NeuroOne Medical Technologies Conference Summary Company Overview - **Company Name**: NeuroOne Medical Technologies Corporation - **Ticker Symbol**: NMTC - **Industry**: Medical Technology focusing on neurological disorders - **Core Business Segments**: Brain, Pain, and Drug Delivery [2][4] Key Products and Technology - **FDA-Cleared Products**: Four products with FDA clearance, including the OneRF ablation system for facial pain and devices for epilepsy treatment [3][5] - **Partnerships**: - **Mayo Clinic**: Long-term partner involved in technology development and investor [4] - **Zimmer Biomet**: Invested $8.5 million for licensing rights to commercialize diagnostic and ablation systems [4] - **Technology Advancements**: - Thin film electrode technology allows for less invasive procedures and dual functionality (diagnostic and therapeutic) [3][6] - OneRF ablation system combines diagnostic and therapeutic functions, reducing the need for multiple surgeries [6][8] Market Potential - **Market Size**: The market for the technologies being pursued is currently generating $3 billion in revenue [11] - **Upcoming Products**: - Percutaneously placed electrode for lower back pain in development [5] - Drug delivery system utilizing sEEG electrodes, with initial orders from a large pharma company [11] Financial Overview - **Revenue Guidance**: Projected revenue for fiscal year 2025 is between $8 million and $10 million [12] - **Gross Margins**: Increased guidance for product gross margins to 50% to 53% [12][30] - **Funding Status**: Company is debt-free and funded through at least fiscal year 2026 [12][28] Competitive Landscape - **Market Position**: NeuroOne is positioned as a leader in developing technologies that integrate diagnostics and therapeutics, unlike competitors who focus solely on diagnostics [25][26] - **Innovation Focus**: Continuous innovation to maintain a competitive edge, with plans to expand into facial pain and back pain markets [26] Strategic Partnerships and Sales - **Sales Strategy**: Currently, all sales are through Zimmer Biomet, with potential for a separate sales force for drug delivery technology [22][23] - **International Expansion**: Plans to expand into international markets with ISO 13485 certifications [28] Clinical and Regulatory Considerations - **Clinical Trials**: No human trials required for certain devices used in acute settings; however, drug delivery systems will require studies tied to specific drugs [19][20] - **Regulatory Pathways**: Strategy to partner with pharmaceutical companies to streamline the approval process for drug delivery systems [20][21] Investment Proposition - **Value Proposition**: NeuroOne offers a diversified technology platform with multiple applications in neurology, minimizing investment risk compared to single-application companies [32][33] - **Future Outlook**: Strong potential for revenue growth and market penetration across various neurological disorders [12][14][32]

Core Viewpoint - Zimmer Biomet (ZBH) is currently viewed as a better value opportunity compared to EssilorLuxottica Unsponsored ADR (ESLOY) based on various financial metrics and rankings [1]. Group 1: Zacks Rank and Earnings Outlook - ZBH has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while ESLOY has a Zacks Rank of 3 (Hold) [3]. - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting that ZBH has an improving earnings outlook [3]. Group 2: Valuation Metrics - ZBH has a forward P/E ratio of 12.80, significantly lower than ESLOY's forward P/E of 38.31, indicating that ZBH may be undervalued [5]. - The PEG ratio for ZBH is 2.40, while ESLOY's PEG ratio is 4.98, further suggesting that ZBH offers better value considering expected earnings growth [5]. - ZBH's P/B ratio is 1.65, compared to ESLOY's P/B of 3.22, reinforcing the notion that ZBH is more attractively valued [6]. Group 3: Value Grades - ZBH has earned a Value grade of A, while ESLOY has a Value grade of D, highlighting the relative attractiveness of ZBH as a value investment [6]. - Stronger estimate revision activity and more favorable valuation metrics for ZBH lead to the conclusion that it is the superior option for value investors at this time [7].

Core Insights - The company expresses high confidence in achieving a growth rate of approximately 6% in Q3, as previously indicated in their August 7 commentary [1] - The company anticipates that Q4 may experience a softer performance compared to Q3 [1] Group 1 - The company plans for an acceleration in growth as implied in their 2025 guidance [1] - The CEO emphasizes the importance of maintaining public commentary and refraining from speculation beyond the disclosed information [1] - The company will be surprised if the growth rate does not reach at least 6% in Q3, indicating strong expectations for performance [1]

Summary of the Conference Call for Zimmer Biomet Company Overview - **Company**: Zimmer Biomet - **Event**: Mawlitthami Healthcare Conference Key Points Industry Dynamics - The orthopedic market is experiencing a healthy environment with global growth projected at over 4% [4][19] - The U.S. market is seeing significant changes, particularly with the rise of Ambulatory Surgery Centers (ASCs), which have increased from 1-2% of sales to over 20% [18][20] - Demographic trends are favorable, with 10,000 to 12,000 people turning 65 daily in the U.S., driving demand for orthopedic procedures [17] Financial Guidance and Performance - Zimmer Biomet expects to achieve a revenue growth of 3.5% to 4.5% for the year 2025, with Q3 anticipated to reach around 6% growth [3][5] - The company has reduced its tariff estimates from $60 million-$80 million to about $40 million, contributing to increased earnings per share guidance [13][14] - Cash flow generation has exceeded expectations, leading to a lower debt load and improved operating margins [14] Product Innovations - The "Magnificent Seven" new products are driving growth, including the Oxford Partial Cement and Z1 Triple Tapered Stem, which are gaining market share [9][10] - The company is launching new products in 2026, including ROSA D15, which will enhance surgical accuracy and efficiency [12] - The integration of Paragon 28 is progressing well, contributing at least 270 basis points of revenue growth this year [37] Market Segmentation and Strategy - Zimmer Biomet is focusing on specialization within its sales force, particularly in the ASC market, to enhance productivity and efficiency [48][49] - The company is committed to maintaining pricing discipline, with a pricing group reporting directly to the CFO [28][32] - The extremities business is growing faster than traditional hip and knee segments, driven by younger demographics and high reimbursement rates [40] Competitive Landscape - Zimmer Biomet is positioned as a leader in the orthopedic market, with a strong focus on innovation and operational execution [69] - The company is committed to maintaining its leadership in robotic surgery with ongoing investments in the ROSA platform and the upcoming Monogram Technologies for autonomous robotics [64][43] International Markets - The international markets are healthy, with growth in regions like Japan and Australia, although challenges remain in China [53][59] - Pricing dynamics in international markets are improving, contrary to previous expectations [61] Cultural and Operational Changes - The company has undergone significant cultural and operational changes since 2019, with improved engagement scores and a stronger balance sheet [68][69] - Zimmer Biomet is focused on accountability and performance within its sales teams, ensuring that growth is tied to compensation [49] Future Outlook - The company is optimistic about its future, with a strong pipeline of innovations and a commitment to enhancing its market position through strategic investments and partnerships [44][69] Additional Insights - The company is exploring various modalities of navigation and robotics, aiming to offer comprehensive solutions in orthopedic surgery [45][66] - There is a strong emphasis on maintaining quality and innovation as key drivers for market selection by healthcare providers [41] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Zimmer Biomet's focus on innovation, market dynamics, and financial performance.

Summary of Bactiguard Conference Call - September 01, 2025 Company Overview - **Company**: Bactiguard - **Industry**: Medical Devices, specifically focusing on infection prevention related to medical devices Core Points and Arguments 1. **Transformation Journey**: Bactiguard has undergone a transformation to become a leader in preventing device-related infections, addressing a significant unmet need in the healthcare market [2][3] 2. **Market Impact**: Healthcare-associated infections impose a multi-billion dollar cost burden on the industry, highlighting the importance of Bactiguard's focus on infection prevention [3][4] 3. **Scalable Platform**: The company has developed a scalable platform that leverages licensing models to enhance profitability and bring more products to market [4][16] 4. **Therapeutic Areas**: Bactiguard targets five therapeutic areas with significant unmet needs for infection solutions, including orthopedics, cardiology, neurology, urology, and vascular access [4][5] 5. **Infection Rates**: Infection rates in cardiology and orthopedic fields can be as high as 40%, indicating a substantial addressable market exceeding $80 billion [5][6] 6. **Technology**: Bactiguard's technology involves an ultra-thin noble metal coating that prevents microbial adhesion without killing them, thus avoiding the creation of antibiotic resistance [6][7] 7. **Clinical Evidence**: The technology has shown a 70% reduction in infection risk across over 100,000 patients, with zero reported adverse events [7][8] 8. **Partnerships**: Key partnerships with Becton Dickinson and Zimmer Biomet enhance Bactiguard's market presence and product offerings [8][9] 9. **Wound Management Portfolio**: The company also offers a wound management product, HydroSyn Aqua, which is effective against various microbes and has a strong safety profile [11][12] 10. **Revenue Growth**: Bactiguard has experienced quarter-over-quarter and year-over-year revenue growth, primarily driven by its licensing model and wound management portfolio [13][14] 11. **EBITDA Improvement**: The company has transitioned from negative EBITDA to positive, demonstrating significant momentum in profitability [15][16] 12. **Strategic Focus**: Bactiguard aims to be the premier partner for med tech companies, focusing on advancing business through licensing partnerships and investing in key knowledge areas [18][19] 13. **Future Targets**: By 2030, Bactiguard aims to establish over 10 application areas in exclusivity or license partnerships, targeting over $200 million in EBITDA and $600 million in revenues [20][21] Additional Important Content - **Regulatory Challenges**: The transition of product approvals to partners has faced delays due to regulatory processes, but confidence in long-term collaboration remains strong [27][28] - **Market Expansion**: Bactiguard is looking to expand into new markets, including CE Mark territories and countries like India, which presents additional growth opportunities [28][29] - **Board Expertise**: The company has strengthened its board with experienced members, such as Rick Kuntz, former Chief Medical Officer of Medtronic, to enhance its strategic direction [21]

Core Insights - Zimmer Biomet (ZBH) is focusing on expanding its ROSA Robotic Platform and cementless knee implants to drive growth and market penetration, targeting a 5% weighted average market growth (WAMG) rate by 2027 [1][6] - The company has a market capitalization of $21.30 billion and has shown an earnings yield of 7.5%, outperforming the industry average of -0.3% [2] - Despite a 6.8% decline in stock value over the past year, ZBH has surpassed earnings estimates in three of the last four quarters, with an average earnings surprise of 1.81% [2] Growth Drivers - The knee business is expected to see significant growth, with a sequential increase of 150 basis points and a year-over-year growth of 1.7% projected for 2025 [4] - Adoption rates for the Oxford Partial Cementless Knee are promising, with nearly 50% of trained surgeons incorporating it into practice, and 10% converting from competitors [5] - The Persona OsseoTi Cementless Knee is also gaining traction, particularly in Europe, where over 100 accounts are implanting the system [5] Strategic Initiatives - Zimmer Biomet's four-pillar expansion strategy includes increasing patient awareness, enhancing safety and precision through robotics, improving efficiency with smart implants, and elevating surgical outcomes [6][9] - The company is implementing a direct-to-patient campaign to boost awareness of knee solutions and encourage earlier treatment seeking [6] - The focus on robotics and navigation platforms aims to enhance efficiency and accuracy in orthopedic surgeries [6] Market Conditions - The global musculoskeletal market is gradually stabilizing, with better-than-expected sales growth in certain regions, supported by improved procedural volumes [10] - In Q2 2025, Zimmer Biomet reported year-over-year growth in large joints, with the overall global business for knees, hips, and S.E.T. growing by 1.8%, 4%, and 4.9% respectively [11] Financial Position - As of Q2 2025, Zimmer Biomet had cash and cash equivalents of $557 million against total debt of $7.57 billion, indicating a challenging solvency position [12] - The company anticipates a $40 million impact on 2025 operating profit due to tariffs, a reduction from the earlier estimate of $60-$80 million [13] - The Zacks Consensus Estimate for Zimmer Biomet's 2025 earnings per share has increased by 2% to $8.11, with revenues expected to rise by 7% to $8.21 billion [14]

Company Overview - Zimmer Biomet is a leading musculoskeletal healthcare company that designs, manufactures, and markets a wide range of orthopedic reconstructive products, including sports medicine, biologics, extremities and trauma products, spine, bone healing, craniomaxillofacial and thoracic products, dental implants, and related surgical products [11] - The company operates in over 25 countries and markets products in more than 100 countries [11] Investment Analysis - Zimmer Biomet currently holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of B [12] - The company has a Momentum Style Score of A, with shares increasing by 10.3% over the past four weeks [12] - In the last 60 days, 10 analysts have revised their earnings estimates higher for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.16 to $8.11 per share [12] - Zimmer Biomet has an average earnings surprise of +1.8%, indicating a positive trend in earnings performance [12] - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Zimmer Biomet is recommended for investors' consideration [13]

Core Insights - NeuroOne Medical Technologies Corporation has reported a significant improvement in financial results for the third quarter of fiscal year 2025, with a 105% increase in revenue year-over-year and a gross profit margin of 53.9% [3][6][14]. Financial Performance - Product revenue for the third quarter of fiscal year 2025 reached $1.7 million, up from $0.8 million in the same quarter of fiscal year 2024 [6][13]. - For the first nine months of fiscal year 2025, product revenue increased 100% to $6.4 million compared to $3.2 million for the same period in fiscal year 2024 [13]. - License revenue for the first nine months of fiscal year 2025 was $3.0 million, derived from an expanded distribution agreement with Zimmer Biomet [13]. - Operating expenses decreased by 9% to $2.8 million in the third quarter of fiscal year 2025, compared to $3.1 million in the same quarter of the prior year [15]. - The net loss for the third quarter improved to $1.5 million, or $(0.03) per share, compared to a net loss of $2.8 million, or $(0.10) per share, in the same quarter of the prior year [16]. Operational Highlights - The first patient treated with the OneRF Ablation System achieved one year of seizure freedom, indicating the effectiveness of the technology [11]. - The company submitted its 510(k) application to the FDA for the OneRF Trigeminal Nerve Ablation System ahead of schedule, with expected revenue generation in calendar year 2025 upon clearance [4][11]. - NeuroOne received its first order for the sEEG-based drug delivery system from a biopharmaceutical company, marking entry into a new market [4][11]. - The company is pursuing ISO 13485 certification to facilitate entry into international markets, which could provide additional growth opportunities [5][10]. Capital and Market Position - NeuroOne completed an oversubscribed capital raise totaling $8.2 million in net proceeds in April 2025, strengthening its financial position [6][17]. - The company has 17 issued and outstanding patents in the U.S. and internationally, enhancing its competitive advantage [7]. - The company expects product revenue for fiscal year 2025 to range between $8.0 million and $10.0 million, representing an increase of 132% to 190% compared to fiscal year 2024 [18].

[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]