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 Viewpoint - Shoulder Innovations is preparing for an IPO on NASDAQ with a target fundraising of $100 million, aimed at expanding its product line and integrating AI into the surgical ecosystem [1][2]. Financial Performance and Fundraising Purpose - For the 12 months ending March 31, 2025, Shoulder Innovations reported revenue of $34.57 million, a year-on-year increase of 64.07% [2]. - The company sold 1,443 implant systems, up from 559 in the previous fiscal year, with an average revenue per case exceeding $20,000, indicating strong pricing power [2]. - Despite maintaining a gross margin above 80%, the company incurred a net loss of $15.17 million due to R&D and sales network investments [2]. - The IPO funds will primarily be allocated to consolidating market coverage, optimizing AI capabilities, and exploring international markets [3][2]. Market Outlook and Competitive Landscape - The global shoulder replacement market is expected to exceed $5 billion by 2030, with a compound annual growth rate (CAGR) of over 7% [4]. - Shoulder Innovations faces competition from companies like Zimmer Biomet, Stryker, and DePuy Synthes, but its InSet™ system offers a unique solution focusing on postoperative stability and surgical efficiency [5][7]. Product Development and Technology - The InSet™ system addresses the common failure cause of glenoid loosening in shoulder arthroplasty, utilizing an embedded design to reduce micro-movement by up to 87% [11][9]. - The company has developed the InSet™ PLUS model for angle adjustments and the InSet™ Reverse product line for rotator cuff injury patients, creating a comprehensive product matrix [13][11]. - The ProVoyance™ AI surgical planning software enhances preoperative decision-making and integrates with the InSet™ system for improved surgical outcomes [14][15]. Conclusion - Shoulder Innovations is positioned to evolve from a high-growth implant company to a comprehensive orthopedic innovator, leveraging its technology and market strategies to enhance its competitive edge [15].

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]

Core Viewpoint - Wohl & Fruchter LLP is investigating the fairness of the proposed sale of Monogram Technologies, Inc. to Zimmer Biomet for $4.04 per share in cash, along with a contingent value right that could yield up to $12.37 per share if certain milestones are met by 2030 [1][3]. Group 1 - Monogram has agreed to be sold to Zimmer Biomet for an upfront payment of $4.04 per share in cash, plus a non-tradeable contingent value right (CVR) that could provide additional cash based on future milestones [1][3]. - Investors have expressed disappointment regarding the sale price, with comments indicating that the price is perceived as too low [2][4]. - Wohl & Fruchter LLP is examining whether the Monogram Board of Directors acted in the best interests of shareholders and if the sale price is fair [4].

Core Insights - The latest PatentVest Pulse report highlights a significant shift in the surgical robotics market, indicating it is not saturated despite the low percentage of robotic surgeries performed globally [1][2] - The report analyzes over 18,000 patent families and $4 billion in M&A activity, focusing on 28 robotic platforms, emphasizing the importance of platform defensibility in the sector [1][3] Industry Overview - Surgical robotics is characterized by fewer than 6% of the 310 million surgeries performed globally involving robots, attributed to cost, complexity, and deployment constraints rather than clinical limitations [2] - The report identifies strategic signals for future category leaders, including IP positioning, regulatory momentum, and platform scalability [3] Company Dynamics - Major surgical robotics platforms like Mako, Monarch, and Hugo began as venture-backed companies with strong IP and regulatory momentum, suggesting potential future leaders are among current emerging companies [5] - Intuitive Surgical remains dominant in the market but is experiencing slower expansion compared to challengers who are outpacing it in new patent filings [8] - Legacy companies such as Medtronic, Johnson & Johnson, and Stryker maintain strong commercial infrastructures, while public challengers like Vicarious Surgical and Microbot Medical are advancing their platforms [8] - Venture-backed companies are aligning for strategic scale, mirroring profiles of past M&A targets, indicating a trend towards consolidation in the industry [8]