Research Update: Zimmer Biomet Holdings Inc. Outlook Revised To Negative On COVID-19-Related Risks To Operating Performance

Zimmer Biomet Holdings Inc. reduced its 2019 leverage to 3.3x, creating some additional capacity for underperformance within the rating. At the same time, Zimmer's portfolio is highly exposed to elective procedures, which introduces a significant risk to its 2020 operating performance given the likely deferral of many nonurgent procedures. We expect a large percentage of elective procedures, including elective orthopedic surgeries and many dental procedures in the U.S. and globally, to be deferred for at least a quarter or even longer, depending on the severity and duration of the pandemic. While the company has the capacity within the rating to withstand a moderate EBITDA decline, a more severe and prolonged pandemic could materially affect the company's operating performance and significantly

...- Zimmer Biomet Holdings Inc. reduced its 2019 leverage to 3.3x, creating some additional capacity for underperformance within the rating. At the same time, Zimmer's portfolio is highly exposed to elective procedures, which introduces a significant risk to its 2020 operating performance given the likely deferral of many nonurgent procedures. - We expect a large percentage of elective procedures, including elective orthopedic surgeries and many dental procedures in the U.S. and globally, to be deferred for at least a quarter or even longer, depending on the severity and duration of the pandemic. - While the company has the capacity within the rating to withstand a moderate EBITDA decline, a more severe and prolonged pandemic could materially affect the company's operating performance and significantly weaken its credit measures. - We are affirming our '###' ratings on Zimmer Biomet Holdings and its senior unsecured debt. We are also revising the outlook to negative from stable. - The negative...

Research Update