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ZimVie stock soars despite layoffs news

WESTMINSTER — ZimVie Inc. (Nasdaq: ZIMV), a medical technology company that manufactures devices for spinal surgery and oral reconstruction that was spun off last year from Zimmer Biomet Holdings Inc. (NYSE and SIX: ZBH), disclosed Thursday that its first quarter 2023 losses grew year over year, its sales shrunk and it would soon be slashing more than 100 jobs, but Wall Street reacted with a thumbs up.

Presumably, investors were encouraged by ZimVie’s newly announced restructuring plans that the company said “have the objective of reducing our global cost structure and streamlining our organizational infrastructure across all regions, functions, and levels. As a result of this initiative, we expect an approximate 5% reduction in our global workforce, in addition to reductions in discretionary spending.”

ZimVie reported having about 2,700 employees in the first quarter of 2023, so a 5% reduction would result in about 135 workers losing their jobs. 

“We expect this restructuring initiative will complement our initiatives to improve operating margins and cash flow, as well as provide us with the financial flexibility to continue to prioritize investments in our product offerings and technologies,” the company said. “We estimate that this program will generate $17-20 million in annualized net savings by 2024.” 

ZimVie’s net loss for the first quarter of 2023 was $30 million on sales of $225.1 million, compared to a $25.7 million net loss on sales of about $234.3 million during the same period last year.

“I am pleased with the progress our team is making to evolve our product portfolio and shift our focus from operational enhancements to innovation and commercial execution,” ZimVie CEO Vafa Jamali said in a prepared statement. “We have introduced several new dental product launches year-to-date, opened our expanded, state-of-the-art, North America training institute at our flagship Dental facility in Palm Beach Gardens, Florida, and have had a number of commercial wins in spine. Concurrently, we have taken definitive actions to continue reducing operating expenses to improve our operating profile. I am optimistic about the future of ZimVie.”

ZimVie’s stock finished trading Thursday at $9.44, up 22.44%.

This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2023 BizWest Media LLC.

Source: BizWest