,614 | $ 54,167 | ||
| Third party sales | 103,222 | $ 105,311 | 338,228 | $ 344,131 | |
| U.S | |||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
| Property, plant and equipment, net | 31,652 | 31,652 | 35,444 | ||
| Third party sales | 65,350 | 65,003 | 202,414 | 204,173 | |
| Spain | |||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
| Property, plant and equipment, net | 14,358 | 14,358 | 14,431 | ||
| Third party sales | 9,089 | 10,453 | 37,257 | 39,072 | |
| Other countries | |||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
| Property, plant and equipment, net | 3,604 | 3,604 | $ 4,292 | ||
| Third party sales | $ 28,783 | $ 29,855 | $ 98,557 | $ 100,886 | |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Amount of accrued loss contingency | $ 1.3 | $ 2.6 |
Restructuring and Other Cost Reduction Initiatives - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 18 Months Ended | 28 Months Ended | ||
|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2024 |
|
| January 2024 restructuring plan [Member] | Employee Termination Benefits and Professional Fees [Member] | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges Pre-tax | $ 0.7 | $ 3.5 | ||||
| January 2024 restructuring plan [Member] | Employee Termination Benefits and Professional Fees [Member] | Maximum | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges | 5.0 | 5.0 | $ 5.0 | $ 5.0 | ||
| January 2024 restructuring plan [Member] | Employee Termination Benefits and Professional Fees [Member] | Minimum | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges | 4.0 | 4.0 | 4.0 | 4.0 | ||
| April and July 2023 Restructuring Plan [Member] | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges Pre-tax | $ 4.1 | |||||
| April and July 2023 Restructuring Plan [Member] | Employee Termination Benefits and Professional Fees [Member] | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges Pre-tax | $ 1.3 | $ 3.8 | ||||
| June 2022 Restructuring Plan [Member] | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges Pre-tax | $ 0.2 | $ 0.2 | ||||
| June 2022 Restructuring Plan [Member] | Employee Termination Benefits and Professional Fees [Member] | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring Charges Pre-tax | $ 3.0 | |||||
Restructuring and Other Cost Reduction Initiatives - Schedule of Restructuring Liabilities (Details) - Restructuring Plans Member $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2024
USD ($)
| |
| Restructuring Cost and Reserve [Line Items] | |
| Restructuring Reserve, Beginning Balance | $ 947 |
| Additions | 3,679 |
| Cash payments | (3,821) |
| Restructuring Reserve, Ending Balance | 805 |
| Employee Severance [Member] | |
| Restructuring Cost and Reserve [Line Items] | |
| Restructuring Reserve, Beginning Balance | 947 |
| Additions | 3,518 |
| Cash payments | (3,703) |
| Restructuring Reserve, Ending Balance | 762 |
| Other Restructuring [Member] | |
| Restructuring Cost and Reserve [Line Items] | |
| Restructuring Reserve, Beginning Balance | 0 |
| Additions | 161 |
| Cash payments | (118) |
| Restructuring Reserve, Ending Balance | $ 43 |
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