Zimmer Biomet Q1 2026 Earnings Call - Strong Tech Momentum Amidst U.S. Sales Force Transformation

Chris Pasquale, Analyst, Nephron Research1: Good morning, ladies and gentlemen, welcome to the Zimmer Biomet first quarter 2026 earnings conference call. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded today, April 28th, 2026. Following today’s presentation, there will be a question and answer session. At this time, all participants are in a listen-only mode. If you have a question, please press the star followed by the one on your push-button phone. I would now like to turn the conference over to David DeMartino, Senior Vice President, Investor Relations. Please go ahead.

David DeMartino, Senior Vice President, Investor Relations, Zimmer Biomet: Thank you, operator. Good morning, everyone. Welcome to Zimmer Biomet’s first quarter 2026 earnings conference call. Joining me on today’s call are Ivan Tornos, our Chairman, President and Chief Executive Officer, and Suketu Upadhyay, our CFO and EVP Finance, Operations and Supply Chain. 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 on these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our first quarter earnings release, which can be found on our website, zimmerbiomet.com. With that, I’ll turn the call over to Iván. Iván.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Good morning, everyone, and thank you for joining today’s call. I would like to start, as I always do, by sharing my gratitude towards Zimmer Biomet team members around the world. Your determination, your discipline, and your dedication to customers and patients are what moves our business and our mission forward. We’re off to a strong start to the year strategically, operationally, and financially, and that momentum is a direct reflection of the strength of our team, the resilience of our business, and the impact that we can have when we stay focused on innovating and executing for our customers. Once again, my sincere thanks to the Zimmer Biomet team members. During my prepared remarks this morning, I’m going to cover four key areas. First, I’ll start by summarizing our first quarter results. Second, I will provide an update on our U.S. go-to-market changes.

Third, I will discuss our 2026 outlook. Lastly, I’ll briefly cover the progress that we continue to make across the three key strategic priorities of the company. Those being people and culture, operational excellence, and innovation and diversification. Starting with the first quarter results, I’m proud of how the team began the year, making strong progress towards our 2026 sales growth commitments, EPS, and free cash flow commitments. In the first quarter, we grew sales 2.9% on an organic constant currency basis at the upper end of our annual 2026 revenue guidance range. We delivered adjusted EPS of $2.09, which was up 15% year-over-year. Notably, the first quarter saw a $0.20 benefit from tariff-related items relative to our expectations.

As we get into the details of these results, unless otherwise noted, all the statements on this call will be about the first quarter of 2026 and how it compares to the same period in 2025, and all commentary will be on a constant currency and adjusted operating basis. First quarter 2026 organic constant currency commentary excludes the impact from the Paragon 28 acquisition, which we closed in April of 2025. Looking at the first quarter results in more detail, our U.S. business increased 3.2%, while international grew 2.5%. These results reflect healthy end markets, strong technology sales, which once again grew in strong double-digit rates, and continued momentum from our recently launched new products. Importantly, this performance was against the backdrop of changes to our go-to-market strategies in both the U.S. and some designated international markets.

U.S. knee growth of 2.2% in the quarter reflects a greater than 20% increase in partial knee sales driven by our Oxford Partial Knee cementless knee, the only partial cementless knee on the market in the U.S. This performance was partially offset by pressure in our legacy total knee implants, such as NexGen and Vanguard, which we continue to phase out as part of our brand rationalization strategy. International knees grew 1.3% for the quarter. Our U.S. hip franchise grew 5% in the quarter as we are seeing increasing traction of our hip triple play of Z1, which now represents nearly 40% of our U.S. hip stems, OrthoGrid, our AI-based hip navigation platform, and HAMMR, our surgical impactor. International hip sales increased by 1%.

While it’s still early in its launch, we are seeing rapid adoption in Japan, the second-largest market for Zimmer Biomet, of our first of the world iodine-coated hip implant, which is designed to help address the risk of periprosthetic joint infection after total joint replacement. Our technology and data, bone cement, and surgical business grew nearly 12% in the quarter. Our strategy of offering a comprehensive suite of technology solutions is paying dividends, as we are seeing continued strong ROSA and TMINI sales across the board. To further this one-stop shop approach, at the American Academy of Orthopaedic Surgeons in March in New Orleans, we hosted technical evaluations of mBôs, our fully autonomous AI-driven orthopedic robotic system, which we acquired via the Monogram acquisition.

Surgeon feedback was overwhelmingly positive as the potential gains in safety, efficiency, ease of use, reproducibility, and accuracy resonated very strongly with the customers that we engaged. We recently completed enrollment in our 102-patient clinical study, and we continue to expect U.S. approval and the launch of the semiautonomous version in early 2027, followed by the fully autonomous version in late 2027 or early 2028. In anticipation of the mBôs launch, we’re increasing the number of robotic clinical sales representatives targeting to hire over 200 by the end of 2027. Finally, SCP growth of 1.6% was once again led by our U.S. CMFT and upper extremities businesses, partially offset by continued challenges in restorative therapies and in our trauma business.

Double-digit CMFT growth in the U.S. was driven by our sternal closure franchise, which continues to perform very nicely above market. Upper extremities increased upper single digits in the U.S. as both our OsseoFit stemless shoulder and our Identity total shoulder platform continued to gain momentum. Moving on now to discuss the U.S. go-to-market changes. In the U.S., the transition to a dedicated and specialized sales channel is progressing as planned. While the quarter did see some modest disruption, it was in line with our expectations, and importantly, we are seeing rapid increases in productivity in those territories that we have transitioned. We remain on track to complete the transition by the end of 2027. Internationally, the evolution of our go-to-market models, particularly in emerging markets, is ongoing and also is performing accordance to the plan and the expectations that we had.

While we did see an impact on growth in the quarter, this was very much accounted for internally. While our commercial changes are progressing as planned, given that it is still early in the year, we are maintaining our full year 2026 organic constant currency revenue growth guidance of 1%-3%, with growth roughly consistent throughout the remainder of 2026. Inside of this, our assumption of up to 100 basis points of price erosion is unchanged. We continue to anticipate an approximate 50 basis points FX tailwind to full year revenue growth, with the second quarter being about neutral at current rates and Paragon 28 to contribute around 100 basis points to reported sales growth in 2026 before being reflected in organic growth.

As a result, our reported sales guidance also remains unchanged at 2.5%-4.5% for the full year. We now expect 2026 operating margins to be better than anticipated, down slightly less than 50 basis points from 2025, which still contemplates lower growth margins, dilution from the Paragon 28 acquisition, and increased investments in our U.S. commercial channel. We anticipate operating margins in the second quarter of 2026 being down roughly 200 basis points from the second quarter of 2025, and the third quarter operating margins being down around 50 basis points sequentially from the second quarter. Our guidance for interest expense, tax rate, and end of year shares outstanding, which we continue to assume up to $750 million of share repurchases, remains unchanged.

Given these dynamics, we are raising both our EPS and free cash flow growth expectations for the year 2026. We now expect adjusted EPS to be $8.40-$8.55 from the previous guide of $8.30-$8.45. We expect our free cash flow growth to be in the range of 9%-11% versus the previous guide of 8%-10%. As I said, all in, the year is off to a very strong start, and I could not be any prouder or excited about what the remainder of 2026 is going to bring to Zimmer Biomet. Turning now to our three key strategic priorities for the company, people and culture being number 1, operational excellence number 2, innovation and diversification number 3.

People and culture remain the key competitive differentiator for Zimmer Biomet, and we continue to focus on placing the right talent in the right roles to advance our strategy. With that in mind, I’m very pleased to share that Dr. Jonathan M. Vigdorchik, a renowned surgeon from the Hospital for Special Surgery, has joined Zimmer Biomet as Chief Science, Technology, and Medical Affairs Officer reporting to me. In this role, Dr. Vigdorchik will lead the strategy, delivery, and management of our global portfolio spanning AI-enabled robotics, software and data, smart implants, and connected technologies, while also overseeing our global medical education. On our second priority of operational excellence, we continue to make great strides in improving operating efficiency through expanding our manufacturing footprint into lower cost geographies.

In addition, we’re making very meaningful progresses on reducing working capital by lowering our days of inventory on hand, while at the same time accelerating a very robust SKU rationalization program. We expect these combined efforts to strengthen our industry-leading margins, while meaningfully continuing to improve our free cash flow conversion rates. On pillar number three, from an innovation perspective, we recently committed to becoming 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. This is gonna give us the opportunity to invest in technology that has the potential to truly change the standard of care, from AI data applications to cartilage repair solutions. Speaking of the latter, we’re also teaming up with some of the world’s leading researchers in this groundbreaking opportunity.

It is inspiring to see how rapidly we’re advancing our commitment to solving some of the key problems in orthopedics, whether it’s awareness, safety, efficiency, and outcomes today and in the future. Lastly, on diversification, our recent acquisitions are all seeing positive momentum. Paragon 28 first quarter growth accelerated around 200 basis points from the fourth quarter of 2025 and is trending back towards double-digit growth performance. OrthoGrid delivered its strongest quarter to date with significant growth and accelerated adoption, solidifying OrthoGrid as a core driver of our digital ecosystem and anterior hip triple play. Finally, with enrollment complete in the Monogram clinical study, we remain on track to bring this very exciting first of the world technology to market. In conclusion, we are very proud of the progress that we’re making so far in 2026.

We continue to prioritize our go-to-market commercial transformation in the U.S., and we continue to focus on driving robust adoption of our new product innovation cycle. Before I turn the call over, I want to comment on the announcement that we made this morning regarding Suky Upadhyay’s decision to leave Zimmer Biomet for a new opportunity in the biotechnology space. For nearly 7 years, Suky Upadhyay has been a value partner and disciplined operator, helping us in improving our WAMGR, weighted average market growth rate profile through organic and inorganic portfolio optimization, driving a top quartile margin profile for Zimmer Biomet, strengthening the balance sheet, and significantly improving the free cash flow conversion and growth. I’m thankful for his leadership and contributions, and I wish him continued success in his next chapter.

Above all, I’m thankful for his friendship, which I know will continue for many years to come. During this transition, Paul Stellato, our current Controller, Chief Accounting Officer, and Head of Corporate FP&A, will serve as interim Chief Financial Officer. Paul is a seasoned business leader, bringing more than 20 years of both financial and IR Investor Relations experience to the role. Since he joined Zimmer Biomet in 2022, Paul has been instrumental in translating our strategy into disciplined capital allocation, including our share repurchase program and recent acquisitions, as well as leading the creation of global shared services around the world. I’m extremely confident that he is the right leader at the right time, and I’m confident he’ll provide steady direction and leadership as we continue to conduct a search for a successor, and I look forward to our continued partnership.

With that, let me turn the call over to Suketu Upadhyay. Thank you.

Chris Pasquale, Analyst, Nephron Research6: Thank you, Iván. Good morning, everyone. I’m proud of what we’ve accomplished together over the past seven years. I believe Zimmer Biomet has a clear strategy and meaningful opportunity ahead. I would also like to take a minute to thank the entire Zimmer Biomet organization for all of the hard work and dedication that you put into advancing our mission while delivering on the company’s objectives. Your dedication and resiliency are impressive. I wish you continued success. Turning to the results. Reviewing the first quarter results, net sales were $2.087 billion, an increase of 9.3% on a reported basis and 2.9% excluding the impact of foreign currency in the Paragon 28 acquisition. Consolidated pricing was 40 basis points negative in the quarter, in line with our expectations.

Growth in the quarter benefited from opportunistic end-of-quarter purchases above historical levels, continued momentum from our recently launched products, as Ivan noted, and strong robotic sales. Turning to our P&L, we reported GAAP diluted earnings per share of $1.22 compared to GAAP diluted earnings per share of $0.91 in the prior year quarter. Higher revenue, lower restructuring costs, the previously mentioned tariff benefit, and a lower share count were partially offset by modestly higher taxes in the quarter due to geographic mix. On an adjusted basis, we delivered diluted earnings per share of $2.09 compared to $1.81 in the prior year.

This increase was driven by higher revenue, the aforementioned tariff benefit, and a lower share count, which were partially offset by increased commercial investments. Adjusted gross margin was 73%, higher than the first quarter of 2025, driven by favorable mix and a benefit from tariffs. Notably, a portion of this tariff benefit included refunds that we had anticipated in the second half of the year. Adjusted operating margin was 27.3%. Adjusted net interest and non-operating expenses were $71 million, above the prior year, driven by higher debt related to Paragon 28. Our adjusted effective tax rate was 18% and fully diluted shares outstanding were 195.8 million, down year-over-year due to $250 million of share repurchases in the first quarter. Turning to cash and liquidity.

We had another strong quarter of cash generation with operating cash flows of $359 million and free cash flow of $246 million. We ended the quarter with approximately $424 million cash and cash equivalents. As Iván had covered the rest of year outlook, I would like to close by again thanking the entire ZB team for their hard work and dedication. With that, I’ll turn the call back over to David.

David DeMartino, Senior Vice President, Investor Relations, Zimmer Biomet: Thank you, Sukhi. Operator, let’s open up for questions. In order for us to take as many questions as possible, please limit yourself to one question. Operator, please go ahead.

Chris Pasquale, Analyst, Nephron Research1: Thank you, David. We’ll take our first question from Rick Wise with Stifel.

Chris Pasquale, Analyst, Nephron Research3: Good morning, Ivan. Hi, everybody. Gonna miss you, Suky. From my perspective, the year’s off to a good start. You outperformed, Ivan, in the quarter. You beat sales, strong gross margins. You beat EPS. Just since I only have one question, you didn’t raise, you know, overall by the beat. You left sales unchanged, EPS less than the EPS beat. I appreciate you keep talking about, you know, being more balanced and tempered as you think about guidance, it’s the start of the year. Are you seeing anything in the business or the market or competitively or in your sales transition that prompts that conservatism beyond just, again, your desire to stick with your tempered guidance? Thanks so much.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Hey, good morning, Rick. Thanks for the question. As you highlighted, we had a very strong first quarter. As I sit here looking at the next three quarters, the word that comes to mind is confident. I’m very confident that we’re moving in the right direction. We continue to see the sales force changes progressing as planned. We had some disruption in the quarter early in Q2, but everything is going in accordance to plan. We have a solid pipeline in technology. You saw the growth in technology. Continue to see great momentum with new products. We got a very robust list of new customer targeting strategies that are materializing. From a revenue standpoint, I’m very confident that we are moving in the right direction. On EPS, we did raise, maybe we didn’t raise by the entire beat.

We’re also investing in a variety of fronts, namely in the sales force and model changes. We did raise free cash flow. Again, very solid first quarter. Everything moving in the right direction. Why we’re not raising our guidance now? Because it’s early in the year. This is a year of transition. We said so. We are making fairly substantial changes in a variety of fronts. Go-to-market models here in the U.S., some changes in emerging markets, namely China. We’re making investments in innovation at a bold pace. We’re hiring people. We’re making talent changes. We feel even though the first quarter was very strong, it’s probably prudent to wait, you know, let’s call it 90 days, and then have the conversation again. Again, I’ll leave you with one word, confident.

Very confident that we’re moving in the right direction. Thank you for the question.

Chris Pasquale, Analyst, Nephron Research3: Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Vijay Kumar with Evercore ISI.

Chris Pasquale, Analyst, Nephron Research8: Good morning, everyone, and thanks for taking my question. Congrats on a nice sprint here and Sukhi, wish you the best. Maybe, one, sort of high level, Ivan on, you know, you mentioned your sales force, transformation is on plan. You also made some interesting comments about you’re seeing rapid increase in productivity in regions where you’re seeing this transition. Any, any further details that you can share on other metrics that you’re tracking, perhaps things like attrition rates, what percentage of sales force now dedicated or direct, if you will? Sort of, on that similar, line, any macro impact that we need to think of outside of, the sales force reorg, anything from Middle East? Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Absolutely. Let me give you some of the key public metrics that we’ve been sharing. At the beginning of the journey, early 2026, we mentioned that roughly 66%, so two-thirds of the U.S. sales force, roughly 2,500 people, were 1099s. At the end of Q1, the number is already slightly below 60%. Already roughly a 10% reduction on the number of 1099s. And obviously, that implies that these 1099s are now fully dedicated to Zimmer Biomet. No longer they’re doing Zimmer Biomet one or two other jobs. A fairly significant decrease in the number of non-dedicated individuals. We started the year with roughly 25% of the sales force being specialized, so one of every four reps carrying a dedicated sales bag.

Another number is approaching, if not exceeding 13.30%. We locked in. I believe you and I spoke about this, Vijay. We locked in the top 6 independent distributors, accounting for roughly 40% of sales. They got an extension of not less than 7 years with Zimmer Biomet, so that was a fairly significant risk that we retired. Relative to turnover rates, we had a target of no more than 12% turnover given the changes, and our turnover rate is in the single-digit range. Again, early in the year, only 90 days behind, but everything is progressing in accordance to plan.

To the point that we’re thinking that perhaps we could go a bit faster as we get into Q2, Q3 and the rest of 2026, with the commitment still being we’re gonna close the entire transformation by the end of 2027. I believe you had a second question or part two of the question. Anything else? Any follow-ups there?

Chris Pasquale, Analyst, Nephron Research8: Just on the macro piece. Middle East, any impact?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Okay, Middle East. From a macro standpoint, obviously, like everybody else, we continue to monitor what’s happening in the Middle East. To date, we have seen no material supply disruptions. A minor freight cost increase in the quarter that we’re able to absorb. From a supply standpoint, most of our key products are dual source, if not three sources. We got at least one year of poly, so this is not something that we’re concerned about. We’re not seeing any distribution challenges there. Again, so far life is good. From a sales impact standpoint, we didn’t see any impact in the first quarter. That’s on the Middle East.

You got a variety of other macro ordeals that we’re monitoring, but nothing that it was impactful in the quarter and nothing that we see as being impactful in the second quarter and beyond. Thank you for the question, Vijay.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Mathew Blackman with TD Cowen.

Matthew Blackman, Analyst, TD Cowen: Good morning, everybody. Thanks for taking my question. Can you hear me okay?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Yes, we can.

Matthew Blackman, Analyst, TD Cowen: Great. Iván, Vijay actually asked this, I think, in those list of questions, but I’m not sure that you touched on it. You did talk to seeing increasing productivity in some of the geographies where you’re doing the Salesforce work. I was just hoping maybe you could expand a little bit on that. Just maybe in general, talk to some to the extent that you’re seeing any green shoots, let’s call it, from the work that you’ve done, maybe sort of in the latter part of 2025 or maybe even early here in 2026 that’s worth, you know, calling out that gives us confidence in the lift that you still have ahead of you. Thank you so much.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: I appreciate the question, Matt. We probably could spend an hour going through data points, because you can imagine, given the magnitude of the project, we’re tracking all kinds of KPIs. I’ll give you maybe three or four reasons to believe. In the territories that we did switch from non-dedicated to dedicated, so again, the 10% reduction, we’ve seen fairly dramatic improvements in productivity. Nationwide or average rev, that’s around 7 cases, or lead competitor is in the 16, 17 cases per week range. In the territories where we made the switches, already are in double digit ranges for the number of cases. That’s pretty encouraging to see very quickly that improvement. No surprise.

When you go from spending 2, 3 days a week doing cases to 5 days, you can imagine the productivity is going to increase. Along with productivity increases, we’ve seen sales improvement in those dedicated structures. Our upper extremities, shoulder number for the quarter was strong. That is directly correlated to the number of shoulder specialists that we have added, both in an inpatient HOPD structure as well as in ASCs. We continue to see great momentum in shoulders. Productivity is improving, number of cases. Sales is improving in those territories. The lower turnover rates that I was quoting to Vijay, is mostly coming from some of these territory changes, higher engagement once we become full, fully part of the company.

Again, plenty of reasons to believe that we’re moving in the right direction.

Matthew Blackman, Analyst, TD Cowen: That really helpful, Iván. Really appreciate it. Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Thank you, Matt.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Robbie Marcus with JP Morgan.

Chris Pasquale, Analyst, Nephron Research4: Great. Good morning, and thank you for taking the question. Sukhi, I’ll add, I guess my sadness and congratulations. You’ll be missed. Wanted to follow up, Ivan, maybe on a couple things you mentioned, and it really comes down to what is and what isn’t maybe one time in the quarter. It seems like there were some product discontinuations in these, maybe a little bit of end of quarter purchasing and then perhaps maybe some benefit in gross margin. Wondering if you could size any of those. Any other, you know, potentially one-time items in the quarter and how to think about that resolving over the rest of the year. Thanks.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Absolutely. Thank you, Robbie. I’ll touch on U.S. knees and what happened in the quarter, maybe, Sukhi, you can comment on gross margins and how durable they are. Look, it was not the greatest quarter for U.S. knees, it was definitely in alignment to our expectations. We knew we were going to be going through some of these changes related to the quarter market transformation, we accounted for those. I would say the single largest reason why the U.S. knee number was no higher than the 2.2 is some of the changes that we made in the U.S. organization. We lost two accounts in the quarter, fairly large.

We believe we’re gonna be able to recoup some of that business, but we’ll see as we get into the rest of the year. There was a Kaiser strike in the West Coast, where we have the highest share in knees. While that was disruptive for everybody, it was more disruptive for us. In my prepared remarks, Robbie, I mentioned how we are moving from legacy brands, namely NexGen and Vanguard, to transferring to a one new franchise, that being Persona. As we went through that, we saw some disruption. I will tell you, probably mostly in line except a couple of the accounts that we lost, and that’s the bulk of it. We gotta do better, and we expect to do better than growing 2.2%, in U.S. knees.

Relative to our quarter-end deals, all that stuff, those are in line with what we typically do. It was not a significant one-time event. We do strategic purchases. We try to convert ASCs. There is demand in the market for bundle deals where we include technology implants and whatnot, and we’re gonna continue to do those. Suky, you wanna comment on gross margin?

Chris Pasquale, Analyst, Nephron Research6: Yeah. Hey, Robbie. On gross margin, we saw a very strong quarter, largely driven by the invalidation of the IEEPA tariffs, which contributed about $0.20 to our results in the quarter. We were, you know, beyond that, a little bit better on underlying performance as well. The way to think about the gross margin line is, of that $0.20 that we benefited in Q1, we had originally assumed about half of that would be credited in the second half, so that was a bit of a pull forward. The remainder of that $0.20 drops $0.10 to the bottom line and is largely the driver of the beat or the raise, I should say, on earnings per share.

As you think about gross margin for the full year, we still expect it to be down modestly versus prior year at around 71%, give or take. The way you should think about the cadence is that it’s gonna be roughly consistent for the remainder of the quarters. Again, underlying performance on gross margin is as expected. The biggest driver in Q1 was the invalidation of those tariffs. Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Wonderful. Thanks a lot.

Chris Pasquale, Analyst, Nephron Research1: Our next question comes from Travis Steed from Bank of America.

Chris Pasquale, Analyst, Nephron Research7: Hey, guys. Thanks for the question. Just to follow up a little bit on Robbie’s question. I guess, looking at the U.S. knees specifically, comps do get kind of 400 basis points tougher in the back half, just how do we get confidence that in the kind of the back half acceleration in U.S. knees? I don’t know if I heard correctly, Did you say in the, in the earlier question, you saw some disruption early in Q2? I don’t know if that was early Q1 misspeak or maybe I misheard it wrong.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: No, no. The disruption was on Q1, Travis. You know, when you look at the changes we made in the first quarter, noted the reduction on non-dedicated representatives, there was some disruption. We did lose two fairly large accounts in the quarter. No, I did not comment on disruption on the second quarter. Your main question, what gives us confidence that we’re gonna accelerate our knee growth in the second half is the ramp-up of our new products, is the fact that we continue to place and sell a lot of technology. 30% growth in technology in the first quarter. All in with the rest of surgery, bone cement is 12%, the actual technology growth in the first quarter, and that’s TMINI, that’s ROSA, that’s ROSA OptimiZe, is 30%.

Once you start growing technology at those rates, obviously implants follow at some point. The account conversions that we’re seeing, the technology sales, the changes we’re making from a go-to-market standpoint, new product acceleration gives us confidence that the numbers should increase. Thank you, Travis.

Chris Pasquale, Analyst, Nephron Research7: Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Chris Pasquale from Nephron.

Chris Pasquale, Analyst, Nephron Research: It didn’t come up in your prepared remarks, but one of your competitors has been dealing with an issue that impacted their ability to serve customers for a few weeks at the end of the quarter. It doesn’t appear to me at first glance like you benefited much from that dynamic, but could you just talk about what you’ve seen in the market and whether you think that has any implications for your business either, you know, here in the first quarter or what you’re expecting in 2Q?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Thank you, Chris. First things first, it’s very unfortunate that companies go through those dynamics. I’ll start with that. No, we did not see any material impact, so we did not see the fact that we had a competitor going through such a dynamic, impacting our business in a meaningful way. Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to David Roman with Goldman Sachs.

David Roman, Analyst, Goldman Sachs: Thank you. Morning, everybody. I appreciate your taking the question. Maybe we could unpack a little bit some of the trends outside the United States. I think this is the first quarter in quite some time that OUS growth has trailed the U.S. and likely trailed where end markets look to be performing. Could you maybe help us think through some of the factors influencing those geographies to the extent to which there might have been any type of intermittent disruption versus what might be a change in the trajectory of that franchise?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Good to hear from you, David. Couple of things. Number one, the comps in the first half for international are more difficult than the second half. That’s one part. I never like to talk about comps, but it is definitely an element here. Secondly, we’ve made, as we announced at the end of 2025, and as we said in 2026, early in the year, we made and we’re making some distributor changes in geographies such as emerging markets, Middle East, in Europe, and China primarily, where we have gone from a large network of distributors to having one, if not two partners. That’s obviously brought some disruption.

And then thirdly, there were a couple of one-time events that have been orders in certain geographies internationally that didn’t come our way. All of that said, the expectation is that we’re gonna be growing international mid-single digit in the second half of 2026. Thanks for the question, David.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Larry Biegelsen with Wells Fargo.

Larry Biegelsen, Analyst, Wells Fargo: Good morning. Thanks for taking the question. I guess for my one question, Ivan, I’d love to hear about, you know, the rollout of Monogram. I know it’s early, but it’s an important product for you. You know, once you launch the semi-autonomous system with Persona early next year, you know, how should we think about the pace of the rollout? You know, will there be, you know, a limited launch initially at select centers and how that might, you know, impact ROSA? Just help us think about, you know, that, please. Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Larry, I love the fact that you always got technology-related questions about the future of the company, so thank you for that. Very excited about Monogram. As I mentioned in my prepared remarks, we completed the clinical trial, so we are deeply focused now on the preparation of the 510(k) submission. We continue to anticipate that we’re gonna be in a position to launch this new-to-the-world technology in early 2027. What we expect of Monogram, if what we’ve proven is right, the features remain that we’re gonna be launching the most efficient robot out there, and where we can do cases under 4 minutes procedure times. We believe that it’s gonna have the highest amount of safety given the enhanced surgical boundaries.

We believe that it’s gonna really democratize orthopedic cases from a technology standpoint, very consistent when it comes to our procedures. It’s very reproducible. The learning curve is very short. It is easy to use. The level of accuracy we’re seeing with the robot is like nothing that I’ve seen in my many years dealing with technology. We believe we got a bold platform that can get scaled up fairly rapidly. To that point, we are gonna invest to make sure that’s the case. We are hiring north of 200 sales reps behind the launch of Monogram, in addition to the many reps that we already got in the field. We are investing heavily on clinical evidence.

We recently announced that we hired Dr. Jonathan M. Vigdorchik, who happens to be one of the world’s global key opinion leaders when it comes to technology, someone who’s actually been an entrepreneur as well. We’re also investing in rethinking or rather thinking not just the clinical strategy, but also the economic strategy. I could spend an hour talking about it, but I will say this is gonna be a very bold launch, one that we’re preparing already as we speak. What’s gonna happen with ROSA? We are committed to having a suite of technology solutions. ROSA OptimiZe was recently launched. One of the reasons why technology is growing 30%, we’re gonna keep that. It is the number one robot outside of the U.S., where CT scanning is not the preference.

We like what we’ve seen with our partnership with THINK Surgical and TMINI. We strongly believe that the combination of Monogram plus ROSA plus TMINI is gonna give us a competitive advantage. Very excited about Monogram.

Larry Biegelsen, Analyst, Wells Fargo: Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Thanks for the question.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Matthew Taylor with Jefferies.

Chris Pasquale, Analyst, Nephron Research0: Thanks for taking the question. I actually wanted to ask a few questions about the tariff impact, because you saw the benefit here in Q1. I guess, what are you assuming for the rest of the year with regards to IEEPA tariffs or tariffs in general, and what do you think could happen with the Section 232 investigation? Just asking out of curiosity more than anything else.

Chris Pasquale, Analyst, Nephron Research6: Yeah. Hey, Matt. Good to talk to you. We are assuming that the Section 122 tariffs remain intact for into the second half of the year. We are assuming that the IEEPA remain invalidated, therefore we took the benefit of that $0.20 in the first quarter, as I mentioned. Moving forward on the Section 232, I think it’s still evolving and dynamic and no material updates at this point, but the overall situation remains fluid, and we’ll keep you posted as things unfold.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: I’ll just add, Matt, quickly, on the Section 232, the validation we’re getting from our I/O sources is that it’s not gonna impact those companies that operate under the Nairobi Protocol. We’re feeling pretty confident that we got a pathway to mitigate that. Thank you.

Chris Pasquale, Analyst, Nephron Research0: Thank you. Thanks, guys.

Chris Pasquale, Analyst, Nephron Research1: Our next question comes from the line of Richard Newitter with Truist Securities.

Chris Pasquale, Analyst, Nephron Research2: Hi. Thanks for taking the questions. What are the innovations that feels most innovative for you guys that’s exclusively in your hands? It’s the Canary Smart implant that’s embedded in Persona IQ. Just noticed it doesn’t get a ton of airtime even on this call. I know you had some positive clinical trial updates at AAOS for this technology. Seems like, you know, there’s potential to generate real savings to the system here, better patient management post-surgery. I know in the most recent CMS inpatient rule proposal, the CJR is extending some of those initiatives that would seem to lend themselves in favor of a technology like this.

Would just love to hear kinda where you are on this, on this particular product sub-segment, why we’re not hearing about it more, and how and if this can be leveraged as a more meaningful differentiator moving through 2026 into 2027. Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: I love the question, Richard. Thank you. Look, early on, probably we talked too much about Persona IQ without having the data. We’re taking a different approach. We’re gonna get all the data, we’re gonna get everything validated, then we’re gonna talk about it. I will tell you overall, everything is tracking in accordance to expectations. As you mentioned, we did publish some very robust data, on what Persona IQ brings in terms of lowering costs, improving outcomes, et cetera, et cetera. That was published, I think it was four to six weeks ago. I’ve seen with some of the changes around IPPS and the CJR expansion, this is the kind of product that can make a robust impact.

There is an increase on DRGs, or expenditures, as you say, with DRGs 469 and 470, for those companies that perform better. Now we will be in possession of the only implant that can, in an objective way, track whether our implant is performing better. Companies that have connected data before, during, and after the procedure, companies that can bring objective data around outcomes, prompts or whatnot, and they can validate, they can reduce the cost of care, I believe they’re gonna be meaningfully rewarded. We continue to invest in a variety of fronts to make sure that we are the company that can validate all of the above. Committed to the space, the technology, and we like what we see.

Chris Pasquale, Analyst, Nephron Research2: Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Caitlin Roberts with Canaccord Genuity.

Caitlin Roberts, Analyst, Canaccord Genuity: Hi, thanks for taking the question. Just to touch on ROSA Shoulder, any updated color on the launch and when it will move to a broader launch?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Caitlin, thanks for the question. We are now fully on the full market release. I was actually down in Florida, where we’ve been demoing the technology. The feedback continues to be very strong. It is surgeon-centered, we’re not launching a technology that only certain surgeons can use. If you’re an anatomic or reverse type of surgeon when it comes to technique, you can use ROSA Shoulder for both types of surgery. We are getting really solid data around the accuracy of the platform. We can robotically do surgeries that impact the glenoid as well as the humeral. We can do both the glenoid reaming and humeral resection. It is extremely efficient. We already are actively working on version 2, that’s even more efficient than the first generation ROSA Shoulder.

It is fully integrated to the rest of the ROSA ecosystem. Again, another example, going back to the question that Rich had, of collecting data before, during, and after surgery with ROSA Shoulder, and being able to engage in prompts, conversations, outcomes and whatnot. Again, we’ve moved from limited market release to full market release, and we’re going to scale up the number of units that we’re going to be deploying in the U.S. and other markets. Thank you, Caitlin.

Caitlin Roberts, Analyst, Canaccord Genuity: Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Matt Miksik with Barclays.

Matt Miksik, Analyst, Barclays: Hey, thanks so much for taking the questions. Follow-up on Paragon. You mentioned some acceleration there. If you could talk about what’s driving that and whether you expect to maybe exit the year on double digits, and how we should think about the timeline for another, you know, potentially Paragon-like strategic investment. Thanks.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Hey, thanks, Matt. We exited the first quarter at almost a double-digit when it comes to Paragon 28. Early in the second quarter, we are in the teens, the growth is accelerating. We also saw a 200 basis points sequential increase from Q4 of 2025 to Q1. To answer your question succinctly, what’s driving this is focus. We believe in Albert and the team alone. They’re getting robust investments behind the platform. They’re launching products at a rapid pace. They’re hiring reps in a variety of fronts. Focus is what’s driving the growth here. We expect to exit 2026 strongly in the double-digit growth rates.

In terms of when are we ready to do the next deal, look, we got a lot going on here. We are changing the go-to-market model here in the U.S., integrating Paragon, about to launch Monogram, which is gonna be very disruptive and is gonna require a lot of focus. We got another deal called OrthoGrid, also doing really well, that we’re integrating. We’re gonna pause. We’re gonna continue to do buybacks, and at the right time, we’ll execute on a deal similar to Paragon, which I think is going to be very, very solid for Zimmer Biomet. Thanks for the question, Matt.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Steven Lichtman with William Blair.

Chris Pasquale, Analyst, Nephron Research5: Thank you. Good morning, guys. Suki, all the best to you. Iván, where do you think we are at on underlying hip and knee market growth? Are there any incremental headwinds to market growth in the U.S. that you’re seeing on elective procedures or willingness of your hospital customers to purchase bigger-ticket items like ROSA?

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: We continue to track the market growth rates, and it’s very solid. We peg the overall recon market to be growing north of 4, if not 4.5%. Obviously, we gotta do better in knees. We are where we need to be, but we’re gonna accelerate in hips. We’ve not seen any material impacts. You know, I get the question around what’s happening with Medicaid, ACA and whatnot. We track all kinds of data. First of all, Medicaid is low single digit for us. Said differently, I think it’s around 1% of our revenue comes from Medicaid, less than that. And then in terms of ACA, it’s less than, you know, 1%, 2% of our cases. We track the top 10 accounts in the U.S.

Top 10 accounts meaning hospitals like Mayo, Cleveland, HSS here in New York, and other. We continue to see waiting lists being fairly long. I would say the market is four and a half durable. Pricing dynamics continue to be where they need to be. We had a, you know, a quarter of 40 basis points of price erosion overall in alignment with our expectations. We don’t see anything from a market perspective that we’re concerned about. Thank you.

Chris Pasquale, Analyst, Nephron Research5: Thanks, Ivan.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Jeff Johnson with Baird.

Jeff Johnson, Analyst, Baird: Thank you. Good morning, guys, and thanks for taking the question. Suki, best of luck. Ivan, maybe on the sales transition, I know we covered a lot of this last quarter, but I just wanna make sure I’m understanding a couple things. We’ve heard in some conversations, I think some of your reps that were not 100% dedicated, you’re kinda truing up and giving them guarantees this year. That extra stub that you may be guaranteeing some of those reps, are you excluding those costs from non-GAAP EPS and margins? Just I think about how to set my model up for next year, this year and next year.

Secondly, in some of those conversations we’ve heard, you know, if those guys were trued up and given a guarantee this year, it might be more next year they think about do they stay or not without that guarantee. How are you thinking about the disruptions from the sales transition? Is that more of a 2026 impact? Could some of that continue into 2027? Wondering how you think kinda these disruptions gate out between this year and next year. Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Thank you, Jeff. Look, we go through sales force changes in a variety of ways and magnitudes often, this is not something we exclude. Going back to why OpEx is slightly higher, and where is the EPS going, we’re investing in making sure that this works out. That’s number 1. We have offered 2-year guarantees that are backed up from a revenue standpoint, in some cases, 3-year guarantees. I will tell you, Jeff, the single largest guarantee that you can offer to sales rep is to let him or her know that there’s going to be a long-term future for the employee.

Money may cover, you know, two to three years, when you have technology that you’re launching like Monogram, when you have the fullest bag in orthopedics, when you’re making the investments that we’re making, most reps see this as the place to be, you know, for the next 2 years. We can all switch jobs every other year. Money is not gonna keep you there. Having the future that they feel they have here at Zimmer Biomet is what’s keeping them here. I will tell you, my conversations with sales reps all over the U.S., and I’m spending 70% of my time on the road visiting every single territory, that’s what we hear.

If you give me a bag that is robust, if you make me part of something that is gonna be great for the long term, money matters in the short term, but my career is probably more important. Thank you, Jeff.

Jeff Johnson, Analyst, Baird: Thank you.

Chris Pasquale, Analyst, Nephron Research1: We’ll go next to Matt O’Brien with Piper Sandler.

Matt O’Brien, Analyst, Piper Sandler: Good morning. Thanks for taking the question, and Suketu, best wishes in your future endeavors. Just on the pricing side, Iván, you know, you mentioned down 40 basis points in Q1, but I think you said you’re sticking with the down 100 basis points for the year. I guess, why stick with the 100 basis points? Should we expect things to get progressively worse throughout the course of the year and then exit the year, you know, down even more than 100 basis points and kinda continue forward at a higher rate than we’ve seen historically? Or are you just still gonna be trying to build in some conservativism, you know, with that metric here this year and then going forward? Thank you.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Well, first of all, that is the range that we’ve been given for a while, you know, flat to 100 basis points. In 2025, we did better than that. There were a couple of one-time events in international markets. As we enter 2026, we guided, you know, flat to 100. We like where we closed the first quarter. It’s a similar answer to, you know, revenue and other elements of the guidance. We’re gonna wait and see. There are macro events happening. There are changes in a variety of international markets. There is competitive pressure here in the U.S., we’re gonna wait and see. We like where we are at the end of the first quarter. We’ll update you on pricing again in the August call. Thank you.

Chris Pasquale, Analyst, Nephron Research1: This concludes the question and answer portion of today’s call. I would like to turn the call back over to Iván Tornos for any closing remarks.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: Sure. I wanna thank everybody for joining the call today. Most importantly, I wanna thank the Zimmer Biomet team for the strong execution the first quarter. I leave you with one word, confidence. Confidence. I am very confident we’re heading the right direction, not just in terms of 2026, but most importantly, how we are making this company future-proof when it comes to the strategy that we have, how we think about operating the company for the future, and the commitments that we’re making. I would like Suki, my friend Suki here, to close the call, given the fact that this is gonna be the last time that he represents Zimmer Biomet as the CFO. Suki?

Chris Pasquale, Analyst, Nephron Research6: Yep. Thanks, Ivan. I’ve learned and taken a lot away from you over our seven years together, and the one thing that’s most impactful is your approach to gratitude, so I’ll start there. I’d like to thank you, the ZB team, the board, and all of our many partners for an amazing seven years. We’ve accomplished a lot in a really tough environment. Ivan, we’ve built a strong foundation from which to grow, and I’m confident that under your leadership and with the team’s execution, you will take ZB to the next level. I wish you all the success, and I’ll be cheering from the sidelines.

Ivan Tornos, Chairman, President and Chief Executive Officer, Zimmer Biomet: I’m gonna miss you. Thank you. Thanks, everybody. Bye-bye.

Chris Pasquale, Analyst, Nephron Research1: This concludes today’s call. Thank you for your participation. You may now disconnect.