Zimmer Biomet Holdings, Inc.

What they do

Zimmer Biomet sells orthopedic reconstructive products (knees and hips), sports medicine, biologics, extremities and trauma products, craniomaxillofacial and thoracic products, bone cement, surgical products, and integrated digital and robotic technologies. Its customers are orthopedic surgeons, neurosurgeons, other specialists, healthcare institutions such as hospitals and ambulatory surgery centers, stocking distributors, healthcare dealers and buying groups. Products reach customers through direct channel accounts and through stocking distributors and dealers; consignment sales represented approximately 85 percent of 2025 net sales, and no individual customer exceeded 2 percent of net sales in 2025. The company is organized into three regional operating segments: Americas (mainly the U.S.), EMEA and Asia Pacific.

Revenue drivers

• Americas segment — Largest operating segment, principally the U.S., which accounted for roughly 95 percent of the region's 2025 net sales; sells through a mix of employees and independent sales agents, most exclusive to Zimmer Biomet, and is the focus of a multi-year go-to-market conversion initiative.
• Knees and Hips — Core reconstructive product categories reported in the company's sales analysis by product category; sold globally in competitive markets alongside Johnson & Johnson MedTech, Stryker and Smith & Nephew.
• S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) — Reported product category that was expanded by the April 2025 acquisition of Paragon 28, which added 2.5 percentage points to total 2025 net sales growth.
• Technology & Data, Bone Cement and Surgical — Reported product category spanning digital and robotic technologies, bone cement and surgical products; includes the ROSA robotic platform, which received FDA 510(k) clearance for the next-generation ROSA Shoulder System.

Recent performance

Second quarter 2026 net sales were $2.177 billion, up 4.8% reported, 4.7% constant currency and 4.0% organic constant currency. Second quarter net earnings were $198.3 million and diluted EPS were $1.03, up 33.8%, while adjusted diluted EPS were $2.07, consistent with the prior year period. Second quarter operating cash flow was $447.9 million and free cash flow was $308.3 million. Full-year 2025 net sales rose 7.2% to $8.23 billion, including a 2.5% contribution from Paragon 28 and a 0.8% favorable foreign currency effect, but net earnings fell to $705.1 million from $903.8 million. The 2025 earnings decline reflected about $170 million of inventory and instrument charges for product lines to be discontinued, acquisition and related costs for Paragon 28 and Monogram, U.S. tariffs and higher performance-related compensation, partly offset by sales growth and favorable mix.

Strategy

Management is pursuing a U.S. commercial transformation, including converting substantial portions of the Americas sales force from independent agents to employees and making go-to-market changes in the U.S. and certain international markets. It is adding scale and technology through acquisitions, including Paragon 28 (closed April 2025) and Monogram Technologies (closed October 2025), and is investing in direct-to-patient marketing, medical education and information technology. The company also raised its expected share repurchases to up to $1 billion of common stock during fiscal 2026. Innovation priorities include the ROSA robotics platform, with the next-generation ROSA Shoulder System cleared by the FDA and first cases completed, and the ROSA Knee with OptimiZe.

Risks

• Go-to-market execution — The U.S. commercial transformation and related international go-to-market changes are expected to weigh on 2026 sales and could disrupt customer relationships or salesforce productivity.
• Acquisition integration and cost — Paragon 28 and Monogram add integration costs, acquisition-related expenses and higher interest expense from debt borrowed for the deals.
• Product discontinuations — The company recorded approximately $170 million of inventory and instrument charges in 2025 related to product lines it intends to discontinue.
• Competition and pricing — The orthopedic and musculoskeletal market is highly competitive, with major competitors Johnson & Johnson MedTech, Stryker and Smith & Nephew, and competition is based partly on pricing, alongside technology, innovation, quality, reputation and customer service.

Outlook

For 2026, management guided to net sales growth of 2.5% to 4.5%, driven by market growth, new product introductions, Paragon 28 and a 0.5% positive foreign currency impact. Paragon 28 is expected to add about 1.0 percentage point to growth until the April 2026 anniversary of the deal closing. Operating profit is expected to increase on higher sales, fixed-cost leverage, restructuring savings and the absence of the 2025 inventory and instrument charges, partly offset by inflation, U.S. commercial sales channel investment, higher net interest expense and a higher effective tax rate.