WARSAW, Ind., June 4, 2024 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global medical technology leader, today announced that members of the Zimmer Biomet management team will be presenting at the Goldman Sachs 45th Annual Healthcare Conference on Tuesday, June 11, 2024, at 8:40 a.m. ET. A live webcast of the presentation can be accessed via Zimmer Biomet's Investor Relations website at https://investor.zimmerbiomet.com. The webcast will be archived for replay following the conferenc ...

Zimmer Biomet Holdings, Inc. (ZBH) recently held its 2024 Investor Day and outlined its exciting long-term growth and value-creation plan as well as its strategic targets. The company provides a path for compelling and long term top-line growth, improved operational profitability, and increased free cash flow generation. In the past five years, Zimmer Biomet experienced a significant metamorphosis, emerging as a more robust enterprise with promising prospects. Being a provider of orthopedics and medical tec ...

Presents Path for Compelling and Durable Topline Growth, Improved Operational Profitability and Increased Free Cash Flow Generation Details New Capital Allocation Priorities and Commitment to Strategic Diversification Announces Strategic Partnership with CBRE, the World's Largest Commercial Real Estate Services and Investment Firm, to Develop and Outfit Orthopedic Ambulatory Surgery Centers (ASC) in the U.S. WARSAW, Ind. and NEW YORK, May 29, 2024 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ...

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor. Zacks Premium also includes the Zacks Style Scores. What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over ...

WARSAW, Ind., May 20, 2024 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global medical technology leader, today announced that it will host an Investor Day on Wednesday, May 29, 2024, at 1:00 p.m. E.T. until approximately 4:30 p.m. ET at the New York Stock Exchange in New York City. The event will feature presentations by members of the senior management team, including President and CEO Ivan Tornos and Chief Financial Officer, EVP, Finance, Operations and Supply Chain Suky Upadhyay, ...

Zimmer Biomet (ZBH) is well-poised to grow in the coming quarters owing to the encouraging business recovery and increased provider capacity driving backlog pull-through. The company also progresses on the four-pillar strategy to expand the Knee business. Further, the global musculoskeletal market's gradual stabilization bodes well for its operations. Meanwhile, unfavorable solvency and currency fluctuations raise concerns for Zimmer Biomet. In the past year, this Zacks Rank #3 (Hold) stock has declined 11% ...

WARSAW, Ind., May 13, 2024 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH), a global medical technology leader, today announced that its Board of Directors has approved the payment of a quarterly cash dividend to stockholders for the second quarter of 2024. The cash dividend of $0.24 per share is payable on or about July 31, 2024 to stockholders of record as of the close of business on June 26, 2024. About Zimmer Biomet Zimmer Biomet is a global medical technology leader with a comprehensi ...

As detailed in the report, Zimmer Biomet is committed to being a good corporate citizen and a leader in responsible, ethical business practices. Key highlights include: Achieving the highest ever employee engagement levels since our 2015 merger. Our company-wide engagement index score increased a remarkable 7 points over 2022 results, with improved scores for 100% of the indicators. Furthering our commitment to integrating health equity into our business strategy. Our new Community Centered Care (C3) frame ...

Part I - Financial Information [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Zimmer Biomet Holdings, Inc. and its subsidiaries for the three months ended March 31, 2024 and 2023, along with detailed notes explaining the basis of presentation, significant accounting policies, revenue breakdown, restructuring activities, inventory, property, plant and equipment, acquisitions, debt, accumulated other comprehensive income, fair value measurements, derivative instruments, income taxes, earnings per share, segment information, and commitments and contingencies [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Details net sales, operating profit, and net earnings for the specified periods | Metric (in millions, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :---------------------------------- | :---------------------------------- | | Net Sales | $1,889.2 | $1,831.0 |\ | Operating Profit | $265.9 | $327.3 |\ | Net Earnings | $172.8 | $232.8 |\ | Net Earnings of Zimmer Biomet Holdings, Inc. | $172.4 | $232.5 |\ | Basic EPS | $0.84 | $1.11 |\ | Diluted EPS | $0.84 | $1.11 | - **Net Sales** increased by **$58.2 million (3.2%) YoY**, from **$1,831.0 million** in **Q1 2023** to **$1,889.2 million** in **Q1 2024**. **Operating Profit** decreased by **$61.4 million (18.8%) YoY**, from **$327.3 million** in **Q1 2023** to **$265.9 million** in **Q1 2024**. **Net Earnings** decreased by **$60.0 million (25.8%) YoY**, from **$232.8 million** in **Q1 2023** to **$172.8 million** in **Q1 2024**. **Diluted EPS** decreased by **$0.27 (24.3%) YoY**, from **$1.11** in **Q1 2023** to **$0.84** in **Q1 2024**[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Presents net earnings and other comprehensive income components, reflecting changes in equity from non-owner sources | Metric (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------- | :---------------------------------- | :---------------------------------- | | Net Earnings of Zimmer Biomet Holdings, Inc. | $172.4 | $232.5 |\ | Total Other Comprehensive (Loss) Income | $(20.2) | $1.3 |\ | Comprehensive Income Attributable to Zimmer Biomet Holdings, Inc. | $152.2 | $233.8 | - **Total Other Comprehensive Income** shifted from a gain of **$1.3 million** in **Q1 2023** to a loss of **$20.2 million** in **Q1 2024**, primarily due to **foreign currency cumulative translation adjustments** moving from a gain of **$12.4 million** to a loss of **$35.8 million**[11](index=11&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (in millions) | March 31, 2024 | December 31, 2023 | | :------------------- | :------------- | :---------------- | | Total Current Assets | $4,631.5 | $4,609.5 |\ | Total Assets | $21,452.4 | $21,496.9 |\ | Total Current Liabilities | $2,797.0 | $2,857.4 |\ | Total Liabilities | $8,846.4 | $9,008.7 |\ | Total Stockholders' Equity | $12,606.0 | $12,488.1 | - **Total Assets** slightly decreased from **$21,496.9 million** at **December 31, 2023**, to **$21,452.4 million** at **March 31, 2024**. **Total Liabilities** decreased by **$162.3 million**, while **Total Stockholders' Equity** increased by **$117.9 million** over the same period[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Outlines changes in stockholders' equity, including net earnings, other comprehensive income, dividends, and share repurchases | Metric (in millions) | Balance January 1, 2024 | Balance March 31, 2024 | | :------------------- | :---------------------- | :--------------------- | | Total Stockholders' Equity | $12,488.1 | $12,606.0 |\ | Net earnings | $172.4 | $172.4 |\ | Other comprehensive loss | $(20.2) | $(20.2) |\ | Cash dividends declared | $(49.3) | $(49.3) |\ | Share repurchases | - | $(88.0) | - **Total Stockholders' Equity** increased by **$117.9 million** from **January 1, 2024**, to **March 31, 2024**. Key activities included **net earnings** of **$172.4 million**, an **other comprehensive loss** of **$20.2 million**, **cash dividends** of **$49.3 million**, and **share repurchases** of **$88.0 million**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the specified periods | Metric (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------- | :---------------------------------- | :---------------------------------- | | Net cash provided by operating activities | $228.0 | $307.7 |\ | Net cash used in investing activities | $(195.0) | $(149.4) |\ | Net cash used in financing activities | $(50.1) | $(206.7) |\ | Change in cash and cash equivalents | $(22.7) | $(45.5) |\ | Cash and cash equivalents, end of period | $393.0 | $330.2 | - **Net cash provided by operating activities** decreased by **$79.7 million YoY**, from **$307.7 million** in **Q1 2023** to **$228.0 million** in **Q1 2024**. **Net cash used in investing activities** increased by **$45.6 million YoY**, from **$149.4 million** in **Q1 2023** to **$195.0 million** in **Q1 2024**. **Net cash used in financing activities** decreased by **$156.6 million YoY**, from **$206.7 million** in **Q1 2023** to **$50.1 million** in **Q1 2024**[18](index=18&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) Clarifies unaudited financial data, normal adjustments, and interim results not indicative of full-year performance - **Financial data** is unaudited and includes only normal recurring adjustments, not indicative of full-year results[19](index=19&type=chunk)[20](index=20&type=chunk) - Rounding may cause sums of components in tables to not equal total amounts reported in **millions**[21](index=21&type=chunk) [Note 2. Significant Accounting Policies](index=8&type=section&id=Note%202.%20Significant%20Accounting%20Policies) Outlines accounting principles and evaluation of new FASB ASUs on segment and income tax disclosures - The company is evaluating the impact of **ASU 2023-07** (Improvements to Reportable Segment Disclosures), effective for **fiscal years beginning after December 15, 2023**, and interim periods for **fiscal years beginning after December 15, 2024**[24](index=24&type=chunk) - The company is evaluating the impact of **ASU 2023-09** (Improvements to Income Tax Disclosures), effective for **fiscal years beginning after December 15, 2024**[25](index=25&type=chunk) [Note 3. Revenue](index=8&type=section&id=Note%203.%20Revenue) Details net sales by geography and product category, highlighting key growth drivers | Net Sales by Geography (in millions) | March 31, 2024 | March 31, 2023 | | :----------------------------------- | :------------- | :------------- | | United States | $1,099.2 | $1,060.4 |\ | International | $790.0 | $770.6 |\ | Total | $1,889.2 | $1,831.0 | | Net Sales by Product Category (in millions) | March 31, 2024 | March 31, 2023 | | :------------------------------------------ | :------------- | :------------- | | Knees | $788.1 | $762.5 |\ | Hips | $491.2 | $492.8 |\ | S.E.T. | $452.6 | $433.4 |\ | Other | $157.3 | $142.3 |\ | Total | $1,889.2 | $1,831.0 | - **Net sales** increased by **3.2% YoY**. **U.S. sales** grew **3.7%**, while **International sales** grew **2.5%**. **Knees sales** increased by **3.4%**, **S.E.T. sales** increased by **4.4%**, and **Other sales** increased by **10.6%**. **Hips sales** slightly decreased by **0.3%**[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 4. Restructuring](index=10&type=section&id=Note%204.%20Restructuring) Describes ongoing global restructuring programs aimed at optimizing cost structure and driving efficiencies | Restructuring Plan | Total Estimated Pre-Tax Charges (in millions) | Incurred as of March 31, 2024 (in millions) | | :----------------- | :-------------------------------------------- | :------------------------------------------ | | 2023 Restructuring Plan | ~$120.0 | $92.4 |\ | 2021 Restructuring Plan | ~$180.0 | $170.0 |\ | 2019 Restructuring Plan | ~$370.0 | $336.4 | - **The 2023 Restructuring Plan** incurred **$79.6 million** in expenses during **Q1 2024**, primarily for employee termination benefits[29](index=29&type=chunk) - **The 2021 Restructuring Plan** is expected to be completed by the end of **2024**, and **the 2019 Restructuring Plan** by the end of **2025**[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 5. Inventories](index=13&type=section&id=Note%205.%20Inventories) Provides a breakdown of inventory categories, including finished goods, work in progress, and raw materials | Inventory Category (in millions) | March 31, 2024 | December 31, 2023 | | :------------------------------- | :------------- | :---------------- | | Finished goods | $1,846.7 | $1,831.2 |\ | Work in progress | $226.7 | $246.5 |\ | Raw materials | $314.8 | $307.5 |\ | Total Inventories | $2,388.2 | $2,385.2 | [Note 6. Property, Plant and Equipment](index=13&type=section&id=Note%206.%20Property%2C%20Plant%20and%20Equipment) Details the composition of net property, plant and equipment, with instruments as the largest asset category | Category (in millions) | March 31, 2024 | December 31, 2023 | | :------------------------------- | :------------- | :---------------- | | Land | $18.8 | $18.9 |\ | Buildings and equipment | $2,254.1 | $2,245.9 |\ | Capitalized software costs | $555.2 | $552.2 |\ | Instruments | $3,814.6 | $3,748.6 |\ | Construction in progress | $206.4 | $200.6 |\ | Accumulated depreciation | $(4,758.2) | $(4,705.8) |\ | Property, plant and equipment, net | $2,090.9 | $2,060.4 | [Note 7. Acquisitions](index=13&type=section&id=Note%207.%20Acquisitions) Summarizes recent acquisitions, their strategic purpose, and the allocation of associated goodwill - **Acquired Embody, Inc.** for **$154.5 million** (**1.1 million** shares + **$19.5 million** cash) to expand the sports medicine portfolio[36](index=36&type=chunk) - **Completed three other acquisitions** in **2023** for orthopedics and surgical technology, with initial cash considerations of **$15.0 million**, **$42.2 million**, and **$60.7 million**, respectively, plus contingent considerations[37](index=37&type=chunk)[38](index=38&type=chunk)[41](index=41&type=chunk) - **Goodwill** from these acquisitions, totaling **$215.0 million**, is primarily allocated to the **Americas operating segment** and **Americas Orthopedics reporting unit**, with the **April 2023 acquisition goodwill** in the **Asia Pacific segment**[43](index=43&type=chunk)[45](index=45&type=chunk) [Note 8. Debt](index=17&type=section&id=Note%208.%20Debt) Outlines the company's debt structure, including senior notes and revolving credit facilities, and covenant compliance | Debt Category (in millions) | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Current portion of long-term debt | $970.0 | $900.0 |\ | Long-term debt | $4,826.2 | $4,867.9 |\ | Total Debt | $5,796.2 | $5,767.9 | - The company has a **$1.5 billion 2023 Five-Year Revolving Facility** and a **$1.0 billion 2023 364-Day Revolving Credit Agreement**, both with no outstanding borrowings as of **March 31, 2024**[52](index=52&type=chunk)[56](index=56&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - **Outstanding borrowings** under the **Uncommitted Credit Facility** were **$120.0 million** as of **March 31, 2024**[50](index=50&type=chunk) [Note 9. Accumulated Other Comprehensive Income](index=19&type=section&id=Note%209.%20Accumulated%20Other%20Comprehensive%20Income) Explains changes in AOCI, primarily driven by foreign currency translation and cash flow hedge adjustments | AOCI Component (in millions) | Balance at Dec 31, 2023 | Balance at Mar 31, 2024 | | :--------------------------- | :---------------------- | :---------------------- | | Foreign Currency Translation | $(159.4) | $(195.2) |\ | Cash Flow Hedges | $63.3 | $80.0 |\ | Defined Benefit Plan Items | $(94.9) | $(96.0) |\ | Total AOCI | $(191.0) | $(211.2) | - **Foreign currency cumulative translation adjustments** resulted in a loss of **$35.8 million** in **Q1 2024**, compared to a gain of **$12.4 million** in **Q1 2023**[62](index=62&type=chunk) - **Unrealized cash flow hedge gains** were **$34.7 million** in **Q1 2024**, up from **$8.8 million** in **Q1 2023**[62](index=62&type=chunk) [Note 10. Fair Value Measurement of Assets and Liabilities](index=21&type=section&id=Note%2010.%20Fair%20Value%20Measurement%20of%20Assets%20and%20Liabilities) Details fair value measurement of financial assets and liabilities, including derivatives and contingent consideration | Fair Value Item (in millions) | March 31, 2024 (Recorded Balance) | December 31, 2023 (Recorded Balance) | | :---------------------------- | :-------------------------------- | :----------------------------------- | | Total Assets | $104.1 | $60.2 |\ | Total Liabilities | $326.0 | $359.8 | - **Contingent consideration** related to acquisitions, valued using discounted cash flow techniques and probability-weighted estimates, decreased from **$141.7 million** at **December 31, 2023**, to **$115.2 million** at **March 31, 2024**[66](index=66&type=chunk)[68](index=68&type=chunk) - During **Q1 2024**, the company **issued 0.2 million shares** (**$23.4 million**) and paid **$1.5 million** cash for a commercial milestone related to the **Embody acquisition**[67](index=67&type=chunk) [Note 11. Derivative Instruments and Hedging Activities](index=24&type=section&id=Note%2011.%20Derivative%20Instruments%20and%20Hedging%20Activities) Describes the use of derivatives to manage interest rate and foreign currency risks, designated as various hedge types - The company uses **fixed-to-variable interest rate swaps** as fair value hedges to manage interest rate risk, with changes in fair value recorded in current earnings[72](index=72&type=chunk) - **Foreign currency exchange forward contracts** are used as cash flow hedges for intercompany sales of inventory, with gains/losses temporarily recorded in **AOCI** and reclassified to cost of products sold when the hedged item affects net earnings[80](index=80&type=chunk)[81](index=81&type=chunk) - **Euro Notes** and **cross-currency interest rate swaps** are designated as net investment hedges to mitigate foreign exchange rate fluctuations on investments in foreign subsidiaries, with changes in fair value recorded in **AOCI**[76](index=76&type=chunk)[77](index=77&type=chunk) | Effect of Hedging on Income Statement (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------------------------- | :---------------------------------- | :---------------------------------- | | Gain (loss) on fair value hedging (Interest rate swaps) | $(10.6) | $(8.2) |\ | Gain (loss) on cash flow hedging (Foreign exchange forward contracts) | $22.0 | $23.1 |\ | Gain on net investment hedging (Cross-currency interest rate swaps) | $8.2 | $9.0 | [Note 12. Income Taxes](index=30&type=section&id=Note%2012.%20Income%20Taxes) Discusses the effective tax rate, ongoing tax audits, and estimates for changes in unrecognized tax benefits - **Effective tax rate (ETR)** increased to **19.7%** in **Q1 2024** from **18.9%** in **Q1 2023**, driven by the mix of U.S. and foreign earnings[96](index=96&type=chunk) - The **IRS** has proposed adjustments for tax years **2010-2012**, **2013-2015** (including a proposed **$370 million** additional tax expense for **2013** related to transfer pricing), and **2016-2019**, which the company intends to vigorously contest[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Management's best estimate for changes in unrecognized tax benefits within the next twelve months ranges from a **$270 million** decrease to a **$20 million** increase[91](index=91&type=chunk) [Note 13. Earnings Per Share](index=32&type=section&id=Note%2013.%20Earnings%20Per%20Share) Provides details on basic and diluted weighted average common shares outstanding used in EPS calculations | Metric (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------- | :---------------------------------- | :---------------------------------- | | Weighted average shares outstanding for basic net earnings per share | 205.2 | 209.4 |\ | Weighted average shares outstanding for diluted net earnings per share | 206.2 | 210.4 | - **Basic and diluted weighted average common shares outstanding** decreased **YoY**, contributing to **EPS calculations**[97](index=97&type=chunk) [Note 14. Segment Information](index=32&type=section&id=Note%2014.%20Segment%20Information) Presents financial data for Americas, EMEA, and Asia Pacific segments, detailing sales and operating profit performance | Segment (in millions) | Net Sales (Q1 2024) | Net Sales (Q1 2023) | Operating Profit (Q1 2024) | Operating Profit (Q1 2023) | | :-------------------- | :------------------ | :------------------ | :------------------------- | :------------------------- | | Americas | $1,186.5 | $1,141.3 | $639.3 | $608.9 |\ | EMEA | $444.8 | $425.6 | $153.0 | $149.5 |\ | Asia Pacific | $258.0 | $264.1 | $93.3 | $90.2 | - **Americas segment operating profit** increased by **5.0% YoY**, driven by higher **net sales** and lower royalty expense. **EMEA operating profit** increased by **2.3% YoY**, but operating profit as a percentage of **net sales** decreased due to higher manufacturing costs and a lower-margin profit mix. **Asia Pacific operating profit** increased by **3.4% YoY**, despite a **net sales** decline, due to higher hedge gains, lower royalty expense, and restructuring savings[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Certain product category headquarter costs (R&D, marketing) and support function costs were reclassified from operating segments to **Corporate items** in **Q1 2024**[101](index=101&type=chunk) [Note 15. Commitments and Contingencies](index=34&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) Outlines legal proceedings, product liability lawsuits, and contractual obligations for future payments - **Accrued litigation liabilities** were **$226.5 million** as of **March 31, 2024**, down from **$244.1 million** at **December 31, 2023**[105](index=105&type=chunk) - The company faces ongoing product liability lawsuits related to **Durom Cup**, **M/L Taper** and **Versys Femoral Head implants**, and **Biomet metal-on-metal hip implants**[106](index=106&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) - **Potential future payments** from contractual obligations (R&D, sales milestones) could range from **$0** to approximately **$405 million**[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Reviews Zimmer Biomet's financial performance, key drivers, and outlook for the reporting period - **Net sales** increased **3.2%** in **Q1 2024** compared to the prior year, driven by market growth, new product introductions, and commercial execution, but tempered by a **1.2% negative foreign currency effect**[115](index=115&type=chunk) - **Net earnings** declined from **$232.5 million** in **Q1 2023** to **$172.4 million** in **Q1 2024**, primarily due to **$71.0 million** in employee termination benefits-related charges from **the 2023 Restructuring Plan**[116](index=116&type=chunk) - For **2024**, the company expects mid-single-digit revenue growth, a **negative 0.5% impact** from foreign currency, and an increase in **operating profit**, partially offset by higher intangible asset amortization and restructuring costs[117](index=117&type=chunk) [Executive Level Overview](index=37&type=section&id=Executive%20Level%20Overview) Summarizes the company's financial performance and strategic outlook for the reporting period - **Net sales** increased **3.2%** in **Q1 2024** compared to the prior year, driven by market growth, new product introductions, and commercial execution, but tempered by a **1.2% negative foreign currency effect**[115](index=115&type=chunk) - **Net earnings** declined from **$232.5 million** in **Q1 2023** to **$172.4 million** in **Q1 2024**, primarily due to **$71.0 million** in employee termination benefits from **the 2023 Restructuring Plan**[116](index=116&type=chunk) - The **2024 outlook** projects mid-single-digit revenue growth, a **negative 0.5% foreign currency impact**, and increased **operating profit**, partially offset by higher intangible asset amortization and restructuring costs[117](index=117&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Analyzes the company's net sales, expenses, and operating profit, detailing key performance drivers | Net Sales by Geography (in millions) | Q1 2024 | Q1 2023 | % Inc | | :----------------------------------- | :------ | :------ | :---- | | United States | $1,099.2 | $1,060.4 | 3.7% |\ | International | $790.0 | $770.6 | 2.5% |\ | Total | $1,889.2 | $1,831.0 | 3.2% | | Net Sales by Product Category (in millions) | Q1 2024 | Q1 2023 | % Inc / (Dec) | | :------------------------------------------ | :------ | :------ | :------------ | | Knees | $788.1 | $762.5 | 3.4% |\ | Hips | $491.2 | $492.8 | (0.3)% |\ | S.E.T. | $452.6 | $433.4 | 4.4% |\ | Other | $157.3 | $142.3 | 10.6% |\ | Total | $1,889.2 | $1,831.0 | 3.2% | | Expenses as a Percentage of Net Sales | Q1 2024 | Q1 2023 | % Inc / (Dec) | | :------------------------------------ | :------ | :------ | :------------ | | Cost of products sold, excluding intangible asset amortization | 27.1% | 27.4% | (0.3)% |\ | Intangible asset amortization | 7.5% | 7.3% | 0.2% |\ | Research and development | 5.7% | 6.0% | (0.3)% |\ | Selling, general and administrative | 39.0% | 39.1% | (0.1)% |\ | Restructuring and other cost reduction initiatives | 6.6% | 2.3% | 4.3% |\ | Operating profit | 14.1% | 17.9% | (3.8)% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, cash flow activities, and available capital resources - **Cash and cash equivalents** totaled **$393.0 million** as of **March 31, 2024**, with **$1.0 billion** available under the **2023 364-Day Credit Agreement** and **$1.5 billion** under the **2023 Five-Year Revolving Facility**[141](index=141&type=chunk) - **Net cash provided by operating activities** decreased to **$228.0 million** in **Q1 2024** from **$307.7 million** in **Q1 2023**, driven by higher bonus, income tax, and restructuring payments[143](index=143&type=chunk) - **Net cash used in financing activities** was **$50.1 million** in **Q1 2024**, including **$113.6 million** for common stock repurchases and **$70.0 million** net proceeds from revolving facilities[145](index=145&type=chunk) - The company **repurchased approximately 0.7 million shares** for **$88.0 million** in **Q1 2024**, with **$67.8 million** remaining authorized under the **$1.0 billion share repurchase program**[152](index=152&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) Refers to disclosures on new accounting standards and their potential impact on financial reporting - Refer to **Note 2** for details on recent accounting pronouncements[156](index=156&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) Confirms no changes to critical accounting estimates previously disclosed in the annual report - No changes to **critical accounting estimates** in **Q1 2024** compared to the **2023 Annual Report on Form 10-K**[157](index=157&type=chunk) [Cautionary Note Regarding Forward-Looking Statements and Factors That May Affect Future Results](index=44&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements%20and%20Factors%20That%20May%20Affect%20Future%20Results) Warns that forward-looking statements are subject to risks and uncertainties that could impact future results - **Forward-looking statements** are based on current beliefs and subject to significant risks and uncertainties[158](index=158&type=chunk) - **Key risk factors** include competition, pricing pressures, dependence on new product development, business disruptions, restructuring execution, and challenges with governmental laws and regulations[159](index=159&type=chunk) - The company disclaims any intention or obligation to update or revise **forward-looking statements**[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Confirms no material changes to market risk disclosures since the prior annual report - No material changes in **market risk disclosures** since the **2023 Annual Report on Form 10-K**[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures and the absence of material changes in internal control - **Disclosure controls and procedures** were effective at a reasonable assurance level as of **March 31, 2024**[165](index=165&type=chunk) - No material changes in **internal control over financial reporting** occurred during **Q1 2024**[166](index=166&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Refers to detailed information on ongoing legal proceedings and related liabilities - **Legal proceedings information** is detailed in **Note 15** of the financial statements[167](index=167&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Advises readers to consider the comprehensive risk factors outlined in the annual report - **Risk factors** from the **2023 Form 10-K** should be carefully considered, as they could materially affect the business[168](index=168&type=chunk) - Additional unknown or currently immaterial risks may also adversely affect the company[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the issuance of equity securities and share repurchases during the reporting period - **Issued 0.2 million common shares** (**$23.4 million**) for an **Embody acquisition commercial milestone** in **Q1 2024**[169](index=169&type=chunk) - **Repurchased 0.2 million common shares** in **February 2024** to minimize dilution from the milestone issuance[169](index=169&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------ | :------------------------------- | :--------------------------- | | January 2024 | 530,017 | $120.94 |\ | February 2024 | 192,737 | $123.87 |\ | March 2024 | - | - |\ | Total | 722,754 | $121.72 | [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms that there were no defaults on senior securities during the reporting period - **No defaults upon senior securities**[171](index=171&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to the company's operations - **Not applicable**[171](index=171&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) Covers other material events, including auditor engagement and trading arrangements by insiders - **Audit Committee approved PricewaterhouseCoopers LLP** for audit-related and tax services[171](index=171&type=chunk) - No **Rule 10b5-1 trading arrangements** or **non-Rule 10b5-1 trading arrangements** were adopted, amended, or terminated by directors or officers in **Q1 2024**[172](index=172&type=chunk)[173](index=173&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) Provides a comprehensive list of all exhibits filed or furnished as part of the report - Exhibits include **Restated Certificate of Incorporation**, **Restated Bylaws**, **Change in Control Severance Agreements**, **List of Subsidiaries**, and various certifications (e.g., **Section 302**, **Section 906**)[174](index=174&type=chunk) [Signatures](index=52&type=section&id=Signatures) Confirms the official signing of the report by authorized financial officers - Report signed by **Suketu Upadhyay** (CFO) and **Paul Stellato** (VP, Controller, CAO) on **May 2, 2024**[176](index=176&type=chunk)

Financial Data and Key Metrics Changes - The company reported net sales of $1.889 billion, reflecting a 3.2% increase on a reported basis and a 4.4% increase excluding foreign currency impact [18] - GAAP diluted earnings per share (EPS) was $0.84 compared to $1.11 in the prior year, while adjusted diluted EPS was $1.94 compared to $1.89 in the prior year [21] - Adjusted gross margin was 72.9%, driven by higher manufacturing costs offset by better pricing and lower royalties [22] - The adjusted operating margin was 28.6%, slightly ahead of the prior year, driven by higher sales and lower SG&A related to the restructuring program [51] Business Line Data and Key Metrics Changes - Global Knee sales grew 4.3%, with U.S. growth at 2.2% and international growth at 7.3%, driven by the Persona product portfolio and ROSA Robotic Platform [19] - The S.E.T. category grew 5.3%, led by key focus areas of CMFT, upper extremities, and sports, growing on average about low double digits [20] - Global Hips grew 1.5%, with U.S. growth at 1% and international growth at 2% [48] - The Other category grew 12.2%, driven by strong ROSA sales, although growth is expected to moderate as the year progresses [49] Market Data and Key Metrics Changes - U.S. growth was 3.7% and international growth was 5.4%, with EMEA showing stronger-than-expected growth [47] - The company faced a selling day headwind of about 200 basis points that impacted all regions and product categories [18] Company Strategy and Development Direction - The company is focused on three strategic priorities: people and culture, operational excellence, and innovation and diversification [12][40] - The company plans to introduce over 40 new products in the next 24 to 36 months, with a strong pipeline that has twice the dollar value compared to 2018 [81][82] - The company aims for mid-to-high single-digit adjusted earnings growth while ensuring free cash flow grows faster than earnings [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 5% to 6% constant currency revenue growth for 2024, with adjusted operating margin expansion and over $1 billion in free cash flow [17][24] - The company noted that the end markets remain healthy, driven by high levels of patient demand and technological advancements [4] - Management highlighted the positive pricing dynamics, reporting flat pricing in the quarter compared to previous years' price erosion [39][71] Other Important Information - The company is undergoing a restructuring program that has been implemented with no major disruptions, resulting in cost savings and increased operational agility [5] - The company is actively searching for a new Head of Investor Relations following the departure of Keri Mattox [16] Q&A Session Summary Question: Long-term growth algorithm and Q2 expectations - Management indicated that the long-term growth algorithm includes 5% to 6% revenue growth, potential margin expansion, and low double-digit EPS growth, but emphasized that this is not a base case [30][34] - Regarding Q2, management noted that selling days would provide a tailwind, but they would not provide specific quarter-over-quarter guidance [32] Question: Drivers of revenue growth - Management stated that new product introductions are the primary driver of revenue growth, with a pipeline of 40 new products expected over the next 24 to 36 months [31] Question: Pricing environment - Management reported that pricing was flat in Q1, a significant improvement from previous years' price erosion, and they expect pricing dynamics to remain favorable [71][74] Question: M&A strategy - Management expressed a preference for smaller tuck-in acquisitions under $2 billion that are EPS neutral within two years, while also being open to larger deals if they meet strategic and financial criteria [15][102] Question: ROSA Shoulder launch outlook - Management expressed excitement about the ROSA Shoulder launch, noting positive initial feedback and expectations for significant impact as the year progresses [138]