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]

Zimmer Biomet Holdings, Inc. (ZBH) posted first-quarter 2024 adjusted earnings per share (EPS) of $1.94, exceeding the Zacks Consensus Estimate by 3.7%. The adjusted figure increased 2.6% year over year.The quarter’s adjustments included certain amortization, restructuring and other cost reduction initiatives and European Union Medical Device Regulation-related charges, among others.On a reported basis, the company registered earnings of 84 cents per share, which reflected a 24.3% decline from the year-ago ...

For the quarter ended March 2024, Zimmer Biomet (ZBH) reported revenue of $1.89 billion, up 3.2% over the same period last year. EPS came in at $1.94, compared to $1.89 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $1.87 billion, representing a surprise of +1.16%. The company delivered an EPS surprise of +3.74%, with the consensus EPS estimate being $1.87.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street ex ...

Zimmer Biomet (ZBH) came out with quarterly earnings of $1.94 per share, beating the Zacks Consensus Estimate of $1.87 per share. This compares to earnings of $1.89 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.74%. A quarter ago, it was expected that this orthopedic device maker would post earnings of $2.15 per share when it actually produced earnings of $2.20, delivering a surprise of 2.33%.Over the last four quarters, t ...

[Q1 2024 Financial and Business Highlights](index=1&type=section&id=Zimmer%20Biomet%20Announces%20First%20Quarter%202024%20Financial%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Q1 2024 net sales reached **$1.889 billion** (up 4.4% constant currency), with diluted EPS of **$0.84** and adjusted EPS of **$1.94**, reiterating full-year guidance Q1 2024 Key Financial Metrics | Metric | Value | YoY Change (Reported) | YoY Change (Constant Currency) | | :--- | :--- | :--- | :--- | | Net Sales | $1.889 billion | +3.2% | +4.4% | | Net Earnings | $172.4 million | - | - | | Adjusted Net Earnings | $399.7 million | - | - | | Diluted EPS | $0.84 | - | - | | Adjusted Diluted EPS | $1.94 | - | - | - The company has reiterated its full-year 2024 financial guidance[3](index=3&type=chunk) [Business and Operational Highlights](index=2&type=section&id=Recent%20Highlights) Zimmer Biomet achieved key operational milestones, including FDA clearances for ROSA® Shoulder System and Z1 Femoral Hip Stem, alongside strategic partnerships and DEI/ESG recognition - Received U.S. FDA 510(k) clearance for the ROSA® Shoulder System, the world's first robotic assistant for shoulder replacement surgery, with the first successful surgery completed in April[5](index=5&type=chunk) - Obtained U.S. FDA 510(k) clearance for the Z1 Femoral Hip Stem, a modern triple taper system expected to launch later in the year[5](index=5&type=chunk) - Announced partnerships with three major U.S. pickleball organizations to promote joint health education[5](index=5&type=chunk) - Continued to receive recognition for Diversity, Equity, and Inclusion (DEI) and Environmental, Social, and Governance (ESG) efforts, including being named one of America's Greatest Workplaces for Women by Newsweek and a Supplier Engagement Leader by CDP[6](index=6&type=chunk) [Sales Performance Analysis](index=4&type=section&id=Geographic%20and%20Product%20Category%20Sales) [Sales by Geography and Product](index=4&type=section&id=Sales%20by%20Geography%20and%20Product) Q1 2024 total net sales grew **4.4%** constant currency, with U.S. up **3.7%** and International up **5.4%**, driven by Knees and S.E.T. product categories Q1 2024 Net Sales Breakdown (in millions) | Category | Geography | Net Sales | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | **Total** | **Global** | **$1,889.2** | **3.2%** | **4.4%** | | By Geography | United States | $1,099.2 | 3.7% | 3.7% | | | International | $790.0 | 2.5% | 5.4% | | By Product | Knees | Total | $788.1 | 3.4% | 4.3% | | | Hips | Total | $491.2 | -0.3% | 1.5% | | | S.E.T. | Global | $452.6 | 4.4% | 5.3% | | | Other | Global | $157.3 | 10.6% | 12.2% | [Full-Year 2024 Financial Guidance](index=5&type=section&id=Financial%20Guidance) [Full-Year 2024 Projections](index=5&type=section&id=Full-Year%202024%20Projections) Zimmer Biomet reiterated its full-year 2024 guidance, projecting reported revenue growth of **4.5% to 5.5%** (constant currency **5.0% to 6.0%**) and adjusted diluted EPS of **$8.00 to $8.15** Projected Year Ending December 31, 2024 | Metric | Guidance Range | | :--- | :--- | | Reported Revenue Change | 4.5% - 5.5% | | Foreign Currency Exchange Impact | (0.5)% | | Constant Currency Revenue Change | 5.0% - 6.0% | | Adjusted Diluted EPS | $8.00 - $8.15 | [Consolidated Financial Statements](index=10&type=section&id=Consolidated%20Financial%20Statements) [Condensed Consolidated Statements of Earnings](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Q1 2024 net sales increased to **$1.889 billion**, but operating profit decreased to **$265.9 million** and net earnings fell to **$172.4 million**, due to increased restructuring expenses Q1 2024 vs Q1 2023 Statement of Earnings (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $1,889.2 | $1,831.0 | | Operating Profit | $265.9 | $327.3 | | Earnings before income taxes | $215.1 | $286.8 | | Net Earnings of Zimmer Biomet | $172.4 | $232.5 | | Diluted EPS | $0.84 | $1.11 | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were **$21.45 billion**, slightly down from year-end 2023, with stable liabilities and stockholders' equity increasing to **$12.61 billion** Balance Sheet Summary (in millions) | Line Item | 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 | $1,826.9 | $1,957.5 | | Long-term debt | $4,826.2 | $4,867.9 | | Stockholders' equity | $12,606.0 | $12,488.1 | | Total Liabilities and Stockholders' Equity | $21,452.4 | $21,496.9 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 net cash from operations decreased to **$228.0 million**, with increased investing and decreased financing activities, ending the quarter with **$393.0 million** in cash and equivalents Q1 2024 vs Q1 2023 Statement of Cash Flows (in millions) | Line Item | Q1 2024 | Q1 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 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Reconciliation of Reported Net Sales to Constant Currency](index=13&type=section&id=Reconciliation%20of%20Reported%20Net%20Sales%20to%20Constant%20Currency) Foreign currency exchange negatively impacted Q1 2024 total net sales by **1.2%**, with International segment most affected at **2.9%** negative impact Q1 2024 Sales Growth Reconciliation | Category | Reported % Change | Foreign Exchange Impact | Constant Currency % Change | | :--- | :--- | :--- | :--- | | **Total** | **3.2%** | **(1.2)%** | **4.4%** | | United States | 3.7% | -% | 3.7% | | International | 2.5% | (2.9)% | 5.4% | | Knees | 3.4% | (0.9)% | 4.3% | | Hips | (0.3)% | (1.8)% | 1.5% | [Reconciliation of Reported to Adjusted Net Earnings and EPS](index=14&type=section&id=Reconciliation%20of%20Reported%20to%20Adjusted%20Results) Q1 2024 reported net earnings of **$172.4 million** adjusted to **$399.7 million**, mainly due to intangible asset amortization and restructuring, yielding adjusted diluted EPS of **$1.94** Q1 2024 Reconciliation of Net Earnings and Diluted EPS | Metric | As Reported | Adjustments | As Adjusted | | :--- | :--- | :--- | :--- | | Net Earnings (in millions) | $172.4 | $227.3 | $399.7 | | Diluted EPS | $0.84 | $1.10 | $1.94 | - Key adjustments include intangible asset amortization, restructuring and other cost reduction initiatives, and costs related to the European Union Medical Device Regulation[45](index=45&type=chunk) [Reconciliation of Operating Cash Flow to Free Cash Flow](index=16&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Q1 2024 free cash flow was **$90.9 million**, down from **$178.2 million** last year, after deducting capital expenditures for instruments and other property from operating cash flow Free Cash Flow Calculation (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $228.0 | $307.7 | | Additions to instruments | $(82.0) | $(82.8) | | Additions to other property, plant and equipment | $(55.1) | $(46.7) | | **Free cash flow** | **$90.9** | **$178.2** | [Other Reconciliations (Profit Margins, Tax Rate, Net Debt)](index=17&type=section&id=Other%20Reconciliations) Adjusted gross margin improved to **72.9%**, operating profit margin to **28.6%**, effective tax rate was **18.5%**, and net debt stood at **$5.40 billion** as of March 31, 2024 Key Adjusted Metrics Comparison | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Adjusted Gross Margin | 72.9% | 72.8% | | Adjusted Operating Profit Margin | 28.6% | 28.4% | | Adjusted Effective Tax Rate | 18.5% | 16.3% | Net Debt (in millions) | Date | Net Debt | | :--- | :--- | | March 31, 2024 | $5,403.2 | | December 31, 2023 | $5,352.1 | [Company Overview and Disclosures](index=5&type=section&id=Disclosures) [About the Company](index=5&type=section&id=About%20the%20Company) Zimmer Biomet is a global medical technology leader focused on maximizing mobility and improving health through innovative products, including digital and robotic technologies - Zimmer Biomet positions itself as a global medical technology leader with a portfolio designed to maximize mobility and improve health, leveraging innovative products and a suite of integrated digital and robotic technologies[14](index=14&type=chunk)[15](index=15&type=chunk) [Note on Non-GAAP Financial Measures](index=6&type=section&id=Note%20on%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures like constant currency sales, adjusted net earnings, and free cash flow to evaluate performance and provide meaningful investor information - The company uses non-GAAP financial measures to provide information that is not impacted by certain items that can cause dramatic changes in reported income but do not affect the fundamentals of operations[26](index=26&type=chunk) - Non-GAAP measures mentioned include constant currency sales changes, adjusted operating profit, adjusted diluted EPS, and free cash flow[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Forward-looking statements, including financial guidance, are subject to significant risks and uncertainties such as competition, pricing pressures, regulatory changes, and global economic conditions - The press release contains forward-looking statements regarding financial guidance and business prospects, which are subject to risks and uncertainties[28](index=28&type=chunk) - Key risks include competition, pricing pressures, new product development, supply chain disruptions, regulatory changes, and macroeconomic conditions[29](index=29&type=chunk)[30](index=30&type=chunk)

In its upcoming report, Zimmer Biomet (ZBH) is predicted by Wall Street analysts to post quarterly earnings of $1.88 per share, reflecting a decline of 0.5% compared to the same period last year. Revenues are forecasted to be $1.87 billion, representing a year-over-year increase of 2.2%.Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 0.2% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during th ...

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Zimmer Biomet (ZBH) , which belongs to the Zacks Medical - Products industry, could be a great candidate to consider.This orthopedic device maker has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 3.05%.For the last reported quarter, Zimmer came o ...