Biomet ( BMET) has tripped up once again. The orthopedic-device maker on Tuesday missed revenue expectations for the second straight quarter and issued disappointing guidance as well. The company's third-quarter sales increased just 5% from a year ago to $506 million, coming up short of analysts' $516 million target. Net income grew at twice that rate, however, jumping 10% to $106 million. Earnings per share of 43 cents matched the consensus estimate. Performance by division proved mixed. The company's core reconstructive joint business saw revenue increase by 10% in the latest quarter, with hip growth actually outpacing knee growth this time around. Meanwhile, the company's troubled EBI division -- which sells fixation supplies and spinal devices -- showed only modest signs of progress. There, as the company was quick to point out, sales of internal fixation devices gained some momentum while sales of electrical stimulation devices finally increased after several quarters of declines. Overall, however, the EBI division posted only minor growth instead of the real advances some people had hoped for. "Fixation revenues increased 0.4%, while spine sales grew 2.5%," noted J.P. Morgan analyst Michael Weinstein, whose firm counts Biomet as a client. Thus, "the EBI franchise has yet to turn the corner, as growth remained at depressed F2Q levels." Meanwhile, Biomet has warned that currency effects will hurt fourth-quarter results. The company is now looking for earnings of 45 cents to 46 cents a share in the upcoming quarter on sales of $530 million to $540 million. Analysts, on average, were expecting earnings of 47 cents on sales of $546 million. The company's stock fell 2.5% to $36 early Tuesday.
Wachovia analyst Michael Matson was bracing for a possible miss. Last week, Matson predicted that Biomet would fall short of revenue targets even if the company managed to meet profit forecasts for the quarter. He listed several reasons, including ongoing challenges in the company's EBI division, when explaining his cautious view.