Zimmer Lower’s Revenue Estimates While Lawsuits Rage In Court

Back in July, Zimmer Holdings predicted its sales revenues to increase between 2.5% and 3.5%. The Company reported revenues of $4.220 billion for fiscal 2010. According toestimates, analysts were expecting the Company to report EPS of $4.77 on revenues of $4.473 billion for fiscal 2011. Since July of this year, Zimmer stock has been steadily sinking to the tune of about $15 per share or 22%. Zimmer has had a rough year on many fronts, not the least of which is the ever increasing number of lawsuits building against its knee and hip replacements. Since 2003, more than 200,000 Zimmer NexGen recall knee replacement components have been sold within the United States.

Following reports of at least 114 Zimmer knee complications, the manufacturer issued a recall for Zimmer NexGen MIS Tibial Components, NextGen TM Tibial Trays, NexGen MIS Modular Tibial Plates and Keels. The Zimmer NexGen MIS Zimmer knee recall affected more than 68,000 knee components that were distributed throughout the United States.Several months prior to the recall,
Zimmer sent a letter to healthcare facilities and customers who had bought the device instructing them to destroy or disregard all previous guides on the surgical techniques needed to install the implants and sent out revised surgical guides.The Zimmer replacement knee is a “high-flex” component, which attaches to the bottom of the thigh bone. In most knee replacement systems, a type of surgical cement is used to hold the implant in place. However, the Zimmer NextGen knee does not use cement and this may be a design defect which increases the risk of a knee replacement loosening.

In August 2011, all federal lawsuits involving problems with Zimmer NexGen knee replacements were consolidated as part of an MDL in the U.S. District Court for the Northern District of Illinois, where they will be centralized for pretrial proceedings. Although the MDL process is managed similar to how a Zimmer NexGen knee replacement class action lawsuit would proceed during pretrial litigation, the cases do remain individual claims. The cases will be remanded back to the federal district court where they were originally filed for trial if a ZImmerNexGen settlement agreement is not reached during the MDL process.