This Healthcare Stock Is the Worst Performer in the S&P 500 Today. Here’s Why.

Zimmer Biomet, the maker of knee and hip replacements, reported lower-than-expected quarterly sales. (Dreamstime)

Key Points

• Zimmer Biomet Holdings falls after reporting third-quarter net sales of $2 billion, slightly below estimates of $2.01 billion.
• The company lowers its full-year organic revenue growth outlook to 3.5% to 4%, from a previous range of 3.5% to 4.5%.
• Weakness in international markets, including Latin America, the Middle East, and Eastern Europe, impact Zimmer Biomet’s results.

Zimmer Biomet Holdings was the worst performer in the S&P 500 on Wednesday after the maker of knee and hip replacements reported weaker-than-expected quarterly sales.

The company reported adjusted earnings of $1.90 a share for the third quarter, ahead of analysts’ consensus estimates of $1.87. However, net sales totaled $2 billion, just off Wall Street’s call for $2.01 billion. Zimmer also lowered the top end of its outlook for full-year organic revenue growth, saying it expects gains of 3.5% to 4%, compared to a previous range of 3.5% to 4.5%.

Zimmer stock sank 15% on Wednesday, putting it on track for its largest single-day decline on record and its lowest close since April 1, 2020, according to Dow Jones Market Data.

The company reported weakness in international markets and non-core businesses, such as restorative therapies. Distributor challenges in Latin America and a cancelation of orders in the Middle East and Eastern Europe weighed on results, CEO Ivan Tornos said on a conference call.

Lower-than-expected growth in U.S. knee and hip replacement sales also disappointed Wall Street, said RBC Capital Markets analyst Shagun Singh in a research note Wednesday.

“Today’s negative reaction is largely based on a surprise top-line miss that has put in focus ZBH’s operational controls,” Singh wrote. “Post-today’s move, we expect investors to remain on the sidelines until ZBH demonstrates progress on operational challenges and issues 2026 guide.”

The firm reiterated an Outperform rating for Zimmer stock and lowered its price target to $101 from $111.

Still, the reconstructive surgery space isn’t totally in the doldrums, with the fundamentals in the market remaining in place, according to Singh. Zimmer, Johnson & Johnson , and Stryker now have all reported quarterly earnings. The trio makes up around 90% of the global reconstruction market, and RBC estimates that the market grew 6.3% in the third quarter.

J&J stock slipped 0.5% on Wednesday, while Stryker declined 1.7%.

Write to Nate Wolf at nate.wolf@barrons.com