ZBH

This article first appeared on GuruFocus. - Total Revenue: SEK 58.5 million in Q3 2026 (up from SEK 48 million); SEK 166.5 million year-to-date; rolling 12-month revenue near SEK 240 million at constant currency. - Net Sales Growth: Up 24% in Q3 excluding currency; total revenue growth of more than 21% at constant currency. - License Revenue: Grew 40% excluding currency in Q3. - BD Partnership Revenue: Grew 30% excluding currency; approximately SEK 38 million for the quarter; strongest growth in a decade. - Zimmer Biomet Revenue: Contributed slightly more than SEK 3 million for the quarter, with double-digit royalty growth from in-market sales. - Wound Management Revenue: SEK 14 million in Q3, down just under 9% excluding currency; approximately 14% organic growth over the first nine months. - Adjusted EBITDA: SEK 20 million in Q3, up more than SEK 14 million year-over-year; more than SEK 30 million year-to-date; above SEK 55 million on a rolling 12-month basis. - Adjusted EBITDA Margin: 34% in Q3 (more than tripled year-over-year); 24% on a rolling 12-month basis. - Operating Expenses: Total operating costs kept flat for the quarter and year-to-date despite continued growth investments. - Net Profit: Positive at more than SEK 7 million in Q3, an improvement of more than SEK 14 million versus Q3 last year. - Operating Cash Flow: SEK 14 million in Q3, an improvement of more than SEK 16 million year-over-year; almost SEK 19 million year-to-date (more than SEK 30 million improvement for the nine-month period). - Total Cash Flow: Positive at about SEK 10 million for the quarter and positive year-to-date. - Cash Position: Total cash increased to SEK 55 million at quarter-end. - Net Debt: Reduced to SEK 64 million excluding leasing, corresponding to approximately 1.2x rolling 12-month adjusted EBITDA. - Warning! GuruFocus has detected 3 Warning Signs with FRA:5JE. - Is FRA:5JE fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Net sales grew 24% year-over-year excluding currency, with total revenue of SEK 58 million, up from SEK 48 million. - License revenues increased 40% excluding currency, driven by the strongest growth in the BD partnership in a decade. - Adjusted EBITDA reached SEK 20 million, a margin of 34%, more than tripling from the prior year, demonstrating operating leverage. - Positive net profit of SEK 7 million, an improvement of SEK 14 million year-over-year, and strong operating cash flow of SEK 14 million. - Zimmer Biomet royalties showed double-digit growth from in-market product sales, and partner engagement in orthopedics is strong, supporting future growth. - Wound management revenues declined nearly 9% excluding currency in Q3 due to order phasing and variability, despite 14% organic growth year-to-date. - The company does not expect OpEx to remain flat or decrease going forward, as it continues to invest in the organization and regulatory programs. - Growth in new markets is from a low base, and the company cannot quantify the split between new and existing markets, limiting visibility. - There is inherent quarterly variability in wound management, and the softer Q3 performance may raise concerns about consistency. - The company did not provide specific details on the number of new markets launched by BD or the exact impact, leaving some uncertainty about future growth drivers. Q: How much of BD's 30% constant-currency growth came from newly launched markets versus long-standing established markets, and can you give more detail beyond "strong demand"? A: CFO Patrick Bach explained that Bactiguard supplies BD under a global agreement and is not able to split out, or permitted to report, growth by existing versus new markets. Underlying growth is positive in both, with new markets growing from a very low base but contributing meaningfully to the quarter. CEO Christine Lind added that BD continues to launch in new markets, with sales training support in Asia and further European countries still available to launch into. Q: Was the strong BD performance in Q3 driven by a positive stocking effect, and should we be cautious on Q4 as a result? A: CFO Patrick Bach said Bactiguard examined this closely and held in-depth discussions with BD, which confirmed no significant stocking effects. The quarter was lifted by in-market growth in both existing and new markets, and no changed downward momentum is expected in future periods. New market launches do show up in the books for the first time, but this reflects genuine demand rather than channel stocking. Q: Wound management fell just under 9% in Q3 on order phasing should we expect a stronger contribution in Q4, and what does continued investment in Malaysia entail? A: CFO Patrick Bach attributed the softer quarter to order phasing, including some regulatory-related phasing, and did not quantify it. Underlying demand for the Hydrus and Aqua portfolio remains as strong as in Q2, and double-digit growth is still expected for the full year and beyond. Malaysia investments cover organizational strengthening, operational machinery, and MDR costs, all held within flat OpEx. Q: OpEx was flat to slightly down year over year how should we think about the cost base going forward? A: CFO Patrick Bach said Bactiguard has deliberately taken cost out to build a scalable platform and does not expect to reduce salary costs on the contrary, it continues to invest in its organizations in Sweden and Malaysia. Savings are being pulled from other operating costs, keeping OpEx flat for the quarter and year-to-date. Costs are not expected to stay flat or decline going forward, but the platform remains highly scalable. Q: Were there any non-recurring effects or one-offs behind the lower costs and strong margin this quarter? A: CFO Patrick Bach confirmed there were no material one-offs or non-recurring effects in Q3, on either the top line or bottom line. The P&L demonstrates the leverage and scale of the business as demand increases in the license segment. He noted Bactiguard has historically flagged significant accrual changes or milestone payment recognition, but none applied this quarter. Q: Zimmer Biomet royalties are now more closely tied to market performance with double-digit growth from product sales what fixed or minimum component remains, and what is the gross run rate versus the old structure? A: CFO Patrick Bach said the double-digit in-market royalty growth comes from the ZNN Bactiguard nail system across Europe, albeit from a relatively low base versus other partnerships. The amended agreement is non-exclusive for the trauma nail system and includes both fixed fees and royalties. Fixed fees still make up the majority of reported Zimmer Biomet revenue, but the in-market royalty share is growing with positive demand. Q: How much development spend was capitalized rather than expensed in the quarter? A: CFO Patrick Bach said there was no significant capitalization of R&D work or other non-recurring items. Part of reported OpEx relates to MDR costs of approximately SEK 6 million for the nine-month year-to-date period, which are excluded from adjusted EBITDA. He flagged this as a good run rate to apply for both 2026 and 2027, though it can vary quarter to quarter. Q: Can you comment on how many new markets BD has launched in to date? A: CEO Christine Lind declined to comment on the number or specific new markets, but noted significant opportunity remains, as the markets BD is now rolling out are far from the total territories where it holds market rights. She highlighted BD as exceptionally strong at market launches and at maintaining traction over the long term, and expects continued growth both from new launches and from already-launched markets in coming quarters. Q: Is the double-digit growth expectation for wound management, or specifically for Hydrus? A: CFO Patrick Bach confirmed the double-digit expectation applies to the wound management business overall, not just Hydrus. The business stands at approximately 14% organic growth year-to-date, and that pace is expected to continue for the full year. He reiterated that wound management should return with a strong quarter going forward after the Q3 order-phasing dip. Q: Are selling and other external expenses partly tied to wound management sales volumes, so that lower sales pull costs down? A: CFO Patrick Bach said costs are tied to sales to some degree but not significantly, as OpEx is managed strategically overall. There are no plans to cut salary costs instead the organization has been strengthened in Sweden and Malaysia while savings continue to be found in other external costs. This is why OpEx came in flat or better for the quarter and year-to-date. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Warsaw, Indiana-based Zimmer Biomet Holdings, Inc. (ZBH) operates worldwide as a medical technology company. The company has a market cap of $18.8 billion and designs, manufactures, and markets orthopedic reconstructive products, such as knee and hip products; S.E.T. products, including sports medicine, biologics, foot and ankle, upper extremities, and trauma, among others. ZBH is expected to release its Q3 2026 earnings on Wednesday, November 4, 2026, before the market opens. Ahead of the event, analysts expect the company's EPS to be $1.89 on a diluted basis, down marginally from $1.90 in the year-ago quarter. The company has exceeded Wall Street's EPS estimates in each of its last four quarters, which is impressive. - Broadcom's Hock Tan Says AI's Next Bottleneck Isn't Chips, Power, or Memory. It's Not a Tech Problem at All. - Google Hits Major Quantum Breakthrough. This Could Be a Game-Changer for GOOGL Stock. - 63 Reasons Point to CoreWeave's Default. Yet Goldman Sachs Upgraded It to a 'Buy' for 1 Key Reason. - Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! For fiscal 2026, analysts project the company's EPS to be $8.54, up 4.2% from $8.20 in fiscal 2025. Moreover, its EPS is expected to rise by roughly 5.2% year over year (YoY) to $8.98 in fiscal 2027. ZBH stock has declined 5% over the past 52 weeks, lagging behind the S&P 500 Index's ($SPX) 14.4% rise and the State Street Healthcare Select Sector SPDR ETF's (XLV) 24.2% rise during the same time frame. ZBH's sales trends have been underwhelming over the last five years, as its 4.4% annual growth came under the average for the healthcare sector. Moreover, the company's annual earnings per share growth over the last five years has been 2.4%, which lagged its revenue gains, leading to less profitable incremental sales. ZBH's returns on capital have also been below average, showcasing the lack of compelling investment opportunities. Analysts are somewhat bullish on ZBH, with the stock having a "Moderate Buy" rating overall. Among the 29 analysts covering the stock, seven are recommending a "Strong Buy," one suggests a "Moderate Buy," 20 recommend a "Hold," and one suggests a "Strong Sell." ZBH's average analyst price target of $105.29 indicates a 6.6% upside from current levels. On the date of publication, Aritra Gangopadhyay did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

As the Q2 earnings season comes to a close, it's time to take stock of this quarter's best and worst performers in the surgical equipment & consumables - diversified industry, including Zimmer Biomet (NYSE:ZBH) and its peers. The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly. The 5 surgical equipment & consumables - diversified stocks we track reported a strong Q2. As a group, revenues beat analysts' consensus estimates by 1.6%. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE:ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries. Zimmer Biomet reported revenues of $2.18 billion, up 4.8% year on year. This print exceeded analysts' expectations by 2%. Overall, it was a strong quarter for the company with a narrow beat of analysts' full-year EPS guidance estimates and a beat of analysts' EPS estimates. "We delivered strong second quarter results with solid top- and bottom-line performance and continued progress on our key growth drivers and commercial transformation," said Ivan Tornos, Chairman, President and CEO of Zimmer Biomet. Investor expectations, however, were likely higher than Wall Street's published projections, leaving some wishing for even better results (analysts' consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 7% since reporting and currently trades at $89.14. Is now the time to buy Zimmer Biomet? Access our full analysis of the earnings results here, it's free. Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs. Solventum reported revenues of $2.21 billion, up 2.2% year on year, outperforming analysts' expectations by 2.5%. The business had a stunning quarter with an impressive beat of analysts' organic revenue estimates and a beat of analysts' EPS estimates. Solventum pulled off the biggest analyst estimate beat of the whole group. The market seems content with the results as the stock is up 1.4% since reporting. It currently trades at $88.67. Is now the time to buy Solventum? Access our full analysis of the earnings results here, it's free. With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE:STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments. STERIS reported revenues of $1.49 billion, up 7.3% year on year, in line with analysts' expectations. It was a mixed quarter as it posted a beat of analysts' EPS estimates. STERIS delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 7.8% since the results and currently trades at $214.45. Read our full analysis of STERIS's results here. With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE:BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide. BD reported revenues of $4.98 billion, up 5.4% year on year. This result topped analysts' expectations by 2%. It was a strong quarter as it also put up a narrow beat of analysts' full-year EPS guidance estimates and a beat of analysts' EPS estimates. The stock is up 7.6% since reporting and currently trades at $183.70. Read our full, actionable report on BD here, it's free. With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE:CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products. CONMED reported revenues of $343.5 million, flat year on year. This number surpassed analysts' expectations by 1.8%. Overall, it was a very strong quarter as it also logged a beat of analysts' EPS estimates and an impressive beat of analysts' full-year EPS guidance estimates. CONMED had the slowest revenue growth among its peers. The stock is up 2.8% since reporting and currently trades at $44.44. Read our full, actionable report on CONMED here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Zimmer Biomet currently trades at $91.50 per share and has shown little upside over the past six months, posting a middling return of 4.4%. The stock also fell short of the S&P 500's 16.9% gain during that period. Is now the time to buy Zimmer Biomet, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it's free. We're passing on Zimmer Biomet for now. Here are three reasons why there are better opportunities than ZBH, plus one stock we'd rather own. A company's long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Zimmer Biomet grew its sales at a mediocre 4.4% compounded annual growth rate. This was below our standard for the healthcare sector. We track the long-term change in earnings per share (EPS) because it highlights whether a company's growth is profitable. Zimmer Biomet's EPS grew at an unimpressive 2.4% compounded annual growth rate over the last five years, lower than its 4.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded. Growth gives us insight into a company's long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity). Zimmer Biomet historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 4.2%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies. Zimmer Biomet isn't a terrible business, but it doesn't pass our bar. With its shares underperforming the market lately, the stock trades at 10.4× forward P/E (or $91.50 per share). While this valuation is fair, the upside isn't great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We'd recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce. ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

It has been about a month since the last earnings report for Zimmer Biomet (ZBH). Shares have added about 1.8% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Zimmer due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers. Zimmer Biomet posted second-quarter 2026 adjusted earnings per share of $2.07, which beat the Zacks Consensus Estimate of $2.01 by 3%. The adjusted figure was unchanged year over year. The quarter’s adjustments included intangible asset amortization, restructuring and other cost-reduction initiatives, inventory and manufacturing-related charges, acquisition and integration costs, litigation expenses and other charges. GAAP earnings were $1.03 per share compared with 77 cents in the year-ago period. Net sales of $2.18 billion increased 4.8% year over year. The figure also surpassed the Zacks Consensus Estimate of $2.13 billion by 2.3%. Sales increased 4.7% on a constant-currency basis and 4% on an organic constant-currency basis. The organic measure excludes the impact of the Paragon 28 acquisition. Sales generated in the United States totaled $1.24 billion, up 5.6% year over year. International sales grossed $937 million, reflecting growth of 3.7% on a reported basis and 3.5% on a constant currency basis. The company currently reports under four product categories: Knees, Hips, S.E.T. and Technology & Data, Bone Cement and Surgical. Sales in the Knees unit improved 0.4% year over year to $828.9 million. At constant exchange rate or CER, revenues increased 0.1%. U.S. Knees sales rose 1.4%, while international sales declined 0.9% on a reported basis and 1.5% at CER. Hips sales increased 5% year over year to $562.7 million and rose 5.1% at CER. U.S. Hips revenues advanced 5.9%, while international sales grew 4% on a reported basis and 4.2% at CER. Revenues in the S.E.T. unit rose 6.4% year over year to $586 million. Sales increased 6.2% at CER. Technology & Data, Bone Cement and Surgical revenues surged 21.1% to $199.4 million. At CER, sales increased 21.5%, marking the strongest growth among Zimmer Biomet’s product categories. Adjusted gross margin, after excluding intangible asset amortization and inventory and manufacturing-related charges, was 71.1%. This compared with approximately 72.3% in the year-ago quarter. Cost of products sold, excluding intangible asset amortization, increased 7.3% to $635.5 million. Selling, general and administrative expenses rose 10.4% to $899.3 million, while research and development expenses declined 7.5% to $104.8 million. Adjusted operating profit was $559.7 million compared with $578.5 million a year earlier. The adjusted operating margin contracted 210 basis points to 25.7%. Zimmer Biomet exited the second quarter of 2026 with cash and cash equivalents of $410 million compared with $591.9 million at the end of 2025. Net cash provided by operating activities was $447.9 million in the quarter compared with $378.2 million in the year-ago period. Free cash flow increased to $308.3 million from $247.7 million. For the first six months of 2026, operating cash flow totaled $807.2 million. The company repurchased $500.8 million of common stock and paid $93.4 million in dividends during the period. Zimmer Biomet updated its financial guidance for 2026. Reported revenue growth is now expected in the range of 3.9-4.9%, up from the prior projection of 2.5-4.5%. Constant-currency revenue growth is projected between 3.4% and 4.4%, compared with the earlier range of 2-4%. Organic constant-currency growth is expected in the band of 2.25-3.25%, up from 1-3%. Adjusted earnings for the full year are now expected in the range of $8.47-$8.59 per share. The previous guidance called for adjusted earnings of $8.40-$8.55. It turns out, estimates revision have trended upward during the past month. Currently, Zimmer has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Zimmer has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Zimmer Biomet’s second quarter results were driven by strong execution in its hip franchise, robust technology sales, and progress in the U.S. sales force transformation. CEO Ivan Tornos highlighted that new product adoption, such as the Z1 hip stem and OrthoGrid navigation, contributed to above-average growth in the U.S. In addition, increased demand for the company’s technology and data solutions, including capital equipment sales, played a key role. Management attributed the quarter’s performance to successful integration of Paragon 28 and continued momentum in key business segments like S.E.T. (Sports Medicine, Extremities, and Trauma), despite some international headwinds. Is now the time to buy ZBH? Find out in our full research report (it’s free). Revenue: $2.18 billion vs analyst estimates of $2.13 billion (4.8% year-on-year growth, 2% beat) Adjusted EPS: $2.07 vs analyst estimates of $2.01 (3% beat) Management slightly raised its full-year Adjusted EPS guidance to $8.53 at the midpoint Operating Margin: 15%, in line with the same quarter last year Constant Currency Revenue rose 4.7% year on year (2.8% in the same quarter last year) Market Capitalization: $18.55 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Frederick Wise (Stifel): asked about the pace and implications of the U.S. sales force transition. CEO Ivan Tornos described the transformation as ahead of plan, explaining that investments in retention and recruiting are deliberate and are expected to yield improved growth and productivity by 2027. Larry Biegelsen (Wells Fargo): inquired about the health of the reconstruction market and exposure to public payer shifts. Tornos stated that market fundamentals remain sound, with minimal exposure to ACA and Medicaid changes, and reaffirmed the company’s confidence in overall orthopedic procedure demand. Mathew Blackman (TD Cowen): questioned the sustainability of hip market outperformance in the U.S. and internationally. Tornos attributed gains to execution and innovation, highlighting strong demand for iodine-coated hips in Japan and momentum in the U.S. from the “triple play” platform. Vijay Kumar (Evercore ISI): asked about the drivers of growth in the Technology & Data segment. Tornos clarified that growth was fueled primarily by technology adoption and a healthy capital equipment cycle rather than one-time events, and expects technology to continue as a key contributor. Ryan Zimmerman (U.S. Bancorp BTIG): raised concerns about pricing headwinds and potential reimbursement changes. Tornos responded that pricing erosion remains within historical ranges, and that the company’s focus on bundled care and clinical outcomes should help mitigate future pricing pressure. Moving forward, our analysts will be monitoring (1) the progress of Zimmer Biomet’s U.S. sales force transformation and associated productivity gains, (2) the pace of global adoption for new platforms such as the iodine-coated hip and ROSA Shoulder robotics, and (3) the impact of operational and manufacturing investments on both supply chain resilience and margins. Execution on new product launches and maintaining momentum in key high-growth segments will be crucial signposts for future quarters. Zimmer Biomet currently trades at $97.24, up from $95.81 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 8:30 a.m. ET Senior Vice President, Investor Relations - David DeMartino Chairman, President and CEO - Ivan Tornos Interim CFO and VP, Controller and Chief Accounting Officer - Paul Stellato Operator: Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, August 5, 2026. [Operator Instructions] I would now like to turn the conference over to David DeMartino, Senior Vice President, Investor Relations. Please go ahead. David DeMartino: Thank you, operator, and good morning, everyone. Welcome to Zimmer Biomet's Second Quarter 2026 Earnings Conference Call. Joining me on today's call are Ivan Tornos, our Chairman, President and CEO; and Paul Stellato, our Interim CFO and VP, Controller and Chief Accounting Officer. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. For a detailed discussion of all these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements, please refer to our SEC filings. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our second quarter earnings release, which can be found on our website, zimmerbiomet.com. With that, I'll turn the call over to Ivan. Ivan? Ivan Tornos: Thank you, David. Good morning, everyone, and thank you for joining today's call. I would like to start the way that I always do with gratitude, thanking our Zimmer Biomet team members around the world. Thank you for your commitment, your resilience and most importantly, your dedication to serving our customers and their patients each and every day. I'm truly grateful to have the opportunity to serve alongside you on this journey. Equally important, I'm beyond proud of the work that you do, David. During my prepared remarks this morning, I'm going to cover 3 things. First, I'll summarize our strong second quarter results. Second, I'll review our upgraded outlook for the year 2026. And then thirdly, I'll provide an update on our 3 strategic priorities, which remain unchanged. First, people and culture; second, operational excellence; and third, innovation and diversification. To begin, we delivered second quarter net sales of $2.177 billion, which came in above our expectations, representing 4.8% growth on a reported basis and 4% growth on an organic constant currency basis. On an organic constant currency basis, we grew 4.6% in the U.S., while our international business grew 3.1%. The growth in the U.S. demonstrates the strong progress we are making across a variety of fronts, including our U.S. sales force transformation. Starting with Hips, we delivered 5.1% constant currency growth, including 5.9% growth in the critical U.S. market and 4.2% growth internationally. In the U.S., our hip triple play continues to gain momentum, driven by the continued penetration of Z1, our triple-taper hip stem, which now represents over 40% of our U.S. hip stems and will soon surpass 100,000 implants worldwide. Secondly, we've seen greater utilization of HAMMR, our surgical impactor, which is now used in over 25% of our U.S. primary hip cases. And thirdly, we have seen increased adoption of OrthoGrid, our AI-based navigation solution for direct anterior hip procedures. OrthoGrid had its strongest quarter to date and the first half of 2026 saw as many cases as the entire full year 2025. We expect growth to accelerate in this platform in quarters to come. Outside the U.S., our iodine-coated hip launch in Japan is exceeding expectations as we are seeing robust demand from both existing surgeons and competitive accounts. We expect this first-to-the-world technology to be a meaningful growth driver in the second half of the year 2026 and well beyond 2026. We're actively pursuing pathways to bring this game-changing technology to additional markets outside of Japan. Knees increased 0.1% in the quarter with U.S. Knee growth of 1.4%, offset by a 1.5% decline internationally, which was heavily impacted by China and core emerging markets. We continue to see traction with new product launches and are very confident that the specialization work being done in the U.S. and go-to-market changes in key OUS markets will lead to improved performance. S.E.T. grew 3.4% on an organic constant currency basis in the quarter, which was a 180 basis points acceleration from the first quarter of the year. In the U.S., we delivered mid-single-digit growth and Paragon 28 sales increased mid-teens. This was driven by a differentiated and innovative product portfolio, strong execution, healthy market dynamics and the successful integration of the acquisition. CMFT, craniomaxillofacial and thoracic, once again grew double digits, led by our thoracic franchise, while upper extremities reported another quarter of upper single-digit growth. These compelling results were partially offset by continued pressure in both trauma and restorative therapies. Technology & Data, Bone Cement and Surgical grew 21.5%, demonstrating that our strategy of offering a comprehensive suite of customer-centric solutions is resonating with customers. We delivered record capital sales this quarter, driven by both ROSA with OptimiZe and TMINI and saw early contribution from the much anticipated next-generation ROSA Shoulder launch. ROSA Shoulder is the only robotic shoulder system in the world that can perform both anatomic and reverse procedures and reset both the glenoid and humeral sides of the joint. Surgeon feedback from the first round of cases is very strong, and we look forward to doing many more cases in quarters to come. U.S. technology sales grew over 50%, and we continue to have a very robust capital equipment pipeline, demonstrating surgeon enthusiasm for our differentiated product offerings and a healthy CapEx environment. Turning now to our outlook. With a strong first half, the transition to a dedicated and specialized U.S. sales channel progressing as planned, continued new product momentum and healthy underlying markets, we are raising our full year organic constant currency revenue guidance to 2.25% to 3.25% from the previous range of 1% to 3%. We are also increasing our adjusted earnings per share guidance to $8.47 to $8.59 from the previous guidance of $8.40 to $8.55. Paul will provide more detail in his prepared remarks. With that, let's turn to our 3 strategic priorities: people and culture, operational excellence and innovation and diversification. First, in the area of people and culture, which is a key pillar of our strategy, we are doing great things. This is our top priority as a company, underpinning all that we do. And I love the fact that this is truly, and I mean truly becoming a competitive advantage for Zimmer Biomet. Over the last year, we were recognized by leading global publications such as TIME Magazine and Forbes as one of America's best companies. We're also highlighted by Fortune magazine as one of America's most innovative companies, and we earned multiple Great Places to Work certifications and Best Workplaces awards all around the world. These recognitions not only cement our status as a best and preferred place to work, but they also help us recruit top performers in key roles while maintaining high engagement and low people turnover. Our people and culture first imperative extends to the acquisitions that we do. When we acquired Paragon 28 just over 12 months ago, our goal was to strike the right balance between integration and preserving the fast, agile and entrepreneurial culture that have been central to the success of Paragon 28. More than a year after the close, Paragon 28 is growing mid-teens with commercial integration largely completed and negligible turnover among key team members. Paragon 28 now represents the template for future acquisitions as we identify a target that makes sense strategically and financially, accelerates our WAMGR and creates a growth platform just like Paragon 28 has done for Zimmer Biomet. We have successfully brought Paragon 28 into the company, combining the best of both organizations, and we are now very confident of the capabilities in place to do future deals with similar dynamics to this one. Finally, our people and culture first imperative is central to how we're approaching our global commercial transformation. In the U.S., our transition to a dedicated and focused sales organization, one specialized around key call points and growth areas is progressing as planned. 6 months in, with less customer disruption and sales force turnover than initially expected, we have confidence to accelerate our transformational efforts in certain territories. We firmly believe that once these efforts are completed at the end of next year, Zimmer Biomet will be a stronger company with a far more productive commercial channel and a more durable, diversified and scalable growth engine. Our second priority is operational excellence. We continue to take actions to drive efficiencies. This includes shifting certain R&D spend to our newly opened global capability center in India, where we can access strong talent while improving our cost structure. Additionally, we are excited to open a new manufacturing plant in Costa Rica, which furthers our strategy of increasing supply chain resilience while gaining access to lower-cost geographies. Construction in Costa Rica is well underway, and we are scheduled to establish the initial manufacturing lines next year. Lastly, to drive long-term margin improvement, we're aggressively implementing AI, artificial intelligence, initiatives to address our operating expenses cost base. Our third strategic priority is innovation and diversification. We remain very excited about our pipeline and the differentiated technologies we are bringing to market. As previously mentioned, we are encouraged by the early launch of our iodine-coated hip platform in Japan, which is designed to help address the risk of periprosthetic joint infection after total joint replacement. Within the overall $0.5 billion Japanese hip market, this first-to-the-world technology is driving share of wallet and also competitive conversions. Looking ahead, in the U.S., we continue to make excellent progress with Monogram and anticipate filing the 510(k) for Monogram in the very near future. Beyond these 2 transformational product launches, we expect to introduce over 50, 5-0, new products in the next 36 months with many of these launches being first-to-the-world introductions. While we could not be more enthusiastic about our current product cycle, we are deeply committed to being the boldest innovator in musculoskeletal health for years to come. Our role as the exclusive orthopedic investor in the Mobility Revolution Fund, a musculoskeletal venture capital fund, launched through a collaboration between Deerfield Management and the Hospital for Special Surgery in New York City is an example of this commitment. Throughout the fund, we will have the opportunity to invest in disruptive technology ranging from AI and data applications to cartilage repair with the potential to redefine orthopedic care and further our mission to alleviate pain and improve the quality of life for people around the world. In addition to our organic innovation strategy, we are going to continue to look for responsible opportunities to diversify through M&A as we continue to aspire as a company to have a WAMGR, weighted average market growth rate, of 5% to 6% by the end of this decade. All in, we delivered strong second quarter results, made strong progress on our key strategic priorities and we increased our outlook for the year 2026. The work that we are doing to transform our company, starting with our critical commercial channel is well underway. I'm very proud of the team. I'm very proud of our progress, and I'm very excited with the momentum that we have as we advance our customer-centric strategy and address the most challenging problems in health care. I truly do mean I want to say that the boldest chapters for this company remain ahead. With that, I'll turn the call over to Paul. Thank you. Paul Stellato: Thanks, and good morning, everyone. As Ivan reviewed, we grew sales 4% on an organic constant currency basis in the second quarter, driven by strength in Hips, high-growth segments of S.E.T. and Robotics. We reported GAAP diluted earnings per share of $1.03 compared to GAAP diluted earnings per share of $0.77 in the second quarter of 2025. Higher revenue and lower acquisition-related costs, along with a lower share count were the primary drivers of the increase. Our adjusted earnings per share were $2.07, in line with the prior year quarter as higher revenue and lower share count were offset by the expected dilution from the Paragon 28 acquisition and investments in the U.S. commercial organization. Pricing was an 80 basis point headwind in the quarter, within our guidance range of up to 100 basis points of pricing pressure for the year. Adjusted gross margin was 71.1%, down 120 basis points year-over-year and in line with our expectations. This decrease was driven by increased manufacturing costs, partially offset by geographic and product mix. Adjusted operating margin was 25.7%, down 210 basis points year-over-year and in line with our expectations as we continue to invest in our U.S. channel. Adjusted net interest and nonoperating expenses were $71 million, modestly below the prior year. Our adjusted effective tax rate was 18% and fully diluted shares outstanding were 192.8 million, down year-over-year due to $500 million in share repurchases during the first half of 2026, including $250 million repurchased during the second quarter. Now turning to cash and liquidity. We had another strong quarter of cash generation with operating cash flow of $448 million and free cash flow of $308 million, up 18% and 24%, respectively. We ended the quarter with approximately $410 million in cash and cash equivalents. Regarding our updated outlook for the full year 2026. As Ivan mentioned, we now expect organic constant currency revenue growth of 2.25% to 3.25%, up from 1% to 3% previously. We continue to anticipate foreign exchange to be an approximate 50 basis point tailwind to full year revenue growth. In addition, given Paragon 28's strong performance, it will contribute 110 basis points to full year reported sales growth, above our initial expectation of around 100 basis points. As a reminder, the Paragon 28 transaction closed on April 21, 2025, and is now included within organic growth. We now expect 2026 reported sales growth to be 3.9% to 4.9%, up from 2.5% to 4.5%. The updated revenue guidance contemplates a healthy orthopedic procedural market and new product momentum balanced with the continued risk of disruption from our U.S. and international go-to-market changes and up to 100 basis points of pricing erosion. From a phasing perspective, we continue to anticipate third and fourth quarter constant currency growth rates to be consistent, while foreign exchange is expected to be a 50 basis point headwind in the third quarter. Shifting to the P&L. For the full year, we continue to expect gross margin to be around 71%, and we now forecast operating margins to decline a little more than 50 basis points, reflecting the aforementioned investments in our U.S. commercial organization. Within that, we anticipate third quarter operating margins to be down slightly on a sequential basis from the second quarter. Our assumptions for full year net interest and other nonoperating expense and tax rate remain unchanged at $295 million and 18%, respectively. And as previously announced, we now plan to repurchase up to $1 billion of shares this year, an increase of $250 million from our initial expectation. As a result, we now anticipate having about 193 million fully diluted weighted average shares outstanding for 2026. Taking all of this into account, we are increasing our adjusted earnings per share expectations for the year to a range of $8.47 to $8.59 versus our prior guidance of $8.40 to $8.55. We continue to expect to grow free cash flow 9% to 11%. We remain focused on delivering solid results this year while continuing to position the company for long-term success. With that, I'll turn the call back over to David. David DeMartino: Thank you, Paul. Operator, let's open up for questions. [Operator Instructions] Operator, please go ahead. Operator: [Operator Instructions] We'll go first to Rick Wise with Stifel. Frederick Wise: It's terrific to see all the positive progress and see the quarter's healthy beat and raise performance. Of course, I'm inclined to credit your tornado tour efforts as helping, in particular, the U.S. sales team get all jazzed up. But share with us, if you would, Ivan, some more of your updated latest thoughts about the sales force transition. It seems to be going well, but maybe help us better understand what's left to do, the growth implications since it seems to be going better than expected. But also maybe help us understand, it seems like you're making a deliberate choice to reinvest some of the sales outperformance, margin outperformance in higher SG&A spend. How do we -- is that a conscious decision? Is there something we need to understand better? And maybe just about the implications going forward in the second half and 2027. Ivan Tornos: Thank you, Rick. First and most important, I'm going to invite you to the next tornado tour, you're going to love it, 5 states in 5 days, seeing countless reps, managers and distributors. So giddy up because it's an intense week. I'll tell you, the sales force transition, the go-to-market changes are going better, if not much better than expected. And I think that's evidenced in the numbers that we posted for the quarter. We delivered almost 6% growth in Hips, 5.9%. Our technology business, we invested a lot, added a ton of reps in the channel, grew 53% in the quarter. When you look at S.E.T., there is a lot to unpack in S.E.T., as you know. But our shoulders business, our upper extremities business delivered upper single-digit growth. Again, that's the outcome of the specialization changes that we're making, and we're growing across the board. Surgical had a great quarter. So again, across the board, the dedicated specialized structure is yielding results, 4.6% growth in the U.S. So you see that the changes that we're making are increasing productivity. The number of cases per week are increasing. And again, we're seeing the return on these investments. Beyond the financials, we look at all kinds of people metrics. Our attrition rates or people turnover rates are the lowest that we have seen in a while. And engagement is very high. We are on track to complete all of these by the end of 2027. So we're going at the right pace. We always said we're going to have 3 stages. The first one is done, which was the lower or lowest risk. We are now in the second stage, and we're taking our time to understand what is the pace, what is the level of investment that we need to secure. And then quickly, we're going to move into the third stage. And again, repeating myself, we'll be done with this project. We'll have a fully dedicated and specialized structure by the end of 2027. So everything is on track, and that's why you see us today raising our guidance. In terms of your second question, the SG&A question, look, we said from day 1 that we're not going to be penny-wise and pound-foolish. This is not a cost savings strategy, the go-to-market changes in the U.S. This is a growth strategy. We want to have the best sales force in orthopedics, and we're building just that. So to not be penny-wise, pound-foolish, we got retention agreements across the board. We locked in the top 6 independent distributors. We have added 200 tech reps or we're adding 200 tech reps, probably midpoint into recruiting those 200 reps. We've invested heavily in sales excellence programs across the board. We got what we deem the best comp plan in orthopedics today, which is enabling us to recruit med tech top reps from across the board. Really excited about the people that we're bringing here. So that's why the SG&A is modestly up. We like this investment. We like these investments. We know that are going to help us go at pace, derisking the go-to-market changes. And most importantly, we know that these investments in '26 are going to yield better results in 2027. So I love what we see, everything on track, and thank you for your question. Operator: We'll go next to Larry Biegelsen with Wells Fargo. Larry Biegelsen: Congrats on the nice quarter here. Ivan, you know the Recon market question is coming, and you talked about healthy underlying trends. So when we aggregate the data, it looks like the Recon market did slow in the first half of '26. It looks like it slowed in the U.S. and outside the U.S. So my question is, what do you attribute that to? And you know there have been concerns about the ACA subsidies expiring and the Medicaid cuts. What are you assuming in the guidance? And I know you framed it as kind of low single-digit percent of your U.S. procedures for both the ACA exchanges and Medicaid, but that's still, call it, in the aggregate, maybe 5%. If those declines, say, 20%, it could still be a 1% headwind for you. So how are you thinking about this? Ivan Tornos: Thanks for the question. Look, this is my second stint in orthopedics, 8 years now at Zimmer Biomet previously with DePuy for a few years. The one thing I've learned is that markets don't change one quarter to the other. So we don't look at 1 quarter dynamics. The second half of '25 was stronger than the first half of '26. Hips was very strong in the second quarter. We continue to see knees, the knee market in the U.S. around 3% or 4%. So again, we don't look at 1 quarter dynamics. We know that in Q1, there were some acute events. Some of that got resolved in the second quarter. I'm talking about some of the strikes. I'm talking about some of the external changes. We are not concerned about market health. We continue to peg the overall market at 4% to 5%. Otherwise, we'll not be growing 4.6% in the quarter in the U.S. Relative to the ACA, we keep monitoring this. I'll tell you, for us, the exposure to ACA and exchanges is low single digit. Our single largest payer or our largest payer for Zimmer Biomet is Medicare. As you know, the population age matters. The average hip patient in the U.S. is 65 years old. For knees, it's around 67. So these are Medicare patients. When you throw on top of that commercial, that's virtually the entire payer ecosystem. So low single exposure to ACAs. We track all kinds of data as the largest orthopedic company in the world, we look at waiting list, which remain unchanged. Average in the top 10 hospitals in the U.S. is 3 to 6 months, that is, waiting times. We look at cancellation rates. This is a metric that we started to monitor during COVID. What percentage of times do patients cancel their procedure? At one point, this was 40%, 50%. For the last 5 years, it's been in the teens. That tells us that when a patient commits to a procedure, 85%, 90% of the time, they will go through the procedure. So that's not changed. We look at referral cycles from the time you go to see a primary care doctor to the time you schedule the surgery, what is the waiting cycle? And again, it remains pretty much the same. So you may have some mix elements, Hips are stronger 1 quarter, Knees softer 1 quarter. Again, overall, we are not concerned. We like what we see as we look into the second half of the year 2026. And then internationally, there's all kinds of events, whether it's tenders, whether it's geopolitical dynamics in the Middle East. So we're not concerned about market health, and that's why we're raising guidance for the second half of 2026. Thanks for the question. Operator: We'll go next to Matthew Blackman with TD Cowen. Mathew Blackman: Can you hear me okay? Ivan Tornos: Yes, we can, Matt. Mathew Blackman: Great. And Ivan, I just wanted to drill down a little bit on some of your latter comments in response to Larry's question and specifically on the hip market. It was a noisy quarter in the hip market globally, everyone's growth decelerated with the exception of Zimmer Biomet. So I was just hoping to get your perspectives. First on the U.S. market, anything notable in terms of volumes or share or mix? And then OUS, obviously, you've got new products, particularly in Japan. I appreciate that OUS is a lot of different geographies. But just help us understand the opportunity OUS for the Zimmer hip franchise and the health of underlying -- key underlying markets there. Ivan Tornos: Thanks, Matt, for taking the time this morning. Well, let me just piggyback to that first comment that Zimmer Biomet did grow in the quarter. Again, I'll tell you, that tells you that it's all about execution. The markets are not a problem. The innovation story is compelling here. So as long as we continue to execute, our expectation is that we'll continue to deliver the performance that we can deliver. Relative to new products, hips and the opportunity outside of the U.S. and here in the U.S., let's start with iodine. It's one of the most transformational products that this company has launched. Periprosthetic joint infections are the #1 cost for readmissions. Infection is a multibillion-dollar cost to all health care systems. Japan is the second largest market outside of the U.S., roughly $0.5 billion in value. And the launch has gone much better than expected. Candidly, I mean, we're struggling to supply at the pace that we need to supply. The demand is very high. We expect to convert the lion's share of the entire market over to iodine-coated devices. We get a 40% premium every time that we move from non-coated -- non-iodine-coated hip to a coated hip. We are converting not just Zimmer Biomet customers, but also competitive accounts. So the launch is going really, really well. We are in active conversations with the FDA to understand the pathway to bring this to the U.S. and we got a pipeline of countries all over the world where we're going to be bringing this disruptive technology. Here in the U.S., look, we don't have iodine today, but we do have the hip triple play, what we call the hip triple-play platform, Z1, HAMMR or surgical impactor and OrthoGrid. All 3 of them are taking market share. All 3 of them are going better than expected. And that's why we delivered 5.9% growth in Hips in the U.S. this quarter. So that's on Hips. I'm not going to ramble through the rest of the portfolio, but we like the innovation story. And again, I'll leave you with one word, execution. We got to execute better. That's what we're making the go-to-market changes, and then we'll be able to deliver quarters like this, if not much better than this. Operator: We'll go next to Patrick Wood with UBS. Patrick Wood: Ivan, you obviously said there's a lot to unpack in S.E.T. So I'd love to just drill into that a little bit better. Obviously, a bit of a sequential acceleration on that side. I know there's a lot going on between shoulder and sternal closure. So anything you can give us a sense for how -- what drove that acceleration and how you're thinking about that for the balance of the year and moving into '27? Ivan Tornos: Thanks, Patrick. We love this business. We delivered a 4% plus in the U.S. We're slightly behind mid-single-digit growth globally in S.E.T., some timing with Sports Med that is going to move on to the second half. As you heard in my prepared remarks, Paragon 28 is growing close to 15% or upper extremities business growing strongly, close to upper, if not upper -- actually upper single digit, our CMFT business growing in the teens. I don't know how many quarters in a row. This is driven by our thoracic business. You know the opportunity here is $2 billion plus when you move from wires to rigid fixation for sternal closure. So it's a standard of care change. So again, CMFT growing in the teens, shoulders growing upper single digit, Paragon 28, stellar growth at almost 15%. We expect bigger growth in the second half. So we like where we are with S.E.T. We do have 2 headwinds. We've been very candid about those 2 headwinds, those being trauma and restorative therapies. Actually, if you take those out, the U.S. growth will be solidly in the upper single digit year-to-date. So we're addressing the changes that we need to make in those 2 businesses, trauma and restorative therapies. Net-net, the second half of 2026, we expect to have a much better S.E.T. growth profile. But again, very pleased with the progress. And congratulations to the team, especially Paragon 28 for a stellar performance in the second quarter. Operator: We'll go next to Vijay Kumar with Evercore ISI. Vijay Kumar: I guess I'll focus on Bone, Tech and Cement north of 20%, really strong. How much of this is being driven by Zimmer's tech strategy resonating in the marketplace versus any one-time effect? Did you benefit from any Bone Cement competitors being off the market? If so, could that be a comp headwind when you think about '27? Ivan Tornos: Thanks, Vijay. Look, there's a lot in this other category. I particularly don't love the name Other for everything. The lion's share of the growth is Technology. Technology in the U.S. grew 30% in Q1. In the second quarter grew 53%. As we look at the second half of 2026, the pipeline in Technology, both in the U.S. and outside the U.S. is very strong. So I'll tell you, the lion's share of the growth is Technology. Our Bone Cement business is a tiny fraction of that category. There were some onetime events in some international markets. But no, the growth here comes from Technology, number one, and surgical. I referenced the surgical, the first quarter of 2026 and the second quarter has been much stronger than the past. That is part of our ASC strategy. So no, it's certainly not Bone Cement. It's Technology. And I'll tell you there's 2 different dynamics here, one internal and one external. On the external front with Technology, the CapEx environment is very healthy. As you probably heard now from all competitors, we all have a strong pipeline of robots that we're selling. The CapEx, again, is very, very healthy, most in the U.S., but in some countries outside of the U.S. And the second dynamic is here internally, we have the most comprehensive suite of solutions, whether it's handhelds that are cordless, whether it's CT scan devices, non-CT scan devices, mixed reality, large footprint robotics, if I can speak, whether it's the launch of ROSA OptimiZe, whether it's ROSA Shoulder, it will take an hour to go through it. We got a best-in-class portfolio in Technology, and we're in the early stages of gaining the market share that we can gain with our technology. Operator: We'll go next to Travis Steed with Bank of America. Travis Steed: Congrats on the good quarter. I guess I'm looking at kind of comp adjusted growth. Q2 was a nice acceleration. If you end up beating the guide in the back half, you'll have another acceleration in the back half of the year on the total company growth. Is that the sales force transition getting better and the execution getting better? Is it new products? Just curious what's driving that kind of acceleration over the course of the year? When you look at '27, what gets better, what gets worse? Does the sales force acceleration -- or is the sales force less of a headwind in '27 or new products more of a tailwind? Or is there -- is pricing better or worse in '27? Just trying to think about the factors of '27. We can make our own call on kind of market growth rates, but kind of the Zimmer specific factors on '27 that you could kind of call out what gets better or worse? Ivan Tornos: Travis, thanks for joining. Look, the numbers, when you see the numbers without understanding the details can mislead you. If you look at 2025, if you look at last year, the first half of 2025, when you adjust for the selling day impact dynamics of the first half, the growth in the first half of 2025 is 3.6%. And when you look at the second half of 2025, when you adjust for the ERP comparable versus '24, and I'm going back in history, now the growth rate in the second half of 2025 is around 4%, 4.2%. So 3.6% growth, real growth in the first half of '25 and 4.2% growth in the second half of '25. So that's a 60 basis points acceleration from the first half to the second half. What gives us confidence that we're going to deliver that, if not more? We've seen great momentum with our go-to-market changes, again, as evidenced by the results. We continue to see an uptick in new product acceleration. Our S.E.T. business, as I referenced earlier during my answer to Patrick, it is going to accelerate. We don't have the supply challenges we have with Sports Medicine. We continue to see Paragon 28 delivering strongly early in Q3, they continue to do really well. So a combination of commercial execution, innovation and the fact that the growth is not as acute as it may look at face value, give us confidence on delivering on the second half of 2026. Relative to '27, look, we're not going to get into commentary around what '27 looks like. I will tell you, if you ask me today, we are confident that the performance should improve in the year 2027. To begin with, by then, we'll be mostly done with all the go-to-market changes. We will not have the struggles that we have in China today. China is only 2% of the revenue of Zimmer Biomet, 1% of the EBITDA, but it's a country that has been declining 20% this year. So we're going to have favorable comps as we get into 2027. We also have some noise in emerging markets. Those disappear as we get into 2027. So again, the U.S. will perform better given the go-to-market changes, we're not going to have some of the headwinds that we got today in a variety of international regions. So we do believe '27 is going to be better. but we'll talk about 2027 when it's time to talk about 2027. Operator: We'll go next to Robbie Marcus with JPMorgan. Robert Marcus: Congrats on a good quarter. Ivan, I wanted to ask following up on -- you were talking about all the different tech and robotic platforms you have. How do you think about coalescing that as a strategy to drive revenue growth and balance that? I have to imagine there's a decent amount of support dollars that go into having so many robotic platforms. So how do you think about all of those? Do you focus on a few? Do you keep the broadest offering? And how do you think about returns and support for those platforms? Ivan Tornos: Thanks, Robbie. Look, we've taken a very data-centric approach to what is the best pathway when it comes to technology. We don't call ourselves a robotic company. We call ourselves a technology company. So we segmented all kinds of technology within orthopedics. Percentage of surgeons that use robotics in the U.S. remains 20%. So 80% of surgeons don't use a robot in the U.S. When you look at OUS dynamics, 10% of surgeons will use a robot, 90% do not. So we don't want to be a robotic company. We want to be a navigation company. And that's why here in the U.S., we offer surgical guidance for non-robotic users. We have FDA-approved mixed reality. We recently acquired 3 quarters now, 4 quarters ago, OrthoGrid for direct anterior and similar technologies outside of the U.S. When you look at the percentage of surgeons that use robots, again, the 20% in the U.S., 29,000 orthopedic surgeons, 20% use robots here in the U.S. One robot does not fit all. We do extensive market research. You got some surgeons that prefer CT scan. You got some that prefer imageless, you got some that like small portable to move the robot from one operating room to the other one. So we have that optionality. Again, we got a large footprint, small footprint, portable, which, by the way, is cordless, CT scan, non-CT scan. We got all kinds of robots. And similar dynamics outside the U.S. Outside the U.S., the preference is for CT scan-less robotics, and we have that. So that's why you see such a comprehensive suite of solutions. In terms of the cost, look, we're evaluating that. As we launch Monogram, as we continue to track which products are doing better than other, as we see where the standard of care is going to evolve towards, we may start to prune the portfolio and have a more simplified portfolio. But right now, we like the optionality of having such a comprehensive suite of solutions. And look, 53% growth in the second quarter tells us that we're doing something right. Thanks, Robbie. Operator: We'll go next to Matt Taylor with Jefferies. Matthew Taylor: So Ivan, I want to ask you about other since you don't like that. But let me ask another technology-based question. I'd love an update on ROSA Shoulder, how that is going. Maybe you could talk about the rollout, the uptake that you expect and how that's differentiated from other technology-driven shoulder solutions? Ivan Tornos: Matt, good to hear from you. First of all, I do like the category Other. I just don't like the name because we do a lot of bold stuff within what we call Other. So to be continued on that, ROSA Shoulder is going better than expected. Early in the launch, but what a great opportunity. Shoulder arthroplasty, as you know, is one of the fastest-growing areas within orthopedics. Today, only about 20% of doctors perform shoulder arthroplasties because it is a very difficult procedure. The real estate in the shoulder is minimal. The accuracy needs to be very high. It's very complex. And reimbursement is very high. It's actually the highest of all core orthopedic procedures. So you bring in a solution to a complex problem that you can monetize, you're going to get rewarded. And that's what robotics are bringing to the space. As you know, earlier this year, we received the clearance for next-generation ROSA Shoulder. We launched the original version, I want to say 1.5 years ago. We did a very extensive LMR, limited market release. We learned a ton. And with the learnings, we reconfigured parts of ROSA, and now we launched ROSA Shoulder next generation, what we call version 1.1. It is the only system that can do both reverse and anatomic procedures. Reverse is roughly 70% of all shoulder arthroplasties around the world, especially in the U.S. But you got 1/3 of surgeons that prefer an anatomic approach. And again, we are the only company that offers both. It's also the only system that can do both the humeral and the glenoid resection. What that gives you is more accuracy in the cuts that yields to a better outcome and faster recovery. Generation 2 versus Generation 1 is a much simpler and improved interface. Again, we took our time. I know we've been talking about the LMR for, I don't know, 1.5 years. Now we're moving into a full market release as we speak in the next couple of weeks. And again, only a month into the launch, but we have seen great adoption. We're getting outstanding feedback and early to make commitments, but if we do the work that I believe we're going to do, we expect the penetration of robotics to go faster than it did when robots were launching Knees back 10, 12 years ago. So a great overall opportunity and a great platform, and we look forward to updating you every other quarter. Operator: We'll go next to Ryan Zimmerman with U.S. Bancorp BTIG. Ryan Zimmerman: First, Ivan, I have to say congrats on the World Cup. I think we all have known you're big fan there, and it's nice to see. But I want to ask about pricing in the quarter. If you look at pricing over the last 3 quarters, the headwinds have increased a little bit. It's still within the range of what you expect. But when you think about Medicare is your largest payer, the CJR-X program, the PFS rates that are proposed for '27, which are down potentially up to 20% right now. Is it your assumption that pricing headwinds will increase in orthopedics because of these dynamics? It just seems like that it will increase the shift to the ASC and potentially put some pressure on implant pricing. So I would appreciate your thoughts there. Ivan Tornos: Thanks for joining. And yes, Spain did send Lionel Messi into retirement. And before that, we sent my friend Cristiano Ronaldo into retirement. And if you ask me, that game should have been 3-0, not 1-0. Relative to pricing, look, the ongoing question for 5 years now, 20 quarters, I've been asked whether I thought that pricing was going to get worse, and it hasn't. It is very much within the guidance that we provided of flat to 100 basis points. Pricing dynamics are not changing all that much in the ASC environment. As you know, most of these ASCs are owned by surgeons or private equity companies or astute operators that understand that the implant is only around 14% to 15% of the overall cost. So the conversation is not about the implant. The conversation is around reduction of surgical time, ensuring that you're not sending the patient to an inpatient unit, lowering readmissions, et cetera, et cetera. So we continue to track pricing dynamics, inpatient, HOPD, hospital outpatient departments and stand-alone ASCs, and they're very comparable. If you look at the data going back 20 years, the implant right now as a percentage of DRG, remains at the lowest point. So I'm not sure that you got much more to squeeze in those implants. And with the conversations we're having now around CGR expansion, comprehensive joint [ registry ] expansion, with the focus right now, not on the surgery alone, but the entire recovery, the entire episode of treatment, I don't envision that anyone who understands data is going to choose lower-priced implants or is going to try to negotiate lower pricing. It's going to be around the comprehensive bundle of care and companies that drive efficiency, companies that enable best-in-class clinical outcomes are going to win. With all that rambling, I'll tell you, we don't expect the second half to be an uptick when it comes to price erosion. 85% of our book of business is contracted. We got visibility into the second half of '26 as well as 2027, and we're very confident on our guidance of flat to 100 basis points at worst of price erosion. Thanks for joining the call. Operator: We'll go next to Steve Lichtman with William Blair. Steven Lichtman: Ivan, you touched on M&A in your prepared remarks. With Paragon now fully in the fold, could you give us your latest thoughts on the type of deal that makes sense for Zimmer Biomet right now? Are you thinking about going further outside of your verticals? And any comments on size preference in terms of tuck-in or could we see something larger? Ivan Tornos: Thanks, Steve. Look, it has not changed. It's the same story, I believe, that we've been telling for now 2 to 3 years. Our M&A strategy remains consistent across 3 vectors. First, we're going to focus on the higher-growth segments of Recon. Not all Recon is created equal. You got segments within Recon that are higher growth, data, technology, infection. And that's why we have acquired companies like OrthoGrid, obviously, Monogram, surgical impactors and other data technology plays. So that's vector number one. We will continue to invest in higher-growth segments of Recon, where we own the call point and where we are the leading company globally. The second vector is going to be higher growth areas within S.E.T. Again, foot and ankle, sports medicine, upper extremities, CMFT, and there's a lot of optionality there. And we've done some deals there. You referenced Paragon 28, which is going great. But also Embody in Sports Medicine is going great or acquisitions in CMFT are going much better than expected. That's why for, again, 5 years, CMFT has been growing strongly in the teens. So again, our second vector is going to be S.E.T. And then thirdly, at some point, we look at more adjacent areas to S.E.T. Are they businesses peripheral to neuro that we want to look into? S.E.T. happens -- most of these procedures happening in ASC, what are some other opportunities. So those are the 3 vectors we're going to go at pace. We're going to be bold, as I tell my team, but not reckless. In terms of criteria, you called it, it's similar to Paragon 28. Up to $2 billion acquisition price, ideally, that's our zip code. Needless to say, whatever we acquire needs to be immediately accretive to revenue and WAMGR or weighted average market growth rate. Similar to Paragon, it has to be EPS accretive by the second year. We're looking for a double-digit return on investment capital or invested capital ROIC by the year 5. So we're going to take our time. We have an ambition to have a WAMGR of 5% to 6% by the end of the decade. That doesn't mean we need to buy or delta from 4.25% today to 6%. There's a lot of organic work that we're doing to move into higher growth WAMGR environments from an R&D perspective. But yes, now that we know that we can do effective R&D or M&A, now that we've learned that we can integrate, given what we've done with Paragon 28, we're going to continue to look at this. Thanks for the question. Operator: We'll go next to Joanne Wuensch with Citi. Joanne Wuensch: Nice quarter. I'm a little curious how you're thinking about guidance philosophy and how you're thinking about the raise for the second half of the year and as you think about setting 2027. The company in a very short period of time has gone through a number of changes, the sales force change in your product pipeline, a couple of stumbles not worth mentioning. How do you think about pulling all of this together when you do give the guidance? And should we think about your commentary in the phrase of conservative, realistic or hopeful? Ivan Tornos: Thanks, Joanne. Look, I'd say that my guidance -- our guidance philosophy is going to be to say less and do more. We're going to take a measured approach given all the variables that we continue to analyze, and that's what we're doing. We're confident on the guidance for the second half of 2026. Lots of puts and takes, but we see certainly more upside than downside when we look at where we finished the first half, but we're going to go one quarter at a time. We'll take the same philosophy for 2027. And at the right time, we'll talk about 2027. But the philosophy is going to be to say less and to do more as we did in the second quarter of 2026. Operator: We'll go next to Vik Chopra from BMO. Vikramjeet Chopra: Congrats on a nice quarter. Ivan, I wanted to ask where you are with your CFO search and what specific attributes you're looking for in a permanent CFO? Ivan Tornos: Thank you. Look, we have a great interim CFO, who's sitting here to my right. Paul Stellato has been a great business partner for 4 years. A lot of the transformational work that this company has gone through over the last 4 years has been led by Paul. So I am in no hurry here because I got a stellar interim CFO. Obviously, we're looking also at external candidates. We're looking for someone who wants to be part of this transformation. Somebody is going to be in the trenches, somebody is going to think like an operator, somebody with experience in value creation, someone who brings credibility from a street perspective, a true business partner. So that's what we're looking for. But again, we're going to take our time. We've got a great interim CFO here at Zimmer Biomet and everything is very much on track as we think about the search and the process. Thanks for the question. Operator: This concludes the question-and-answer portion of today's call. I would like to turn the call over to Ivan Tornos for any closing remarks. Ivan Tornos: Thanks, operator. Look, we started today with gratitude, and I'm going to close with gratitude. I want to thank again all the employees, 17,000 of you at Zimmer Biomet, who do so much every day. I'm grateful for your hard work, your dedication, the results, the progress and most importantly, for what you do for patients and customers every day. In closing, we're very pleased with the results in the second quarter. The transformation of the company is going as expected, if not better than expected. We are extremely confident on the guidance raise that we provided this morning. And most importantly, we're really excited about the changes that we're making in 2026. We always said it was going to be a transitional year. It will be a transitional year. And as we enter in '27, '28, we're going to have a totally different company. So very excited, very proud of the team, and I thank everybody for joining the call this morning. Operator: This concludes today's call. Thank you for your participation. You may now disconnect. Before you buy stock in Zimmer Biomet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Zimmer Biomet wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Zimmer Biomet (ZBH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Zimmer Biomet Holdings, Inc.? Here are five stocks we like better. Zimmer Biomet reported solid Q2 growth: Net sales rose 4.8% to $2.177 billion, driven by hips, specialty businesses and technology. Adjusted EPS was $2.07, while U.S. organic sales increased 4.6%. Technology and hip products led performance: Hip sales grew 5.1%, while technology, data, bone cement and surgical sales surged 21.5%, supported by strong ROSA, TMINI and OrthoGrid adoption. Knee sales were nearly flat, with international weakness—especially in China—offsetting U.S. gains. Zimmer Biomet raised its 2026 outlook: Organic sales growth is now expected at 2.25% to 3.25%, and adjusted EPS guidance increased to $8.47-$8.59. The company also plans up to $1 billion in share repurchases this year, despite margin pressure from costs and investments in its U.S. sales organization. A Closer Look at Healthcare Sector Earnings: AZN vs. EW vs. ZBH Zimmer Biomet (NYSE:ZBH) reported second-quarter 2026 net sales of $2.177 billion, up 4.8% on a reported basis and 4.0% on an organic constant-currency basis, as growth in hips, specialty businesses and technology helped offset weaker performance in certain other product lines. U.S. organic constant-currency sales rose 4.6%, while international sales increased 3.1%. Chairman, President and CEO Ivan Tornos said the U.S. result reflected progress in the company’s sales-force transformation, product launches and commercial execution. → No Hangover: Revisiting Microsoft One Week After Earnings Intuitive Surgical Leads the Pack in Robotic Surgery Innovation GAAP diluted earnings per share increased to $1.03 from $0.77 a year earlier. Adjusted EPS was $2.07, unchanged from the prior-year quarter. Interim CFO Paul Stellato said higher revenue and a lower share count were offset by expected dilution from the Paragon 28 acquisition and investments in the U.S. commercial organization. Hip sales grew 5.1% on a constant-currency basis, including 5.9% growth in the United States and 4.2% internationally. Tornos attributed U.S. hip performance to adoption of the company’s “triple play” offering: the Z1 Triple Taper Hip Stem, the HAMMR surgical impactor and OrthoGrid navigation technology for direct anterior hip procedures. → MarketBeat Week in Review – 08/03 - 08/07 2 Robotic Surgery Stocks Challenging Intuitive Surgical's Lead Z1 now accounts for more than 40% of Zimmer Biomet’s U.S. hip systems, according to Tornos, while HAMMR was used in more than 25% of U.S. primary hip cases. OrthoGrid recorded its strongest quarter to date, with first-half case volume matching its full-year 2025 level. In Japan, the company said demand for its iodine-coated hip technology exceeded expectations. Tornos said the product is intended to address the risk of periprosthetic joint infection after joint replacement and is drawing interest from existing customers as well as competitive accounts. He said Zimmer Biomet is pursuing pathways to bring the technology to additional countries, including discussions with the Food and Drug Administration regarding a potential U.S. path. → Why the Landlord of the AI Boom Could Outlast the Chipmakers Knee sales increased 0.1% during the quarter. U.S. knee growth of 1.4% was partly offset by a 1.5% international decline, which management said was heavily affected by China and core emerging markets. The company’s sports, extremities and trauma, or S.E.T., business grew 3.4% organically on a constant-currency basis, accelerating 180 basis points from the first quarter. U.S. S.E.T. sales rose at a mid-single-digit rate, while Paragon 28 sales increased in the mid-teens. Craniomaxillofacial and thoracic sales grew at a double-digit rate, and upper-extremity sales increased at an upper-single-digit rate. Those gains were partly offset by continued pressure in trauma and restorative therapies. Technology and data, bone cement and surgical sales grew 21.5%. Tornos said U.S. technology sales rose more than 50%, supported by record capital sales of ROSA with OptimiZe and TMINI systems as well as an early contribution from the next-generation ROSA Shoulder launch. He said the robotic shoulder system can be used in both anatomic and reverse shoulder procedures. Pricing was an 80-basis-point headwind in the quarter, within the company’s full-year expectation of up to 100 basis points of pricing pressure. Adjusted gross margin declined 120 basis points year over year to 71.1%, reflecting higher manufacturing costs, partly offset by geographic and product mix. Adjusted operating margin fell 210 basis points to 25.7% as Zimmer Biomet continued investing in its U.S. sales channel. Operating cash flow totaled $448 million, up 18% from the prior year, while free cash flow rose 24% to $308 million. The company ended the quarter with about $410 million in cash and cash equivalents. Zimmer Biomet repurchased $500 million of stock in the first half, including $250 million in the second quarter. It now plans to repurchase up to $1 billion of shares during 2026, $250 million above its prior expectation. Management raised its outlook for 2026 organic constant-currency revenue growth to 2.25% to 3.25%, from prior guidance of 1% to 3%. Reported sales growth is now expected to be 3.9% to 4.9%, compared with the previous 2.5% to 4.5% range. The company continues to expect foreign exchange to provide an approximately 50-basis-point benefit to full-year sales growth, though it expects currency to be a 50-basis-point headwind in the third quarter. Paragon 28 is expected to contribute 110 basis points to reported sales growth for the year, above the prior expectation of about 100 basis points. Zimmer Biomet raised adjusted EPS guidance to $8.47 to $8.59, from $8.40 to $8.55. It maintained expectations for gross margin of about 71%, net interest and other non-operating expense of $295 million, an 18% adjusted tax rate and free-cash-flow growth of 9% to 11%. Tornos said the company’s move toward a dedicated, specialized U.S. sales organization is progressing with less customer disruption and sales-force turnover than initially expected. Zimmer Biomet expects to complete the transformation by the end of 2027. The company has added, or is in the process of adding, 200 technical representatives and has increased investments in retention, compensation and sales-excellence initiatives. Management also outlined operational initiatives including shifting some research-and-development activity to a global capability center in India, constructing a manufacturing facility in Costa Rica and applying artificial intelligence to operating expenses. Looking ahead, Tornos said Zimmer Biomet expects to introduce more than 50 products over the next 36 months and plans to continue evaluating acquisitions in higher-growth reconstruction, S.E.T. and adjacent markets. The company aims to reach a weighted average market growth rate of 5% to 6% by the end of the decade. Zimmer Biomet (NYSE: ZBH) is a global medical device company focused on musculoskeletal healthcare. Headquartered in Warsaw, Indiana, the company designs, manufactures and markets a broad portfolio of products used to treat joint disorders, bone disorders and related conditions. Its customer base includes orthopaedic and dental surgeons, hospitals, ambulatory surgery centers and other healthcare providers that rely on implants, instruments and related services for reconstructive and restorative procedures. The company's product offerings span joint replacement systems for hips, knees and shoulders; trauma and extremities implants; spine and thoracic solutions; dental and craniomaxillofacial implants and prosthetics; and sports medicine devices. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Zimmer Biomet Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by disciplined execution of the 5x30 strategy, resulting in commercial momentum and strong cash generation despite macroeconomic headwinds. EXPAREL achieved increased penetration across all segments, though elective soft tissue procedures in hospital inpatient settings saw softness due to deferrable procedure trends. The divestiture of iovera to Zimmer Biomet sharpens the company's focus as a pure-play innovation-driven biopharmaceutical entity while improving margin profiles. Market access reached a 'tipping point' with UnitedHealthcare providing separate reimbursement for EXPAREL, bringing total covered lives to 150 million. Management attributes EXPAREL's resilience to its value proposition in opioid-sparing care and its ability to outperform the broader elective surgery market. The transition to a U.S.-based manufacturing process for PCRX-201 marks a critical milestone in scaling the company's gene therapy capabilities. The second half of 2026 is viewed as a catalyst-rich period with top-line data expected for ZILRETTA in shoulder OA and iovera in spasticity. Revenue guidance was adjusted to $735 million to $760 million solely to account for the iovera divestiture, while EXPAREL sales targets remain unchanged. Management expects the delta between volume and revenue growth to narrow as the impact of the third GPO discount lapping is fully realized. PCRX-201 Phase 2 Part A results are anticipated by year-end, with Part B enrollment already underway to evaluate long-term durability against corticosteroids. International expansion is on track with EXPAREL revenues in South Korea expected to begin in 2027 following LG Chem's regulatory filing. The iovera divestiture includes $70 million upfront and up to $70 million in milestones, allowing Pacira to redirect capital to higher-return pharmaceutical assets. SG&A expenses included non-recurring costs associated with a contested election of directors at the 2026 Annual Meeting. Fourth-quarter margins are expected to be slightly lower due to the sale of higher-cost inventory and planned facility shutdown-related costs. The NOPAIN Act is scheduled for potential re-upping at the end of 2027, with management pursuing both legislative and CMS rulemaking paths for extension. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management is working on two paths: direct CMS rulemaking and congressional action to tack the extension onto a larger bill by late 2027. The UnitedHealthcare win serves as a commercial benchmark that reduces reliance on government-only reimbursement frameworks. Volume growth of 4% was impacted by a slowdown in soft tissue procedures, but management expects recovery through expansion in ASCs and hospital outpatient departments. Growth is specifically targeted at 'macro-resilient' procedure types where separate reimbursement is available outside the surgical bundle. Pacira remains open to distributor or partnership models for EXPAREL in the U.S. to extend reach, provided they are cost-effective and return value. The company will maintain its direct field force but views the Zimmer and J&J partnerships as templates for future collaboration.

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Zimmer Biomet Holdings Inc (NYSE:ZBH) delivered strong Q2 2026 results with net sales of $2.177 billion, exceeding expectations and achieving 4% organic constant currency growth, driven by robust US performance of 4.6%. The company raised its full-year 2026 organic constant currency revenue guidance to 2.25%-3.25% and adjusted EPS guidance to $8.47-$8.59, reflecting confidence in continued momentum. Hips segment showed strong growth of 5.1% constant currency, with US hip growth of 5.9%, driven by successful adoption of the Z1 triple taper stem, Hammer surgical impactor, and OrthoGrid AI navigation. The Paragon 28 acquisition is performing exceptionally well, with sales growing mid-teens and contributing 110 basis points to full-year reported sales growth, exceeding initial expectations. Technology and data, bone cement, and surgical segments grew 21.5%, with US technology sales up over 50%, driven by strong demand for Rosa robotics and the new Rosa Shoulder launch. The company is making excellent progress on its US commercial transformation, with lower-than-expected sales force turnover and customer disruption, and is on track to complete the transition by end of 2027. Zimmer Biomet Holdings Inc (NYSE:ZBH) is advancing its innovation pipeline, including the first-to-world iodine-coated implant launch in Japan exceeding expectations and the upcoming Monogram 510(k) filing, positioning for future growth. Knees segment growth was weak at 0.1% in the quarter, with US growth of only 1.4% and international decline of 1.5%, impacted by China and core emerging markets. Pricing remained a headwind of 80 basis points in the quarter, within the guidance range but reflecting ongoing pressure on implant pricing. Adjusted gross margin declined 120 basis points to 71.1% due to increased manufacturing costs, partially offset by product mix. Adjusted operating margin decreased 210 basis points year-over-year to 25.7%, as the company continues to invest heavily in the US commercial organization and sales force expansion. International business growth was sluggish at 3.1% organic constant currency, with significant headwinds from China (declining 20% annually) and other emerging markets. The company faces ongoing challenges in trauma and restorative therapies within the SCT segment, which are dragging down overall growth and require strategic changes. The US commercial transformation is still a work in progress, with the company expecting continued disruption and investment through 2027, which could impact near-term profitability. Warning! GuruFocus has detected 5 Warning Sign with ZBH. Is ZBH fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide an update on the Salesforce transition, its growth implications, and whether the decision to reinvest sales outperformance into higher SG&A is a conscious choice? A: Yvonne Trancos (Chairman, President, CEO): The go-to-market changes are progressing better than expected, evidenced by 4.6% US growth and 5.9% hip growth. We are on track to complete the dedicated and specialized structure by the end of 2027. The SG&A investment is a deliberate growth strategywe are adding 200 tech reps, locking in top distributors, and offering the best comp plan in orthopedics to recruit top talent. These investments in 2026 are expected to yield better results in 2027. Q: The recon market appears to have slowed in the first half of 2026. What do you attribute this to, and what are your assumptions regarding ACA subsidy expirations and Medicaid cuts? A: Yvonne Trancos (Chairman, President, CEO): We don't look at one-quarter dynamics; markets don't change that quickly. We peg the overall market at 4-5% growth. Our exposure to ACA exchanges is low single-digits, and Medicare is our largest payer. We monitor metrics like waiting lists (3-6 months at top hospitals) and cancellation rates (in the 10s, down from 40-50% during COVID), which remain stable. We are not concerned about market health, which is why we raised guidance for the second half of 2026. Q: Can you drill into the hip market performance, particularly the US and OUS opportunities, given the noisy quarter globally? A: Yvonne Trancos (Chairman, President, CEO): Our growth shows it's about execution. In the US, the "hip triple play" (Z1 stem, HAMMR impactor, and OrthoGrid) is taking market share, driving 5.9% growth. OUS, the iodine-coated implant launch in Japan is exceeding expectations, with demand outpacing supply. We get a 140% premium for coated implants and are converting competitive accounts. We are in active FDA discussions to bring this technology to the US. Q: What drove the sequential acceleration in the SCT segment, and how are you thinking about it for the balance of the year? A: Yvonne Trancos (Chairman, President, CEO): SCT grew 3.4% organically, a 180 basis point acceleration from Q1. Paragon 28 grew mid-teens, upper extremities grew upper single-digits, and CMFT grew double-digits. We have two headwindstrauma and restorative therapiesbut excluding those, US growth would be solidly upper single-digits. We expect a much better SCT growth profile in the second half of 2026. Q: The "Other" category (bone tech and cement) grew over 20%. How much is driven by your tech strategy versus one-time events? A: Yvonne Trancos (Chairman, President, CEO): The lion's share of growth is technology, not bone cement. US technology sales grew 53% in Q2. The CapEx environment is very healthy, and we have the most comprehensive suite of solutions (handhelds, CT scan devices, mixed reality, large and small footprint robotics). We are in the early stages of gaining market share with our best-in-class technology portfolio. Q: What is driving the acceleration in growth through the year, and what are the specific factors for 2027 (better or worse)? A: Yvonne Trancos (Chairman, President, CEO): Real growth accelerated from 3.6% in H1 2025 to 4.2% in H2 2025. We are confident in delivering similar or better acceleration in H2 2026 due to go-to-market changes, new product momentum, and easing supply challenges. For 2027, we expect improved performance as go-to-market changes are mostly complete, China headwinds (2% of revenue, declining 20% annually) ease, and emerging market noise dissipates. Q: How do you think about coalescing your multiple robotic platforms into a strategy to drive revenue growth, and how do you balance support costs? A: Yvonne Trancos (Chairman, President, CEO): We are a technology company, not just a robotics company. Only 20% of US surgeons use robots, so we offer surgical guidance for non-robotic users. We provide optionalityCT scan, imageless, portable, cordless, large and small footprintto cater to different preferences. We may prune the portfolio as standards evolve, but currently, the comprehensive suite is driving 53% growth in US technology sales. Q: Can you provide an update on the Rosa Shoulder launch, its rollout, uptake, and differentiation? A: Yvonne Trancos (Chairman, President, CEO): Rosa Shoulder is going better than expected. It's the only system that can perform both reverse and anatomic procedures and can resect both the glenoid and humeral sides. Shoulder arthroplasty is fast-growing, with only 20% of doctors performing it due to complexity. The next-generation version (1.1) has a simpler interface and is moving into full market release. We expect robotics penetration in shoulders to grow faster than it did in knees 10-12 years ago. Q: Pricing headwinds have increased over the last three quarters. With Medicare as your largest payer and proposed PFS rate cuts for 2027, do you expect pricing pressure to increase? A: Yvonne Trancos (Chairman, President, CEO): Pricing remains within our guidance of flat to 100 basis points of erosion. In the ASC environment, implants are only 14-15% of overall cost, so the conversation is about efficiency and outcomes, not just implant price. Implant cost as a percentage of DRG is at its lowest point. With 85% of our book contracted, we have visibility into 2026 and 2027 and remain confident in our pricing guidance. Q: What are your latest thoughts on M&A, including deal size and whether you'd go outside your verticals? A: Yvonne Trancos (Chairman, President, CEO): Our M&A strategy remains consistent across three vectors: higher-growth segments of Recon (e.g., technology, infection), higher-growth areas within SCT (e.g., foot For the complete transcript of the earnings call, please refer to the full earnings call transcript.