Zimmer Biomet To Stop Selling CPT Hip Implant System By End Of 2024 Due To High Fracture Risks

By Connor Hart

The Food and Drug Administration said hip replacement surgeries that use Zimmer Biomet's CPT Hip System result in a higher risk of thigh bone fracture.

The agency on Tuesday said recent research found a higher risk of thigh bone fracture with the device — Zimmer Biomet's CPT Hip System Femoral Stem 12/14 Neck Taper — compared with hip replacement devices of a similar design. If a fracture occurs, additional surgical intervention will likely be needed, it added.

The FDA's finding comes after Warsaw, Ind.-based Zimmer Biomet in July initiated a voluntary recall to update instructions for use for the CPT Hip System because of an increased risk of thigh bone fracture. The manufacturer also announced its plan to phase out the sale of the device by the end of the year.

The FDA recommended patients and caregivers discuss the benefits and risks of all available hip replacement devices, and that health-care providers and facilities consider using an alternative prosthesis where possible.

The agency said it will continue monitoring and reviewing data regarding the device's performance, and work with Zimmer Biomet to address its concerns.

Write to Connor Hart at connor.hart@wsj.com

Warsaw, Indiana-based Zimmer Biomet Holdings, Inc. designs, manufactures, and markets effective, innovative solutions that support orthopedic surgeons and clinicians in restoring mobility, alleviating pain, and improving the quality of life for patients worldwide. With a market cap of $21.9 billion, Zimmer Biomet operates in more than 25 countries across the globe and sells products in more than 100 countries.

Companies worth $10 billion or more are generally described as "large-cap stocks," Zimmer Biomet fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the medical devices industry.

Zimmer Biomet touched its 52-week high of $133.90 on March 2024 and is trading 19.8% below that peak. ZBH saw marginal gains over the past three months, lagging behind the Health Care Select Sector SPDR Fund’s 7.8% gains during the same time frame.

Over the longer term, ZBH has substantially underperformed XLV. ZBH declined 11.4% over the past 52 weeks and 11.7% in 2024 compared to XLV’s 19% gains over the past year and 15.3% returns on a YTD basis.

To confirm the bearish trend, ZBH has traded below its 50-day moving average since mid-April and below its 200-day moving average since late May with slight fluctuations.

Shares of Zimmer Biomet plunged 3.4% after the release of its Q2 earnings on Aug. 7. The company reported a solid 3.9% annual net sales growth to $1.9 billion, exceeding Wall Street’s expectations. It also experienced a 1.3% net margin expansion to 12.5% compared to the year-ago quarter, and its net earnings surged by 15.8%, totaling $242.9 million.

However, the company reduced its full-year revenue growth guidance to the 4% to 5% range due to the expected foreign currency exchange impact, potentially leading to a fall in share prices. Nevertheless, the stock rebounded 2.7% in the next trading session.

Zimmer Biomet’s competitor, Medtronic plc , has substantially outperformed ZBH over the past year. MDT gained 10.2% over the past 52 weeks and 9.4% on a YTD basis.

Among the 28 analysts covering the ZBH stock, the consensus rating is a “Moderate Buy.” The mean price target of $124.67 represents a potential upside of 16% from current price levels.

On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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