Executive Summary

Q3 2024 third-party net sales were $103.2M, down 2.0% YoY (constant currency -2.2%), with GAAP diluted EPS from continuing operations of $(0.11) and adjusted diluted EPS of $0.12; adjusted EBITDA was $13.1M (12.7% margin) .
Management narrowed FY24 guidance: net sales to $450–$455M (from $450–$460M), adjusted EBITDA to $60–$62M (from $60–$65M), and adjusted EPS to $0.57–$0.62 (from $0.55–$0.70), citing manufacturing efficiencies and U.S. demand resilience .
North America improved sequentially; U.S. grew 0.5% YoY in Q3 (1.6% excluding iTero scanners), while international declined due to timing of orders in Japan/Italy and a lost DSO in Spain (~$3M impact) .
Balance sheet continued to de-lever: gross debt ~$220M and cash ~$67M at quarter-end, following $15M additional repayment; net debt ~$153M excluding seller note from spine sale .
Stock reaction catalysts: visible margin improvement via plant optimization (Valencia shift ~20% cost benefit vs Palm Beach Gardens), digital adoption (RealGUIDE 5.4, Implant Concierge) and narrowed, credible FY guidance supporting 15%+ adjusted EBITDA margin target by April 1, 2025 .

What Went Well and What Went Wrong

What Went Well

U.S. demand stabilized and modestly grew: U.S. third-party net sales +0.5% YoY; excluding scanner sales, U.S. grew 1.6% and is ~60% of revenue mix .
Manufacturing efficiency initiatives improved margins: sequential adjusted cost of products sold fell 60 bps vs Q2; gross margin uplift tied to Valencia plant resizing and product migration (~20% production cost benefit vs Palm Beach Gardens) .
Digital momentum: complete digital portfolio (ex-iTero) grew >10% YoY; Implant Concierge +20%; surgical guides +30% driven by RealGUIDE 5.4 adoption; management emphasizes “remarkable adoption” and “rapid updates” to software .

What Went Wrong

International softness: OUS sales -6.0% reported (-6.6% constant currency), driven by timing of orders in Japan/Italy and weaker Spain; Spain’s lost DSO reduced revenue by ~$3M .
Scanner headwinds: oral scanner capital sales remain soft, pressuring reported U.S. growth despite underlying strength in biomaterials and digital .
Revenue contracted YoY: total third-party net sales -2.0% reported (-2.2% constant currency) vs Q3 2023 amid macro pressure in Europe and timing issues in Japan/Italy .

Financial Results

Quarterly Results vs Prior Periods

Metric	Q1 2024	Q2 2024	Q3 2024
Revenues ($USD Millions)	$118.2	$116.8	$103.2
GAAP Diluted EPS – Continuing Ops ($USD)	$(0.42)	$(0.35)	$(0.11)
Adjusted Diluted EPS ($USD)	$0.08	$0.13	$0.12
Adjusted EBITDA ($USD Millions)	$12.5	$16.1	$13.1
Net Loss Margin %	(9.7%)	(8.2%)	(3.0%)
Adjusted EBITDA Margin %	10.5%	13.8%	12.7%

Geography – Third-Party Net Sales

Geography ($USD Millions)	Q1 2024	Q2 2024	Q3 2024
United States	$67.7	$69.3	$65.4
International	$50.4	$47.5	$37.9
Total	$118.2	$116.8	$103.2

Actual vs Consensus – Q3 2024

Metric	Actual	Consensus	Beat/Miss
Revenues ($USD Millions)	$103.2	N/A*	N/A*
GAAP Diluted EPS – Continuing Ops ($USD)	$(0.11)	N/A*	N/A*
Adjusted Diluted EPS ($USD)	$0.12	N/A*	N/A*

*Consensus values unavailable from S&P Global due to request limit. Values would be retrieved from S&P Global.

KPIs and Operating Metrics

KPI	Q2 2024	Q3 2024
Digital portfolio growth (ex-iTero)	High single digits YoY	>10% YoY
Implant Concierge YoY growth	>20%	~20%
Surgical guide sales YoY growth	>20%	>30%
U.S. growth ex iTero	+0.8%	+1.6%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2024	$450M–$460M	$450M–$455M	Narrowed (lowered top end)
Adjusted EBITDA	FY 2024	$60M–$65M	$60M–$62M	Narrowed (lowered top end)
Adjusted EPS	FY 2024	$0.55–$0.70	$0.57–$0.62	Narrowed (raised low end)
Adjusted EBITDA margin target	Post spine sale	15%+ by April 1, 2025	Reaffirmed	Maintained
Share-based comp (FY)	FY 2024	$17.0–$17.5M	~$6.3M (updated methodology)	Updated

Note: Guidance metrics are non-GAAP where indicated; reconciliations not provided due to unavailability without unreasonable efforts .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
U.S. market health	Q1: U.S. implants challenged; pricing stable, digital/biomaterials support . Q2: U.S. grew 0.1% reported; excluding scanners +0.8% .	U.S. +0.5% reported; +1.6% ex-iTero; management “confident” in Q4 growth .	Improving sequentially in U.S. .
International demand	Q1: OUS stable; EMEA +4% . Q2: OUS -3.8% reported; flat ex capital .	OUS -6% reported; timing in Japan/Italy; Spain DSO loss (~$3M) .	Choppy; timing issues; cautious near-term .
Digital adoption	Q1: Guided surgery ~50% growth; subscription renewals strong . Q2: RealGUIDE 5.4; digital ex-iTero high single digits; guides >20% .	Digital ex-iTero >10%; Implant Concierge +20%; guides +30% .	Accelerating adoption and pull-through .
Manufacturing efficiency	Q1: Plan for automation & footprint optimization . Q2: Streamlining; expected improvement in costs .	Sequential cost improvements; Valencia shift (~20% cost benefit) .	Structural margin uplift underway .
Debt reduction / balance sheet	Q1: Paid down $275M post spine sale; cash ~$66M, debt ~$234M . Q2: Gross debt ~$235M; cash $78.6M .	Additional $15M repayment; gross debt ~$220M; cash ~$67M; net debt ~$153M .	Continued de-leveraging .
China exposure	Q2: Minimal exposure; APAC growth in constant currency .	Exposure minimal; APAC mixed with growth in India/Australia; Japan timing .	Limited risk from China volatility .

Management Commentary

“In the third quarter we saw an improvement to revenue growth in our largest market of North America, achieved manufacturing efficiencies, and saw increased adoption of our digital offerings.” — Vafa Jamali, CEO .
“Adjusted EBITDA… was $13.1 million, a 12.7% adjusted EBITDA margin… Our solid performance underscores our continued commitment to… manufacturing efficiency initiatives… and investment in R&D and U.S. sales.” — Richard Heppenstall, CFO .
“We are narrowing our full year revenue guidance to $450 million to $455 million… adjusted EBITDA to $60 million to $62 million… and adjusted EPS… $0.57 to $0.62.” — Richard Heppenstall, CFO .
“We believe our implant portfolio’s growth is outpacing the premium market… digital portfolio… grew over 10% in the third quarter… Implant Concierge grew 20%… surgical guide sales… grew over 30%.” — Vafa Jamali, CEO .
“We’re expecting gross margin to stay in the similar range… we started moving production of our high-runner products to Valencia, which has about a 20% benefit in cost of production…” — Richard Heppenstall, CFO .

Q&A Highlights

Guidance and demand cadence: Management is “optimistic” about U.S. recovery in Q4; Japan expected to return to growth; Italy impacts were timing; Europe facing macro pressure; Spain DSO loss ~$3M .
Margin sustainability: Sequential 260 bps gross margin improvement tied to plant optimization and product mix; management expects similar ranges in Q4 and continued improvement into 2025 .
Digital momentum: RealGUIDE software +30% YoY in software piece; digital ex-iTero +10%; platform viewed as sticky and differentiated .
Strategic posture: Software remains open-architecture; management would only consider closing if share was “very significant,” preserving broad ecosystem pull-through .
Capital sales headwinds: iTero weakness continues; Medit partnership provides broader scanner price points without sacrificing technology; lower equipment sales baked into guidance .

Estimates Context

S&P Global consensus estimates for Q3 2024 could not be retrieved due to request limit; therefore, beat/miss vs consensus cannot be quantified in this report. We note management narrowed FY guidance and delivered adjusted EPS of $0.12 and adjusted EBITDA margin of 12.7% in Q3 .
Where estimates need adjustment: Given narrowed FY ranges and visible margin progress from manufacturing efficiencies, Street models may need to reflect higher FY EPS low-end ($0.57) and slightly tighter revenue range ($450–$455M), with Q4 margin cadence implied by management commentary .

Key Takeaways for Investors

Sequential margin improvement looks durable: plant consolidation and Valencia production shift (~20% cost benefit) underpin sustained gross margin levels into Q4 and beyond .
U.S. stabilization and ex-scanner growth: underlying U.S. demand grew 1.6% ex iTero, supporting near-term revenue resilience as scanner drag normalizes .
Digital pull-through accelerates implant demand: strong growth in RealGUIDE, Implant Concierge, and surgical guides should drive procedure volume and premium mix over time .
International timing risk manageable: Japan/Italy timing and Spain DSO loss weighed on Q3; management expects Japan to resume growth in Q4, reducing volatility risk .
De-leveraging continues: with gross debt ~$220M and net debt ~$153M, ongoing repayments shift value from debt holders to equity, improving interest expense profile .
FY24 outlook credible and tighter: narrowed ranges for revenue and EBITDA, and raised EPS low-end suggest confidence in execution and margin trajectory toward 15%+ by April 1, 2025 .
Trading implication: near-term catalysts include Q4 U.S. growth, sustained margin levels, and continued digital adoption; watch for scanner normalization and international order timing to reduce variability .

Non-GAAP and Adjustments: Adjusted EPS/EBITDA exclude restructuring, acquisition/integration/divestiture costs, EU MDR compliance, inventory write-offs, share-based comp modifications, and other items; reconciliations are provided in the company’s exhibits **[1876588_0001193125-24-247561_d757334dex991.htm:10]** **[1876588_0001193125-24-247561_d757334dex991.htm:11]** **[1876588_0001193125-24-247561_d757334dex991.htm:12]** **[1876588_0001193125-24-247561_d757334dex992.htm:8]** **[1876588_0001193125-24-191520_d878261dex991.htm:11]** **[1876588_0001193125-24-191520_d878261dex991.htm:12]** **[1876588_0001193125-24-134207_d825203dex991.htm:10]** **[1876588_0001193125-24-134207_d825203dex991.htm:11]**.

Additional Q3-period press releases: UBS Global Healthcare Conference participation announced Oct 29, 2024 ; Q3 call scheduling announced Oct 16, 2024 ; GenTek U.S. launch (FDA clearance) on July 23, 2024 supports restorative and digital workflow portfolio expansion .

ZimVie Inc. (ZIMV)·Q3 2024 Earnings Summary