Core Insights - Zimmer Biomet Holdings, Inc. has appointed Jehanzeb Noor as Senior Vice President, Chief Strategy, Innovation and Business Development Officer, reporting to President and CEO Ivan Tornos [1][2] Group 1: Leadership and Responsibilities - Jehanzeb Noor will lead strategy development and execution, oversee M&A activities including the integration of the pending acquisition of Paragon 28, and manage research and product development organizations [2] - Noor will also serve as Chief of Staff to the CEO, indicating a significant role in the company's strategic direction [2] Group 2: Background and Experience - Prior to joining Zimmer Biomet, Noor was President and Managing Director for Europe, Africa, and Asia at Trivium, where he focused on operational excellence and margin expansion [3] - Noor has held various leadership roles, including CEO of Smiths Medical and positions at Amcor, McKinsey, Ford Motor Company, and Constellation Energy Commodities Group [3] Group 3: Educational Qualifications - Jehanzeb Noor holds a Master of Science in Product Development, a Bachelor of Science in Finance, and a Bachelor of Science in Mechanical Engineering, all from the Massachusetts Institute of Technology (MIT) [4] Group 4: Company Overview - Zimmer Biomet is a global leader in medical technology, focusing on maximizing mobility and improving health through innovative products and integrated digital and robotic technologies [5][6] - The company has over 90 years of experience and is committed to delivering high-quality solutions to patients and providers [6]

Core Insights - Zimmer Biomet Holdings, Inc. has launched the "You'll Be Back" campaign aimed at creating an online community for individuals suffering from joint pain, encouraging them to share their experiences and connect with healthcare professionals [1][2] - The campaign is led by Arnold Schwarzenegger, who emphasizes the importance of community support in overcoming mobility challenges and aims to inspire individuals to take action against their pain [2][3] - Osteoarthritis is highlighted as a prevalent condition affecting nearly 27 million Americans over the age of 65, with projections indicating that by 2030, approximately 4 million people in the U.S. will require joint replacement surgery [3] Company Overview - Zimmer Biomet is recognized as a global leader in medical technology, focusing on enhancing mobility and health through innovative products and integrated digital solutions [5][6] - The company has over 90 years of experience in the industry, positioning itself to deliver high-quality solutions to both patients and healthcare providers [6] Campaign Details - The "You'll Be Back" campaign invites individuals with joint pain to submit their stories on a dedicated website, with selected participants featured in a motivational docuseries [2][3] - The campaign aims to empower patients by providing them with resources and a platform to voice their health journeys, thereby fostering a sense of community [2][3]

Financial Performance - In 2024, the company's net sales increased by 3.8% to $7,678.6 million compared to 2023, driven by market growth, new product introductions, and positive price realization [171]. - Net earnings for 2024 were $903.8 million, a decline from $1,024.0 million in 2023, primarily due to higher restructuring charges and intangible asset amortization [172]. - The company expects 2025 revenue growth of 1.0% to 3.5%, with foreign currency exchange rates negatively impacting net sales by approximately 1.5% to 2.0% [173]. - U.S. net sales grew by 3.5% in 2024, while international net sales increased by 4.3%, both driven by market growth in key product categories [176][182]. - The company's Knees and Hips product categories saw net sales increases of 4.4% and 1.6%, respectively, in 2024 compared to 2023 [177][183]. Cost and Expenses - Cost of products sold, excluding intangible asset amortization, was 28.5% of net sales in 2024, an increase from 28.2% in 2023, primarily due to higher manufacturing costs [184][185]. - Intangible asset amortization expense increased to 7.7% of net sales in 2024, reflecting acquisitions and buyouts of licensing agreements [186]. - Gross margin for 2024 was 63.8%, a decrease from 64.2% in 2023, primarily impacted by manufacturing costs and changes in foreign currency exchange rates [187]. - Research & development expenses decreased in both amount and as a percentage of net sales in 2024 compared to 2023, driven by lower compliance spending and savings from the 2023 Restructuring Plan [188]. - Selling, general & administrative expenses increased in amount but decreased as a percentage of net sales in 2024, attributed to variable selling costs and higher bad debt-related charges [189]. - Total expenses related to restructuring programs were $219.0 million in 2024, up from $151.9 million in 2023, mainly due to the initiation of the 2023 Restructuring Plan [190]. Cash Flow and Investments - Cash flows from operating activities were $1,499.4 million in 2024, a decrease from $1,581.6 million in 2023, primarily due to higher payments for accounts payable and restructuring-related costs [203]. - Cash flows used in investing activities increased to $888.1 million in 2024 from $778.9 million in 2023, including $276.3 million for acquisitions and $153.0 million for technology access [204]. - As of December 31, 2024, the company had $525.5 million in cash and cash equivalents and $1.0 billion available to borrow under a revolving credit agreement [201]. - The company plans to acquire Paragon 28, Inc. for approximately $1.2 billion, expected to be funded through cash on hand and debt financing [211]. Tax and Shareholder Returns - The effective tax rate for 2024 was 12.7%, significantly higher than 4.0% in 2023, influenced by foreign rate differentials and changes in unrecognized tax benefits [194]. - A $2.0 billion share repurchase program was authorized in May 2024, with $868.0 million executed in 2024 to return cash to investors [214]. Restructuring Plans - The 2023 Restructuring Plan is expected to incur total pre-tax charges of approximately $120 million by the end of 2025, with $114 million already incurred through December 31, 2024 [215]. - The 2021 Restructuring Plan resulted in $169 million of total pre-tax charges and is estimated to have reduced gross annual pre-tax operating expenses by approximately $190 million relative to the 2021 baseline expenses by the end of 2024 [215]. - The 2019 Restructuring Plan is expected to incur total pre-tax restructuring charges of approximately $400 million by the end of 2025, with $368 million incurred through December 31, 2024 [215]. Liabilities and Risks - The company has a remaining liability of $154.6 million from the transition tax related to the deemed repatriation of foreign earnings, with $68.7 million recorded in current income tax liabilities and $85.9 million in non-current income tax liabilities as of December 31, 2024 [217]. - Total liabilities for litigation matters were estimated at $156.4 million as of December 31, 2024, with potential for additional charges upon resolution of uncertainties [218]. - The company has entered into contractual arrangements that may result in future payments ranging from $0 to $325 million, dependent on product R&D milestones and sales [221]. - The company had net assets in legal entities with non-U.S. Dollar functional currencies amounting to $1,950.5 million as of December 31, 2024 [238]. - The majority of the company's debt is fixed-rate, and a 10 percent change in interest rates would not have a material effect on interest expense, net [244]. - The company is exposed to credit risk primarily through cash and cash equivalents, derivative instruments, and accounts receivable, but believes reserves for losses are adequate [246]. - The company performs sensitivity analyses related to potential commodity price changes as part of its risk management program [241].

Core Viewpoint - Zimmer Biomet (ZBH) is currently facing significant challenges due to macroeconomic factors, staffing shortages, and supply chain issues, leading to a negative outlook reflected in its Zacks Rank of 5 (Strong Sell) [1][2]. Group 1: Growth Challenges - The company is experiencing growth impediments due to industry-wide staffing shortages and supply chain hazards, exacerbated by geopolitical complications and high policy rates aimed at combating inflation [2][3]. - Specific challenges include reimbursement headwinds in the Restorative Therapies business and acute supply challenges in Sports and Trauma, which are pressuring revenues and operating profits [3]. - The adverse impact of foreign exchange rates has been notable, with a 1% decline in net sales in 2024 and an expected 1.5%-2% impact on 2025 revenues [5]. Group 2: Financial Performance - In Q4 2024, Zimmer Biomet reported a 5.1% increase in the cost of products sold and a 3.4% rise in selling, general, and administrative expenses, leading to a contraction in adjusted gross and operating margins [4]. - The company ended Q4 2024 with cash and cash equivalents of $525.5 million and total debt of $6.20 billion, indicating a concerning solvency position as near-term payable debt exceeds cash on hand [6]. - The debt-to-capital ratio improved slightly to 33.2% from 34.3% in the previous quarter, but the overall debt levels remain high relative to cash reserves [7]. Group 3: Positive Factors - Despite the challenges, there has been gradual stability in the global musculoskeletal market, with certain geographies showing better-than-expected sales growth driven by improved procedural volume [8]. - In Q4 2024, the company experienced strong growth in large joints, with global sales in Knees, Hips, and S.E.T. categories increasing by 5.6%, 4%, and 8.4% respectively at constant exchange rates [9]. - Zimmer Biomet is focusing on expanding its presence in international developed and emerging markets, which are expected to provide long-term growth opportunities [10][11]. Group 4: Market Performance - Over the past three months, Zimmer Biomet's shares have declined by 10.8%, contrasting with a 6% growth in the industry, although strategic market expansion and new product launches are anticipated to help regain momentum [12].

Core Insights - Zimmer Biomet's shares declined to $105 in September, indicating potential value despite projected mid-single digit sales growth, improved cash flows, and higher earnings growth driven by recent M&A activities [1] Group 1: Company Performance - The company is expected to achieve mid-single digit sales growth [1] - Improved cash flows and higher earnings growth are anticipated due to recent mergers and acquisitions [1] Group 2: Investment Opportunities - The investing group "Value In Corporate Events" focuses on identifying opportunities in IPOs, mergers & acquisitions, earnings reports, and changes in corporate capital allocation [1] - The group covers 10 major events monthly to find the best investment opportunities [1]

Core Insights - Zimmer Biomet Holdings, Inc. (ZBH) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $2.31, slightly exceeding the Zacks Consensus Estimate by $0.01, marking a 5% increase year over year [1][3] - The company’s full-year adjusted EPS for 2024 was $8.00, reflecting a 5.9% improvement from 2023, also beating the Zacks Consensus Estimate by $0.01 [3] - Following the earnings announcement, ZBH shares fell over 1.3% in pre-market trading [3] Financial Performance - ZBH's fourth-quarter net sales reached $2.02 billion, a 4.3% increase year over year (4.9% at constant exchange rates), surpassing the Zacks Consensus Estimate by 0.6% [4] - For the full year, ZBH generated revenues of $7.68 billion, up 3.8% from the previous year (4.8% at constant exchange rates), also exceeding the Zacks Consensus Estimate by 0.1% [4] Revenue Breakdown - In Q4, U.S. sales totaled $1.18 billion, up 4.7% year over year, while international sales were $842 million, reflecting a 3.7% increase year over year (5.2% at constant exchange rates) [5] - Revenue from the Knees segment grew 5.6% year over year at constant exchange rates to $839.2 million, while the Hips segment saw a 4% increase to $520 million [6] - The S.E.T. segment reported an 8.4% year-over-year growth at constant exchange rates, reaching $489.4 million, while the "Other" category saw a decline of 4.3% to $174.6 million [7] Margin Analysis - Adjusted gross margin was 71%, down 123 basis points year over year, while adjusted operating margin contracted 43 basis points to 28.7% [8] - Selling, general and administrative expenses rose 3.4% to $746.9 million, whereas research and development expenses decreased by 4.3% to $108.4 million [8] Cash Position - At the end of Q4, ZBH had cash and cash equivalents of $525.5 million, up from $415.8 million a year ago [10] - Cumulative net cash provided by operating activities was $1.49 billion, compared to $1.58 billion in the previous year [10] Future Outlook - ZBH expects reported revenue growth for 2025 to be between 1% and 3.5% year over year, with an anticipated adverse impact from foreign exchange of 1.5% to 2% [11] - The company projects adjusted EPS for 2025 to be in the range of $8.15 to $8.35, while the Zacks Consensus Estimate stands at $8.57 [11] Strategic Developments - ZBH announced a definitive agreement to acquire Paragon 28, a company specializing in the foot and ankle orthopedic segment, which is expected to enhance ZBH's diversification strategy and growth potential in the $5 billion foot and ankle market [14]

Financial Data and Key Metrics Changes - In Q4 2024, Zimmer Biomet achieved nearly 5% constant currency revenue growth, marking the 12th consecutive quarter of mid-single digit or better growth [10][32] - Adjusted earnings per share (EPS) grew by 6% to $8, with free cash flow reaching over $1 billion [32][50] - The company provided full-year 2025 financial guidance of constant currency revenue growth of 3% to 5% and adjusted EPS of $8.15 to $8.35, excluding the impact of the Paragon 28 acquisition [13][44] Business Line Data and Key Metrics Changes - The S.E.T. segment grew by 8.4%, with notable growth in CMFT at 13% and Sports at 22% [38] - Global knees grew by 5.6%, with U.S. growth at 3.9% and international growth at 8% [35] - Global hips grew by 4%, with U.S. growth at 3.2% and international growth at 4.8% [36] Market Data and Key Metrics Changes - The U.S. business grew by 4.7%, driven by strong high single-digit growth in S.E.T., while international growth was 5.2% [34] - The ASC market is rapidly expanding, with the company seeing a significant increase in sales from this segment, which has grown from 2-3% in 2019 to nearly 20% today [120] Company Strategy and Development Direction - The company plans to focus on people and culture, operational excellence, and innovation and diversification as key priorities for 2025 [15][26] - A four-point plan has been established to enhance performance in these areas, including leadership changes and a commitment to operational excellence in the U.S. market [16][17] - The acquisition of Paragon 28 is expected to enhance Zimmer Biomet's offerings in the foot and ankle space, complementing existing portfolios and driving growth [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of end markets, driven by an aging population, technological advancements, and a shift to outpatient procedures [12] - The company anticipates continued growth in the S.E.T. segment and expects to maintain a strong balance sheet post-acquisition of Paragon 28 [49][50] - Management acknowledged challenges from foreign exchange impacts but remains optimistic about achieving financial goals in 2025 [46][130] Other Important Information - The company reported a decline in the Technology and Data segment by 4.3% due to tough comparisons from the prior year [39] - Adjusted gross margin was 71.3%, lower than the previous year, primarily due to capitalized cost increases [41] - The company ended 2024 with $526 million in cash and cash equivalents and plans to continue share repurchases opportunistically [42][50] Q&A Session Summary Question: Guidance Philosophy for 2025 - Management indicated a more appropriate guidance range for 2025, considering one less selling day and potential drivers for upper range performance [55][58] Question: Integration of Paragon 28 - Management expressed confidence in minimal disruption during the integration of Paragon 28, highlighting the strong culture and innovation within the company [63][66] Question: Sales Growth and Margin Progression - Management provided insights on expected revenue growth and margin progression, indicating a stronger second half of 2025 due to new product uptake and easier comparisons [80][81] Question: EPS Growth Guidance - Management attributed the EPS guidance to foreign exchange impacts and emphasized the importance of investments for long-term growth [130] Question: ASC Opportunity - Management highlighted the significant growth potential in the ASC market, with plans to leverage the Paragon acquisition to enhance offerings in this space [120][123]

Core Insights - Zimmer Biomet reported $2.02 billion in revenue for Q4 2024, a year-over-year increase of 4.3% and an EPS of $2.31, up from $2.20 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1] Financial Performance - Revenue of $2.02 billion surpassed the Zacks Consensus Estimate of $2.01 billion, resulting in a surprise of +0.53% [1] - EPS of $2.31 compared to the consensus estimate of $2.30, yielding a surprise of +0.43% [1] Key Metrics - Net Sales for Knees in International markets reached $349.10 million, exceeding the average estimate of $346.83 million, with a year-over-year change of +6.8% [4] - Net Sales for Hips in International markets were $248.30 million, slightly below the average estimate of $251.75 million, reflecting a year-over-year change of +2.8% [4] - Net Sales for Knees in the United States totaled $490.10 million, surpassing the average estimate of $487.71 million, with a year-over-year change of +3.9% [4] - Net Sales for Hips in the United States were $271.70 million, below the average estimate of $275.82 million, showing a year-over-year change of +3.2% [4] - Total Net Sales in the United States reached $1.18 billion, exceeding the average estimate of $1.16 billion, with a year-over-year change of +4.7% [4] - International Net Sales amounted to $842 million, slightly below the average estimate of $845.46 million, with a year-over-year change of +3.7% [4] - Overall Net Sales for Knees were $839.20 million, slightly above the average estimate of $837.55 million, reflecting a +5.1% change year-over-year [4] - Net Sales for Other products were $174.60 million, exceeding the average estimate of $172.36 million, but showing a year-over-year decline of -5% [4] - Net Sales for S.E.T. reached $489.40 million, surpassing the average estimate of $474.56 million, with a year-over-year change of +8% [4] - Net Sales for Hips totaled $520 million, slightly below the average estimate of $524.38 million, with a year-over-year change of +3% [4] Stock Performance - Zimmer's shares returned +6.6% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Zimmer Biomet (ZBH) came out with quarterly earnings of $2.31 per share, beating the Zacks Consensus Estimate of $2.30 per share. This compares to earnings of $2.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 0.43%. A quarter ago, it was expected that this orthopedic device maker would post earnings of $1.75 per share when it actually produced earnings of $1.74, delivering a surprise of -0.57%.Over the last four quarters, ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of Zimmer Biomet's financial performance for Q4 and full-year 2024, strategic developments, and 2025 financial guidance [Fourth Quarter and Full-Year 2024 Financial Performance](index=1&type=section&id=Fourth%20Quarter%20and%20Full-Year%202024%20Financial%20Performance) Zimmer Biomet reported strong financial results for Q4 and full-year 2024, meeting its financial guidance, with net sales increasing across both periods and adjusted diluted EPS also seeing healthy increases Fourth Quarter 2024 Financial Highlights | Metric | Reported Value | YoY Change (Reported) | YoY Change (Constant Currency) | | :----- | :------------- | :-------------------- | :----------------------------- | | Net Sales | $2.023 billion | 4.3% | 4.9% | | Net Earnings | $239.4 million | - | - | | Adjusted Net Earnings | $462.4 million | - | - | | Diluted EPS | $1.20 | - | - | | Adjusted Diluted EPS | $2.31 | - | - | Full-Year 2024 Financial Highlights | Metric | Reported Value | YoY Change (Reported) | YoY Change (Constant Currency) | | :----- | :------------- | :-------------------- | :----------------------------- | | Net Sales | $7.679 billion | 3.8% | 4.8% | | Net Earnings | $903.8 million | - | - | | Adjusted Net Earnings | $1.630 billion | - | - | | Diluted EPS | $4.43 | - | - | | Adjusted Diluted EPS | $8.00 | - | - | [Recent Strategic Developments and Product Innovations](index=2&type=section&id=Recent%20Strategic%20Developments%20and%20Product%20Innovations) Zimmer Biomet is actively diversifying its portfolio into higher-growth segments, highlighted by the agreement to acquire Paragon 28, which will significantly expand its S.E.T. business, alongside key regulatory approvals for innovative knee and shoulder systems and a direct-to-patient initiative with Arnold Schwarzenegger - Announced definitive agreement to acquire Paragon 28, Inc., a leading medical device company focused on the foot and ankle orthopedic segment, expanding into the **~$5 billion market** and aiming to make the S.E.T. business larger and faster-growing than the Hip business[5](index=5&type=chunk)[7](index=7&type=chunk) - Received U.S. FDA Premarket Approval (PMA) for the **Oxford® Cementless Partial Knee**, making it the only FDA-approved cementless partial knee implant in the U.S. after extensive international clinical experience[7](index=7&type=chunk) - Announced FDA 510(k) clearance for the **OsseoFit™ Stemless Shoulder System** for total shoulder replacement, designed to optimize anatomical fit and bone preservation[7](index=7&type=chunk) - Received CE Mark Certification for the **Persona® Revision Knee System**, enhancing personalized solutions for revision knee arthroplasty[7](index=7&type=chunk) - Welcomed Arnold Schwarzenegger as Chief Movement Officer to motivate and support individuals in increasing mobility and maintaining joint health, supporting Direct-to-Patient efforts[7](index=7&type=chunk) [Full-Year 2025 Financial Guidance](index=5&type=section&id=Full-Year%202025%20Financial%20Guidance) Zimmer Biomet provided its financial outlook for the full-year 2025, projecting revenue growth and adjusted diluted EPS within specific ranges, taking into account anticipated foreign currency exchange impacts Projected Year Ending December 31, 2025 Financial Guidance | Metric | Range | | :-------------------------- | :------------ | | Reported Revenue Change | 1.0% - 3.5% | | Foreign Currency Exchange Impact | (2.0)% - (1.5)% | | Constant Currency Revenue Change | 3.0% - 5.0% | | Adjusted Diluted EPS | $8.15 - $8.35 | [Company Overview](index=5&type=section&id=Company%20Overview) This section provides an overview of Zimmer Biomet's global medical technology leadership, its innovative approach, and key investor information [About Zimmer Biomet](index=5&type=section&id=About%20Zimmer%20Biomet) Zimmer Biomet is a global medical technology leader with over 90 years of experience, offering a comprehensive portfolio focused on maximizing mobility and improving health, integrating innovative products with digital and robotic technologies leveraging data and AI to enhance patient experience - Zimmer Biomet is a global medical technology leader with a comprehensive portfolio designed to maximize mobility and improve health[16](index=16&type=chunk) - The company transforms the patient experience through innovative products and integrated digital and robotic technologies that leverage data, data analytics, and artificial intelligence[16](index=16&type=chunk) - With over **90 years of trusted leadership**, Zimmer Biomet operates in **25+ countries** and has sales in **100+ countries**[17](index=17&type=chunk)[18](index=18&type=chunk) [Investor Information](index=5&type=section&id=Investor%20Information) Zimmer Biomet provides investor information through its dedicated Investor Relations website, which is used for disclosing material non-public information and complying with Regulation FD, and also hosts investor conference calls with replays available online - The company's Investor Relations website (https://investor.zimmerbiomet.com) is a primary channel for disclosing material, non-public information and complying with Regulation FD[15](index=15&type=chunk)[20](index=20&type=chunk) - A conference call for Q4 and full-year 2024 results was scheduled for February 6, 2025, with an audio webcast accessible via the Investor Relations website[15](index=15&type=chunk) [Financial Review (GAAP)](index=11&type=section&id=Financial%20Review%20(GAAP)) This section presents Zimmer Biomet's GAAP financial statements, including consolidated statements of earnings, balance sheets, and cash flows for the specified periods [Consolidated Statements of Earnings](index=11&type=section&id=Consolidated%20Statements%20of%20Earnings) The Consolidated Statements of Earnings provide a detailed breakdown of Zimmer Biomet's revenue, expenses, and net earnings for both the fourth quarter and the full year of 2024, compared to 2023, on a GAAP basis [Three Months Ended December 31, 2024 and 2023](index=11&type=section&id=Three%20Months%20Ended%20December%2031%2C%202024%20and%202023) For the fourth quarter of 2024, Zimmer Biomet reported an increase in net sales but a decrease in net earnings compared to the prior year, primarily due to higher operating expenses and a significantly higher provision for income taxes Consolidated Statements of Earnings (Q4 2024 vs. Q4 2023, in millions USD) | Metric | Q4 2024 | Q4 2023 | | :------------------------------------------ | :-------------------- | :-------------------- | | Net Sales | $2,023.2 | $1,940.1 | | Operating Profit | $389.0 | $354.2 | | Earnings before income taxes | $289.0 | $284.4 | | Provision (benefit) for income taxes | $49.0 | $(135.2) | | Net Earnings of Zimmer Biomet Holdings, Inc. | $239.4 | $419.2 | | Diluted EPS | $1.20 | $2.01 | [Years Ended December 31, 2024 and 2023](index=12&type=section&id=Years%20Ended%20December%2031%2C%202024%20and%202023) For the full year 2024, Zimmer Biomet achieved higher net sales and operating profit compared to 2023, but net earnings decreased due to a substantial increase in the provision for income taxes Consolidated Statements of Earnings (Full-Year 2024 vs. Full-Year 2023, in millions USD) | Metric | FY 2024 | FY 2023 | | :------------------------------------------ | :-------------------- | :-------------------- | | Net Sales | $7,678.6 | $7,394.2 | | Operating Profit | $1,285.7 | $1,277.7 | | Earnings before income taxes | $1,036.6 | $1,067.3 | | Provision for income taxes | $131.4 | $42.2 | | Net Earnings of Zimmer Biomet Holdings, Inc. | $903.8 | $1,024.0 | | Diluted EPS | $4.43 | $4.88 | [Condensed Consolidated Balance Sheets](index=13&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2024, Zimmer Biomet's balance sheet shows a slight decrease in total assets compared to the prior year, with an increase in cash and cash equivalents, while total liabilities also decreased, leading to a stable stockholders' equity Condensed Consolidated Balance Sheets (as of Dec 31, 2024 vs. 2023, in millions USD) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------------- | :------------------------- | :------------------------- | | Cash and cash equivalents | $525.5 | $415.8 | | Total current assets | $4,671.5 | $4,609.5 | | Goodwill | $8,951.1 | $8,818.5 | | Total Assets | $21,365.3 | $21,496.9 | | Current liabilities | $1,587.9 | $1,957.5 | | Long-term debt | $5,341.6 | $4,867.9 | | Total Liabilities and Stockholders' Equity | $21,365.3 | $21,496.9 | [Consolidated Statements of Cash Flows](index=14&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the full year 2024, Zimmer Biomet's net cash provided by operating activities slightly decreased, while net cash used in investing activities increased, and net cash used in financing activities significantly decreased, primarily due to higher proceeds from senior notes and lower net payments on revolving facilities, despite substantial common stock repurchases Consolidated Statements of Cash Flows (Full-Year 2024 vs. Full-Year 2023, in millions USD) | Metric | FY 2024 | FY 2023 | | :------------------------------------------ | :-------------------- | :-------------------- | | Net cash provided by operating activities | $1,499.4 | $1,581.6 | | Net cash used in investing activities | $(888.1) | $(778.9) | | Net cash used in financing activities | $(484.5) | $(763.5) | | Change in cash and cash equivalents | $109.7 | $40.1 | | Cash and cash equivalents, end of period | $525.5 | $415.8 | - Proceeds from senior notes increased significantly to **$1,436.3 million** in 2024 from $499.8 million in 2023[42](index=42&type=chunk) - Repurchase of common stock increased to **$868.0 million** in 2024 from $692.2 million in 2023[42](index=42&type=chunk) [Sales Performance by Geography and Product Category](index=3&type=section&id=Sales%20Performance%20by%20Geography%20and%20Product%20Category) This section details Zimmer Biomet's net sales performance, broken down by geographic region and specific product categories for both the fourth quarter and full year 2024 [Three Months Ended December 31, 2024](index=3&type=section&id=Three%20Months%20Ended%20December%2031%2C%202024) In Q4 2024, Zimmer Biomet's net sales grew across both the United States and International segments, with International sales showing stronger constant currency growth, while the S.E.T. category led product growth and Technology & Data, Bone Cement and Surgical experienced a decline Net Sales - Three Months Ended December 31, 2024 (in millions USD) | Category | Net Sales | % Change (Reported) | % Change (Constant Currency) | | :----------------------------------- | :-------- | :------------------ | :--------------------------- | | **Geographic Results** | | | | | United States | $1,181.2 | 4.7% | 4.7% | | International | $842.0 | 3.7% | 5.2% | | Total | $2,023.2 | 4.3% | 4.9% | | **Product Categories** | | | | | Knees Total | $839.2 | 5.1% | 5.6% | | Hips Total | $520.0 | 3.0% | 4.0% | | S.E.T. | $489.4 | 8.0% | 8.4% | | Technology & Data, Bone Cement and Surgical | $174.6 | (4.9)% | (4.3)% | [Year Ended December 31, 2024](index=4&type=section&id=Year%20Ended%20December%2031%2C%202024) For the full year 2024, Zimmer Biomet's total net sales increased, driven by growth in both U.S. and International markets, with International showing stronger constant currency growth, while the S.E.T. category was the strongest performer and Hips showed the slowest growth Net Sales - Year Ended December 31, 2024 (in millions USD) | Category | Net Sales | % Change (Reported) | % Change (Constant Currency) | | :----------------------------------- | :-------- | :------------------ | :--------------------------- | | **Geographic Results** | | | | | United States | $4,439.0 | 3.5% | 3.5% | | International | $3,239.6 | 4.3% | 6.6% | | Total | $7,678.6 | 3.8% | 4.8% | | **Product Categories** | | | | | Knees Total | $3,173.5 | 4.4% | 5.2% | | Hips Total | $1,999.1 | 1.6% | 3.0% | | S.E.T. | $1,865.7 | 6.5% | 7.1% | | Technology & Data, Bone Cement and Surgical | $640.3 | 0.7% | 1.9% | [Non-GAAP Financial Measures and Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains Zimmer Biomet's use of non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents for various financial metrics [Note on Non-GAAP Financial Measures](index=6&type=section&id=Note%20on%20Non-GAAP%20Financial%20Measures) Zimmer Biomet uses non-GAAP financial measures, such as constant currency sales, adjusted net earnings, adjusted diluted EPS, and free cash flow, to provide investors with additional insights into the company's performance, as these measures exclude certain items that management believes do not reflect the fundamentals of ongoing operations, allowing for better period-to-period comparisons and trend analysis - Non-GAAP financial measures are used to supplement GAAP measures, providing meaningful incremental information to investors by excluding certain items that can cause dramatic changes in reported income but do not impact operational fundamentals[22](index=22&type=chunk)[28](index=28&type=chunk) - Constant currency percentage changes exclude the effects of foreign currency exchange rates, calculated by translating current and prior-period sales at predetermined exchange rates[23](index=23&type=chunk) - Adjusted net earnings and diluted EPS exclude the effects of certain detailed items, as reconciled in the press release[24](index=24&type=chunk) - Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities[25](index=25&type=chunk) [Reconciliation of Net Sales % Change to Constant Currency % Change](index=15&type=section&id=Reconciliation%20of%20Net%20Sales%20%25%20Change%20to%20Constant%20Currency%20%25%20Change) These reconciliations illustrate the impact of foreign currency exchange rates on net sales growth, providing a clearer view of underlying business performance by showing sales changes on a constant currency basis for both the fourth quarter and full year 2024 [Three Months Ended December 31, 2024](index=15&type=section&id=Three%20Months%20Ended%20December%2031%2C%202024) For Q4 2024, foreign currency exchange had a negative impact on reported net sales growth, particularly affecting international sales and the Hips category, resulting in higher constant currency growth rates across most segments Net Sales % Change (Q4 2024 vs. 2023) | Category | % Change (Reported) | Foreign Exchange Impact | % Change (Constant Currency) | | :----------------------------------- | :------------------ | :---------------------- | :--------------------------- | | **Geographic Results** | | | | | United States | 4.7% | -% | 4.7% | | International | 3.7% | (1.5)% | 5.2% | | Total | 4.3% | (0.6)% | 4.9% | | **Product Categories** | | | | | Knees Total | 5.1% | (0.5)% | 5.6% | | Hips Total | 3.0% | (1.0)% | 4.0% | | S.E.T. | 8.0% | (0.4)% | 8.4% | | Technology & Data, Bone Cement and Surgical | (4.9)% | (0.6)% | (4.3)% | [Year Ended December 31, 2024](index=16&type=section&id=Year%20Ended%20December%2031%2C%202024) For the full year 2024, foreign currency exchange also had a negative impact on reported net sales, with International sales and the Hips category experiencing the most significant adverse effects, leading to higher constant currency growth rates Net Sales % Change (Full-Year 2024 vs. 2023) | Category | % Change (Reported) | Foreign Exchange Impact | % Change (Constant Currency) | | :----------------------------------- | :------------------ | :---------------------- | :--------------------------- | | **Geographic Results** | | | | | United States | 3.5% | -% | 3.5% | | International | 4.3% | (2.3)% | 6.6% | | Total | 3.8% | (1.0)% | 4.8% | | **Product Categories** | | | | | Knees Total | 4.4% | (0.8)% | 5.2% | | Hips Total | 1.6% | (1.4)% | 3.0% | | S.E.T. | 6.5% | (0.6)% | 7.1% | | Technology & Data, Bone Cement and Surgical | 0.7% | (1.2)% | 1.9% | [Reconciliation of Reported to Adjusted Results (Net Earnings & EPS)](index=17&type=section&id=Reconciliation%20of%20Reported%20to%20Adjusted%20Results%20(Net%20Earnings%20%26%20EPS)) These reconciliations detail the adjustments made to GAAP net earnings and diluted EPS to arrive at adjusted figures for both the fourth quarter and full year 2024 and 2023, with key adjustments including intangible asset amortization, restructuring costs, and litigation expenses [Three Months Ended December 31, 2024 and 2023](index=17&type=section&id=Three%20Months%20Ended%20December%2031%2C%202024%20and%202023) For Q4 2024, significant adjustments, primarily intangible asset amortization and restructuring initiatives, increased reported net earnings of **$239.4 million** to adjusted net earnings of **$462.4 million**, and diluted EPS of **$1.20** to adjusted diluted EPS of **$2.31** Reconciliation of Reported to Adjusted Results (Q4 2024, in millions USD) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | | Net Earnings of Zimmer Biomet Holdings, Inc. | $239.4 | $223.0 | $462.4 | | Diluted earnings per common share | $1.20 | $1.11 | $2.31 | Key Adjustments (Q4 2024) * Intangible asset amortization: **$157.6 million** * Restructuring and other cost reduction initiatives: **$20.9 million** * Litigation: **$27.4 million** Reconciliation of Reported to Adjusted Results (Q4 2023, in millions USD) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | | Net Earnings of Zimmer Biomet Holdings, Inc. | $419.2 | $38.9 | $458.1 | | Diluted earnings per common share | $2.01 | $0.19 | $2.20 | Key Adjustments (Q4 2023) * Intangible asset amortization: **$144.9 million** * Restructuring and other cost reduction initiatives: **$61.3 million** * Other certain tax adjustments: **$(167.8) million** [Years Ended December 31, 2024 and 2023](index=18&type=section&id=Years%20Ended%20December%2031%2C%202024%20and%202023) For the full year 2024, reported net earnings of **$903.8 million** were adjusted to **$1,630.2 million**, and diluted EPS of **$4.43** to adjusted diluted EPS of **$8.00**, primarily due to significant intangible asset amortization and restructuring costs Reconciliation of Reported to Adjusted Results (Full-Year 2024, in millions USD) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | | Net Earnings of Zimmer Biomet Holdings, Inc. | $903.8 | $726.4 | $1,630.2 | | Diluted earnings per common share | $4.43 | $3.57 | $8.00 | Key Adjustments (Full-Year 2024) * Intangible asset amortization: **$591.9 million** * Restructuring and other cost reduction initiatives: **$219.0 million** * Other certain tax adjustments: **$(46.0) million** Reconciliation of Reported to Adjusted Results (Full-Year 2023, in millions USD) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :------------------------ | :------------------------ | :------------------------ | | Net Earnings of Zimmer Biomet Holdings, Inc. | $1,024.0 | $560.2 | $1,584.2 | | Diluted earnings per common share | $4.88 | $2.67 | $7.55 | Key Adjustments (Full-Year 2023) * Intangible asset amortization: **$561.5 million** * Restructuring and other cost reduction initiatives: **$151.9 million** * Other certain tax adjustments: **$(96.0) million** [Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow](index=20&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Zimmer Biomet's free cash flow for the full year 2024 increased to **$1,055.3 million** from $978.8 million in 2023, despite a slight decrease in net cash provided by operating activities, primarily due to reduced additions to instruments and other property, plant and equipment Free Cash Flow (Q4 and Full-Year 2024 vs. 2023, in millions USD) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------------ | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | $506.2 | $588.4 | $1,499.4 | $1,581.6 | | Additions to instruments | $(51.9) | $(79.0) | $(240.3) | $(311.7) | | Additions to other property, plant and equipment | $(51.5) | $(62.9) | $(203.8) | $(291.1) | | Free cash flow | $402.8 | $446.5 | $1,055.3 | $978.8 | [Reconciliation of Gross Profit & Margin to Adjusted Gross Profit & Margin](index=21&type=section&id=Reconciliation%20of%20Gross%20Profit%20%26%20Margin%20to%20Adjusted%20Gross%20Profit%20%26%20Margin) Adjustments for inventory and manufacturing-related charges and intangible asset amortization significantly increased both gross profit and gross margin for Zimmer Biomet in Q4 and full-year 2024, providing a higher adjusted view of profitability Gross Profit & Margin (Q4 and Full-Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Gross Profit (in millions USD) | $1,278.9 | $1,256.4 | $4,895.5 | $4,748.9 | | Adjusted gross profit (in millions USD) | $1,442.5 | $1,406.2 | $5,506.7 | $5,328.8 | | Gross margin | 63.2% | 64.8% | 63.8% | 64.2% | | Adjusted gross margin | 71.3% | 72.5% | 71.7% | 72.1% | [Reconciliation of Operating Profit & Margin to Adjusted Operating Profit & Margin](index=22&type=section&id=Reconciliation%20of%20Operating%20Profit%20%26%20Margin%20to%20Adjusted%20Operating%20Profit%20%26%20Margin) Adjustments for various non-recurring or non-operational items, including intangible asset amortization and restructuring initiatives, significantly increased Zimmer Biomet's operating profit and margin for both the fourth quarter and full year 2024, presenting a more favorable adjusted operating performance Operating Profit & Margin (Q4 and Full-Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Operating profit (in millions USD) | $389.0 | $354.2 | $1,285.7 | $1,277.7 | | Adjusted operating profit (in millions USD) | $623.2 | $588.5 | $2,195.4 | $2,086.9 | | Operating profit margin | 19.2% | 18.3% | 16.7% | 17.3% | | Adjusted operating profit margin | 30.8% | 30.3% | 28.6% | 28.2% | [Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate](index=23&type=section&id=Reconciliation%20of%20Effective%20Tax%20Rate%20to%20Adjusted%20Effective%20Tax%20Rate) The reconciliation shows that Zimmer Biomet's adjusted effective tax rate for Q4 and full-year 2024 was higher than the reported rate, due to the tax effects of various adjustments to earnings before taxes and other certain discrete tax adjustments Effective Tax Rate (Q4 and Full-Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Effective tax rate | 16.9% | (47.6)% | 12.7% | 4.0% | | Adjusted effective tax rate | 17.5% | 15.8% | 18.0% | 16.3% | [Reconciliation of Debt to Net Debt](index=24&type=section&id=Reconciliation%20of%20Debt%20to%20Net%20Debt) As of December 31, 2024, Zimmer Biomet's net debt increased to **$5,679.1 million** from $5,352.1 million in 2023, reflecting an increase in total debt partially offset by higher cash and cash equivalents Debt to Net Debt (as of Dec 31, 2024 vs. 2023, in millions USD) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------------ | :------------------------- | :------------------------- | | Debt, both current and long-term | $6,204.6 | $5,767.9 | | Cash and cash equivalents | $(525.5) | $(415.8) | | Net debt | $5,679.1 | $5,352.1 | [Explanations of Non-GAAP Adjustments](index=19&type=section&id=Explanations%20of%20Non-GAAP%20Adjustments) This section provides detailed explanations for the various adjustments made to GAAP financial measures to derive non-GAAP results, including inventory and manufacturing-related charges, intangible asset amortization, restructuring initiatives, acquisition/integration costs, litigation expenses, European Union Medical Device Regulation compliance costs, other specific charges, and certain tax adjustments - Inventory and manufacturing-related charges include excess and obsolete inventory, accelerated depreciation, and fixed overhead costs related to plant shutdowns[55](index=55&type=chunk) - Intangible asset amortization and deferred tax rate changes on intangible assets are excluded to allow for performance comparison against peers, given varying acquisition levels[55](index=55&type=chunk) - Restructuring and other cost reduction initiatives cover global programs aimed at reorganizing businesses, reducing costs, and optimizing operations, including employee termination benefits and contract terminations[55](index=55&type=chunk) - Acquisition, integration, divestiture, and related gains and expenses stem from various acquisitions, post-separation costs related to ZimVie, and gains from transition service agreements[55](index=55&type=chunk) - Litigation charges and gains are excluded for patent, product liability, and commercial litigation, to provide useful incremental information, with consistency maintained for subsequent changes in estimates[55](index=55&type=chunk) - Costs related to initial compliance with the European Union Medical Device Regulation (EU MDR) for previously-approved medical devices are excluded, primarily temporary personnel and third-party professional fees[55](index=55&type=chunk) - Other charges include various expenses from specific, highly variable events or projects with significant impact, such as gains and losses from changes in fair value on equity investments[55](index=55&type=chunk) - Other certain tax adjustments relate to significant and discrete tax items, including intercompany transactions, tax-only amortization from restructurings, tax reform impacts, and favorable tax settlements[55](index=55&type=chunk) [Forward-Looking Statements and Risk Factors](index=7&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines Zimmer Biomet's forward-looking non-GAAP financial measures and provides cautionary notes regarding the inherent risks and uncertainties associated with future statements [Forward-Looking Non-GAAP Financial Measures](index=7&type=section&id=Forward-Looking%20Non-GAAP%20Financial%20Measures) Zimmer Biomet includes forward-looking non-GAAP financial measures in its guidance, which are based on internal forecasts that exclude certain items, and quantitative reconciliations to GAAP are not provided due to the unreasonable effort required to predict the timing and nature of excluded items, and to avoid implying a misleading degree of precision - Forward-looking non-GAAP financial measures are based on internal forecasts that omit certain amounts included in GAAP measures, such as charges related to EU MDR compliance, restructuring, acquisition/integration, and certain legal and tax matters[29](index=29&type=chunk) - Quantitative reconciliations to GAAP are not provided for these forward-looking measures due to the unreasonable effort required to predict excluded items and to avoid implying a misleading degree of precision[29](index=29&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section serves as a cautionary note regarding forward-looking statements, emphasizing that such statements are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially, highlighting various factors including competition, pricing pressures, new product development, employee retention, shifts in sales mix, and risks associated with acquisitions like Paragon 28, regulatory approvals, and global economic conditions - Forward-looking statements are based on current beliefs and expectations but are subject to significant risks, uncertainties, and changes in circumstances that could cause actual outcomes to differ materially[30](index=30&type=chunk)[31](index=31&type=chunk) - Key risks include competition, pricing pressures, dependence on new product development, ability to attract and retain skilled employees, shifts in product or regional sales mix, and the successful execution of restructuring plans[31](index=31&type=chunk) - Risks related to the Paragon 28 acquisition include failure to obtain regulatory approvals, lack of stockholder approval, inability to realize anticipated benefits, and integration challenges[31](index=31&type=chunk) - Other significant risks involve business disruptions, supply chain issues, cybersecurity breaches, government investigations, healthcare reform, substantial indebtedness, changes in tax obligations, and global economic and political instability[31](index=31&type=chunk)[32](index=32&type=chunk) - Readers are cautioned not to rely on forward-looking statements, as there is no assurance they will prove accurate, and the company disclaims any obligation to update or revise them[32](index=32&type=chunk)[33](index=33&type=chunk)