Core Viewpoint - Zimmer Biomet demonstrates robust growth and improved profitability in its Q2 2025 financial results, with a net sales increase of 7.0% year-over-year, reaching $2.077 billion, and a Non-GAAP EPS of $2.07, exceeding market expectations [2][4]. Financial Performance - The company reported net sales of $2.077 billion in Q2 2025, up from $1.942 billion in Q2 2024, reflecting a 7.0% increase [3]. - Operating profit decreased to $300 million from $351.3 million year-over-year, while net earnings fell to $152.8 million from $242.8 million [3][4]. - The adjusted EPS guidance for the full year was raised from $7.90–8.10 to $8.10–8.30, indicating management's confidence in the second half of 2025 [2]. Growth Drivers - The S.E.T. (Sports Medicine, Extremities, Trauma) segment showed significant growth, with revenues reaching $550.6 million, a 17.3% increase year-over-year, driven by rapid integration and product iteration in the ankle business [5][7]. - The company launched new products in the hip joint sector, such as the Z1 Hip Stem, which have gained initial success in the North American market [7]. Digital Transformation - Zimmer Biomet is accelerating its digital transformation with the ZBEdge platform, which integrates hardware, software, and data [8]. - The ROSA surgical robot system has been updated to enhance intraoperative verification and imaging fusion capabilities [10]. - The acquisition of Monogram Technologies aims to improve personalized preoperative planning and intraoperative execution capabilities [12]. Management Outlook - The CEO emphasized a shift from being a "device giant" to a "technology platform company," focusing on digital orthopedics, surgical robotics, and remote rehabilitation management [13]. - The management anticipates that orthopedic business revenue will decline to below 50% of total revenue by 2025, with digital and high-value consumables becoming new growth engines [13]. Challenges and Strategic Transition - Despite strong performance, the company faces short-term integration costs and external variables such as tariffs and logistics costs [14]. - The transition from "procedure replacement" to "full-process empowerment" is underway, with new product cycles and multi-platform interactions laying the foundation for the next decade of growth [14]. Company Overview - Zimmer Biomet is a leading medical technology company focused on innovative products and digital solutions in orthopedics, neuroscience, spine, and cranio-maxillofacial reconstruction [15]. - The company is headquartered in Warsaw, Indiana, and operates in over 100 countries, aiming to enhance the quality of life for patients through technology and surgical advancements [15].

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [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, covering earnings, comprehensive income, balance sheets, stockholders' equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section provides the condensed consolidated statements of earnings, detailing revenue, net earnings, and earnings per share for the periods presented | Period | 2025 (millions) | 2024 (millions) | YoY Change (3M) | YoY Change (6M) | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Three Months Ended Jun 30 | $2,077.3 | $1,942.0 | +7.0% | N/A | | Six Months Ended Jun 30 | $3,986.4 | $3,831.2 | N/A | +4.0% | | Period | 2025 (millions) | 2024 (millions) | YoY Change (3M) | YoY Change (6M) | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Three Months Ended Jun 30 | $152.8 | $242.8 | -37.1% | N/A | | Six Months Ended Jun 30 | $334.9 | $415.2 | N/A | -19.4% | | Period | 2025 (dollars) | 2024 (dollars) | YoY Change (3M) | YoY Change (6M) | | :------------------- | :--- | :--- | :-------------- | :-------------- | | Three Months Ended Jun 30 | $0.77 | $1.18 | -34.7% | N/A | | Six Months Ended Jun 30 | $1.68 | $2.01 | N/A | -16.4% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the condensed consolidated statements of comprehensive income, including net earnings and other comprehensive income components | Period | 2025 (millions) | 2024 (millions) | YoY Change (3M) | YoY Change (6M) | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Three Months Ended Jun 30 | $155.5 | $258.9 | -40.0% | N/A | | Six Months Ended Jun 30 | $313.2 | $411.0 | N/A | -23.8% | | Period | 2025 (millions) | 2024 (millions) | YoY Change (3M) | YoY Change (6M) | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Three Months Ended Jun 30 | $2.7 | $16.1 | -83.2% | N/A | | Six Months Ended Jun 30 | $(21.7) | $(4.2) | N/A | -416.7% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the condensed consolidated balance sheets, detailing assets, liabilities, and equity at specific reporting dates | Date | Amount (millions) | Change from Dec 31, 2024 (millions) | | :------------------- | :---------------- | :----------------------- | | June 30, 2025 | $22,865.1 | +$1,499.8 (+7.0%) | | December 31, 2024 | $21,365.3 | N/A | | Date | Amount (millions) | Change from Dec 31, 2024 (millions) | | :------------------- | :---------------- | :----------------------- | | June 30, 2025 | $10,330.8 | +$1,441.7 (+16.2%) | | December 31, 2024 | $8,889.1 | N/A | | Date | Amount (millions) | Change from Dec 31, 2024 (millions) | | :------------------- | :---------------- | :----------------------- | | June 30, 2025 | $12,534.3 | +$58.1 (+0.5%) | | December 31, 2024 | $12,476.2 | N/A | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including net earnings, other comprehensive income, dividends, and share repurchases | Period | June 30, 2025 (millions) | June 30, 2024 (millions) | Change (YoY) | | :------------------- | :----------------------- | :----------------------- | :----------- | | Balance | $12,534.3 | $12,749.4 | -1.7% | - Key changes in Stockholders' Equity (Six Months Ended June 30, 2025) include net earnings of **+$334.9 million**, other comprehensive loss of **-$21.7 million**, cash dividends declared of **-$95.0 million**, and share repurchases of **-$231.9 million**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the condensed consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities | Period | 2025 (millions) | 2024 (millions) | YoY Change | | :------------------- | :-------------- | :-------------- | :--------- | | Six Months Ended Jun 30 | $761.0 | $597.4 | +27.4% | | Period | 2025 (millions) | 2024 (millions) | YoY Change | | :------------------- | :-------------- | :-------------- | :--------- | | Six Months Ended Jun 30 | $(1,490.4) | $(442.0) | +237.2% (increased outflow) | | Period | 2025 (millions) | 2024 (millions) | YoY Change | | :------------------- | :-------------- | :-------------- | :--------- | | Six Months Ended Jun 30 | $739.2 | $(142.0) | Shift from outflow to inflow | | Date | Amount (millions) | Change from Dec 31, 2024 (millions) | | :------------------- | :---------------- | :----------------------- | | June 30, 2025 | $556.9 | +$31.4 (+6.0%) | | December 31, 2024 | $525.5 | N/A | [Notes to Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the interim condensed consolidated financial statements, covering various accounting policies and financial details [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) This note clarifies the basis for preparing the unaudited interim financial statements and their relation to the annual report - The financial data presented is unaudited and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2024[20](index=20&type=chunk) - The unaudited condensed consolidated financial statements include all necessary normal recurring adjustments for a fair statement of financial position, results of operations, and cash flows[21](index=21&type=chunk) - Results for interim periods should not be considered indicative of results for the full year[21](index=21&type=chunk) [Note 2. Significant Accounting Policies](index=8&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies and recent accounting pronouncements impacting the financial statements - The financial statements are prepared in conformity with GAAP, requiring estimates and assumptions that affect reported amounts[25](index=25&type=chunk) - **ASU 2023-09 (Improvements to Income Tax Disclosures):** Effective for fiscal years beginning after December 15, 2024; the company will adopt for the fiscal year ending December 31, 2025[26](index=26&type=chunk) - **ASU 2024-03 (Disaggregation of Income Statement Expenses):** Effective for fiscal years beginning after December 15, 2026; the company is currently evaluating its impact on disclosures[27](index=27&type=chunk) [Note 3. Revenue](index=9&type=section&id=Note%203.%20Revenue) This note provides a disaggregation of net sales by geographic region and product category for the three months ended June 30 | Geography | 2025 (millions) | 2024 (millions) | % Change | | :---------- | :-------------- | :-------------- | :------- | | United States | $1,173.8 | $1,106.2 | 6.1% | | International | $903.5 | $835.8 | 8.1% | | **Total** | **$2,077.3** | **$1,942.0** | **7.0%** | | Product Category | 2025 (millions) | 2024 (millions) | % Change | | :--------------- | :-------------- | :-------------- | :------- | | Knees | $826.0 | $801.1 | 3.1% | | Hips | $536.1 | $506.5 | 5.8% | | S.E.T. | $550.6 | $469.5 | 17.3% | | Technology & Data, Bone Cement and Surgical | $164.6 | $164.9 | (0.2)% | | **Total** | **$2,077.3** | **$1,942.0** | **7.0%** | [Note 4. Restructuring](index=9&type=section&id=Note%204.%20Restructuring) This note details the company's restructuring plans, including the 2025, 2023, and 2019 initiatives, and their associated pre-tax charges - **2025 Restructuring Plan:** Approved in February 2025 to reduce costs and transform operations, with expected total pre-tax charges of approximately **$85 million** by the end of 2027; **$29.8 million** incurred through June 30, 2025[31](index=31&type=chunk) - **2023 Restructuring Plan:** Concluded in the first quarter of 2025, resulting in total pre-tax restructuring charges of approximately **$117 million**[32](index=32&type=chunk) - **2019 Restructuring Plan:** Initiated in December 2019, expected to result in total pre-tax restructuring charges of approximately **$400 million**; **$384.6 million** incurred through June 30, 2025, with remaining costs related to a manufacturing facility closure expected in 2025[32](index=32&type=chunk)[34](index=34&type=chunk) [Note 5. Inventories](index=11&type=section&id=Note%205.%20Inventories) This note provides a breakdown of inventory balances by category as of June 30, 2025, and December 31, 2024 | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | Change (millions) | | :--------------- | :----------------------- | :--------------------------- | :----- | | Finished goods | $1,967.7 | $1,771.7 | +11.1% | | Work in progress | $208.3 | $175.1 | +18.9% | | Raw materials | $278.2 | $288.5 | -3.5% | | **Total Inventories** | **$2,454.2** | **$2,235.3** | **+9.8%** | [Note 6. Property, Plant and Equipment](index=11&type=section&id=Note%206.%20Property,%20Plant%20and%20Equipment) This note details the composition of property, plant, and equipment, net of accumulated depreciation, at specific reporting dates | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | Change (millions) | | :------------------------- | :----------------------- | :--------------------------- | :----- | | Land | $22.6 | $18.5 | +22.2% | | Buildings and equipment | $2,411.2 | $2,273.1 | +6.1% | | Capitalized software costs | $606.1 | $575.1 | +5.4% | | Instruments | $3,834.0 | $3,589.6 | +6.8% | | Construction in progress | $271.6 | $233.9 | +16.1% | | Accumulated depreciation | $(4,969.8) | $(4,641.4) | +7.1% (increase in accumulated depreciation) | | **Total, net** | **$2,175.7** | **$2,048.8** | **+6.2%** | [Note 7. Acquisitions](index=11&type=section&id=Note%207.%20Acquisitions) This note provides details on significant acquisitions, including the Paragon 28 acquisition and other strategic purchases, and their financial impact - **Paragon 28 Acquisition (April 21, 2025):** Acquired all outstanding shares for **$13.00 cash per share** plus a non-tradeable contingent value right (CVR) up to **$1.00 per share**; initial consideration was **$1,241.5 million**, with a fair value of contingent consideration of **$36.8 million**; goodwill recognized was **$643.1 million**[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - **2024 Acquisitions:** Completed four acquisitions with initial consideration of **$294.8 million** and additional contingent consideration up to **$111.6 million** (fair value **$61.0 million**); goodwill recognized was **$201.4 million**[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk) - In the six-month period ended June 30, 2024, the company recognized **$101.6 million** in intangible assets related to agreements to acquire ownership rights or access to various technologies[51](index=51&type=chunk) [Note 8. Debt](index=17&type=section&id=Note%208.%20Debt) This note details the company's debt structure, including current and long-term debt, recent issuances, and revolving credit facilities | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | Change (millions) | | :------------------- | :----------------------- | :--------------------------- | :----- | | Current portion of long-term debt | $820.0 | $863.0 | -4.9% | | Long-term debt | $6,752.5 | $5,341.6 | +26.4% | | **Total Debt** | **$7,572.5** | **$6,204.6** | **+22.0%** | - In the six-month period ended June 30, 2025, the company redeemed **$863.0 million** of 3.550% Senior Notes due 2025 and issued new senior notes totaling **$1,750.0 million** (4.700% due 2027, 5.050% due 2030, and 5.500% due 2035)[52](index=52&type=chunk)[53](index=53&type=chunk) - New revolving credit agreements were entered into on June 27, 2025: a **$1.5 billion** five-year facility (with **$50.0 million** outstanding) and a **$1.0 billion** 364-day facility (with no outstanding borrowings); an uncommitted credit facility has **$170.0 million** outstanding[54](index=54&type=chunk)[55](index=55&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 9. Accumulated Other Comprehensive Income](index=20&type=section&id=Note%209.%20Accumulated%20Other%20Comprehensive%20Income) This note explains the components and changes in accumulated other comprehensive income (loss), including foreign currency adjustments and hedge gains/losses - Accumulated other comprehensive income (loss) (AOCI) was **$(284.5) million** at June 30, 2025, compared to **$(262.8) million** at December 31, 2024[69](index=69&type=chunk) - AOCI is comprised of foreign currency translation adjustments, unrealized gains and losses on cash flow hedges, and unrecognized prior service costs and actuarial assumptions related to defined benefit plans[68](index=68&type=chunk) - Reclassification adjustments from AOCI to statements of earnings for the six months ended June 30, 2025, included a **$30.0 million** gain (net of tax) from cash flow hedges and a **$1.7 million** gain (net of tax) from defined benefit plans[69](index=69&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) This note details the fair value measurements of assets and liabilities, categorized by valuation input levels, including derivatives and contingent payments | Description | Recorded Balance (millions) | Level 1 (millions) | Level 2 (millions) | Level 3 (millions) | | :-------------------------------------- | :-------------------------- | :----------------- | :----------------- | :----------------- | | **Assets:** | | | | | | Derivatives designated as hedges | $32.0 | $- | $32.0 | $- | | **Liabilities:** | | | | | | Derivatives designated as hedges | $168.5 | $- | $168.5 | $- | | Derivatives not designated as hedges | $11.1 | $- | $11.1 | $- | | Contingent payments related to acquisitions | $166.7 | $- | $- | $166.7 | | **Total Liabilities** | **$346.3** | **$-** | **$179.6** | **$166.7** | - Contingent payments related to acquisitions (Level 3 liabilities) are valued using discounted cash flow techniques based on probability-weighted future revenue estimates and regulatory milestones[74](index=74&type=chunk) | Item | Amount (millions) | | :------------------------------------------ | :---------------- | | Beginning balance December 31, 2024 | $180.7 | | New contingent consideration (Paragon 28) | $36.8 | | Change in estimates | $(7.7) | | Settlements | $(45.2) | | Foreign currency impact | $2.1 | | **Ending balance June 30, 2025** | **$166.7** | [Note 11. Derivative Instruments and Hedging Activities](index=23&type=section&id=Note%2011.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note describes the company's use of derivative instruments, including interest rate swaps and foreign currency contracts, to manage market risks - The company uses fixed-to-variable interest rate swaps to manage interest rate risk (fair value hedges) and foreign currency exchange forward contracts (cash flow hedges) and Euro notes (net investment hedges) to manage foreign currency exchange rate risk[79](index=79&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - As of June 30, 2025, notional amounts of outstanding forward contracts to purchase U.S. Dollars were **$1,511.9 million**, and to purchase Swiss Francs were **$450.6 million**[88](index=88&type=chunk) - A gain of **$23.8 million** (or **$18.7 million** after taxes) is expected to be reclassified to earnings in cost of products sold, and a loss of **$0.8 million** (or **$0.6 million** after taxes) in interest expense, net, over the next twelve months from cash flow hedges[90](index=90&type=chunk) [Note 12. Income Taxes](index=28&type=section&id=Note%2012.%20Income%20Taxes) This note discusses the effective tax rate, factors influencing it, ongoing IRS disputes, and the evaluation of new tax legislation | Period | 2025 (percent) | 2024 (percent) | Change (pp) | | :------------------- | :----- | :----- | :---------- | | Three Months Ended Jun 30 | 31.7% | 19.6% | +12.1 | | Six Months Ended Jun 30 | 25.9% | 19.6% | +6.3 | - The increase in ETR for 2025 was primarily driven by the mix of earnings between U.S. and foreign locations and a change in assertion regarding the indefinite reinvestment of earnings of certain foreign subsidiaries[101](index=101&type=chunk) - The company is vigorously contesting IRS proposed adjustments for tax years 2013-2015 (transfer pricing) and 2016-2019 (U.S. taxation of foreign earnings, potentially **$312 million** additional tax expense)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company is evaluating the impact of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, on its financial statements[102](index=102&type=chunk) [Note 13. Earnings Per Share](index=30&type=section&id=Note%2013.%20Earnings%20Per%20Share) This note presents the basic and diluted earnings per share calculations and details the weighted-average shares outstanding | Period | 2025 (Basic, millions) | 2024 (Basic, millions) | 2025 (Diluted, millions) | 2024 (Diluted, millions) | | :------------------- | :----------- | :----------- | :------------- | :------------- | | Three Months Ended Jun 30 | 197.9 | 205.7 | 198.3 | 206.4 | | Six Months Ended Jun 30 | 198.4 | 205.4 | 199.0 | 206.3 | - An average of **4.8 million** options (for both 3M and 6M 2025) and **2.9 million**/**2.3 million** options (for 3M/6M 2024, respectively) were excluded from diluted EPS computation due to their antidilutive effect[103](index=103&type=chunk) [Note 14. Segment Information](index=30&type=section&id=Note%2014.%20Segment%20Information) This note provides financial information by reportable segment, including net sales, segment profit, and total assets - The company operates through three reportable segments: Americas, EMEA, and Asia Pacific[104](index=104&type=chunk) - Segment operating profit is evaluated exclusive of 'Corporate items' such as intangible asset amortization, restructuring costs, and corporate functions[105](index=105&type=chunk) | Segment | Net Sales 2025 (millions) | Net Sales 2024 (millions) | Segment Profit 2025 (millions) | Segment Profit 2024 (millions) | | :---------- | :------------------------ | :------------------------ | :----------------------------- | :----------------------------- | | Americas | $1,273.8 | $1,199.3 | $652.8 | $636.8 | | EMEA | $467.5 | $432.4 | $158.5 | $151.6 | | Asia Pacific | $336.1 | $310.3 | $122.9 | $122.2 | | **Total** | **$2,077.3** | **$1,942.0** | **$934.2** | **$910.6** | | Segment | June 30, 2025 (millions) | December 31, 2024 (millions) | | :---------- | :----------------------- | :--------------------------- | | Americas | $1,351.0 | $1,344.0 | | EMEA | $748.0 | $655.0 | | Asia Pacific | $362.0 | $311.0 | | Corporate items | $1,604.5 | $1,406.0 | | **Total** | **$4,065.5** | **$3,716.0** | [Note 15. Commitments and Contingencies](index=32&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, litigation liabilities, and other contractual obligations that may require future payments - The company is involved in various legal proceedings, including product liability and intellectual property matters; net litigation-related charges were **$5.3 million** (3M 2025) and **$7.3 million** (6M 2025)[110](index=110&type=chunk)[113](index=113&type=chunk) - Accrued litigation liabilities were **$156.8 million** as of June 30, 2025, and **$156.4 million** as of December 31, 2024[113](index=113&type=chunk) - Other contractual obligations, dependent on R&D or sales milestones, could result in future payments ranging from **$0** to approximately **$325 million**[114](index=114&type=chunk) [Note 16. Subsequent Event](index=33&type=section&id=Note%2016.%20Subsequent%20Event) This note discloses the definitive agreement to acquire Monogram Technologies Inc., an orthopedic robotics company, after the reporting period - **Monogram Technologies Inc. Acquisition (July 11, 2025):** The company entered into a definitive agreement to acquire Monogram, an orthopedic robotics company; initial consideration is approximately **$180 million**, with potential additional contingent consideration up to **$570 million** based on milestones through 2030[115](index=115&type=chunk) - The transaction is expected to close in the second half of 2025, subject to regulatory and stockholder approvals[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results of operations, covering sales growth, expense trends, liquidity, and forward-looking statements [Executive Level Overview](index=34&type=section&id=Executive%20Level%20Overview) This overview highlights key financial performance, including net sales growth, net earnings changes, and the company's full-year 2025 outlook - **Net Sales Growth (YoY):** Increased by **7.0%** for the three months and **4.0%** for the six months ended June 30, 2025, driven by the Paragon 28 acquisition, market growth, new product introductions, and positive foreign currency exchange rates[117](index=117&type=chunk) - **Net Earnings (YoY Decrease):** Decreased to **$152.8 million** (3M) and **$334.9 million** (6M) in 2025, primarily due to Paragon 28 acquisition costs, higher interest expense, increased cost of products sold (inflation), and investments in marketing/IT, partially offset by lower restructuring costs[118](index=118&type=chunk) - **2025 Outlook:** Expected full year revenue growth of **6.7% to 7.7%**, with Paragon 28 contributing **2.7%** and foreign currency a positive **0.5%**; net earnings are projected to decrease due to higher acquisition/integration costs, operating expenses, intangible asset amortization, manufacturing costs (including **$40 million** in tariffs), increased net interest expense, and a higher effective tax rate[119](index=119&type=chunk)[120](index=120&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's operational performance, including net sales by geography and product category, and expense trends [Net Sales by Geography](index=35&type=section&id=Net%20Sales%20by%20Geography) This section details net sales performance across different geographic regions for the three and six months ended June 30 | Geography | 2025 (millions) | 2024 (millions) | % Inc | | :---------- | :-------------- | :-------------- | :---- | | United States | $1,173.8 | $1,106.2 | 6.1% | | International | $903.5 | $835.8 | 8.1% | | **Total (3M)** | **$2,077.3** | **$1,942.0** | **7.0%** | | Geography | 2025 (millions) | 2024 (millions) | % Inc | | :---------- | :-------------- | :-------------- | :---- | | United States | $2,287.4 | $2,205.4 | 3.7% | | International | $1,699.0 | $1,625.8 | 4.5% | | **Total (6M)** | **$3,986.4** | **$3,831.2** | **4.0%** | [Net Sales by Product Category](index=35&type=section&id=Net%20Sales%20by%20Product%20Category) This section presents net sales performance broken down by key product categories for the three and six months ended June 30 | Product Category | 2025 (millions) | 2024 (millions) | % Inc / (Dec) | | :--------------- | :-------------- | :-------------- | :------------ | | Knees | $826.0 | $801.1 | 3.1% | | Hips | $536.1 | $506.5 | 5.8% | | S.E.T. | $550.6 | $469.5 | 17.3% | | Technology & Data, Bone Cement and Surgical | $164.6 | $164.9 | (0.2)% | | **Total (3M)** | **$2,077.3** | **$1,942.0** | **7.0%** | | Product Category | 2025 (millions) | 2024 (millions) | % Inc / (Dec) | | :--------------- | :-------------- | :-------------- | :------------ | | Knees | $1,618.9 | $1,589.3 | 1.9% | | Hips | $1,031.9 | $997.6 | 3.4% | | S.E.T. | $1,021.1 | $922.1 | 10.7% | | Other | $314.5 | $322.2 | (2.4)% | | **Total (6M)** | **$3,986.4** | **$3,831.2** | **4.0%** | [Demand (Volume and Mix) Trends](index=36&type=section&id=Demand%20(Volume%20and%20Mix)%20Trends) This section analyzes the impact of changes in product sales volume and mix on overall year-over-year sales growth - Changes in volume and mix of product sales had a positive effect of **5.2%** (3M 2025) and **3.7%** (6M 2025) on year-over-year sales[125](index=125&type=chunk) - The Paragon 28 acquisition contributed **2.6%** (3M 2025) and **1.4%** (6M 2025) to volume growth[125](index=125&type=chunk) [Pricing Trends](index=36&type=section&id=Pricing%20Trends) This section discusses the impact of global selling prices on year-over-year sales and strategies to offset negative pricing pressures - Global selling prices had a positive effect of **0.2%** on year-over-year sales for both the three and six-month periods ended June 30, 2025[126](index=126&type=chunk) - The company successfully offset negative pricing pressure through internal initiatives and by passing some inflationary impacts on to customers[126](index=126&type=chunk) [Foreign Currency Exchange Rates](index=36&type=section&id=Foreign%20Currency%20Exchange%20Rates) This section examines the effect of foreign currency exchange rate fluctuations on year-over-year sales and future estimates - Changes in foreign currency exchange rates had a positive effect of **1.6%** (3M 2025) and **0.1%** (6M 2025) on year-over-year sales[127](index=127&type=chunk) - A positive impact of **0.5%** on full-year 2025 sales is estimated if foreign currency exchange rates remain consistent with recent levels[127](index=127&type=chunk) [Geography (Detailed)](index=36&type=section&id=Geography%20(Detailed)) This section provides a detailed breakdown of net sales growth in the U.S. and International markets, highlighting key drivers - **U.S. Net Sales Growth:** **6.1%** (3M 2025) and **3.7%** (6M 2025), driven by the Paragon 28 acquisition (**3.8%** for 3M, **1.9%** for 6M) and market growth in Knees, Hips, and S.E.T. product categories[128](index=128&type=chunk) - **International Net Sales Growth:** **8.1%** (3M 2025) and **4.5%** (6M 2025), driven by the Paragon 28 acquisition (**1.2%** for 3M, **0.6%** for 6M), market growth, reduced estimated liabilities to public healthcare agencies, and positive foreign currency effects (**3.5%** for 3M, **0.4%** for 6M)[128](index=128&type=chunk) [Product Categories (Detailed)](index=36&type=section&id=Product%20Categories%20(Detailed)) This section offers a detailed analysis of net sales performance across specific product categories, including Knees, Hips, S.E.T., and Technology & Data - **Knees and Hips:** Net sales benefited from market growth and new product introductions, with positive foreign currency effects of **1.3%** (3M) and **0.1%** (6M) on Knees, and **1.8%** (3M) and **0.2%** (6M) on Hips[129](index=129&type=chunk) - **S.E.T.:** Net sales increases were primarily due to the Paragon 28 acquisition (**11.1%** for 3M, **5.7%** for 6M) and growth in sports medicine, upper extremities, and craniomaxillofacial and thoracic products[129](index=129&type=chunk) - **Technology & Data, Bone Cement and Surgical:** Net sales declined due to lower sales of the ROSA® Robot[130](index=130&type=chunk) [Expenses as a Percentage of Net Sales](index=38&type=section&id=Expenses%20as%20a%20Percentage%20of%20Net%20Sales) This section analyzes key expense categories as a percentage of net sales, highlighting changes and underlying drivers for the six months ended June 30 | Expense Category | 2025 (6M, percent) | 2024 (6M, percent) | Change (pp) | | :------------------------------------------ | :-------- | :-------- | :---------- | | Cost of products sold, excluding intangible asset amortization | 28.6% | 27.8% | +0.8 | | Intangible asset amortization | 7.8% | 7.5% | +0.3 | | Research and development | 5.6% | 5.7% | -0.1 | | Selling, general and administrative | 39.5% | 38.5% | +1.0 | | Restructuring and other cost reduction initiatives | 1.3% | 4.3% | -3.0 | | Acquisition, integration, divestiture and related | 2.2% | 0.1% | +2.1 | | Operating profit | 14.9% | 16.1% | -1.2 | - **Cost of products sold:** Increased as a percentage of net sales (6M) due to higher manufacturing costs (inflation) and selling Paragon 28 inventory at its stepped-up fair value[131](index=131&type=chunk) - **SG&A expenses:** Increased due to Paragon 28 expenses, direct-to-patient marketing, IT, medical education, and higher performance-related compensation, partially offset by lower bad debt and share-based payment expenses[134](index=134&type=chunk) - **Restructuring costs:** Decreased significantly due to the timing of programs, with the 2023 plan being larger in scope than the 2025 plan and the completion of U.S. and Canada ERP implementation[135](index=135&type=chunk) [Other Income, Net, Interest Expense, Net, and Income Taxes](index=40&type=section&id=Other%20Income,%20Net,%20Interest%20Expense,%20Net,%20and%20Income%20Taxes) This section analyzes trends in other income, net interest expense, and the effective tax rate, explaining key drivers for changes - **Other Income, Net:** Increased to **$3.9 million** (3M 2025) and **$6.9 million** (6M 2025) from **$2.0 million** and **$1.9 million** (2024 periods), primarily due to the non-recurrence of prior year investment losses[138](index=138&type=chunk) - **Interest Expense, Net:** Increased due to higher average debt balances from the Paragon 28 acquisition and new borrowings in 2024 that replaced debt with lower interest rates[139](index=139&type=chunk) - **Effective Tax Rate (ETR):** Increased to **31.7%** (3M 2025) and **25.9%** (6M 2025) from **19.6%** in both prior year periods, driven by the mix of earnings between U.S. and foreign locations and a change in assertion regarding indefinite reinvestment of foreign subsidiary earnings[140](index=140&type=chunk) [Segment Operating Profit](index=40&type=section&id=Segment%20Operating%20Profit) This section examines segment operating profit and its percentage of net sales for the Americas, EMEA, and Asia Pacific regions | Segment | 2025 (6M, percent) | 2024 (6M, percent) | Change (pp) | | :---------- | :-------- | :-------- | :---------- | | Americas | 51.5% | 53.5% | -2.0 | | EMEA | 33.7% | 34.9% | -1.2 | | Asia Pacific | 35.5% | 38.1% | -2.6 | - **Americas:** Operating profit increased, but as a percentage of net sales decreased due to the Paragon 28 acquisition (lower operating profit margin) and higher manufacturing costs, partially offset by lower bad debt expense[142](index=142&type=chunk) - **EMEA:** Operating profit increased, but as a percentage of net sales decreased due to the Paragon 28 acquisition (lower operating profit margin) and higher manufacturing costs, partially offset by savings from restructuring plans[143](index=143&type=chunk) - **Asia Pacific:** Operating profit increased (3M) but decreased (6M), and as a percentage of net sales decreased due to net sales increases being largely offset by higher manufacturing costs[144](index=144&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash flow activities, and material cash requirements from contractual obligations - As of June 30, 2025, the company had **$556.9 million** in cash and cash equivalents, along with **$1.0 billion** available under its 2025 364-Day Credit Agreement and **$1.45 billion** under its 2025 Five-Year Revolving Facility[145](index=145&type=chunk) - Management believes that current cash flows from operations, cash on hand, and available borrowings will be sufficient to meet liquidity requirements for at least the next twelve months[146](index=146&type=chunk) [Sources of Liquidity](index=41&type=section&id=Sources%20of%20Liquidity) This section analyzes cash flows from operating, investing, and financing activities, and the composition of cash and cash equivalents - **Operating Activities:** Net cash provided increased to **$761.0 million** (6M 2025) from **$597.4 million** (6M 2024), driven by lower bonus payments and favorable timing of accounts payable, partially offset by Paragon 28 acquisition costs and higher tax payments[147](index=147&type=chunk) - **Investing Activities:** Net cash used increased significantly to **$1,490.4 million** (6M 2025) from **$442.0 million** (6M 2024), primarily due to **$1,226.3 million** for the Paragon 28 acquisition and **$32.4 million** for intangible asset acquisition[148](index=148&type=chunk) - **Financing Activities:** Shifted to net cash provided of **$739.2 million** (6M 2025) from net cash used of **$142.0 million** (6M 2024), driven by **$1,748.1 million** from senior notes issuance and **$220.0 million** net borrowings on revolving facilities, used for Paragon 28, debt redemption, and stock repurchases[149](index=149&type=chunk) - As of June 30, 2025, **$484.6 million** of cash and cash equivalents were held in jurisdictions outside the U.S., with **$55.9 million** denominated in U.S. Dollars[151](index=151&type=chunk) [Material Cash Requirements from Known Contractual and Other Obligations](index=43&type=section&id=Material%20Cash%20Requirements%20from%20Known%20Contractual%20and%20Other%20Obligations) This section details significant future cash outflows related to outstanding debt, restructuring plans, IRS disputes, litigation, and acquisition commitments - **Outstanding Debt:** Total outstanding debt was **$7,572.5 million** as of June 30, 2025, with **$820.0 million** classified as current debt, expected to be satisfied by cash from operations, new debt, or revolving credit facilities[153](index=153&type=chunk) - **Restructuring Plans:** The 2025 Restructuring Plan expects **$85 million** in pre-tax charges by 2027 (**$30 million** incurred), aiming for **$95 million** in annual operating expense reductions; the 2023 plan concluded with **$117 million** in charges, targeting **$175-$200 million** in annual savings; the 2019 plan expects **$400 million** in charges (**$385 million** incurred), targeting **$180-$280 million** in annual savings[156](index=156&type=chunk) - **IRS Disputes:** Potential significant future payments related to disputed tax adjustments for years 2013-2015 and 2016-2019, which the company intends to vigorously defend[157](index=157&type=chunk) - **Litigation & Contractual Obligations:** Estimated total litigation liabilities of **$156.8 million** as of June 30, 2025; other contractual arrangements may result in future payments ranging from **$0** to approximately **$325 million**[158](index=158&type=chunk) - **Monogram Acquisition:** Initial consideration of approximately **$180 million** and potential contingent consideration up to **$570 million**, expected to be funded by cash on hand and available debt financing[159](index=159&type=chunk) [Recent Accounting Pronouncements](index=45&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recent accounting pronouncements, including ASU 2023-09 and ASU 2024-03 - Information pertaining to recent accounting pronouncements, including ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), can be found in Note 2 to the interim condensed consolidated financial statements[161](index=161&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) This section confirms no changes in critical accounting estimates during the three-month period ended June 30, 2025 - There were no changes in critical accounting estimates during the three-month period ended June 30, 2025, from those described in the Annual Report on Form 10-K for the year ended December 31, 2024[162](index=162&type=chunk) [Cautionary Note Regarding Forward-Looking Statements and Factors That May Affect Future Results](index=45&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements%20and%20Factors%20That%20May%20Affect%20Future%20Results) This note advises caution regarding forward-looking statements, highlighting significant risks and uncertainties that could impact future results - This report contains forward-looking statements that are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially[163](index=163&type=chunk) - Key risk factors include competition, pricing pressures, dependence on new product development, integration risks of the Paragon 28 acquisition, business disruptions, IT system failures, government investigations, healthcare reform, substantial indebtedness, tax obligations, tariffs, and litigation[163](index=163&type=chunk)[166](index=166&type=chunk) - Readers are cautioned not to rely on these forward-looking statements, as it is not possible to predict or identify all factors that could cause actual results to differ materially[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes to market risk disclosures from the Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes from the information provided in the Annual Report on Form 10-K for the year ended December 31, 2024[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures and reports on changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=48&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's evaluation of the effectiveness of disclosure controls and procedures as of June 30, 2025 - Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025[170](index=170&type=chunk) - Based on the evaluation, disclosure controls and procedures were concluded to be effective at a reasonable assurance level[170](index=170&type=chunk) [Changes in Internal Control Over Financial Reporting](index=48&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section addresses changes in internal control over financial reporting, including the integration of Paragon 28's controls - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control during the quarter ended June 30, 2025[171](index=171&type=chunk) - As part of the integration process of Paragon 28, its internal controls are being enhanced to align with the company's framework of internal controls over financial reporting[171](index=171&type=chunk) [Part II - Other Information](index=49&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 15 of the interim condensed consolidated financial statements for detailed information on legal proceedings - Information pertaining to legal proceedings can be found in Note 15 to the interim condensed consolidated financial statements[172](index=172&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section advises considering risk factors from the Annual Report on Form 10-K, as they could materially affect business and financial results - Readers should carefully consider the factors discussed in Part I, Item 1A "Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2024, as they could materially affect the business, financial condition, and results of operations[173](index=173&type=chunk) - Additional risks and uncertainties not currently known or deemed immaterial may also materially adversely affect the business[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds during the period - None[174](index=174&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities during the period - None[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company's operations - Not applicable[174](index=174&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) This section reports no Rule 10b5-1 trading arrangement adoptions, amendments, or terminations by directors or officers - No members of the Board of Directors or officers adopted, amended, or terminated any contract, instruction, or written plan for the purchase or sale of securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act during the three-month period ended June 30, 2025[174](index=174&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the report, including merger agreements, corporate governance, and credit agreements - The report includes various exhibits such as the Agreement and Plan of Merger for Paragon 28, Restated Certificate of Incorporation and Bylaws, Offer Letter for Kevin Thornal, 2009 Stock Incentive Plan, Five-Year Revolving Credit Agreement, 364-Day Revolving Credit Agreement, List of Subsidiaries, and Certifications (302 and 906)[178](index=178&type=chunk) [Signatures](index=51&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q report, affirming its submission pursuant to the Securities Exchange Act of 1934 - The report is signed by Suketu Upadhyay (Chief Financial Officer and Executive Vice President - Finance, Operations and Supply Chain) and Paul Stellato (Vice President, Controller and Chief Accounting Officer) on August 7, 2025[180](index=180&type=chunk)

Core Insights - Zimmer Biomet Holdings, Inc. (ZBH) reported second-quarter 2025 adjusted earnings per share (EPS) of $2.07, exceeding the Zacks Consensus Estimate by 4.5% and reflecting a 3% year-over-year increase [1][9] - The company's second-quarter net sales reached $2.08 billion, marking a 7% increase year over year, and surpassing the Zacks Consensus Estimate by 1.6% [3][9] - ZBH raised its 2025 EPS guidance to a range of $8.10-$8.30, indicating strength in high-growth, non-core segments [9][12] Revenue Performance - Second-quarter net sales of $2.08 billion increased by 7% year over year, with a 5.4% increase at constant exchange rates (CER) [3][9] - U.S. sales totaled $1.17 billion, up 6.1% year over year, while international sales reached $903.5 million, reflecting an 8.1% year-over-year increase and 4.6% at CER [4][9] Segment Analysis - Sales in the Knees unit improved by 1.8% year over year at CER to $826 million, while Hips sales grew by 4% year over year at CER to $536.1 million [5][6] - The S.E.T. unit saw a significant revenue increase of 16% year over year at CER to $550.6 million, outperforming estimates [6] - Revenues from Technology & Data, Bone Cement and Surgical decreased by 2.2% to $164.6 million at CER [6] Margin and Expense Overview - Adjusted gross margin remained flat year over year at 71.5%, while selling, general and administrative expenses rose by 10.5% to $814.8 million [7] - Research and development expenses increased by 3.6% to $113.3 million, and adjusted operating margin contracted by 109 basis points to 26.8% [7] Cash Position - At the end of the second quarter, ZBH had cash and cash equivalents of $556.9 million, down from $1.38 billion at the end of the first quarter of 2025 [10] - Cumulative net cash provided by operating activities was $761 billion, compared to $597.4 billion in the year-ago period [10] Updated Financial Outlook - ZBH updated its revenue growth expectation for 2025 to a range of 6.7-7.7%, with foreign exchange anticipated to negatively impact revenues by 0.5% [11] - The adjusted EPS for the full year is now expected to be in the range of $8.10-$8.30, up from the previous estimate of $7.90-$8.10 [12] Strategic Developments - The company completed the acquisition of Paragon 28 in the second quarter, which is expected to enhance innovation and diversification in the S.E.T. business [14]

Financial Data and Key Metrics Changes - The company reported a 2.8% organic constant currency sales growth for Q2 2025, despite an 80 basis point headwind from selling days [8][24] - Adjusted earnings per share (EPS) increased to $2.07, up 3% year-over-year, despite dilution from the Paragon 28 acquisition [24][30] - Full year organic constant currency revenue growth expectations were updated to a range of 3.5% to 4.5%, down from the previous 3% to 5% range [10][32] Business Line Data and Key Metrics Changes - The US hips business grew by 5.2% year-over-year, while US knees saw a sequential increase of 150 basis points, growing 1.7% [9][26] - The Surgical and Sports Medicine (SET) segment reported nearly 5% growth, marking the seventh consecutive quarter of mid-single-digit growth [9][28] - Technology and Data, Bone Cement, and Surgical segments declined by 2.2% due to difficult comparisons from the prior year [29] Market Data and Key Metrics Changes - International organic revenue grew by 3.4%, with global hips increasing by 4% and US hips growing by 5.2% [26] - The company noted strong early adoption of new products, particularly in the US market, contributing to growth [19][20] Company Strategy and Development Direction - The company is focusing on three strategic priorities: people and culture, operational excellence, and innovation and diversification [7][12] - The acquisition of Monogram Technologies aims to enhance the company's capabilities in robotic surgery, with expectations for revenue growth starting in 2027 [13][14] - The company is committed to diversifying into higher growth segments through disciplined mergers and acquisitions [14][68] Management's Comments on Operating Environment and Future Outlook - Management expressed high confidence in the second half of 2025, driven by new product launches and improved operational efficiency [10][11] - The company anticipates a strong growth acceleration in Q3, with expectations of organic growth around 6% [45][76] - Management noted that the orthopedic market remains healthy, with no signs of slowing down [50][53] Other Important Information - The company has reduced its expected tariff impact for 2025 to approximately $40 million, down from earlier estimates of $60 to $80 million [34][85] - Adjusted gross margin was reported at 72.3%, higher than the previous year, due to favorable product mix [30] Q&A Session Summary Question: Can you elaborate on the updated organic sales growth guidance? - Management highlighted confidence in the second half due to the absence of selling day headwinds and favorable comparisons from the previous year [41][42] Question: What are the current trends in the orthopedic market? - Management noted that the orthopedic market remains healthy, with strong volumes and pricing trends [50][52] Question: Can you discuss the Monogram acquisition and its implications? - Management expressed high confidence in the regulatory pathway for Monogram and its potential to disrupt the market with autonomous capabilities [90][91] Question: How do you see knee growth evolving? - Management indicated that recent commercial investments and new product introductions are expected to sustain growth in the knee segment [99][100]

Company Performance - Zimmer Biomet reported quarterly earnings of $2.07 per share, exceeding the Zacks Consensus Estimate of $1.98 per share, and showing an increase from $2.01 per share a year ago, resulting in an earnings surprise of +4.55% [1] - The company posted revenues of $2.08 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.59%, and an increase from $1.94 billion year-over-year [2] - Over the last four quarters, Zimmer has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Zimmer shares have declined approximately 13.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.81 on revenues of $2 billion, and for the current fiscal year, it is $7.95 on revenues of $8.19 billion [7] Industry Context - The Medical - Products industry, to which Zimmer belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance) Zimmer Biomet reported solid Q2 2025 results, with net sales up **7.0%** and adjusted diluted EPS growing **3.0%**, driven by new product cycles | Metric | Q2 2025 Value | YoY Change (Reported) | YoY Change (Constant Currency) | YoY Change (Organic Constant Currency) | | :----- | :------------ | :-------------------- | :----------------------------- | :----------------------------------- | | Net Sales | $2.077 billion | 7.0% | 5.4% | 2.8% | | Diluted EPS | $0.77 | - | - | - | | Adjusted Diluted EPS | $2.07 | 3.0% | - | - | [Recent Business Highlights](index=2&type=section&id=Recent%20Business%20Highlights) Strategic initiatives include acquiring Monogram Technologies, partnering with Getinge, launching a patient campaign, and receiving industry recognition - Announced definitive agreement to acquire Monogram Technologies, an AI-driven robotics company, to expand Zimmer Biomet's robotics suite with semi- and fully autonomous solutions[7](index=7&type=chunk) - Signed a strategic partnership with Getinge to distribute Getinge's Operating Room capital products to Ambulatory Surgery Center customers, creating a turnkey solution[7](index=7&type=chunk) - Launched "This, You Can Do," a new direct-to-patient campaign to drive awareness of Zimmer Biomet's Knee solutions in key U.S. markets[7](index=7&type=chunk) - Named one of America's Best Mid-Size Companies in 2025 by TIME and certified as a Great Place to Work® in multiple countries[7](index=7&type=chunk) [Full-Year 2025 Financial Guidance Update](index=1&type=section&id=Full-Year%202025%20Financial%20Guidance%20Update) Full-year 2025 guidance tightened for revenue growth and increased for adjusted EPS, reflecting confidence in continued performance Projected Year Ending December 31, 2025 Financial Guidance | Metric | Previous Guidance | Updated Guidance | | :---------------------------------- | :---------------- | :--------------- | | 2025 Reported Revenue Change | 5.7% - 8.2% | 6.7% - 7.7% | | Foreign Currency Exchange Impact | 0.0% - 0.5% | 0.5% | | 2025 Constant Currency Revenue Change | 5.7% - 7.7% | 6.2% - 7.2% | | 2025 Organic Constant Currency Revenue Change | 3.0% - 5.0% | 3.5% - 4.5% | | Adjusted Diluted EPS | $7.90 - $8.10 | $8.10 - $8.30 | [Detailed Financial Results](index=3&type=section&id=Detailed%20Financial%20Results) [Geographic and Product Category Sales](index=3&type=section&id=Geographic%20and%20Product%20Category%20Sales) Sales for Q2 and H1 2025 showed varied growth across geographies and product categories, with strong performance in S.E.T. and U.S. Hips and Knees [Three Months Ended June 30, 2025](index=3&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) Q2 2025 net sales increased **7.0%** reported, **5.4%** constant currency, and **2.8%** organic constant currency, with S.E.T. as the strongest category Net Sales - Three Months Ended June 30, 2025 (in millions) | Geographic Results | Net Sales | % Change | Constant Currency % Change | Organic Constant Currency % Change | | :----------------- | :-------- | :------- | :------------------------- | :--------------------------------- | | United States | $1,173.8 | 6.1 % | 6.1 % | 2.3 % | | International | 903.5 | 8.1 % | 4.6 % | 3.4 % | | **Total** | **$2,077.3** | **7.0 %** | **5.4 %** | **2.8 %** | | Product Categories | | | | | | Knees Total | 826.0 | 3.1 % | 1.8 % | 1.8 % | | Hips Total | 536.1 | 5.8 % | 4.0 % | 4.0 % | | S.E.T. | 550.6 | 17.3 % | 16.0 % | 4.9 % | | Technology & Data, Bone Cement and Surgical | 164.6 | (0.2) % | (2.2) % | (2.2) % | | **Total** | **$2,077.3** | **7.0 %** | **5.4 %** | **2.8 %** | [Six Months Ended June 30, 2025](index=4&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) H1 2025 net sales increased **4.0%** reported, **3.9%** constant currency, and **2.5%** organic constant currency, with S.E.T. as the strongest growth driver Net Sales - Six Months Ended June 30, 2025 (in millions) | Geographic Results | Net Sales | % Change | Constant Currency % Change | Organic Constant Currency % Change | | :----------------- | :-------- | :------- | :------------------------- | :--------------------------------- | | United States | $2,287.4 | 3.7 % | 3.7 % | 1.8 % | | International | 1,699.0 | 4.5 % | 4.1 % | 3.5 % | | **Total** | **$3,986.4** | **4.0 %** | **3.9 %** | **2.5 %** | | Product Categories | | | | | | Knees Total | 1,618.9 | 1.9 % | 1.8 % | 1.8 % | | Hips Total | 1,031.9 | 3.4 % | 3.2 % | 3.2 % | | S.E.T. | 1,021.1 | 10.7 % | 10.6 % | 4.9 % | | Technology & Data, Bone Cement and Surgical | 314.5 | (2.4) % | (2.8) % | (2.8) % | | **Total** | **$3,986.4** | **4.0 %** | **3.9 %** | **2.5 %** | [Condensed Consolidated Statements of Earnings](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Net earnings decreased for Q2 and H1 2025 due to increased operating expenses, especially acquisition, integration, and divestiture costs [Three Months Ended June 30, 2025 and 2024](index=10&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Q2 2025 net sales increased, but net earnings decreased due to higher SG&A and substantial acquisition, integration, and divestiture costs Condensed Consolidated Statements of Earnings (Three Months Ended June 30, in millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net Sales | $2,077.3 | $1,942.0 | | Operating Profit | $300.0 | $351.3 | | Net Earnings of Zimmer Biomet Holdings, Inc. | $152.8 | $242.8 | | Diluted Earnings Per Common Share | $0.77 | $1.18 | [Six Months Ended June 30, 2025 and 2024](index=11&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) H1 2025 net sales increased, but net earnings and diluted EPS decreased due to higher operating expenses, including acquisition and integration costs Condensed Consolidated Statements of Earnings (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net Sales | $3,986.4 | $3,831.2 | | Operating Profit | $592.3 | $617.2 | | Net Earnings of Zimmer Biomet Holdings, Inc. | $334.9 | $415.2 | | Diluted Earnings Per Common Share | $1.68 | $2.01 | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$22.87 billion** as of June 30, 2025, driven by goodwill and intangible assets, with total liabilities rising due to higher long-term debt Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $22,865.1 | $21,365.3 | | Cash and cash equivalents | $556.9 | $525.5 | | Goodwill | $9,709.5 | $8,951.1 | | Intangible assets, net | $4,890.8 | $4,598.4 | | Total current liabilities | $1,879.5 | $1,587.9 | | Long-term debt | $6,752.5 | $5,341.6 | | Total Liabilities and Stockholders' Equity | $22,865.1 | $21,365.3 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow increased, but investing cash flow rose substantially due to business combinations, with financing providing inflow from senior notes Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Cash Flow Category | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $761.0 | $597.4 | | Net cash used in investing activities | $(1,490.4) | $(442.0) | | Net cash provided by (used in) financing activities | $739.2 | $(142.0) | | Change in cash and cash equivalents | $31.4 | $4.4 | | Cash and cash equivalents, end of period | $556.9 | $420.1 | - Business combination investments, net of acquired cash, significantly increased cash used in investing activities to **$1,226.3 million** in 2025 from **$66.5 million** in 2024[41](index=41&type=chunk) - Proceeds from senior notes of **$1,748.1 million** were a major contributor to net cash provided by financing activities in 2025[41](index=41&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Note on Non-GAAP Financial Measures](index=6&type=section&id=Note%20on%20Non-GAAP%20Financial%20Measures) Non-GAAP measures provide additional performance insights by excluding distorting items, used internally for evaluation and compensation - Non-GAAP financial measures are used to evaluate business performance internally and provide meaningful incremental information to investors by enabling period-to-period comparisons not impacted by certain items[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 the same predetermined exchange rate[23](index=23&type=chunk) - Adjusted financial measures exclude the effects of certain items detailed in reconciliations, such as inventory and manufacturing-related charges, intangible asset amortization, restructuring, and acquisition-related costs[24](index=24&type=chunk)[53](index=53&type=chunk) [Net Sales % Change Reconciliations](index=14&type=section&id=Net%20Sales%20%25%20Change%20Reconciliations) Reconciliations clarify organic constant currency performance by showing foreign currency and Paragon 28 acquisition impacts on net sales growth [Three Months Ended June 30, 2025 vs. 2024](index=14&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) Q2 2025 reported sales saw **1.6%** foreign exchange impact and **2.6%** from Paragon 28, leading to **2.8%** organic constant currency growth Reconciliation of Reported Net Sales % Change (Three Months Ended June 30, 2025 vs. 2024) | Geographic Results | % Change (Reported) | Foreign Exchange Impact | Constant Currency % Change | Paragon 28 Impact | Organic Constant Currency % Change | | :----------------- | :------------------ | :---------------------- | :------------------------- | :---------------- | :--------------------------------- | | United States | 6.1 % | - % | 6.1 % | 3.8 % | 2.3 % | | International | 8.1 % | 3.5 % | 4.6 % | 1.2 % | 3.4 % | | **Total** | **7.0 %** | **1.6 %** | **5.4 %** | **2.6 %** | **2.8 %** | | Product Categories | | | | | | | S.E.T. | 17.3 % | 1.3 % | 16.0 % | 11.1 % | 4.9 % | [Six Months Ended June 30, 2025 vs. 2024](index=15&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) H1 2025 reported sales saw **0.1%** foreign exchange impact and **1.4%** from Paragon 28, leading to **2.5%** organic constant currency growth Reconciliation of Reported Net Sales % Change (Six Months Ended June 30, 2025 vs. 2024) | Geographic Results | % Change (Reported) | Foreign Exchange Impact | Constant Currency % Change | Paragon 28 Impact | Organic Constant Currency % Change | | :----------------- | :------------------ | :---------------------- | :------------------------- | :---------------- | :--------------------------------- | | United States | 3.7 % | - % | 3.7 % | 1.9 % | 1.8 % | | International | 4.5 % | 0.4 % | 4.1 % | 0.6 % | 3.5 % | | **Total** | **4.0 %** | **0.1 %** | **3.9 %** | **1.4 %** | **2.5 %** | | Product Categories | | | | | | | S.E.T. | 10.7 % | 0.1 % | 10.6 % | 5.7 % | 4.9 % | [Projected Full-Year 2025 Revenue Change](index=16&type=section&id=Projected%20Full-Year%202025%20Revenue%20Change) Projected full-year 2025 organic constant currency revenue change is estimated between **3.5%** and **4.5%**, after FX and Paragon 28 impacts Reconciliation of Projected Full-Year 2025 Reported Revenue Change to Organic Constant Currency Revenue Change | Metric | Projected Full-year 2025 | | :-------------------------------- | :----------------------- | | Reported revenue change | 6.7 - 7.7 % | | Less: Foreign currency exchange impact | 0.5 % | | Less: Paragon 28 | 2.7 % | | Organic constant currency revenue change | 3.5 - 4.5 % | [Reported to Adjusted Results Reconciliations](index=17&type=section&id=Reported%20to%20Adjusted%20Results%20Reconciliations) Reconciliations adjust GAAP results to non-GAAP figures, clarifying operational performance by excluding non-recurring or non-operational items [Three Months Ended June 30, 2025 and 2024 (Net Earnings & EPS)](index=17&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Net%20Earnings%20%26%20EPS)) Q2 2025 adjusted net earnings were **$411.2 million** (**$2.07** diluted EPS), significantly higher than reported due to amortization and acquisition costs Reported vs. Adjusted Net Earnings and Diluted EPS (Three Months Ended June 30, 2025) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :---------- | :---------- | :---------- | | Net Earnings of Zimmer Biomet Holdings, Inc. | $152.8 | $258.4 | $411.2 | | Diluted earnings per common share | $0.77 | $1.30 | $2.07 | Reported vs. Adjusted Net Earnings and Diluted EPS (Three Months Ended June 30, 2024) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :---------- | :---------- | :---------- | | Net Earnings of Zimmer Biomet Holdings, Inc. | $242.8 | $172.2 | $415.0 | | Diluted earnings per common share | $1.18 | $0.83 | $2.01 | [Six Months Ended June 30, 2025 and 2024 (Net Earnings & EPS)](index=18&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Net%20Earnings%20%26%20EPS)) H1 2025 adjusted net earnings were **$772.3 million** (**$3.88** diluted EPS), compared to reported, with significant amortization and acquisition expense adjustments Reported vs. Adjusted Net Earnings and Diluted EPS (Six Months Ended June 30, 2025) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :---------- | :---------- | :---------- | | Net Earnings of Zimmer Biomet Holdings, Inc. | $334.9 | $437.4 | $772.3 | | Diluted earnings per common share | $1.68 | $2.20 | $3.88 | Reported vs. Adjusted Net Earnings and Diluted EPS (Six Months Ended June 30, 2024) | Metric | As Reported | Adjustments | As Adjusted | | :------------------------------------------ | :---------- | :---------- | :---------- | | Net Earnings of Zimmer Biomet Holdings, Inc. | $415.2 | $399.5 | $814.7 | | Diluted earnings per common share | $2.01 | $1.94 | $3.95 | [Inventory and Manufacturing-Related Charges (Footnote)](index=19&type=section&id=Inventory%20and%20Manufacturing-Related%20Charges%20(Footnote)) Inventory and manufacturing-related charges are excluded from non-GAAP measures for a clearer view of manufacturing costs without acquisition impacts - Inventory and manufacturing-related charges include inventory step-up expense, excess and obsolete inventory charges, accelerated depreciation, and other related costs[53](index=53&type=chunk) - Excluding inventory step-up expense provides useful information on costs as if inventory had not been increased to fair value due to business combinations[53](index=53&type=chunk) [Intangible Asset Amortization (Footnote)](index=19&type=section&id=Intangible%20Asset%20Amortization%20(Footnote)) Intangible asset amortization and deferred tax changes are excluded from non-GAAP measures for better peer comparison, given acquisition-driven variations - Intangible asset amortization and deferred tax rate changes on intangible assets are excluded from non-GAAP measures[53](index=53&type=chunk) - Exclusion allows for internal performance assessment against peers, as amortization varies significantly due to different acquisition levels[53](index=53&type=chunk) [Restructuring and Other Cost Reduction Initiatives (Footnote)](index=19&type=section&id=Restructuring%20and%20Other%20Cost%20Reduction%20Initiatives%20(Footnote)) Restructuring and cost reduction initiatives aim to reduce costs and drive growth, with excluded costs including employee termination benefits and contract terminations - Restructuring programs initiated in December 2019, 2021, 2023, and February 2025 aim to reorganize businesses and reduce costs[53](index=53&type=chunk) - Costs include employee termination benefits, contract terminations, consulting fees, project management expenses, retention period salaries, and relocation costs[53](index=53&type=chunk) [Acquisition, Integration, Divestiture and Related (Footnote)](index=19&type=section&id=Acquisition%2C%20Integration%2C%20Divestiture%20and%20Related%20(Footnote)) Excluded gains and expenses from acquisitions, ZimVie post-separation costs, and transition service agreements include **$43.4 million** in Q2 2025 Paragon 28 compensation - Exclusions relate to various acquisitions, post-separation costs for ZimVie, and gains from transition service agreements[53](index=53&type=chunk) - Expenses for Q2 2025 include **$43.4 million** in compensation for accelerated vesting of Paragon 28 restricted stock units[53](index=53&type=chunk) [Litigation (Footnote)](index=19&type=section&id=Litigation%20(Footnote)) Litigation charges and gains, mainly from patent and product liability, are excluded from non-GAAP measures for consistent period-to-period comparisons - Litigation charges and gains, primarily from patent and product liability, are excluded from non-GAAP measures[53](index=53&type=chunk) - Exclusion ensures consistency in non-GAAP financial measures from period-to-period, even if subsequent changes in estimates are not significant[53](index=53&type=chunk) [European Union Medical Device Regulation (Footnote)](index=19&type=section&id=European%20Union%20Medical%20Device%20Regulation%20(Footnote)) Incremental costs for initial EU Medical Device Regulation compliance, mainly for temporary personnel, are excluded from non-GAAP financial measures - Incremental costs for initial compliance with EU Medical Device Regulation are excluded from non-GAAP measures[53](index=53&type=chunk) - These costs primarily relate to temporary personnel and third-party professionals to supplement internal resources[53](index=53&type=chunk) [Other Charges (Footnote)](index=19&type=section&id=Other%20Charges%20(Footnote)) Other charges from highly variable events, like equity investment gains/losses and pre-acquisition debt interest, are excluded from non-GAAP measures - Other charges include gains and losses from changes in fair value on equity investments[53](index=53&type=chunk) - Interest on debt related to the estimated purchase price and acquisition-related costs up through the acquisition date (e.g., for Paragon 28) is excluded[53](index=53&type=chunk) [Other Certain Tax Adjustments (Footnote)](index=19&type=section&id=Other%20Certain%20Tax%20Adjustments%20(Footnote)) Tax adjustments relate to intercompany transactions, tax-only amortization, tax reform, and Q2 2025 expense for unremitted foreign earnings - Tax adjustments relate to intercompany transactions, tax-only amortization from restructuring, and impacts of tax reform[53](index=53&type=chunk) - In June 2025, tax expense was recognized for unremitted foreign earnings previously expected to remain permanently reinvested[53](index=53&type=chunk) [Free Cash Flow Reconciliation](index=20&type=section&id=Free%20Cash%20Flow%20Reconciliation) H1 2025 free cash flow increased to **$526.1 million** from **$342.4 million**, driven by higher operating cash flow despite increased capital additions Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $378.2 | $369.4 | $761.0 | $597.4 | | Additions to instruments | (80.5) | (65.2) | (140.2) | (147.2) | | Additions to other property, plant and equipment | (50.0) | (52.7) | (94.7) | (107.8) | | **Free cash flow** | **$247.7** | **$251.5** | **$526.1** | **$342.4** | [Gross Profit & Margin Reconciliation](index=21&type=section&id=Gross%20Profit%20%26%20Margin%20Reconciliation) Adjusted gross profit and margin exclude inventory charges and intangible asset amortization; H1 2025 adjusted gross margin was **71.9%**, slightly lower than prior year Reconciliation of Gross Profit & Margin to Adjusted Gross Profit & Margin (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross Profit | $1,324.5 | $1,244.4 | $2,532.8 | $2,479.2 | | Inventory and manufacturing-related charges | 17.0 | 2.7 | 23.2 | 3.8 | | Intangible asset amortization | 160.6 | 144.0 | 311.6 | 286.1 | | **Adjusted gross profit** | **$1,502.1** | **$1,391.1** | **$2,867.6** | **$2,769.1** | | Gross margin | 63.8 % | 64.1 % | 63.5 % | 64.7 % | | Adjusted gross margin | 72.3 % | 71.6 % | 71.9 % | 72.3 % | [Operating Profit & Margin Reconciliation](index=22&type=section&id=Operating%20Profit%20%26%20Margin%20Reconciliation) Adjusted operating profit and margin exclude non-GAAP items; H1 2025 adjusted operating profit was **$1,079.0 million** with a **27.1%** margin Reconciliation of Operating Profit & Margin to Adjusted Operating Profit & Margin (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating profit | $300.0 | $351.3 | $592.3 | $617.2 | | Inventory and manufacturing-related charges | 17.0 | 2.7 | 23.2 | 3.8 | | Intangible asset amortization | 160.6 | 144.0 | 311.6 | 286.1 | | Restructuring and other cost reduction initiatives | 17.5 | 41.5 | 53.5 | 165.9 | | Acquisition, integration, divestiture and related | 78.9 | 5.2 | 89.5 | 5.5 | | European Union Medical Device Regulation | 4.3 | 7.6 | 8.7 | 13.4 | | **Adjusted operating profit** | **$578.5** | **$552.6** | **$1,079.0** | **$1,092.0** | | Operating profit margin | 14.4 % | 18.1 % | 14.9 % | 16.1 % | | Adjusted operating profit margin | 27.8 % | 28.5 % | 27.1 % | 28.5 % | [Effective Tax Rate Reconciliation](index=23&type=section&id=Effective%20Tax%20Rate%20Reconciliation) The adjusted effective tax rate for Q2 and H1 2025 was **18.2%**, after accounting for tax effects of earnings adjustments and other tax items Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Effective tax rate | 31.7 % | 19.6 % | 25.9 % | 19.6 % | | Tax effect of adjustments made to earnings before taxes | 2.2 % | 2.0 % | 2.1 % | 2.8 % | | Other certain tax adjustments | (15.7) % | (3.4) % | (9.8) % | (4.0) % | | **Adjusted effective tax rate** | **18.2 %** | **18.2 %** | **18.2 %** | **18.4 %** | [Debt to Net Debt Reconciliation](index=24&type=section&id=Debt%20to%20Net%20Debt%20Reconciliation) As of June 30, 2025, total debt increased to **$7,572.5 million**, with net debt at **$7,015.6 million**, up from **$5,679.1 million** Reconciliation of Debt to Net Debt (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Debt, both current and long-term | $7,572.5 | $6,204.6 | | Cash and cash equivalents | (556.9) | (525.5) | | **Net debt** | **$7,015.6** | **$5,679.1** | [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) [About the Company](index=5&type=section&id=About%20the%20Company) Zimmer Biomet is a global medical technology leader with 90+ years of experience, offering a comprehensive portfolio to maximize mobility and improve health - Zimmer Biomet is a global medical technology leader with a comprehensive portfolio focused on maximizing mobility and improving health[16](index=16&type=chunk) - The company integrates innovative products with digital and robotic technologies, leveraging data, data analytics, and artificial intelligence[16](index=16&type=chunk) - With over 90 years of leadership, Zimmer Biomet operates in 25+ countries and sells in 100+ countries[17](index=17&type=chunk)[18](index=18&type=chunk) [Website Information](index=6&type=section&id=Website%20Information) Important investor information is routinely posted on Zimmer Biomet's "Investor Relations" website, complying with Regulation FD - Important information for investors is routinely posted on www.zimmerbiomet.com in the "Investor Relations" section[20](index=20&type=chunk) - The website is used for disclosing material, non-public information and complying with Regulation FD[20](index=20&type=chunk) [Forward-Looking Statements & Risks](index=7&type=section&id=Forward-Looking%20Statements%20%26%20Risks) Forward-looking statements face significant risks including competition, pricing, new product development, acquisition integration, supply chain, and regulatory changes - Forward-looking statements are based on current beliefs and assumptions, subject to significant risks and uncertainties that could cause actual outcomes to differ materially[30](index=30&type=chunk) - Key risks include competition, pricing pressures, dependence on new product development, challenges in attracting and retaining skilled employees, and shifts in product/regional sales mix[31](index=31&type=chunk) - Other significant risks involve the successful execution of restructuring plans, integration of acquired companies (e.g., Paragon 28), business disruptions, breaches of IT systems, healthcare reform impacts, and changes in tax and regulatory environments[31](index=31&type=chunk)[32](index=32&type=chunk)

Core Insights - Zimmer Biomet Holdings, Inc. reported second quarter net sales of $2.077 billion, reflecting a 7.0% increase year-over-year, with a 5.4% increase on a constant currency basis and a 2.8% increase on an organic constant currency basis [1][7][30] - The company achieved net earnings of $152.8 million for the second quarter, with diluted earnings per share at $0.77 and adjusted diluted earnings per share at $2.07, marking a 3.0% increase [2][7][27] - The company has tightened its full-year 2025 revenue growth guidance to 6.7% - 7.7% for reported revenue, 6.2% - 7.2% for constant currency revenue, and 3.5% - 4.5% for organic constant currency revenue, while increasing adjusted earnings per share guidance to $8.10 - $8.30 [7][9][32] Financial Performance - For the three months ended June 30, 2025, net sales in the United States were $1,173.8 million, up 6.1%, while international sales reached $903.5 million, up 8.1% [6][30] - The product category performance showed U.S. knees sales at $448.7 million (up 1.7%) and hips sales at $272.5 million (up 5.2%), with S.E.T. sales at $550.6 million, reflecting a significant 17.3% increase [6][30] - For the six months ended June 30, 2025, total net sales were $3,986.4 million, a 4.0% increase from the previous year, with U.S. sales at $2,287.4 million (up 3.7%) and international sales at $1,699.0 million (up 4.5%) [28][31] Strategic Developments - The company emphasized the success of its new product cycle, particularly in the U.S. hips and knees portfolios, and noted strong growth in its global S.E.T. business [4] - The recent agreement to acquire Monogram Technologies is seen as a strategic move to enhance its capabilities in surgical robotics, aligning with the company's long-term strategy focused on customer-centric innovation [4][12]

Core Viewpoint - Zimmer Biomet Holdings, Inc. (ZBH) is set to report its second-quarter 2025 results on August 7, with expectations of revenue growth driven by its Hips and Knees business segments [1][7]. Group 1: Financial Estimates - The Zacks Consensus Estimate for ZBH's revenues is $2.04 billion, reflecting a 5.3% increase from the previous year [2]. - The earnings estimate is projected at $1.98 per share, indicating a 1.5% decline from the year-ago figure [2]. - The earnings estimate has decreased by 0.5% over the past 30 days [2]. Group 2: Business Segment Performance - The Hips business is expected to grow due to the company's comprehensive solutions, including the new Z1 triple-taper hip system and the automated hip surgical impactor system HAMMR, with an estimated 4% year-over-year growth [3][4]. - The Knees business is anticipated to benefit from the Persona portfolio and the FDA clearance for Persona Revision SoluTion Femur, projecting a 6.2% year-over-year growth [5][6]. - The S.E.T business is expected to continue its growth trend, with a projected increase of 2.6% year-over-year, bolstered by the acquisition of Paragon 28, Inc. [7][8]. Group 3: Market Dynamics - The robotics and navigation platforms, particularly OrthoGrid, are expected to have gained market share, contributing positively to the Hips business [4]. - Sales in the Technology & Data, Bone Cement, and Surgical business are projected to report a 4.7% year-over-year growth, despite previous declines due to tough comparisons [9].

Core Insights - The article discusses the current market trends and potential investment opportunities within specific sectors, highlighting the importance of thorough analysis before making investment decisions [1][2]. Group 1: Market Trends - Recent market fluctuations have shown a significant impact on investor sentiment, with a notable increase in volatility across various sectors [1]. - Analysts are observing a shift in consumer behavior, which may lead to changes in demand for certain products and services [2]. Group 2: Investment Opportunities - Certain industries, particularly technology and renewable energy, are identified as having strong growth potential, driven by innovation and regulatory support [1]. - Companies that adapt quickly to market changes and consumer preferences are likely to outperform their competitors [2]. Group 3: Financial Performance - Financial reports indicate that several companies have exceeded earnings expectations, reflecting robust operational performance [1]. - Key metrics such as revenue growth and profit margins are being closely monitored to assess the health of various sectors [2].

Company Overview - Zimmer Biomet Holdings (ZBH) has entered into a definitive agreement to acquire Monogram Technologies Inc., an orthopedic robotics company, for an equity value of approximately $177 million and an enterprise value of nearly $168 million [2][3] - The acquisition includes an upfront payment of $4.04 per share in cash and non-tradeable contingent value rights that could entitle Monogram shareholders to receive up to $12.37 per share if certain milestones are met by 2030 [3][10] Strategic Significance - The acquisition is expected to enhance ZBH's robotic surgery capabilities, particularly expanding its ROSA Robotics platform and introducing new technologies for total knee arthroplasty (TKA) [6][10] - Monogram's semi and fully autonomous robotic technologies are anticipated to improve safety, efficiency, and outcomes in orthopedic surgeries, with commercialization expected in early 2027 [6][7] Financial Implications - ZBH plans to fund the acquisition through a mix of existing cash and debt financing, while maintaining a strong balance sheet [11] - The acquisition is projected to contribute to revenue growth starting in 2027 and is expected to be neutral to adjusted earnings per share in 2025, 2026, and 2027, becoming accretive in 2028 and beyond [12] Market Context - The global orthopedic surgical robots market was valued at $743.3 million in 2023 and is expected to grow at a compound annual growth rate of 5.7% through 2030, driven by increasing cases of knee and hip replacement surgeries [14] - Zimmer Biomet's market capitalization stands at $18.60 billion, with an earnings yield of 8.5%, significantly higher than the industry average of 1.1% [5]