Biotech Values

[DewDiligence]

ZMH -3% on lowered 2014 sales and EPS guidance:

http://finance.yahoo.com/news/zimmer-holdings-inc-reports-second-113000877.html

Full-year revenues are now expected to increase between 2.0% and 3.0% on a constant currency basis from 2013. Previously, the Company had estimated full-year revenues would increase between 3.0% and 5.0%, constant currency.

…The Company now projects full-year 2014 diluted earnings per share to be in a range of $4.65 to $4.75 on a reported basis [GAAP] and $6.00 to $6.10 on an adjusted basis [non-GAAP]. Prior guidance for full-year 2014 reported and adjusted diluted earnings per share was $4.90 to $5.10 and $6.00 to $6.20, respectively.

This updated guidance reflects estimated charges for inventory and manufacturing related expenses, quality and operational excellence initiatives, certain claims and special items of $250 million on a pre-tax basis, and an additional $70 million for expenses related to the pending Biomet merger, totaling $320 million or approximately $1.35 per diluted share, on an after-tax basis.

I.e. the midpoint of the guidance range for 2014 revenue growth (excluding FX) has been reduced by 150 basis point from 4% to 2.5%, while the midpoint of the guidance range for non-GAAP EPS has been reduced by $0.05 from $6.10 to $6.05. (The guidance for GAAP EPS includes a lot of moving parts, as described above.)