Zimmer Biomet — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter net sales were $2.063 billion, an increase of 3.1% on a reported basis and 3.7% on a constant currency basis compared to the prior year.
• Diluted earnings per share (EPS) were $1.00, a decrease of 13.8% year-over-year; adjusted diluted EPS were $1.90, consistent with the prior year period.
• Net earnings for the quarter were $191.6 million; adjusted net earnings were $362.8 million.
• Operating cash flow generated was $560.0 million, and free cash flow was $372.4 million.
• For the nine months ended September 30, 2026, net sales were $6.326 billion (up 5.7% reported, 5.0% constant currency, 3.5% organic constant currency).
• Gross margin was 63.1% for the quarter; adjusted gross margin was 71.7%.
• Operating profit margin was 14.9% for the quarter; adjusted operating profit margin was 25.1%.
• Effective tax rate was 16.2% for the quarter; adjusted effective tax rate was 17.6%.
• Total debt was $7,504.2 million as of September 30, 2026; net debt was $7,104.3 million.
• Cash and cash equivalents were $399.9 million as of September 30, 2026, down from $591.9 million at December 31, 2025.

Guidance and Future Outlook:

• Updated full-year 2026 reported revenue change guidance to 4.4% - 4.9% (previously 3.9% - 4.9%).
• Updated full-year 2026 constant currency revenue change guidance to 4.1% - 4.6% (previously 3.4% - 4.4%).
• Updated full-year 2026 organic constant currency revenue change guidance to 3.0% - 3.5% (previously 2.25% - 3.25%).
• Updated full-year 2026 adjusted diluted EPS guidance to $8.50 - $8.60 (previously $8.47 - $8.59).
• Management expects no significant incremental costs related to European Union Medical Device Regulation starting January 1, 2026.

Business Segments and Product Lines:

• Hips, S.E.T. (Sports Medicine, Biologics, Foot and Ankle, Upper Extremities, Trauma, Craniomaxillofacial and Thoracic), Technology & Data, Bone Cement, and Surgical franchises grew at upper single-digit or double-digit rates, representing two-thirds of the book of business.
• Knees sales decreased 3.1% on a reported basis and 2.6% on a constant currency basis for the quarter.
• Hips sales increased 6.0% on a reported basis and 7.0% on a constant currency basis for the quarter.
• S.E.T. sales increased 6.8% on a reported basis and 7.1% on a constant currency basis for the quarter.
• Technology & Data, Bone Cement, and Surgical sales increased 11.9% on a reported basis and 13.0% on a constant currency basis for the quarter.
• Expanded the foot and ankle portfolio with the launches of the Megalodon® Dynamic Compression System and SmartShot® Marrow Access Device.
• Extended a multi-year limited exclusive distribution and supply agreement with THINK Surgical to reinforce the robotics portfolio.
• Opened a new Zimmer Biomet Institute facility in Charlotte, N.C., to increase access to medical education and training.

Market and Competitive Landscape:

• Sales in the United States increased 3.6% on a reported basis and 3.6% on a constant currency basis for the quarter.
• International sales increased 2.4% on a reported basis and 3.9% on a constant currency basis for the quarter.
• Named to TIME's 2026 World's Best Companies and America's Best Companies lists.
• Formed the Comeback Club in partnership with the Arthritis Foundation to encourage treatment options for joint pain.

Risks and Challenges:

• Risks include competition, pricing pressures, dependence on new product development, changes in customer demand, and the ability to attract and retain skilled employees.
• Risks related to the transformation of the U.S. sales and distribution network, restructuring plans, and product portfolio rationalization.
• Risks associated with the integration of acquisitions, including Paragon 28, and the realization of anticipated benefits.
• Risks related to healthcare reform, cost containment measures, reimbursement levels, and regulatory compliance (FDA, EU Medical Device Regulation).
• Risks involving supply chain disruptions, raw material dependence, and cybersecurity breaches.
• Risks related to substantial indebtedness, tax obligations, and the tax-free nature of the ZimVie Inc. spinoff.

Management Commentary and Tone:

• Ivan Tornos, Chairman, President and CEO, expressed pleasure with solid third-quarter results, citing strong operating and free cash flow.
• Management highlighted the progress of the diversification strategy, the strength of the innovation engine, and strides in commercial execution.
• Management stated confidence to raise full-year guidance based on broad-based performance.
• Recent promotions of Gary Campbell, Brian Hatcher, and Bradley Kessler were announced to accelerate U.S. commercial transformation.

Other Key Points:

• The April 2025 acquisition of Paragon 28, Inc. is excluded from organic constant currency revenue change calculations for the nine-month period.
• Inventory and manufacturing-related charges included excess and obsolete inventory charges on product lines intended for discontinuation by 2032.
• Restructuring and other cost reduction initiatives included global programs initiated in December 2019, 2021, 2023, February 2025, December 2025, and September 2026.
• Litigation charges and gains excluded from non-GAAP measures relate to product liability, commercial, and employment litigation.
• The company paid $139.2 million in dividends to stockholders during the nine months ended September 30, 2026.
• The company repurchased $579.3 million of common stock during the nine months ended September 30, 2026.