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Orthopedic and Dental Industry News Complete Archive »

Zimmer Suspends Durom Sales, Cuts Guidance BY LAUREN UZDIENSKI, JULY 23, 2008

Zimmer's announced yesterday that they would voluntarily suspend sales of the Durom Acetabular Component in the U.S. while they update the labeling and conduct further surgeon training on the product. As a result, the company is lowering full-year revenue guidance to 8.5% to 9% (4.5% to 5% constant currency) growth over the prior year from 10% to 11% (6% to 7% constant currency.) Zimmer is projecting a loss of $20 to $30 million in hip sales attributable to the Durom, but the lowered guidance also reflects weakness in U.S. Dental and "slower than anticipated" adoption rates on certain new products.

Zimmer is not the only company facing issues with their hip business. Last week Stryker reported 7% growth in hip (2% constant currency), trailing every other recon division by a wide margin. Sales were likely impacted by the Trident recall in January. The company has also recently weathered media attention for squeaky hip components and the disappointing debut of the Cormet hip resurfacing product. Whether these hip concerns at Zimmer and Stryker mean a boost for Wright Medical and Smith & Nephew will be seen in coming quarters.

Still, it wasn't a bad quarter for Zimmer. The company reported revenues of $1.08 billion, beating estimates by $0.01 billion, and earnings were in line with estimates. Knee, extremity and spine all reported double-digit revenue growth rates. There is some analyst consensus that trading in the wake of the Durom announcement will represent a low for the company's stock and it will turn around from there, so despite current investor caution, Zimmer could be primed for a rebound.

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