Zimmer Biomet Holdings Q4 2025 Zimmer Biomet Holdings Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Zimmer Biomet Holdings Inc Earnings Call
Speaker #2: Please stand
Operator: Please stand by. Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Q4 2025 earnings conference call. If anyone needs assistance at any time during the conference, please press the star followed by the 0. As a reminder, this conference is being recorded today, 10 February 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 1 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.
Speaker #2: by. Good morning, ladies and conference call. If anyone needs 4th Quarter 2025 earnings please press the star followed by the zero. As a reminder, this conference gentlemen, and welcome to the Zimmer Biomet 10th, 2026.
Speaker #2: to turn the conference over to David DeMartino, Senior Vice President, Investor recorded.
Speaker #3: Thank you, Operator. Good morning, everyone. me on today's call are Yvonne Tornos, our Chairman, to Zimmer Biomet's 4th Quarter Welcome
David DeMartino: Thank you, operator. Good morning, everyone. Welcome to Zimmer Biomet's Q4 2025 Earnings Conference Call. Joining me on today's call are Ivan Tornos, our Chairman, President, and CEO, 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.
David DeMartino: Thank you, operator. Good morning, everyone. Welcome to Zimmer Biomet's Q4 2025 Earnings Conference Call. Joining me on today's call are Ivan Tornos, our Chairman, President, and CEO, 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.
Speaker #3: President, and CEO, and Suketu Upadhyay, our CFO and EVP Finance Relations.
Speaker #3: statements. Actual results may differ materially from those indicated by the forward-looking
Speaker #3: Statements are due to a variety of risks and uncertainties. For detailed comments during this call, we will include forward-looking discussion of all these risks and uncertainties, in addition to the inherent limitations of—started, I'd like to remind you that our—please go to our SEC filings.
Speaker #3: Please note that forward-looking statements, even if actual, assume no obligation to update these results or if future expectations change materially. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking. Reconciliations of these measures to the most directly comparable GAAP financial measures, and an explanation of our basis for calculating these measures, are included within our fourth quarter earnings release, which can be found on zimmerbiomet.com.
David DeMartino: 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 Q4 earnings release, which can be found on our website, ZimmerBiomet.com. With that, I'll turn the call over to Ivan. Ivan?
David DeMartino: 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 Q4 earnings release, which can be found on our website, ZimmerBiomet.com. With that, I'll turn the call over to Ivan. Ivan?
Speaker #3: With that, I'll turn the found on our website
Ivan Tornos: Good morning, everyone, and thank you for joining today's call. I would like to start the way that I always do, by sharing my gratitude toward Zimmer Biomet team members around the world who move our business and mission forward each and every day. Thank you for your tireless work. Thank you for your dedication to solving the most pressing challenges in healthcare. And thank you for your relentless commitment to serving our customers and their patients. Today, Zimmer Biomet is a totally different company than it was just a few short years ago, and this is no doubt thanks to your efforts. During my prepared remarks this morning, I'll cover four key areas. I'll start by summarizing our Q4 results and the results for the fiscal year 2025. Second, I'll provide an update on the plan which we are executing upon to evolve our US commercial organization.
Ivan Tornos: Good morning, everyone, and thank you for joining today's call. I would like to start the way that I always do, by sharing my gratitude toward Zimmer Biomet team members around the world who move our business and mission forward each and every day. Thank you for your tireless work. Thank you for your dedication to solving the most pressing challenges in healthcare. And thank you for your relentless commitment to serving our customers and their patients. Today, Zimmer Biomet is a totally different company than it was just a few short years ago, and this is no doubt thanks to your efforts. During my prepared remarks this morning, I'll cover four key areas. I'll start by summarizing our Q4 results and the results for the fiscal year 2025. Second, I'll provide an update on the plan which we are executing upon to evolve our US commercial organization.
Speaker #4: I'm thank you for joining today's
Speaker #4: do. By sharing my gratitude Good morning, everyone.
Speaker #4: Business and mission forward each and every day—the world who move our day. Solving the most pressing challenges in healthcare, toward Zimmer Biomet team members around healthcare.
Speaker #4: Thank you for your tireless Yvonne? commitment to serving our customers and their patients. Today, call over to Yvonne. Zimmer Biomet is a totally different company than it was just a few short years ago, and this is no prepared remarks this morning, I'll cover four key areas.
Speaker #4: I'll start summarizing our 4th Quarter results. And the results for the fiscal doubt thanks to your efforts. year 2025. During my Second, I'll provide an update on the plan, which we are executing upon to evolve our US commercial organization; thirdly, I'll introduce our 2026 work.
Ivan Tornos: Thirdly, I'll introduce our 2026 guidance. Lastly, I'll briefly cover the progress that we have made across our key strategic priorities, those being people and culture, operational excellence, and thirdly, innovation and diversification. Starting with the year and the Q4, I'm proud to have the team ended the year 2025 delivering on all commitments on sales growth, EPS, and free cash flow while navigating quite a complex challenge in the year: tariff headwinds and integrating three acquisitions within one year. From a constant currency organic revenue standpoint, we ended 2025 right at the middle of our initial yearly guidance, marking the fifth consecutive year for Zimmer Biomet growing mid-single digit or above. Looking at the Q4 results, we grew sales on an organic constant currency basis by 5.4% against a mid-single-digit growth comparable, with our critical US business increasing 5.7% and international growing 5%.
Ivan Tornos: Thirdly, I'll introduce our 2026 guidance. Lastly, I'll briefly cover the progress that we have made across our key strategic priorities, those being people and culture, operational excellence, and thirdly, innovation and diversification. Starting with the year and the Q4, I'm proud to have the team ended the year 2025 delivering on all commitments on sales growth, EPS, and free cash flow while navigating quite a complex challenge in the year: tariff headwinds and integrating three acquisitions within one year. From a constant currency organic revenue standpoint, we ended 2025 right at the middle of our initial yearly guidance, marking the fifth consecutive year for Zimmer Biomet growing mid-single digit or above. Looking at the Q4 results, we grew sales on an organic constant currency basis by 5.4% against a mid-single-digit growth comparable, with our critical US business increasing 5.7% and international growing 5%.
Speaker #4: guidance; and lastly, I'll briefly cover the our key strategic progress that we have made across priorities. Those being people and culture, operational excellence, Thank you for your dedication to and thirdly, innovation and and the 4th Quarter, I'm proud to have the 2025 delivering on our commitments on sales growth, team in the year EPS, and free cash flow, while navigating quite the complex challenge in the year.
Speaker #4: headwinds and integrating three diversification. acquisitions within one year. From a constant currency Starting with the year organic revenue standpoint, we ended Tariff 2025 right at the middle of our the fifth consecutive year for Zimmer Biomet growing mid-single digit or above.
Speaker #4: Looking at the 4th Quarter results, we initial yearly guidance, marking grew sales on an organic constant currency basis against a mid-single digit growth comparable, with our critical US by 5.4% business increasing 5.7% and international growing 5%.
Speaker #4: Healthy end markets, new product momentum, the ongoing evolution of our US sales acceleration in our critical US business. US need growth of continue to drive an 6% in the quarter was driven by increased penetration of persona osteotype, or total cementless knee, which ended the year roughly at around channel, and the recent leadership additions penetration.
Ivan Tornos: Healthy end markets, new product momentum, the ongoing evolution of our US sales channel, and the recent leadership additions continue to drive an acceleration in our critical US business. US knee growth of 6% in the quarter was driven by increased penetration of Persona OsseoTi, or total cementless knee, which ended the year roughly at around 35% penetration. Our Oxford Partial Cementless Knee continues to deliver above expectations, with adoption rates post-training continuing to be very high, with great conversions from competitive accounts. Notably, our DTP, direct-to-patient awareness campaign, in partnership with Arnold Schwarzenegger, drove accelerated momentum in the second half of the year, with the personalized knee campaign yielding very meaningful results.
Ivan Tornos: Healthy end markets, new product momentum, the ongoing evolution of our US sales channel, and the recent leadership additions continue to drive an acceleration in our critical US business. US knee growth of 6% in the quarter was driven by increased penetration of Persona OsseoTi, or total cementless knee, which ended the year roughly at around 35% penetration. Our Oxford Partial Cementless Knee continues to deliver above expectations, with adoption rates post-training continuing to be very high, with great conversions from competitive accounts. Notably, our DTP, direct-to-patient awareness campaign, in partnership with Arnold Schwarzenegger, drove accelerated momentum in the second half of the year, with the personalized knee campaign yielding very meaningful results.
Speaker #4: knee continues to deliver above 35% Our Oxford partial cementless adoption rates post-training continuing accounts. with great conversions from competitive to be very high, Notably, our DTP, direct-to-patient awareness campaign, in partnership with Arnold Schwarzenegger, drove accelerated momentum in the second half of the year with the personalized knee campaign yielding very meaningful results.
Speaker #4: Turning to our huge franchise, Z1, or expectations, with penetration fueled US hip growth of nearly 8% in the quarter, with the implant Z1 now representing over 35% of our US hip stems and gaining meaningful competitive conversions.
Ivan Tornos: Turning to our hips franchise, Z1, or triple taper stem, penetration fueled US hip growth of nearly 8% in the quarter, with the implant, Z1, now representing over 35% of our US hip stems and gaining meaningful competitive conversions. Next, our robotics and navigation strategy of offering a comprehensive suite of customer-centric technology solutions continues to pay strong dividends. Our US technology and data, bone cement, and surgical cells increased over 10% in the quarter, driven by the strongest robotic capital sales quarter in over two years. Finally, in SET, our US CMFT, craniomaxillofacial and thoracic business, continues to perform strongly, growing mid-teens in the quarter, led by a continuous shift in external fixation from wires to plating. Upper extremities had another great quarter of high single-digit growth in the US, where our Identity Shoulder and OsseoFit Stemless Shoulder continued to convert competitive accounts.
Ivan Tornos: Turning to our hips franchise, Z1, or triple taper stem, penetration fueled US hip growth of nearly 8% in the quarter, with the implant, Z1, now representing over 35% of our US hip stems and gaining meaningful competitive conversions. Next, our robotics and navigation strategy of offering a comprehensive suite of customer-centric technology solutions continues to pay strong dividends. Our US technology and data, bone cement, and surgical cells increased over 10% in the quarter, driven by the strongest robotic capital sales quarter in over two years. Finally, in SET, our US CMFT, craniomaxillofacial and thoracic business, continues to perform strongly, growing mid-teens in the quarter, led by a continuous shift in external fixation from wires to plating. Upper extremities had another great quarter of high single-digit growth in the US, where our Identity Shoulder and OsseoFit Stemless Shoulder continued to convert competitive accounts.
Speaker #4: Next, our robotics and navigation strategy of offering a comprehensive suite of customer-centric technology solutions continues to pay strong dividends. Our US technology and data, bone cement, and surgical cells increased over 10% in the quarter, driven by capital cells' strongest quarter in over two years.
Speaker #4: Finally, by the strongest robotic in SET, our US CMFT cranial maxillofacial thoracic business continues to perform strongly, growing mid-teens in the quarter led by a continuous shift in external fixation from wires to plating.
Speaker #4: Upper extremities had another great quarter of high single-digit growth in the US, where our identity shoulder continue to convert competitive accounts. Looking now at 2026, with accelerating the transition to a dedicated and specialized US sales channel.
Ivan Tornos: Looking now at 2026, we're accelerating the transition to a dedicated and specialized US sales channel in order to drive more durable and consistent growth. By the end of 2027, we expect the vast majority of the conversion to dedicated CBHs, Zimmer Biomet employees, to be complete, and also expect a substantial increase in the number of reps specialized in the higher growth areas such as SET, robotics, and in our ASC channel, ambulatory surgical center channel. We have already addressed 1/3 of these organizational changes and have best-in-class plans and project management capabilities with third-party help to ensure a smooth transition for the last 2/3 of this evolution. With a robust innovation cycle in place, we feel it's the opportune time to move faster, and we will.
Ivan Tornos: Looking now at 2026, we're accelerating the transition to a dedicated and specialized US sales channel in order to drive more durable and consistent growth. By the end of 2027, we expect the vast majority of the conversion to dedicated CBHs, Zimmer Biomet employees, to be complete, and also expect a substantial increase in the number of reps specialized in the higher growth areas such as SET, robotics, and in our ASC channel, ambulatory surgical center channel. We have already addressed 1/3 of these organizational changes and have best-in-class plans and project management capabilities with third-party help to ensure a smooth transition for the last 2/3 of this evolution. With a robust innovation cycle in place, we feel it's the opportune time to move faster, and we will.
Speaker #4: In order to drive more durable and consistent growth, by the end of 2027, we expect the vast majority of the conversion to dedicated CBH, Zimmer complete and also expect a substantial increase in the number of reps specialized in the higher growth areas, such as our ASC channel, ambulatory surgical center channel.
Speaker #4: Biomet employees, to be SET, robotics, and in We have already addressed one-third have best-in-class plans and project management capabilities with third-party help to ensure a smooth of these organizational changes, and transition for the last two-thirds of this evolution.
Speaker #4: With our robust innovation cycle in place, we feel it's the faster and we will. full-year organic constant currency With that context, we now expect revenue growth for 2026 in the low single-digit opportune time to move range or 1 to 3 percent growth, with an adjusted EPS earnings per share of $8.30 to $8.45, which includes the contribution from 21st; the one-year closing.
Ivan Tornos: With that context, we now expect full-year organic constant currency revenue growth for 2026 in the low single-digit range, or 1% to 3% growth, with an adjusted EPS, earnings per share, of $8.30 to $8.45, which includes the contribution from Paragon 28 beginning 21 April, the one-year anniversary of the deal closing. Suketu will provide further details during his remarks. The evolution of the US sales force represents the final core initiative in our transformation. And while it might create some short-term disruption across pockets of our organization, it is by far the most crucial step in order to convert Zimmer Biomet into a durable mid-single-digit plus growth company for the long term.
Ivan Tornos: With that context, we now expect full-year organic constant currency revenue growth for 2026 in the low single-digit range, or 1% to 3% growth, with an adjusted EPS, earnings per share, of $8.30 to $8.45, which includes the contribution from Paragon 28 beginning 21 April, the one-year anniversary of the deal closing. Suketu will provide further details during his remarks. The evolution of the US sales force represents the final core initiative in our transformation. And while it might create some short-term disruption across pockets of our organization, it is by far the most crucial step in order to convert Zimmer Biomet into a durable mid-single-digit plus growth company for the long term.
Speaker #4: During his remarks, the evolution of the U.S. sales Paragon 28 beginning April force represents the final core initiative in our transformation. Suki will provide further details. And while it might create some short-term disruption across pockets of our organization, it is by far the most crucial step in order to convert Zimmer Biomet into a durable mid-single-digit-plus growth company for the long
Speaker #1: Term . Turning our three key strategic priorities for Zimmer Biomet starting with culture . remain committed to right people in the right roles to maintain We our leading position in the key areas where we culture .
Ivan Tornos: Turning now to our 3 key strategic priorities for Zimmer Biomet, starting with number one, people and culture, we remain committed to having the right people in the right roles to maintain our leading position in the key areas where we compete. By having a dedicated and specialized US sales channel, we will now enhance our ability to consistently, and with no surprises, execute our strategy. This will drive increased productivity while enabling us to be more competitive in high-growth segments, as mentioned before, such as robotics, ASCs, and the growth drivers within SET, where we have tremendous opportunity ahead and we are still under-penetrated. Secondly, on the second priority of operational excellence, we believe our disciplined cost management and robust capital allocation strategy will enable EPS growth while allowing us to invest in the business for the long term.
Ivan Tornos: Turning now to our 3 key strategic priorities for Zimmer Biomet, starting with number one, people and culture, we remain committed to having the right people in the right roles to maintain our leading position in the key areas where we compete. By having a dedicated and specialized US sales channel, we will now enhance our ability to consistently, and with no surprises, execute our strategy. This will drive increased productivity while enabling us to be more competitive in high-growth segments, as mentioned before, such as robotics, ASCs, and the growth drivers within SET, where we have tremendous opportunity ahead and we are still under-penetrated. Secondly, on the second priority of operational excellence, we believe our disciplined cost management and robust capital allocation strategy will enable EPS growth while allowing us to invest in the business for the long term.
Speaker #1: compete committed to having right roles to We remain maintain our position in the right the key areas where we compete . having the specialized US sales dedicated and we will now leading our to ability having a consistently channel , with no execute surprises , our This will strategy .
Speaker #1: drive increased productivity and us to be more competitive people now to high growth mentioned segments . As before , in the robotics enhance and the growth and drivers within SCT where we have opportunity ahead .
Speaker #1: we are And still under-penetrated . while on the second priority of excellence , we operational believe tremendous disciplined and capital allocation EPs growth management allowing us to will while business long .
Ivan Tornos: Further, given our operating rigor, we expect to continue to grow Free Cash Flow in the upper single-digit to double-digit range in 2026, marking the fourth consecutive year delivering meaningful Free Cash Flow growth. Against that backdrop, we plan to prioritize meaningful return of capital to shareholders over M&A. Lastly, on our third priority of innovation and diversification, we're making significant advancements. Over the past two years, we have closed all core portfolio gaps with the introduction of the Magnificent Seven platform, and we now have the potential to change the standard of care with solutions such as the Oxford Partial Cementless Knee, iodine-coated devices recently launched in Japan, our second-largest market globally, ROSA Shoulder, and the mBôs semi- and fully autonomous AI-driven orthopedic robotic system that we acquired via the Monogram acquisition.
Ivan Tornos: Further, given our operating rigor, we expect to continue to grow Free Cash Flow in the upper single-digit to double-digit range in 2026, marking the fourth consecutive year delivering meaningful Free Cash Flow growth. Against that backdrop, we plan to prioritize meaningful return of capital to shareholders over M&A. Lastly, on our third priority of innovation and diversification, we're making significant advancements. Over the past two years, we have closed all core portfolio gaps with the introduction of the Magnificent Seven platform, and we now have the potential to change the standard of care with solutions such as the Oxford Partial Cementless Knee, iodine-coated devices recently launched in Japan, our second-largest market globally, ROSA Shoulder, and the mBôs semi- and fully autonomous AI-driven orthopedic robotic system that we acquired via the Monogram acquisition.
Speaker #1: for the enable term given our operating rigor , we expect to invest in the cost continue to grow free cash upper to the digit , ASCs in 2026 , double range marking the fourth consecutive single year robust meaningful free .
Speaker #1: Against the backdrop , we delivering such as digit return flow over M&A growth capital to . Lastly , on innovation and prioritize meaningful significant advancements .
Speaker #1: Over the past two years , we closed all core have with the of the gaps Magnificent Seven platform , our third priority of potential to change portfolio now have the the care such as the Oxford standard of Cementless Knee , iodine devices recently introduction launched , or coated globally Shoulder .
Speaker #1: and the with semi and fully autonomous AI Rosa driven orthopedic system that we in via and we monogram robotic the acquisition second largest market we invest externally strengthen our new is today three x it was just Japan what Given the strength of our launches , which innovation once cycle , this is the right Emboss accelerate we feel the evolution of our to So we can a few continue to capitalize channel .
Ivan Tornos: In addition to this, we continue to invest internally and partner externally to strengthen our pipeline of new product launches, which is today 3x what it was just a few short years ago. Given the strength of our innovation cycle, we feel once again that this is the right time to accelerate the evolution of our US channel so we can fully capitalize on a dedicated and specialized sales force. I'll tell you, having traveled to all key sales meetings across the US in the month of January, the excitement behind our innovation story is very high, and so is the engagement. It is now up to us to execute on the plans via this transformation. In conclusion, we are very proud of the progress in our organization, but we are far from being satisfied with where we are at today.
Ivan Tornos: In addition to this, we continue to invest internally and partner externally to strengthen our pipeline of new product launches, which is today 3x what it was just a few short years ago. Given the strength of our innovation cycle, we feel once again that this is the right time to accelerate the evolution of our US channel so we can fully capitalize on a dedicated and specialized sales force. I'll tell you, having traveled to all key sales meetings across the US in the month of January, the excitement behind our innovation story is very high, and so is the engagement. It is now up to us to execute on the plans via this transformation. In conclusion, we are very proud of the progress in our organization, but we are far from being satisfied with where we are at today.
Speaker #1: and again that . sales and I'll tell product traveled key sales across the US in the pipeline of . January , the excitement behind our innovation is very to high .
Speaker #1: And so is the engagement . US story now up to to all execute plans via this on the transformation . In very proud of the progress in we are being are with where organization , but we are at conclusion , we far from 2026 .
Ivan Tornos: In 2026, to close our core turnaround efforts, we are going to be laser-focused on the US go-to-market commercial transformation while we continue to showcase the strength of our robust innovation cycle across the globe. As we then enter 2027, we'll be ready to transform the musculoskeletal space with the launch of mBôs and other disruptive technology platforms while responsibly accelerating our diversification strategy, gaining access to a higher growth market environment. With this behind, in 2028 and beyond, Zimmer Biomet will look and act like a totally different company. With that, I'll now turn the call over to Suketu. Thank you.
Ivan Tornos: In 2026, to close our core turnaround efforts, we are going to be laser-focused on the US go-to-market commercial transformation while we continue to showcase the strength of our robust innovation cycle across the globe. As we then enter 2027, we'll be ready to transform the musculoskeletal space with the launch of mBôs and other disruptive technology platforms while responsibly accelerating our diversification strategy, gaining access to a higher growth market environment. With this behind, in 2028 and beyond, Zimmer Biomet will look and act like a totally different company. With that, I'll now turn the call over to Suketu. Thank you.
Speaker #1: To close our core turnaround efforts , . are going to be laser focused US go to market transformation It is while we continue to showcase In commercial strength of robust innovation the we globe As we enter 2027 , we'll to be ready transform the .
Speaker #1: across launch of space today with the other disruptive musculoskeletal and platforms . While Emboss technology our diversification accelerating strategy , access to growth market gaining behind 2028 and beyond environment , will look Zimmer and and with this our act like Biomet a company .
Speaker #1: a higher
Suketu Upadhyay: Thanks, and good morning, everyone. In the Q4, we grew sales 5.4% on an organic constant currency basis and delivered adjusted earnings per share of $2.42, which was up 4.8% year over year, despite dilution from the Paragon 28 transaction, the impact of tariffs, and continued investments in our commercial organization. On a full-year basis, we grew organic constant currency sales 3.9% and generated $8.20 in adjusted EPS and $1.172 billion in free cash flow. As we get into the details of these results, unless otherwise noted, my statements will be about the Q4 of 2025 and how it compares to the same period in 2024, and my commentary will be on a constant currency and adjusted operating basis. 2025 organic constant currency commentary excludes the impact from Paragon 28 acquisition that closed in April of 2025.
Suketu Upadhyay: Thanks, and good morning, everyone. In the Q4, we grew sales 5.4% on an organic constant currency basis and delivered adjusted earnings per share of $2.42, which was up 4.8% year over year, despite dilution from the Paragon 28 transaction, the impact of tariffs, and continued investments in our commercial organization. On a full-year basis, we grew organic constant currency sales 3.9% and generated $8.20 in adjusted EPS and $1.172 billion in free cash flow. As we get into the details of these results, unless otherwise noted, my statements will be about the Q4 of 2025 and how it compares to the same period in 2024, and my commentary will be on a constant currency and adjusted operating basis. 2025 organic constant currency commentary excludes the impact from Paragon 28 acquisition that closed in April of 2025.
Speaker #1: With that, I'll now turn the call over to Suki. Thank you.
Speaker #2: Thanks and good morning ,
Speaker #2: grew 5.4% on an organic currency
Speaker #2: adjusted earnings per share In the fourth of $2.42 , which sales up 4.8% year over year . Despite quarter , we dilution from the was Paragon 28 transaction .
Speaker #2: The impact of totally different you basis . and investments in our commercial tariffs organization on a full year basis , we grew organic , constant currency sales 3.9% and $8.20 in continued generated adjusted and
Speaker #2: $1,000,000,172 million in free cash EPs flow . As we results these , unless the in noted , statements will about the be fourth quarter 2025 and , constant my period in get into For and commentary will be on a how it constant currency and adjusted operating basis .
Speaker #2: of constant Currency commentary otherwise 2020 . excludes the from that closed in April Paragon 28 of Net sales were 2,244,000,000 , an impact 2025 organic of increase 10.9% on a basis excluding the foreign currency impact of and acquisition the Paragon 28 acquisition .
Suketu Upadhyay: Net sales were $2,244,000,000, an increase of 10.9% on a reported basis and 5.4% excluding the impact of foreign currency and the Paragon 28 acquisition. Consolidated pricing was 50 basis points negative in the quarter. Our US business grew 5.7% on an organic constant currency basis, which, as Ivan mentioned, reflects continued momentum for our recently launched products, strong robotic sales, and end-of-year customer purchases and capital sales above historic levels. Internationally, we grew revenue by 5% on an organic constant currency basis driven by continued new product momentum and strong robotic sales. Turning to our P&L, we reported GAAP-diluted earnings per share of $0.70 compared to GAAP-diluted earnings per share of $1.20 in the prior year quarter.
Suketu Upadhyay: Net sales were $2,244,000,000, an increase of 10.9% on a reported basis and 5.4% excluding the impact of foreign currency and the Paragon 28 acquisition. Consolidated pricing was 50 basis points negative in the quarter. Our US business grew 5.7% on an organic constant currency basis, which, as Ivan mentioned, reflects continued momentum for our recently launched products, strong robotic sales, and end-of-year customer purchases and capital sales above historic levels. Internationally, we grew revenue by 5% on an organic constant currency basis driven by continued new product momentum and strong robotic sales. Turning to our P&L, we reported GAAP-diluted earnings per share of $0.70 compared to GAAP-diluted earnings per share of $1.20 in the prior year quarter.
Speaker #2: Consolidated pricing was 50 basis points 2025 . negative reported quarter and . Our business grew organic , constant currency basis , which , as Yvonne , reflects , in the momentum for our mentioned recently launched robotics sales and end of year customer purchases and capital sales above historic levels US .
Speaker #2: Internationally , we grew 5% on an organic , constant currency driven basis , by continued new product 5.7% on an strong robotic sales .
Speaker #2: Internationally , we grew 5% on an organic , constant currency driven basis , by continued new product 5.7% on an strong robotic sales revenue by our , we reported PNL GAAP diluted earnings per Turning to $0.70 compared to GAAP diluted earnings per continued share $1.20 in the prior year quarter of momentum and Strong .
Suketu Upadhyay: Higher revenue and a lower share count were more than offset by a one-time charge related to a brand rationalization initiative and restructuring charges related to a reduction in workforce, as well as higher interest expense associated with the Paragon 28 transaction. On an adjusted basis, we delivered diluted earnings per share of $2.42 compared to $2.31 in the prior year quarter. This increase was driven by higher revenue, higher adjusted gross margin, and a lower share count, partially offset by an increase in SG&A and a step-up in interest expense tied to Paragon 28. Adjusted gross margin was 72.4% higher than the Q4 of 2024 due to lower manufacturing costs and favorable mix. Adjusted operating margin was 29.1% lower than the prior year quarter as a result of increased commercial investments and the addition of Paragon 28.
Suketu Upadhyay: Higher revenue and a lower share count were more than offset by a one-time charge related to a brand rationalization initiative and restructuring charges related to a reduction in workforce, as well as higher interest expense associated with the Paragon 28 transaction. On an adjusted basis, we delivered diluted earnings per share of $2.42 compared to $2.31 in the prior year quarter. This increase was driven by higher revenue, higher adjusted gross margin, and a lower share count, partially offset by an increase in SG&A and a step-up in interest expense tied to Paragon 28. Adjusted gross margin was 72.4% higher than the Q4 of 2024 due to lower manufacturing costs and favorable mix. Adjusted operating margin was 29.1% lower than the prior year quarter as a result of increased commercial investments and the addition of Paragon 28.
Speaker #2: Higher products . revenue count were more than one time charge share rationalization initiative , brand restructuring charges related to a reduction in workforce , as well as higher interest related expense associated with Paragon 28 transaction .
Speaker #2: On an adjusted basis, we delivered diluted EPS of $2.42, compared to a lower $2.31 in the prior year quarter. This was driven by higher adjusted gross revenue and higher margins. The increase was offset by a lower share count, an increase in interest expense tied to a step-up, and partially by CA. Paragon 28 adjusted margin was 72.4%, higher than that of 2020.
Speaker #2: fourth quarter and due to lower costs Four , favorable manufacturing mix adjusted operating margin lower than the prior gross quarter . As of increased commercial investments and the a result addition of Paragon 28 .
Suketu Upadhyay: Adjusted net interest and non-operating expenses were $71 million, above the prior year driven by higher debt related to Paragon 28 and higher interest rates on refinanced debt that matured in 2024. Our adjusted effective tax rate was 17.9%, and fully diluted shares outstanding were 198.1 million, down year-over-year due to share repurchases in 2025, including $250 million during the Q4. Now turning to cash and liquidity, we had another strong quarter of cash generation with operating cash flows of $517 million and free cash flow of $368 million. We ended the year generating $1,172 million of free cash flow, growing over 11% year-over-year, marking the third consecutive year of at least high single-digit free cash flow growth. We ended with approximately $592 million in cash and cash equivalents.
Suketu Upadhyay: Adjusted net interest and non-operating expenses were $71 million, above the prior year driven by higher debt related to Paragon 28 and higher interest rates on refinanced debt that matured in 2024. Our adjusted effective tax rate was 17.9%, and fully diluted shares outstanding were 198.1 million, down year-over-year due to share repurchases in 2025, including $250 million during the Q4. Now turning to cash and liquidity, we had another strong quarter of cash generation with operating cash flows of $517 million and free cash flow of $368 million. We ended the year generating $1,172 million of free cash flow, growing over 11% year-over-year, marking the third consecutive year of at least high single-digit free cash flow growth. We ended with approximately $592 million in cash and cash equivalents.
Speaker #2: year interest and Adjusted net non-operating expenses were prior driven by related to debt Paragon interest rates on that year , in 71 million above the Our adjusted 2024 .
Speaker #2: effective tax rate 17.9% in fully shares was outstanding diluted was 29.1% , down year year due refinanced debt to share repurchases 28 and higher including during the in 2025 , 250 million were fourth quarter .
Speaker #2: Now , liquidity . another quarter of generation with operating cash flows We had $517 million and free cash flow 368 million . We ended the cash strong , growing higher over cash flow over 11% year over year , marking the third consecutive cash and year high single digit free flow We growth .
Suketu Upadhyay: Now regarding our outlook for full year 2026, unless otherwise noted, my commentary will be on a constant currency and adjusted operating basis and will include the contribution from Paragon 28 in organic growth beginning in April 2026, marking the one-year anniversary of the deal closing. We expect Organic Constant Currency revenue growth of 1% to 3%, with growth roughly consistent throughout the year. In addition, we expect adjusted EPS of $8.30 to $8.45, with Free Cash Flow growth of 8% to 10%, which would mark the fourth consecutive year of high single-digit or greater Free Cash Flow growth, quickly approaching 80% Free Cash Flow conversion. This guidance contemplates end-market growth in line with 2025, the risk of disruption from the US sales force transition, continued evolution of our international go-to-market models, up to 100 basis points of pricing erosion, and a stable tariff and policy environment.
Suketu Upadhyay: Now regarding our outlook for full year 2026, unless otherwise noted, my commentary will be on a constant currency and adjusted operating basis and will include the contribution from Paragon 28 in organic growth beginning in April 2026, marking the one-year anniversary of the deal closing. We expect Organic Constant Currency revenue growth of 1% to 3%, with growth roughly consistent throughout the year. In addition, we expect adjusted EPS of $8.30 to $8.45, with Free Cash Flow growth of 8% to 10%, which would mark the fourth consecutive year of high single-digit or greater Free Cash Flow growth, quickly approaching 80% Free Cash Flow conversion. This guidance contemplates end-market growth in line with 2025, the risk of disruption from the US sales force transition, continued evolution of our international go-to-market models, up to 100 basis points of pricing erosion, and a stable tariff and policy environment.
Speaker #2: $592 million in cash and cash equivalents approximately of at least . Now , outlook of for generating regarding our 2026 , unless cash noted , my commentary constant currency and adjusted operating year a contribution from otherwise 28 inorganic growth .
Speaker #2: Beginning in April 2026 , the one year anniversary of the deal marking closing will be on . We expect basis organic , constant revenue growth of full 1 to 3% , with growth roughly include consistent year throughout the currency .
Speaker #2: addition , we expect adjusted EPs of $8.30 to $8.45 with cash flow free Paragon growth of 8 to 10% , which the year of fourth consecutive would mark digit or flow growth quickly greater free approaching 80% free cash flow conversion cash .
Speaker #2: This guidance contemplates end market growth in line with 2025 . The risk of the disruption from US sales force transition . Continued evolution of our international go to market models Up 100 basis .
Suketu Upadhyay: Now let's walk through the moving parts that impact our reported revenue guidance. At current rates, we expect FX to be approximately a 50 basis point tailwind to full-year revenue growth, which includes approximately 250 basis points of tailwind in the first quarter. We expect Paragon 28 to contribute around 100 basis points to reported sales growth in 2026 before being reflected in organic growth in April. As we have discussed previously, we expect our operating margins to be down about 50 basis points from 2025, which contemplates lower gross margins, dilutions from the Paragon 28 acquisition, and increased investments in our US commercial channel. Operating margins in the first quarter are expected to be down about 100 basis points from the first quarter of 2025 before increasing sequentially by about 100 basis points into the second quarter.
Suketu Upadhyay: Now let's walk through the moving parts that impact our reported revenue guidance. At current rates, we expect FX to be approximately a 50 basis point tailwind to full-year revenue growth, which includes approximately 250 basis points of tailwind in the first quarter. We expect Paragon 28 to contribute around 100 basis points to reported sales growth in 2026 before being reflected in organic growth in April. As we have discussed previously, we expect our operating margins to be down about 50 basis points from 2025, which contemplates lower gross margins, dilutions from the Paragon 28 acquisition, and increased investments in our US commercial channel. Operating margins in the first quarter are expected to be down about 100 basis points from the first quarter of 2025 before increasing sequentially by about 100 basis points into the second quarter.
Speaker #2: points of , erosion to and a and tariff . Now stable let's walk through the parts that our revenue guidance at reported current impact to be expect a 50 basis rates , tailwind we growth , which to full point includes 250 basis points revenue first quarter .
Speaker #2: the We expect 28 to year 100 basis points to reported sales Paragon growth before in organic around growth in being April policy discussed expect previously , we our margins to operating 50 basis from 2025 , reflected points .
Speaker #2: margins . Dilutions Paragon 28 acquisition increased and investments in our US from the channel As we have expected to be down 100 basis points from quarter 2025 , before the first first quarter are about increasing points margins in the into the second quarter .
Suketu Upadhyay: For the full year, we expect adjusted net interest and other non-operating expenses to be approximately $295 million, our adjusted effective tax rate to be about 18%, and to end of the year with about 194 to 195 million shares outstanding. This share count reflects a share buyback program in 2026 of up to $750 million. I'd like to close by thanking the entire ZB team for their hard work and dedication. We continue to make meaningful positive changes across the business while investing to accelerate long-term growth. And with that, I'll turn the call back over to David.
Suketu Upadhyay: For the full year, we expect adjusted net interest and other non-operating expenses to be approximately $295 million, our adjusted effective tax rate to be about 18%, and to end of the year with about 194 to 195 million shares outstanding. This share count reflects a share buyback program in 2026 of up to $750 million. I'd like to close by thanking the entire ZB team for their hard work and dedication. We continue to make meaningful positive changes across the business while investing to accelerate long-term growth. And with that, I'll turn the call back over to David.
Speaker #2: the full we For year , interest and non-operating of adjusted net expenses to be Our 295 million . effective tax other be about 18% and to end expect 194 to 195 million shares share reflects a count share buyback approximately adjusted about 2026 of up to the program $750 million .
Speaker #2: year with across the business investing to while accelerate long term growth outstanding . And with that , I'll call back by over to .
Speaker #2: in close I'd like to thanking the entire team for their hard rate to work and dedication . We continue to make meaningful , positive .
David DeMartino: Thank you, Suketu. 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.
David DeMartino: Thank you, Suketu. 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.
Speaker #3: Thank you . Suki
Speaker #3: questions . for many Let's open up In order for us to limit
Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question and one follow-up. Again, please press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll go first to Matthew Blackman with TD Cowen.
Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question and one follow-up. Again, please press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll go first to Matthew Blackman with TD Cowen.
Speaker #3: take as questions as
Speaker #3: Please go Operator . ahead yourself
Speaker #4: to ask Thank you . If you would like
Speaker #4: a question , please signal David pressing using a speakerphone , please make Star your mute is turned This off to allow signal to reach keypad .
Speaker #4: A question, please signal David by pressing on your speakerphone. Please make sure your mute is turned off to allow the signal to reach the keypad. Thank you for your equipment.
Speaker #4: function . Please limit sure yourself to question and one follow up turn the please your press one on your star one to ask question .
Speaker #4: We'll pause for just telephone everyone an a opportunity to signal for questions If you're Again , . to allow first to Blackman We'll go with Matthew Cowan .
Ivan Tornos: Hello?
Matthew Blackman: Hello?
Operator: Mr. Blackman, you may go first.
Operator: Mr. Blackman, you may go first.
Ivan Tornos: Hey, Matt. Good morning.
Ivan Tornos: Hey, Matt. Good morning.
Suketu Upadhyay: Yes, you can okay, good. You can hear me okay. I appreciate you taking my question. Ivan, we're obviously all focused on the near-term impact of the sales force optimization initiatives, but maybe take a step back. And you did touch on this a bit in the script, but tell us why now, how heavy the lift ahead is, and perhaps most important, what could the business look like if this is executed well, and where and when across the franchises could we see visible returns? Is it exiting this year? Is it 2027? Just any color would be helpful. Appreciate it.
Matthew Blackman: Yes, you can okay, good. You can hear me okay. I appreciate you taking my question. Ivan, we're obviously all focused on the near-term impact of the sales force optimization initiatives, but maybe take a step back. And you did touch on this a bit in the script, but tell us why now, how heavy the lift ahead is, and perhaps most important, what could the business look like if this is executed well, and where and when across the franchises could we see visible returns? Is it exiting this year? Is it 2027? Just any color would be helpful. Appreciate it.
Speaker #5: Hello .
Speaker #4: Mr. Blackman , you're .
Speaker #6: morning .
Speaker #5: Yes ,
Speaker #5: can . Okay ,
Speaker #5: good . You can
Speaker #5: . Appreciate you taking Okay question Good
Speaker #5: Yvonne . obviously all We're focused on the near impact of the Salesforce optimization initiatives , but step back . did touch one maybe And you a bit script , but in the tell TD take a now us why heavy the lift ahead is .
Speaker #5: And perhaps most important , what could look like if this business and when we see franchises , could visible across the it this year ?
Ivan Tornos: Absolutely, Matt. So what I'll do here, maybe I'll provide a longer answer than usual, and then maybe this says sometime in future questions this morning. But maybe start with what it is that we're doing because I'm seeing some people are confusing the what. And then we'll talk about the why we're doing it. I'll directly answer your question of why we're doing it right now. I'll talk about how we're doing it to reassure everyone that we're taking a very prudent approach that is very state-centric. And then when do we see the benefits? So I'll break mine into those four or five key areas. So what it is that we're doing? We're moving from being a company, or rather a channel here in the US, that has a lot of non-dedicated employees. By non-dedicated, this is not a legal 1099, W-2, committed, not committed.
Ivan Tornos: Absolutely, Matt. So what I'll do here, maybe I'll provide a longer answer than usual, and then maybe this says sometime in future questions this morning. But maybe start with what it is that we're doing because I'm seeing some people are confusing the what. And then we'll talk about the why we're doing it. I'll directly answer your question of why we're doing it right now. I'll talk about how we're doing it to reassure everyone that we're taking a very prudent approach that is very state-centric. And then when do we see the benefits? So I'll break mine into those four or five key areas. So what it is that we're doing? We're moving from being a company, or rather a channel here in the US, that has a lot of non-dedicated employees. By non-dedicated, this is not a legal 1099, W-2, committed, not committed.
Speaker #5: Is it 2027? Just any updates on returns? Helpful. Appreciate it.
Speaker #6: So
Speaker #6: maybe I'll provide a longer
Speaker #6: .
Speaker #1: And maybe this says
Speaker #1: morning . Is it But maybe start
Speaker #1: what it is that we're Because I doing . some people are confusing Matt . the . we'll talk what about the it . I'll
Speaker #1: We’re doing it right now. I'll talk, and then about how we're doing questions—this reassures it to that here. We're very much taking a prudent approach.
Speaker #1: very That is . And then when state do we see Absolutely , question of why are think benefits ? I'll break my answer in the 4 or 5 key areas .
Speaker #1: So that we're moving what it is company or channel that has a lot here in the of US those dedicated , we're employees , but from non dedicated .
Ivan Tornos: We got people that have 2, 3 jobs while working at Zimmer Biomet. It's part of the nature of the 1099 model here in the US. That's not something that we want to keep. We want to have 100% of our US sales force being dedicated. Again, not to be confused, W-2, 1099, fully dedicated. So that's number one. We believe in specialization, just like best-in-class companies believe in specialization. You can have self-reps selling hips, knees, components of technology, shoulders, etc., etc. Today, our current specialization rate is around 25%. I won't quote what is the end number, but we're going to make sure that we specialize the sales force so that we can compete at the level that we can compete in the higher growth segments. To that end, we are in something like 200+ self-reps in robotics, countless reps in SET, ASC, etc., etc.
Ivan Tornos: We got people that have 2, 3 jobs while working at Zimmer Biomet. It's part of the nature of the 1099 model here in the US. That's not something that we want to keep. We want to have 100% of our US sales force being dedicated. Again, not to be confused, W-2, 1099, fully dedicated. So that's number one. We believe in specialization, just like best-in-class companies believe in specialization. You can have self-reps selling hips, knees, components of technology, shoulders, etc., etc. Today, our current specialization rate is around 25%. I won't quote what is the end number, but we're going to make sure that we specialize the sales force so that we can compete at the level that we can compete in the higher growth segments. To that end, we are in something like 200+ self-reps in robotics, countless reps in SET, ASC, etc., etc.
Speaker #1: This is And that's not something that Biomet . we want want to keep . We It's want to working at have 100% of our us being Salesforce dedicated .
Speaker #1: not legal rather a committed or committed have people that have . doing non while Zimmer part of 2 or 3 jobs nature of the the US .
Speaker #1: Again , not a . confused W-2 dedicated . So that's We 1099 fully We believe in specialization . like best in class companies believe in specialization .
Speaker #1: You can have sales selling knees . Components of technology , shoulders , etc. , etc. the today our current specialization rate is A one quote .
Speaker #1: What is , Just end But make sure we're going to specialize the Salesforce so that we compete can at higher we can the level that segments we are in the adding that we 200 plus around 25% .
Ivan Tornos: So that is the what, moving from non-dedicated to dedicated. Why are we doing this now? Well, look, we got no gaps in the portfolio. We've done significant work when it comes to technology in data, robotics, and whatnot. We've added a ton of new products when it comes to SET. We just got to have dedicated people to leverage that great new product cycle. We couldn't do this 3, 5, 10 years ago because candidly, we didn't have the products, not to mention we're dealing with other challenges. So now that we have the products, we have to leverage the channel to sell those products at a higher rate. Our productivity rates in the US, we do a lot of third-party benchmarking, are roughly half of what some of our direct competitors have. So in plain English, we're doing half as many cases as some of our direct competitors.
Ivan Tornos: So that is the what, moving from non-dedicated to dedicated. Why are we doing this now? Well, look, we got no gaps in the portfolio. We've done significant work when it comes to technology in data, robotics, and whatnot. We've added a ton of new products when it comes to SET. We just got to have dedicated people to leverage that great new product cycle. We couldn't do this 3, 5, 10 years ago because candidly, we didn't have the products, not to mention we're dealing with other challenges. So now that we have the products, we have to leverage the channel to sell those products at a higher rate. Our productivity rates in the US, we do a lot of third-party benchmarking, are roughly half of what some of our direct competitors have. So in plain English, we're doing half as many cases as some of our direct competitors.
Speaker #1: robotics , countless reps in CT , ASC , et growth cetera . ET what moving from to in dedicated . Why are we doing . now .
Speaker #1: robotics , countless reps in CT , ASC , et growth cetera . ET what moving from to in dedicated . Why are we doing .
Speaker #1: we So now that have to the So that we leverage the channel sell those to products we have at a , or rates in the US , lot of we do a third party benchmarking .
Speaker #1: got gaps in dedicated the portfolio . We've is the done Significant work when it comes this technology in data to whatnot . robotics and We've to be ton of new products CT comes to a dedicated to have people To cetera .
Speaker #1: new product great couldn't no We five , because , candidly , we didn't do this three , not to added have the with dealing with other mention we're challenges .
Speaker #1: what of some of rate our direct competitors . So in plain have we're doing as many half productivity cases of our And that's the why we're doing it .
Ivan Tornos: And that's something we're going to be addressing. So that's the why. We're doing it because of new products. We're doing it because of timing. We're doing it because we got a pretty significant productivity gap here in the US, not to mention our penetration in ASC and SET still is very high, so low penetration. How we're going to do it? We got third-party resources. We got a dedicated team. We have hard people that have done this in the previous life. I'm personally involved in the project. I'm going to continue to remain involved. So we're going to take a staged approach to getting it done. We've done 1/3 of this transformation already. We have locked in a significant percentage of the organization. So I feel that we've been very prudent when it comes to how we're doing it. We learn a lot from the 1/3 we've done.
Ivan Tornos: And that's something we're going to be addressing. So that's the why. We're doing it because of new products. We're doing it because of timing. We're doing it because we got a pretty significant productivity gap here in the US, not to mention our penetration in ASC and SET still is very high, so low penetration. How we're going to do it? We got third-party resources. We got a dedicated team. We have hard people that have done this in the previous life. I'm personally involved in the project. I'm going to continue to remain involved. So we're going to take a staged approach to getting it done. We've done 1/3 of this transformation already. We have locked in a significant percentage of the organization. So I feel that we've been very prudent when it comes to how we're doing it. We learn a lot from the 1/3 we've done.
Speaker #1: to be cycle . products . We're doing it competitors . addressing . of So because We're doing significant pretty productivity here in US , not to it because and SCT And that's still is , still is mention So we got a low . penetration .
Speaker #1: to be cycle . products . We're doing it competitors . addressing . of So because We're doing significant pretty productivity here in US , not to it because and SCT And that's still is , still is mention So we got a low .
Speaker #1: going to do as some We have the our resources . We dedicated How we're people that very high . have done the this in previous life ASC .
Speaker #1: going to do as some We have the our resources . We dedicated How we're people that very high . have done the this in previous life ASC third party I'm personally in involved in the I'm going to continue to remain It involved timing .
Speaker #1: . So we're going to take a penetration in team . approach to getting it done . We don't one third of transformation We have locked project .
Speaker #1: We entire expect the transformation to be as done . we exit 2027 . So the that is what the expected , if why , the how and the when .
Ivan Tornos: It's actually gone better than expected. We did 5 conversions already, late 2025, early 2026. Those are going as expected, if not better. And then just to close this summary, Matt, when are we going to get this done by? We expect the entire transformation to be done as we exit 2027. So that is the what, the why, the how, and the when. And it is the final step in the transformation of Zimmer Biomet. We addressed the operational challenges in the past. We have addressed the leadership gaps that we had. We have built a best-in-class portfolio, remediated all the gaps, and now with significant product launches to change the standard of care. If we don't modify or use US go-to-market structure, we're never going to have the durability and sustainable growth that are referenced in my prepared remarks. Thank you for your question, Matt.
Ivan Tornos: It's actually gone better than expected. We did 5 conversions already, late 2025, early 2026. Those are going as expected, if not better. And then just to close this summary, Matt, when are we going to get this done by? We expect the entire transformation to be done as we exit 2027. So that is the what, the why, the how, and the when. And it is the final step in the transformation of Zimmer Biomet. We addressed the operational challenges in the past. We have addressed the leadership gaps that we had. We have built a best-in-class portfolio, remediated all the gaps, and now with significant product launches to change the standard of care. If we don't modify or use US go-to-market structure, we're never going to have the durability and sustainable growth that are referenced in my prepared remarks. Thank you for your question, Matt.
Speaker #1: organization I feel have hired that this been we've comes when it very prudent we're doing it . to how We learn a lot from the ones that we've actually gone . better than done .
Speaker #1: organization I feel have hired that this been we've comes when it very prudent we're doing it . to how We learn a lot from the ones that we've actually gone .
Speaker #1: We did . So five conversions already already late 2025 , early going 2026 . Those are better . And then just to a this close It's not Matt , get this are we going to by ?
Speaker #1: it is the And final in Zimmer of Biomet . in the transformation operational We in the we have addressed the We leadership gaps that we address the had .
Speaker #1: We have built a past , portfolio best in , remediating gaps . And now with significant product launches to change the standard of all the care .
Speaker #1: don't We modify or us go We're never have that structure . and to market durability use growth that referenced in my are remarks .
Suketu Upadhyay: Appreciate it. Thank you.
Matthew Blackman: Appreciate it. Thank you.
Operator: We'll go next to Rick Weiss with Stifel.
Operator: We'll go next to Rick Weiss with Stifel.
Speaker #1: prepared
Speaker #1: Thank you for your question, Matt.
[Analyst]: Good morning, Ivan. Thank you for all the comments. You highlighted in your comments, Ivan, that obviously the reality that Zimmer has grown mid-single digits for four consecutive years. Now you're offering tempered guidance and guiding to low single-digit growth. Help us better understand what's embedded at a high level in that thinking. I mean, clearly, you're trying to be respectful of the uncertainties about the sales transition process, but that seems to be going well. So what have you baked in and maybe help us think about the year ahead in terms of is the disruption greater in the first half and therefore the second half could be better? Just maybe help us think through those factors. Thank you.
Rick Wise: Good morning, Ivan. Thank you for all the comments. You highlighted in your comments, Ivan, that obviously the reality that Zimmer has grown mid-single digits for four consecutive years. Now you're offering tempered guidance and guiding to low single-digit growth. Help us better understand what's embedded at a high level in that thinking. I mean, clearly, you're trying to be respectful of the uncertainties about the sales transition process, but that seems to be going well. So what have you baked in and maybe help us think about the year ahead in terms of is the disruption greater in the first half and therefore the second half could be better? Just maybe help us think through those factors. Thank you.
Speaker #5: Thank you
Speaker #5: .
Speaker #7: Yvonne morning , the . the Thank you for all comments you highlighted in your comments . Yvonne , that the reality obviously that Zimmer has grown the up mid-single digits for four consecutive years now you're offering tempered guidance and guiding to low single digit growth .
Speaker #7: Understand what’s—help us embed that at a high level in that thinking. I mean, clearly you’re trying to be respectful of the uncertainties about the sales transition process, a transition that seems to be going well.
Speaker #7: So, what have you baked in, and maybe help us think about the year ahead in terms of, is the disruption greater going into the first half, and therefore the second half could be just better? Maybe think about those factors.
Ivan Tornos: Thank you, Rick. Actually, it is 5 years of mid-single-digit revenue growth, not 4. And we are very excited with how we exited 2025 growing in the second half, 5+. But we got to keep it or we got to make it durable. So to your question on what's embedded in the guidance, really, we're looking at 3 things. Number 1, obviously, is the US sales force transition. That is the priority in 2026. If it goes better than expected, obviously, our number exiting 2026 will be higher. If we don't do the job that I expect we're going to do, then we may move towards the lower range of that guidance. So that's item number 1. Number 2, we're paying close attention to the new product cycle and the adoption of these new products, namely the Magnificent Seven.
Ivan Tornos: Thank you, Rick. Actually, it is 5 years of mid-single-digit revenue growth, not 4. And we are very excited with how we exited 2025 growing in the second half, 5+. But we got to keep it or we got to make it durable. So to your question on what's embedded in the guidance, really, we're looking at 3 things. Number 1, obviously, is the US sales force transition. That is the priority in 2026. If it goes better than expected, obviously, our number exiting 2026 will be higher. If we don't do the job that I expect we're going to do, then we may move towards the lower range of that guidance. So that's item number 1. Number 2, we're paying close attention to the new product cycle and the adoption of these new products, namely the Magnificent Seven.
Speaker #7: .
Speaker #1: Thank you Rick . Actually , it years mid-single of digit revenue is five growth , not for and we are very excited with how we exited 2025 .
Speaker #1: Growing in the second half , five plus . But we got to keep it . We got to make it durable . So to your question on what's embedded in the guidance , really we're looking at three things .
Speaker #1: Number one , obviously is the US
Speaker #1: Number one , obviously is the US sales . That is the priority in 2026 . If it goes better than expected . or number Obviously exiting 2026 will be higher .
Speaker #1: If we don't do the job that I expect we going to do , then we towards the lower range of may move that guidance .
Speaker #1: So that's item number one . And paying close number two we're attention to the through product cycle and the adoption of these new products , namely the Magnificent Seven .
Ivan Tornos: If you look at the performance in Q4, very solid across hips and knees, similar performance in the US in Q3. So now we need to make sure that we're going to be able to do the same or better as we enter 2026. So that's the second item we pay attention to. And then number three, international. As we've been discussing, it has been a fragile business now for a couple of quarters. Since one quarter, we do really well. The next quarter, something happens. So again, we got to pay attention in making sure that we do have the right go-to-market models. We are focusing the right growth areas in the right country. So those are the three things we pay attention to: the US sales force transition, the new product adoption cycle, and the international performance in key geographies. Thank you, Rick.
Ivan Tornos: If you look at the performance in Q4, very solid across hips and knees, similar performance in the US in Q3. So now we need to make sure that we're going to be able to do the same or better as we enter 2026. So that's the second item we pay attention to. And then number three, international. As we've been discussing, it has been a fragile business now for a couple of quarters. Since one quarter, we do really well. The next quarter, something happens. So again, we got to pay attention in making sure that we do have the right go-to-market models. We are focusing the right growth areas in the right country. So those are the three things we pay attention to: the US sales force transition, the new product adoption cycle, and the international performance in key geographies. Thank you, Rick.
Speaker #1: If you look at the performance in Q4 , very solid across hips and knees , similar performance in the US Q3 . in So now we sure that we're going to do the same be able to better or as we enter 2026 .
Speaker #1: item we need to make paying attention to . And then number three , international , you know , as we've been discussing , it has been a fragile business now for a couple of quarters .
Speaker #1: You know , since like one quarter . We do really well . The next quarter something happens . So again , we got to pay attention making sure that we do have to market models .
Speaker #1: We the right go in focusing the right growth right countries . areas in the So those are the three things we're paying The US Salesforce attention to .
Speaker #1: transition , the new product adoption cycle , and the international international performance in key geographies . Thank you .
[Analyst]: Thank you. Thank you.
Rick Wise: Thank you. Thank you.
Operator: We'll go next to Patrick Wood with Morgan Stanley.
Operator: We'll go next to Patrick Wood with Morgan Stanley.
[Analyst]: Beautiful. Thank you so much for taking the question. I'd love to just ask a slightly boring one, but on pricing, moving to a negative 100 basis points of erosion in the 2026 guide. Inflation is kind of at the same spot that it was before, and I'm guessing your customers are in a pretty healthy spot from procedure volumes. Just curious why you're thinking pricing stays in the negative territory. I know that's where it was historically, but any outlook on how you think about pricing makes it be super helpful. Thanks.
Patrick Wood: Beautiful. Thank you so much for taking the question. I'd love to just ask a slightly boring one, but on pricing, moving to a negative 100 basis points of erosion in the 2026 guide. Inflation is kind of at the same spot that it was before, and I'm guessing your customers are in a pretty healthy spot from procedure volumes. Just curious why you're thinking pricing stays in the negative territory. I know that's where it was historically, but any outlook on how you think about pricing makes it be super helpful. Thanks.
Speaker #7: you , Thank thank you .
Speaker #4: Next, we'll go to Patrick Wood with Morgan Stanley.
Speaker #8: Thank you so much for question . I'd like to just taking the a slightly boring one . But on pricing , moving to a -100 basis points of erosion in the 26 guide , you know , inflation is kind of that it was at the same spot before .
Speaker #8: And I'm customers healthy are in a guessing your from procedure volumes . Just curious why you're thinking pricing stays in the negative territory .
Suketu Upadhyay: Yeah, Patrick, this is Suketu. Thanks for the question. So overall, for the year 2025, we ended on flat pricing at a consolidated level, so taking all the regions into account. The fourth quarter, as I said in my prepared remarks, was down about 50 basis points. For 2026, you're right. We're saying up to 100 basis points of erosion, which is consistent with our analyst-led commentary almost two years ago. And as you noted, it is a significant improvement to sort of pre-pandemic price profile. The reason we expect to see some level of step-down between 2025 and 2026, and we've talked about this a bit over the last few quarters, is we expect to see a moderation in some of the price increases we've been able to take across EMEA.
Suketu Upadhyay: Yeah, Patrick, this is Suketu. Thanks for the question. So overall, for the year 2025, we ended on flat pricing at a consolidated level, so taking all the regions into account. The fourth quarter, as I said in my prepared remarks, was down about 50 basis points. For 2026, you're right. We're saying up to 100 basis points of erosion, which is consistent with our analyst-led commentary almost two years ago. And as you noted, it is a significant improvement to sort of pre-pandemic price profile. The reason we expect to see some level of step-down between 2025 and 2026, and we've talked about this a bit over the last few quarters, is we expect to see a moderation in some of the price increases we've been able to take across EMEA.
Speaker #8: I know that's where it was historically , but any outlook and how you think about price mix would be super helpful . Thanks .
Speaker #9: Yeah , Patrick , this
Speaker #9: Suki . Thanks for the question . So overall for the year 2025 , we ended . Up we ended on flat pricing at a pretty consolidated level .
Speaker #9: So taking all the regions into account , the fourth quarter , as I said in my prepared was remarks , 50 basis points for 2026 .
Speaker #9: You're right . We're saying up to 100 basis points of erosion , which consistent with our is Analyst Day commentary . Almost almost two years ago .
Speaker #9: And as you noted , it is it significant is a improvement to sort of pre-pandemic price price profile . The reason we expect to see some level of step down between 25 and 2026 , and we've talked about this a bit over the over the last few quarters , is we expect to see a moderation in some of the able to increases .
Speaker #9: And as you noted , it is it significant is a improvement to sort of pre-pandemic price price profile . The reason we expect to see some level of step down between 25 and 2026 , and we've talked about this a bit over the over the last few quarters , is we expect to see a moderation in some of the able to price We've been take across .
Speaker #9: And as you noted , it is it significant is a improvement to sort of pre-pandemic price price profile . The reason we expect to see some level of step down between 25 and 2026 , and we've talked about this a bit over the over the last few quarters , is we expect to see a moderation in some of the able to price We've been take across . EMEA do expect We Asia-Pacific to be down year over year , primarily because of the Japan biannual price decrease ,
Suketu Upadhyay: We do expect Asia-Pacific to be down year-over-year, primarily because of the Japan biannual price decrease, which happens. It's a normal part of our business. Also, we expect to be slightly down in China as we continue to reconfigure our go-to-market strategies. The Americas are expected to be down sort of similar profile to what we saw in 2025. So when you put all those together, we do expect to see a modest step-down into 2026, but again, well within our overall guidance that we provided at our analyst day.
Suketu Upadhyay: We do expect Asia-Pacific to be down year-over-year, primarily because of the Japan biannual price decrease, which happens. It's a normal part of our business. Also, we expect to be slightly down in China as we continue to reconfigure our go-to-market strategies. The Americas are expected to be down sort of similar profile to what we saw in 2025. So when you put all those together, we do expect to see a modest step-down into 2026, but again, well within our overall guidance that we provided at our analyst day.
Speaker #2: Which happens . It's normal . Part of our business . we expect to be slightly down in China as we continue to reconfigure our go to market strategies and the Americas are expected to be down sort of similar profile to what
Speaker #2: we saw in 2025 . So let me put all those together . We do expect to see a modest step down down about into 2026 .
[Analyst]: Appreciate the color. Thanks, guys.
Patrick Wood: Appreciate the color. Thanks, guys.
Speaker #2: But again , well within our our overall guidance that we provided at our Analyst Day .
Suketu Upadhyay: Thank you.
Suketu Upadhyay: Thank you.
[Analyst]: Thank you.
Patrick Wood: Thank you.
Operator: We'll go next to Vijay Kumar with Evercore ISI.
Operator: We'll go next to Vijay Kumar with Evercore ISI.
Speaker #8: I appreciate the color . Thanks guys .
[Analyst]: Hey, guys. Congrats on a nice execution, Q4, and free cash. And thank you for taking my question. Suketu or Ivan, can you give us a bridge from back half, right? When you did mid-singles to 2% guidance at the midpoint for fiscal 2026, how much of this is sales force reorg impact? And Ivan, you mentioned that you've already completed one-third of this transition. What's been your prior experience, right? When you look at the pacing of disruption, was it front-loaded? And when does productivity increase to offset this? Thank you.
Vijay Kumar: Hey, guys. Congrats on a nice execution, Q4, and free cash. And thank you for taking my question. Suketu or Ivan, can you give us a bridge from back half, right? When you did mid-singles to 2% guidance at the midpoint for fiscal 2026, how much of this is sales force reorg impact? And Ivan, you mentioned that you've already completed one-third of this transition. What's been your prior experience, right? When you look at the pacing of disruption, was it front-loaded? And when does productivity increase to offset this? Thank you.
Speaker #2: Thank you .
Speaker #10: Thank you .
Speaker #4: We'll go next to Vijay Kumar with Evercore ISI .
Speaker #11: Hey guys . Congrats on a on a nice execution . Q4 and free cash . And thank you for taking my question Suki .
Speaker #11: Yvonne , can you can you give us a bridge from mid back half right when you did to singles 2% 26 , midpoint for fiscal how much guidance at the is of this Salesforce reorg impact Yvonne , you mentioned that already completed one third of the transition .
Speaker #11: What's been your experience ? prior Right . look at the Like when you pacing of disruption , was it front loaded ? and when And does productivity increased you've to offset this ?
Ivan Tornos: Thank you for the question. Look, for 2026, it's all about this sales force transformation. So yes, we exited 2025 growing strong in the mid-single digit. As we provide guidance for 2026, we just want to be responsible in realizing that this is a significant transformation we're undertaking. I've made public commentary around the fact that in the US, we got roughly 2,500 reps across 34 territories. There's a lot of legacy issues in the channel that we're addressing. And we're going to be responsible. We're going to do it over two years. And we believe there'll be some disruption. So that's why we're giving the guidance that we're giving today. So that's the answer on why we're going from, call it, 5+ in the second half of 2025 to a midpoint of 2 here as we enter 2026.
Ivan Tornos: Thank you for the question. Look, for 2026, it's all about this sales force transformation. So yes, we exited 2025 growing strong in the mid-single digit. As we provide guidance for 2026, we just want to be responsible in realizing that this is a significant transformation we're undertaking. I've made public commentary around the fact that in the US, we got roughly 2,500 reps across 34 territories. There's a lot of legacy issues in the channel that we're addressing. And we're going to be responsible. We're going to do it over two years. And we believe there'll be some disruption. So that's why we're giving the guidance that we're giving today. So that's the answer on why we're going from, call it, 5+ in the second half of 2025 to a midpoint of 2 here as we enter 2026.
Speaker #11: Thank you .
Speaker #1: Thank you question . for the Look for 2026 is all about this Salesforce transformation . So we yes , exited 2025 growing strong in the mid single digit .
Speaker #1: As we provide guidance for 2026, we just want to be responsible in realizing that this is a significant transformation we've undertaken. I've made public commentary around the fact that, in the U.S., we've got roughly 2,500 reps across 34 territories.
Speaker #1: There's a lot of legacy issues in the channel that we addressing , going to be and we're responsible . We're going to do it and over two years we we believe there'll disruption .
Speaker #1: So that's why we're giving the guidance that we're be some So that's the On answer . , you know , why are we going from call it , five plus in the second half of 25 to a midpoint of two here as we enter 2026 , what we have learned as we go through this transitions is that disruption happens sometimes , you know , in the early stages , you know , you go and negotiate your contracts with your distributors and they say , no , we're not interested in in the new model and rarely happens , you know , towards the end , you know , once they sign up , they sign up and they stay .
Ivan Tornos: What we have learned as we go through these transitions is that disruption happens sometimes in the early stages. You go and negotiate your contracts with your distributors, and they say, "No, we're not interested in the new model." And rarely happens toward the end. Once they sign up, they sign up and they stay. And again, many lessons learned from the work we've done already, 1/3 behind. As I referenced in my previous answer to Matt, I believe it was, we already have done 5 additional distributor changes here in the last 4, 5 months, and they're going really, really well. And we have active negotiations going on with roughly 40% of the channel as we speak, and those are going better than expected. In terms of when will we see the outcomes? Toward the end of 2027 is when you start to see increases in productivity. Thank you.
Ivan Tornos: What we have learned as we go through these transitions is that disruption happens sometimes in the early stages. You go and negotiate your contracts with your distributors, and they say, "No, we're not interested in the new model." And rarely happens toward the end. Once they sign up, they sign up and they stay. And again, many lessons learned from the work we've done already, 1/3 behind. As I referenced in my previous answer to Matt, I believe it was, we already have done 5 additional distributor changes here in the last 4, 5 months, and they're going really, really well. And we have active negotiations going on with roughly 40% of the channel as we speak, and those are going better than expected. In terms of when will we see the outcomes? Toward the end of 2027 is when you start to see increases in productivity. Thank you.
Speaker #1: And again , many from lessons learned the work we've done already . One third behind as reference in a my previous to to Matta , I believe it was we already have done answer five additional distributor in the last 4 or 5 changes here and they're months , really going really , well .
Speaker #1: have we And active negotiations on with going roughly 40% of the channel as we speak , and those are going better than expected in the terms of when would we see the outcomes ?
Speaker #1: You know , towards the end of 27 is when you start to see increases in productivity . Thank you .
Operator: We'll go next to Robbie Marcus from JP Morgan.
Operator: We'll go next to Robbie Marcus from JP Morgan.
Suketu Upadhyay: Oh, great. Good morning, and thanks for taking the questions. I know it's one, but I have two quick clarification questions I have a lot of investors asking, so figure I get it out in the call here. First, really strong Q4 performance, particularly in the US across large joints. Just want to make sure there was no one-time items or above-normal sales there. And then, Suketu, as you think about first quarter and first half, getting the cadence right has been really important, particularly over the past few years. And I know you've mentioned it in the script even. So just how do you want people to think about first quarter and first half, top and bottom line? The guide is 1% to 3% on the top and bottom line, and you exited at 5%.
Robbie Marcus: Oh, great. Good morning, and thanks for taking the questions. I know it's one, but I have two quick clarification questions I have a lot of investors asking, so figure I get it out in the call here. First, really strong Q4 performance, particularly in the US across large joints. Just want to make sure there was no one-time items or above-normal sales there. And then, Suketu, as you think about first quarter and first half, getting the cadence right has been really important, particularly over the past few years. And I know you've mentioned it in the script even. So just how do you want people to think about first quarter and first half, top and bottom line? The guide is 1% to 3% on the top and bottom line, and you exited at 5%.
Speaker #4: Robbie, next to Marcus, JPMorgan. We'll go from there.
Speaker #12: great . Good Oh , thanks for morning and the taking . The questions know it's . I one , but I have clarification two .
Speaker #12: of questions . I have a lot So figure asking . investors Quick I get it out in the call here Really first . strong fourth quarter performance particularly in the across large US joints .
Speaker #12: I just want to make sure there was no one time items or above normal sales there . And then Tsuki , as you think first about quarter and first half , getting the cadence right has been really particularly important , over the past few I know it years .
Speaker #12: mentioned you've in the Even script . so , just And want people to how do you think about first quarter first half ? and Top and line .
Speaker #12: bottom know , the is guide You bottom 1 to 3% on the top and line . And you exit it at So five .
Suketu Upadhyay: So help us bridge expectations, how much disruption is built in, and help us get the numbers set for the beginning of the year. Thanks a lot.
Robbie Marcus: So help us bridge expectations, how much disruption is built in, and help us get the numbers set for the beginning of the year. Thanks a lot.
Speaker #12: help us bridge expectations . How much is disruption built in . know , help And , you get the beginning of the for the numbers set us year .
Ivan Tornos: Thank you, Robbie. I'll start and then I'll let Suketu comment on the phasing for the year. In terms of performance in Q4, the main driver behind the solid growth in the US, and I'm frankly very pleased with where we landed, all US, is new product acceleration. We did benefit from some additional capital sales in the quarter. We had some modest uptick when it comes to some of the sales that we do towards ASCs. But I would say the lion's share of the performance is better execution. We did, Robbie, benefit internationally in knees. If you look at the knee number, we grew 8.2%. That is some of the revenue in Q3. You may recall that Q3, we didn't end where we expected. Some Middle East revenue that got into Q4.
Ivan Tornos: Thank you, Robbie. I'll start and then I'll let Suketu comment on the phasing for the year. In terms of performance in Q4, the main driver behind the solid growth in the US, and I'm frankly very pleased with where we landed, all US, is new product acceleration. We did benefit from some additional capital sales in the quarter. We had some modest uptick when it comes to some of the sales that we do towards ASCs. But I would say the lion's share of the performance is better execution. We did, Robbie, benefit internationally in knees. If you look at the knee number, we grew 8.2%. That is some of the revenue in Q3. You may recall that Q3, we didn't end where we expected. Some Middle East revenue that got into Q4.
Speaker #12: Thanks a lot .
Speaker #1: I'll then I'll start and let Suki comment Thank you . on the phasing for for the year in terms performance in Q4 , of driver behind the main solid the growth know , very .
Speaker #1: in the US pleased And where we frankly , you landed is new product us acceleration . We did from benefit some capital additional sales in quarter the .
Speaker #1: had modest We when it uptick comes to we do cells that some of the towards Aces . But will I say the lion's the share of performance is .
Speaker #1: did . We Robbie benefit in nice ? look at If you internationally the NI we number , grew 8.2% . That is some the some of of the revenue in Q3 .
Ivan Tornos: But very, very, very pleased with the execution when it comes to new products, both in the US and international. Suketu, you want to talk about phasing?
Ivan Tornos: But very, very, very pleased with the execution when it comes to new products, both in the US and international. Suketu, you want to talk about phasing?
Speaker #1: recall that Q3 , we didn't may end expected where we You some revenue Middle that got into East Q4 , but pleased with the very very , very , execution products when it comes US and to new international .
Suketu Upadhyay: Yeah. So thanks, Robbie, for the question. So on phasing, it's very consistent with what I said in my prepared remarks, which we expect on the top line for growth to be roughly consistent, ±, from quarter to quarter throughout the year. And that takes into account what Ivan's talked about relative to the sort of US phenomenon on sales force and optimization there, as well as some of the elements that he's been teeing up for some time around international and go-to-market changes. So both of those have been reflected and sort of contribute to sort of that second half of 2025 into 2026 step-down. Relative to P&L, from an operating margin standpoint, some of the building blocks there are we do expect gross margin to be down for the full year. We've talked about that for quite some time.
Suketu Upadhyay: Yeah. So thanks, Robbie, for the question. So on phasing, it's very consistent with what I said in my prepared remarks, which we expect on the top line for growth to be roughly consistent, ±, from quarter to quarter throughout the year. And that takes into account what Ivan's talked about relative to the sort of US phenomenon on sales force and optimization there, as well as some of the elements that he's been teeing up for some time around international and go-to-market changes. So both of those have been reflected and sort of contribute to sort of that second half of 2025 into 2026 step-down. Relative to P&L, from an operating margin standpoint, some of the building blocks there are we do expect gross margin to be down for the full year. We've talked about that for quite some time.
Speaker #1: So you want to both in the facing . talk about
Speaker #2: Yeah . for the So thanks , question . So on very phasing , you know , its consistent with what my I said in , which we remarks expect on the top line growth to be for roughly consistent plus or minus from quarter to quarter throughout the year .
Speaker #2: takes into account what Yvonne's talked about relative to the the sort of us phenomena on sales and and optimization there , as well as some of the elements that he's been teeing up for some time around international and go to market changes .
Speaker #2: So both of those have been reflected and sort of contribute to sort of that first , last or sorry , second half of 2025 into 2026 .
Speaker #2: Step relative down to PNL from an operating margin know , some some of the building there are we do expect gross margin to be down for the full year .
Suketu Upadhyay: We're going to make a lot of that up through SG&A efficiency inside of operating margins, but we do expect that to be down 50 basis points, as I talked about in my prepared remarks. Overall earnings, we expect to grow in line with constant currency, organic growth. And that's going to be assisted by some of the share buyback that we plan to do this year. Now, taking those building blocks into phasing, operating margins, we do expect to be down in Q1, year-over-year, by about 100 basis points. That's largely driven by Paragon 28, which was not yet anniversaryed because we did the deal in Q2 of 2025. We're going to have higher commercial investments as part of this overall optimization in the US.
Suketu Upadhyay: We're going to make a lot of that up through SG&A efficiency inside of operating margins, but we do expect that to be down 50 basis points, as I talked about in my prepared remarks. Overall earnings, we expect to grow in line with constant currency, organic growth. And that's going to be assisted by some of the share buyback that we plan to do this year. Now, taking those building blocks into phasing, operating margins, we do expect to be down in Q1, year-over-year, by about 100 basis points. That's largely driven by Paragon 28, which was not yet anniversaryed because we did the deal in Q2 of 2025. We're going to have higher commercial investments as part of this overall optimization in the US.
Speaker #2: We've talked about quite that for some time to make . a lot We're going of that up through SG&A efficiency inside of operating do margins .
Speaker #2: But we expect that to be down 50 basis points . As I as I talked about in my prepared remarks , overall earnings , we expect to grow in line with with constant currency , organic growth .
Speaker #2: And that's going to be assisted by some of the share buyback that we plan to do this year . Now taking building those blocks into phasing operating margins , we do expect to be down in the first quarter year over year by about 100 basis points .
Speaker #2: largely driven by Paragon 28 , which was not yet anniversary because we did the deal in the second quarter of 25 . We're going to have higher commercial investments as part of this overall optimization in the US as as Yvonne talked about , specialization .
Suketu Upadhyay: As Ivan's talked about, yes, it is specialization, but it's also augmentation where we're adding reps in a couple of key areas. And then, as I said, gross margin will be down in Q1. So again, operating margin's down year-over-year in Q1, about 100 basis points. From there, we expect to see a sequential step-up in Q2 as we anniversary out of Paragon 28. That'll be an increase sequentially in Q2 of about 100 basis points. And then, as we move into the back end of the year, we expect operating margins to be roughly in line with 2025. So hopefully, that gives you a bit, again, top line, roughly consistent growth rate throughout the quarters, plus or minus, and then the operating margins, as I talked about. Very helpful. Appreciate it. Thank you. Thank you, Robbie.
Suketu Upadhyay: As Ivan's talked about, yes, it is specialization, but it's also augmentation where we're adding reps in a couple of key areas. And then, as I said, gross margin will be down in Q1. So again, operating margin's down year-over-year in Q1, about 100 basis points. From there, we expect to see a sequential step-up in Q2 as we anniversary out of Paragon 28. That'll be an increase sequentially in Q2 of about 100 basis points. And then, as we move into the back end of the year, we expect operating margins to be roughly in line with 2025. So hopefully, that gives you a bit, again, top line, roughly consistent growth rate throughout the quarters, plus or minus, and then the operating margins, as I talked about. Very helpful. Appreciate it. Thank you. Thank you, Robbie.
Speaker #2: yesterday But it's also augmentation where we're reps in a couple of key adding areas . And then as I said , gross margin will be down in first quarter .
Speaker #2: again , So operating margins down year over year . In the first quarter , about 100 basis points from their we expect to see a sequential step up in the second quarter as we anniversary out of Paragon 28 .
Speaker #2: That'll be an increase sequentially in the second quarter of about 100 basis points . And then as we move into the back end of the year , we expect operating margins to be roughly in line with 2025 .
Speaker #2: So hopefully that gives you a bit . Again , top line roughly consistent growth rate throughout the quarters plus or minus . And then the operating margins , as I talked about .
[Analyst]: Thank you.
Robbie Marcus: Thank you.
Operator: We'll go next to Travis Steed with Bank of America.
Operator: We'll go next to Travis Steed with Bank of America.
Speaker #12: Very helpful. Appreciate you for it. Thank you.
[Analyst]: Hey. Just wanted to kind of follow up on Robbie's question in terms of on the margins, how you're thinking about the cost of the sales force transition. What you've kind of baked in on the margins from that. And then a question in terms of you've already done a third of this transition already. So one question I get often is, why does it actually take two years to do all this, and when do you start to see some green shoots here?
Travis Steed: Hey. Just wanted to kind of follow up on Robbie's question in terms of on the margins, how you're thinking about the cost of the sales force transition. What you've kind of baked in on the margins from that. And then a question in terms of you've already done a third of this transition already. So one question I get often is, why does it actually take two years to do all this, and when do you start to see some green shoots here?
Speaker #2: Thank you .
Speaker #10: Rob . Thank you .
Speaker #4: We'll go next to Travis Steed with Bank of America .
Speaker #13: Hey just wanted to kind of follow up on Robbie's question in terms of on the margins , how you're thinking about the cost sales force of the transition , is the you've kind of there what on the on baked in margins from from that and then a question in terms of , you know , you've already done a third of this transition already .
Speaker #13: So one question I get often is like , why is it actually take two years to do all this ? And when do you start to see some some green shoots here .
Suketu Upadhyay: Yeah. So thanks for the call or, sorry, for the question, Travis. Overall, the impact of the sales force transition, there's a modest impact to overall operating margins inside of SG&A. I think you start to see that in Q4 or really the back half of last year. You're going to see that continue into 2026. That near-term headwind has been accounted for in our guidance for 2026. But the opportunity, I think, is more attractive as you think mid to longer term. One, it does give us the opportunity to do some restructuring and offset some of that headwind through more productivity, as Ivan talked about. We're at about half of some of our peers.
Suketu Upadhyay: Yeah. So thanks for the call or, sorry, for the question, Travis. Overall, the impact of the sales force transition, there's a modest impact to overall operating margins inside of SG&A. I think you start to see that in Q4 or really the back half of last year. You're going to see that continue into 2026. That near-term headwind has been accounted for in our guidance for 2026. But the opportunity, I think, is more attractive as you think mid to longer term. One, it does give us the opportunity to do some restructuring and offset some of that headwind through more productivity, as Ivan talked about. We're at about half of some of our peers.
Speaker #2: Yeah . So thanks for the call or sorry for the question , Travis . Overall , you know , the impact of the Salesforce transition .
Speaker #2: a There's modest impact to overall operating margins of inside I a think , start to see that in the fourth quarter or really the back half of last year .
Speaker #2: You're going to see that continue into into 2026 . That near-term headwind has been accounted for guidance in our for for 2026 . But the opportunity , I think , is more attractive , as you think longer mid to term one , it give us the does opportunity to to do some and restructuring offset some of that headwind through more productivity .
Suketu Upadhyay: And secondly, the whole idea behind this is that it generates better revenue growth, more durable sort of market, better than market growth rates, and at those levels, that provides a significant amount of leverage into our P&L. So near term, yes. Headwind, modest headwind incorporated into the guide. Mid to long term, we do see it being a benefit.
Suketu Upadhyay: And secondly, the whole idea behind this is that it generates better revenue growth, more durable sort of market, better than market growth rates, and at those levels, that provides a significant amount of leverage into our P&L. So near term, yes. Headwind, modest headwind incorporated into the guide. Mid to long term, we do see it being a benefit.
Speaker #2: As Yvonne talked about , we're about half our of some of peers . And whole idea secondly , the behind this is that it better generates revenue growth , more durable sort of market better than growth rates .
Speaker #2: market and at And those levels that that provides significant amount into our term , of PNL . So yes leverage . modest Headwind , headwind into the near incorporated guide , mid to do see long term .
Ivan Tornos: Then, Travis, relative to your question on why 2 years, no more complex. We're going to be responsible. As I mentioned, we don't want third. So 2,500 reps. Done a third. That's what, 1,600 reps that we got to get through across multiple states. So we're going to take our time in understanding what's the right sequence, locking in the contracts. We have segmented areas by contract status, by market-set status. So it's a project that we're not going to take lightly. So that's why it takes 2 years. And we're going to go slowly to then go fast later on. Thanks.
Ivan Tornos: Then, Travis, relative to your question on why 2 years, no more complex. We're going to be responsible. As I mentioned, we don't want third. So 2,500 reps. Done a third. That's what, 1,600 reps that we got to get through across multiple states. So we're going to take our time in understanding what's the right sequence, locking in the contracts. We have segmented areas by contract status, by market-set status. So it's a project that we're not going to take lightly. So that's why it takes 2 years. And we're going to go slowly to then go fast later on. Thanks.
Speaker #2: being a We .
Speaker #2: benefit Travis ,
Speaker #1: Then, relative to the question on why two years, no more complex than we're going to be responsible. Mentioned, as I don't want a third.
Speaker #1: So, 2,500 reps done. A third. That's, what, 1,600 reps that we’ve got to get through across multiple states. So, take our time and we're going to understand what's the right sequence.
Speaker #1: Looking in the contracts, we have segmented areas by contract status, by market status. So it's a project that we're not going to take lightly.
[Analyst]: Great. Thank you.
Travis Steed: Great. Thank you.
Speaker #1: So that's why it takes two years . And we're going to go slowly to then go fast later on . Thanks
Operator: We'll go next to Matt Taylor with Jefferies.
Operator: We'll go next to Matt Taylor with Jefferies.
Speaker #1: .
[Analyst]: Hi. Thanks for taking the question. I wanted to just follow up on gross margins. I know you said down for the year, and we touched on pricing, but was hoping that you could go through all the puts and takes on gross margin this year and also maybe just talk at a high level about the trajectory beyond 2026 for gross profit.
Matt Taylor: Hi. Thanks for taking the question. I wanted to just follow up on gross margins. I know you said down for the year, and we touched on pricing, but was hoping that you could go through all the puts and takes on gross margin this year and also maybe just talk at a high level about the trajectory beyond 2026 for gross profit.
Speaker #14: you Great . Thank
Speaker #4: next Matt Taylor with . We'll go Jefferies .
Speaker #4: to
Speaker #15: Thanks for Hi . taking the question . I wanted to follow up on just gross margins . I know you said down for the year and we touched on pricing , but was hoping that you could go through all the puts and on gross margin this year .
Suketu Upadhyay: Sure. Thanks for the question, Matt. Yeah. So we expect gross margins for 2026 to be in the range of 70% to 71%. It is a step-down from a pretty good year in 2025. We've been sort of telegraphing that. The key drivers are really the biggest one is around the lower growth profile, as you see in the revenue. We get a lot of leverage in our P&L when the revenue growth rate's at a higher level. And of course, the opposite works at a lower growth level. So volumes are the biggest contributor to that step-down. Secondly, we've talked a bit about the FX hedge gains that we've seen in 2025 tapering off in 2026 as we've seen a weakening of the dollar through 2025. The next big area, again, is around price and geographic mix, which we expect to be a headwind compared to 2025.
Suketu Upadhyay: Sure. Thanks for the question, Matt. Yeah. So we expect gross margins for 2026 to be in the range of 70% to 71%. It is a step-down from a pretty good year in 2025. We've been sort of telegraphing that. The key drivers are really the biggest one is around the lower growth profile, as you see in the revenue. We get a lot of leverage in our P&L when the revenue growth rate's at a higher level. And of course, the opposite works at a lower growth level. So volumes are the biggest contributor to that step-down. Secondly, we've talked a bit about the FX hedge gains that we've seen in 2025 tapering off in 2026 as we've seen a weakening of the dollar through 2025. The next big area, again, is around price and geographic mix, which we expect to be a headwind compared to 2025.
Speaker #15: And also maybe just talk at a high level about the trajectory beyond 26 for gross profit .
Speaker #10: Sure .
Speaker #2: Thanks for the question . Yeah . So we expect gross margins for 26 to be , you know , in the range 70 to 71% .
Speaker #2: It of is a step down from a pretty good year in 2025 . We've been we've been sort of telegraphing that your key drivers are really the biggest one is around the lower growth profile .
Speaker #2: As you see in the revenue . We get a lot of leverage in our PNL when , when , when the revenue growth rates are at a higher level .
Speaker #2: And of course , the opposite works at a lower growth level . So are the volumes contributor to biggest . Stepdown that secondly , a bit we've talked about the FX hedge gains that we've seen in 2025 .
Speaker #2: Tapering off in 2026 , as we've seen a weakening of the dollar through 2025 . The next big area again is around price and geographic mix , which we expect to be a headwind compared to 2025 .
Suketu Upadhyay: And then the last piece is really on tariffs, which on a net basis, year over year, is not a significant increase, but it will be choppy through the quarters, primarily because of certain credits from 2025 that we expect to realize into 2026. So those are your moving parts that really step you down from 2025 into 2026. But I would say we're making up a very large percentage of that through our SG&A restructuring that I talked about in my prepared remarks. And so while gross margins will be down 100 basis points or more, we're making more than half of that up through SG&A efficiencies, even while we're incrementally investing in some portions of our commercial business. It's too early to tell on gross margin outlook beyond 2026.
Suketu Upadhyay: And then the last piece is really on tariffs, which on a net basis, year over year, is not a significant increase, but it will be choppy through the quarters, primarily because of certain credits from 2025 that we expect to realize into 2026. So those are your moving parts that really step you down from 2025 into 2026. But I would say we're making up a very large percentage of that through our SG&A restructuring that I talked about in my prepared remarks. And so while gross margins will be down 100 basis points or more, we're making more than half of that up through SG&A efficiencies, even while we're incrementally investing in some portions of our commercial business. It's too early to tell on gross margin outlook beyond 2026.
Speaker #2: And then the last piece is really on tariffs , which on a net basis , year over year is is not a significant increase , but it will be choppy through the quarters primarily because of certain credits from 2025 that we expect to to realize into 2026 .
Speaker #2: So those are your moving parts that really step you down from 25 into 26. But I would say we're making up a very large percentage of that through SGA restructuring that I talked about in our prepared remarks.
Speaker #2: And so while while gross margins will be down 100 basis points we're we're , or more , making more than half of that up a through efficiencies even while we're incrementally investing in some portions of our commercial business , you know , it's too early to tell on gross margin outlook beyond 2026 .
Suketu Upadhyay: And I think the largest component, which is driving this year, will drive future gross margin, which is really around volumes and sales levels. But beyond that, I can tell you we continue to emphasize efficiency, continue to make great progress in the areas of sourcing improvements. We continue to build out low-cost manufacturing. I think you'll see that in a stepped-up P&E in 2025. And then lastly, I talked about a pretty large-scale portfolio rationalization charge we took in Q4. We believe that that's going to have significant, meaningful midterm and long-term results or benefits, I should say, into cost of goods. So longer term, a little bit too early to tell. Again, it will depend on revenue growth, but we continue to push very hard on a number of efficiency gains and are making good progress. Thanks for the question, Matt.
Suketu Upadhyay: And I think the largest component, which is driving this year, will drive future gross margin, which is really around volumes and sales levels. But beyond that, I can tell you we continue to emphasize efficiency, continue to make great progress in the areas of sourcing improvements. We continue to build out low-cost manufacturing. I think you'll see that in a stepped-up P&E in 2025. And then lastly, I talked about a pretty large-scale portfolio rationalization charge we took in Q4. We believe that that's going to have significant, meaningful midterm and long-term results or benefits, I should say, into cost of goods. So longer term, a little bit too early to tell. Again, it will depend on revenue growth, but we continue to push very hard on a number of efficiency gains and are making good progress. Thanks for the question, Matt.
Speaker #2: And I think the largest component , which is driving this year , will drive future gross margin , which is really around volumes and sales levels .
Speaker #2: But beyond that, I can tell you we continue to emphasize efficiency, and continue to make great progress in the areas of sourcing improvements.
Speaker #2: We we continue to build out low cost manufacturing . I think you'll see that in the stepped up PA in 2025 . And then lastly , I talked about a pretty large scale portfolio rationalization charge .
Speaker #2: We took in the fourth quarter . We believe that that's going to have a significant , mid-term meaningful and long term results or benefits .
Speaker #2: should say , I cost of into goods . So , so longer term , a little bit too early tell to . Again , it will depend on on revenue but we growth .
[Analyst]: Thank you.
Matt Taylor: Thank you.
Speaker #2: continue to But push very hard on a number of gains and efficiency are making good progress . Thanks for the question , Matt .
Operator: Our next question comes from the line of Ryan Zimmerman with BTIG.
Operator: Our next question comes from the line of Ryan Zimmerman with BTIG.
Speaker #15: Thanks .
[Analyst]: Good morning. Thanks for taking the question. I'm going to turn to Paragon 28, actually, because a lot of questions have been asked on guidance. And just ask, I mean, the contribution this quarter was lower than we expected. And if I look at the outlook for 2026, I think it's about 100 basis points, which, again, is a little lower, excuse me, than we expected. And so, Ivan, can you just talk about kind of what you're seeing there? I mean, we have heard, obviously, chatter about kind of the health of the foot and ankle market, particularly in 2025 being softer, and kind of what you expect and where you're seeing specific parts of weakness versus maybe parts that are offsetting that.
Ryan Zimmerman: Good morning. Thanks for taking the question. I'm going to turn to Paragon 28, actually, because a lot of questions have been asked on guidance. And just ask, I mean, the contribution this quarter was lower than we expected. And if I look at the outlook for 2026, I think it's about 100 basis points, which, again, is a little lower, excuse me, than we expected. And so, Ivan, can you just talk about kind of what you're seeing there? I mean, we have heard, obviously, chatter about kind of the health of the foot and ankle market, particularly in 2025 being softer, and kind of what you expect and where you're seeing specific parts of weakness versus maybe parts that are offsetting that.
Speaker #4: Our next question comes from the line of Zimmerman Ryan with BT.
Speaker #15: morning .
Speaker #16: Thanks Good for taking the question . I'm going to turn to Paragon , actually , because a lot of questions have on guidance and and just ask , I mean , the contribution this quarter was lower than we expected .
Speaker #16: I look at And if the outlook 26 , I think it's about 100 basis points , which again , is a little lower than we expected .
Speaker #16: So Yvonne , can you just talk kind of about what you're seeing there ? I mean , we have heard obviously , you know , chatter about kind of the health of the foot and ankle market , particularly in 25 being softer and and kind of what you expect and where you're seeing specific parts of weakness versus maybe parts that are offsetting that .
Ivan Tornos: Yes. Thanks for the question, Ryan. So we've been at it for two quarters, right? So we've done two quarters as a consolidated company. They both came in in the upper single-digit range. Recall that for the year 2025, we said we'll get around 270 basis points or revenue accretion thanks to or due to Paragon 28. We came in roughly 20 basis points behind that, so not a huge gap. We have made a commitment that we're going to grow this business double-digit early in 2026, but we like what we see. I would say mostly everything is going in line. Our revenue, again, is slightly behind what we anticipated, but again, only two quarters. In terms of the EPS dilution, everything is on track, if not better than expected. Committed to a 3% dilution in year one. Came in slightly better, around 1% in the second year.
Ivan Tornos: Yes. Thanks for the question, Ryan. So we've been at it for two quarters, right? So we've done two quarters as a consolidated company. They both came in in the upper single-digit range. Recall that for the year 2025, we said we'll get around 270 basis points or revenue accretion thanks to or due to Paragon 28. We came in roughly 20 basis points behind that, so not a huge gap. We have made a commitment that we're going to grow this business double-digit early in 2026, but we like what we see. I would say mostly everything is going in line. Our revenue, again, is slightly behind what we anticipated, but again, only two quarters. In terms of the EPS dilution, everything is on track, if not better than expected. Committed to a 3% dilution in year one. Came in slightly better, around 1% in the second year.
Speaker #1: Yeah . Thanks . Thanks for the question , Ryan . So we been at it we've for two quarters . Right . So we've we've done consolidated company .
Speaker #1: both two quarters as a They came in at in the upper single digit range . Recall that for the year 2025 we said we'll get around 270 basis points of revenue accretion thanks to our due to Paragon 28 , we came in roughly 20 basis points behind that .
Speaker #1: So, not a huge gap. We have made a commitment that we're going to grow this business double digit in 2026.
Speaker #1: Early in 2026 . But we like what we see . I would say mostly everything is going in line . Our revenue again is slightly behind what we anticipated .
Speaker #1: But again , only two quarters in terms of the EPs dilution . Everything is on track , if not better than expected . Committed to a 3% dilution in year one , came in slightly better , around 1% in the second year .
Ivan Tornos: We expect to deliver on that. Then the integration costs and everything associated with Paragon 28 are also better than expected. We're not seeing any dramatic changes when it comes to market growth. We continue to monitor that. If anything, we've seen that the shift to the ASC continues to move in the right direction. So we're very excited about the business. Again, 2 quarters behind. I just left the sales meeting in San Diego a couple of weeks ago. I'll tell you, Ryan, that with 8 new products being launched in 2026, with virtually the same legacy Paragon 28 employees being now with Zimmer Biomet, the excitement is high, and we expect to deliver double-digit growth in 2026. Thank you, Ryan.
Ivan Tornos: We expect to deliver on that. Then the integration costs and everything associated with Paragon 28 are also better than expected. We're not seeing any dramatic changes when it comes to market growth. We continue to monitor that. If anything, we've seen that the shift to the ASC continues to move in the right direction. So we're very excited about the business. Again, 2 quarters behind. I just left the sales meeting in San Diego a couple of weeks ago. I'll tell you, Ryan, that with 8 new products being launched in 2026, with virtually the same legacy Paragon 28 employees being now with Zimmer Biomet, the excitement is high, and we expect to deliver double-digit growth in 2026. Thank you, Ryan.
Speaker #1: We expect to deliver on that and then the integration cost and everything associated with with Paragon is also better than expected . We're not seeing any dramatic changes when it comes to market growth , and we continue to monitor that .
Speaker #1: If anything , we've seen that that the shift to the continues to move in the right , in the right direction . So we're very excited about the business again , two quarters behind just left the sales meeting in San Diego a couple of ago weeks .
Speaker #1: Tell you , Ryan , that with eight new products being launched in 2026 with virtually the same legacy , Paragon 28 employees being now with Zimmer Biomet , the examine is high and we expect to deliver double digit growth in 2026 .
[Analyst]: Thank you.
Ryan Zimmerman: Thank you.
Operator: We'll go next to Danielle Antalffy with UBS.
Operator: We'll go next to Danielle Antalffy with UBS.
Speaker #1: Thank you . Ryan .
Operator: Good morning, guys. Thanks so much for taking the question. Just on this sales force transition, I'm just curious sort of what gives you the confidence. I appreciate 1/3 has been done so far. But just coming to the decision to make this move, was it best practices at competitors, market research, and physician feedback? And then I appreciate you probably can't comment on 2027 right now, but should 2027 be conceptually a year of growth acceleration versus 2026 wherever you end up, just given you'll be further along in the sales force transition, or are there other factors we should be considering as we put a finer point on 2027 on our models today? Thanks so much.
Danielle Antalffy: Good morning, guys. Thanks so much for taking the question. Just on this sales force transition, I'm just curious sort of what gives you the confidence. I appreciate 1/3 has been done so far. But just coming to the decision to make this move, was it best practices at competitors, market research, and physician feedback? And then I appreciate you probably can't comment on 2027 right now, but should 2027 be conceptually a year of growth acceleration versus 2026 wherever you end up, just given you'll be further along in the sales force transition, or are there other factors we should be considering as we put a finer point on 2027 on our models today? Thanks so much.
Speaker #16: Thank you .
Speaker #4: We'll go next to Daniel and with UBS . Good .
Speaker #17: Good, thanks. So, morning, guys. Thanks so much for taking the question. Just on this Salesforce transition, I'm just curious—what gives you the confidence? I appreciate a third has been done so far.
Speaker #17: But just coming to the decision this to to make move , was it best practices at competitors market research , physician feedback and then appreciate you probably can't comment I on now , 2027 right but should 2027 be conceptually a year of growth acceleration versus 26 wherever you end up just given , you'll be further along in the Salesforce transition ?
Ivan Tornos: Thank you, Danielle. So let's start with the easy one. We're not going to talk about 2027. So that's something we'll do later on in the year. But right now, we're going to focus on 2026. What gives us the confidence that this is the right time and the right project is data. No more complex than that. We look at productivity rates for Zimmer Biomet versus direct competitors that are fully dedicated, fully specialized. And again, I mentioned when it comes to caseload, when it comes to overall productivity, we're behind. And given the strength of the new product portfolio, the time to do it is now. We do a lot of benchmarking in terms of those territories that are fully dedicated and specialized versus those territories that are non-dedicated and they're non-specialized. And it's literally night and day. We see a much greater productivity.
Ivan Tornos: Thank you, Danielle. So let's start with the easy one. We're not going to talk about 2027. So that's something we'll do later on in the year. But right now, we're going to focus on 2026. What gives us the confidence that this is the right time and the right project is data. No more complex than that. We look at productivity rates for Zimmer Biomet versus direct competitors that are fully dedicated, fully specialized. And again, I mentioned when it comes to caseload, when it comes to overall productivity, we're behind. And given the strength of the new product portfolio, the time to do it is now. We do a lot of benchmarking in terms of those territories that are fully dedicated and specialized versus those territories that are non-dedicated and they're non-specialized. And it's literally night and day. We see a much greater productivity.
Speaker #17: are Or there other factors we should be considering as we put a finer point on 27 on our models today ? Thanks so much .
Speaker #1: Danielle . Thank you So let's start with the easy one . We're not going to talk about 2027 . So that's something we'll do later on in the year .
Speaker #1: But right now we're going to focus on 2026 . What gives us the confidence that this is the right time and the right project is data no more complex than that ?
Speaker #1: We look at productivity rates for Biomet Zimmer versus direct competitors that are fully dedicated , fully specialized . And again , I mentioned when it comes to a case load , when it comes to overall productivity , we and behind the given product strength of new the portfolio , the now time to do it is lot of .
Speaker #1: We do a benchmarking in terms of those territories that are fully dedicated and specialized versus those territories that are non dedicated , and there not specialized , and it's literally night and day see a .
Ivan Tornos: No surprise there, Danielle, in those dedicated and specialized territories. If we don't get the US right - and by that, I mean, if we don't get the US to be consistently mid-single digit, at some point upper single digit - this company will never realize the aspirations that we have for this company. The US is 62%, 63% of the revenue. It's north of half of the profit of the company. We got to get it right. So we got the leadership in place. We made a lot of changes. We got the new product cycle in full motion. We're about to enter a new stage when it comes to innovation in 2027 with Monogram. We just have to do it. So it will create some short-term disruption, but it's going to set up the company very nicely as we enter 2027 and beyond.
Ivan Tornos: No surprise there, Danielle, in those dedicated and specialized territories. If we don't get the US right - and by that, I mean, if we don't get the US to be consistently mid-single digit, at some point upper single digit - this company will never realize the aspirations that we have for this company. The US is 62%, 63% of the revenue. It's north of half of the profit of the company. We got to get it right. So we got the leadership in place. We made a lot of changes. We got the new product cycle in full motion. We're about to enter a new stage when it comes to innovation in 2027 with Monogram. We just have to do it. So it will create some short-term disruption, but it's going to set up the company very nicely as we enter 2027 and beyond.
Speaker #1: much greater productivity . No We surprise there Daniel , in those and dedicated specialized territories . If we don't get the US right .
Speaker #1: And by that I mean if we US to be don't get the consistently mid single some point , single upper digit digit at , this company will never realize the aspirations that we have for this company .
Speaker #1: The US is 62 , 63% of the revenue . It's north of half of the profit of the company . We got to get it right .
Speaker #1: So we got the leadership in place . We made a lot of changes . We got the new product cycle in full with motion about to enter a new it comes to innovation in stage .
Speaker #1: 2027 , with monogram , we When to do it . So it some short will create disruption , but it's going to set up the company very nicely as we enter 27 and beyond .
Ivan Tornos: Thank you so much for your question, Danielle.
Ivan Tornos: Thank you so much for your question, Danielle.
Operator: Thank you. Our next question comes from the line of Larry Biegelsen with Wells Fargo.
Operator: Thank you. Our next question comes from the line of Larry Biegelsen with Wells Fargo.
Speaker #1: Thank you so much for your question , Daniel .
[Analyst]: Good morning. Thanks for taking the question. So, Ivan, I wanted to ask about capital allocation. It feels like a change in terms of prioritizing returning free cash flow to shareholders over M&A. So my question is, why the change? I think there was a time not too long ago when you talked about diversification and any color on what percent of free cash flow you'll return to shareholders through buybacks each year, and what can we expect on M&A going forward? Thank you.
Larry Biegelsen: Good morning. Thanks for taking the question. So, Ivan, I wanted to ask about capital allocation. It feels like a change in terms of prioritizing returning free cash flow to shareholders over M&A. So my question is, why the change? I think there was a time not too long ago when you talked about diversification and any color on what percent of free cash flow you'll return to shareholders through buybacks each year, and what can we expect on M&A going forward? Thank you.
Speaker #4: Our next question comes from the line of Larry Biegelsen with Wells Fargo.
Speaker #4: .
Speaker #18: Thanks for Good taking the question . So , I wanted to ask about capital allocation . feels It like a change in terms of prioritizing returning free cash flow to shareholders over M&A .
Speaker #18: So my question is, why the change? I think there was a time not too long ago when you talked about, you know, diversification, and any color on what percent of free cash flow you'll return to shareholders through buybacks each year.
Ivan Tornos: Thank you, Larry. Great to hear from you. I wouldn't say it's a change. I would say that it's a pause. Recall that we've done three acquisitions between OrthoGrid, late 2024, Paragon 28, April of 2025, and then a few months after that, Monogram. I mean, these are pretty significant projects. And then add on top of that, this transformation of the US channel, this is not the time to add more complexity. This is not the time to run more projects. This is the time to be nimble and laser-focused on getting those three integrations right and ensure minimal disruption out of this US transformation. So that is no more complex than that. At the right time, we'll continue to diversify responsibly. So no, we're not throwing in the white towel.
Ivan Tornos: Thank you, Larry. Great to hear from you. I wouldn't say it's a change. I would say that it's a pause. Recall that we've done three acquisitions between OrthoGrid, late 2024, Paragon 28, April of 2025, and then a few months after that, Monogram. I mean, these are pretty significant projects. And then add on top of that, this transformation of the US channel, this is not the time to add more complexity. This is not the time to run more projects. This is the time to be nimble and laser-focused on getting those three integrations right and ensure minimal disruption out of this US transformation. So that is no more complex than that. At the right time, we'll continue to diversify responsibly. So no, we're not throwing in the white towel.
Speaker #18: And what can we expect on M&A going forward ? Thank you .
Speaker #1: Thank you , Larry , and great to hear from you . I wouldn't say it's a change . I would say that it's a pause .
Speaker #1: Recall that we've done three acquisitions between orthograde late 24 Paragon , 28th April of , and then 25 a few months after that .
Speaker #1: I mean , these are a Monogram . pretty significant projects . And then add on top of that , these transformation of the US channel .
Speaker #1: This is not the time to add more complexity . This is not the time to run more projects . This is the time to be nimble and laser focus on getting those three integrations right and ensure minimal disruption out of these US transformation .
Speaker #1: So that it's no more complex than that . At the right time , we'll continue to diversify . Diversify responsibly . So no , we're not throwing in the white towel .
Ivan Tornos: We aspire to have a higher weighted average market growth rate as we continue to evolve the company. But right now, it's all about focus on these three integrations and this project. As you, Mara, read, we got approval yesterday from the board to do up to $1.5 billion in buybacks. We like where the stock of Zimmer Biomet is today. We acquired a quarter billion dollars of shares in Q4 2025. And we're going to continue to acquire shares of Zimmer Biomet given the current valuation. Love the free cash flow generation of this business. You heard Suketu prepared remarks, upper single digit to double digit in 2026. This company generates tremendous cash flow. We got very solid firepower. I like our debt profile. So at the right time, we'll get back to doing the things that we need to do.
Ivan Tornos: We aspire to have a higher weighted average market growth rate as we continue to evolve the company. But right now, it's all about focus on these three integrations and this project. As you, Mara, read, we got approval yesterday from the board to do up to $1.5 billion in buybacks. We like where the stock of Zimmer Biomet is today. We acquired a quarter billion dollars of shares in Q4 2025. And we're going to continue to acquire shares of Zimmer Biomet given the current valuation. Love the free cash flow generation of this business. You heard Suketu prepared remarks, upper single digit to double digit in 2026. This company generates tremendous cash flow. We got very solid firepower. I like our debt profile. So at the right time, we'll get back to doing the things that we need to do.
Speaker #1: We aspire to have a higher weighted average market growth rate as we continue to evolve , the company . But right now , it's all about focus on these three integrations .
Speaker #1: And this project, as you might have read, we got approval yesterday from the Board to do up to $1.5 billion in buybacks.
Speaker #1: We like where the stock of Zimmer Biomet today . is We acquired a quarter billion dollars of shares in the fourth quarter of 2025 .
Speaker #1: And we're going to continue to continue to acquire shares of Zimmer . Given the current valuation , love the free cash flow generation of this heard business .
Speaker #1: You in his prepared remarks . You know , upper single digit to double digit in 2026 is a company generates tremendous cash flow .
Ivan Tornos: But in 2026, those are the priorities. Thank you so much.
Ivan Tornos: But in 2026, those are the priorities. Thank you so much.
Speaker #1: We’ve got very solid firepower. I like our debt profile. So, at the right time, we’ll get back to doing the things that we need to do.
[Analyst]: Thank you.
Larry Biegelsen: Thank you.
Operator: We'll go next to Chris Pasquale with Nephron.
Operator: We'll go next to Chris Pasquale with Nephron.
Speaker #1: But in 2026 , those are the priorities . Thank you so much .
[Analyst]: Thanks. Ivan, you highlighted strong performances from CMFT, Upper Extremities, but organic growth for SET still did step down a bit. Can you talk a little bit about the other SET segments, how they performed in the quarter, and then how you're thinking about that business once Paragon becomes sort of part of the organic piece going forward? Thank you.
Chris Pasquale: Thanks. Ivan, you highlighted strong performances from CMFT, Upper Extremities, but organic growth for SET still did step down a bit. Can you talk a little bit about the other SET segments, how they performed in the quarter, and then how you're thinking about that business once Paragon becomes sort of part of the organic piece going forward? Thank you.
Speaker #18: you Thank .
Speaker #4: Chris next to We'll go Pasquale with Nephron .
Speaker #19: Thanks, Yvonne. You highlighted strong performances from CMT Upper Extremities, but organic growth for CT still did step down a bit.
Speaker #19: Can you talk a little bit about the other CT segments , how they performed in the quarter and then how you're thinking about that business once Paragon becomes part of the piece organic going forward ?
Ivan Tornos: Sure. Sure. Thanks for the question. So net-net, in the year, SET delivered mid-single digit growth again. So now there has been a cadence of quarters and years in what we've seen this business perform. To your point, CMFT mid-teens growth, shoulders upper single digit, if not double digit, sports in and out of the upper single digit territory. Obviously, foot and ankle is double digit given Paragon. But we do have two problem children: our trauma business and our restorative therapies business, HA injections here in the US. So those are the two headwinds that we got. We spoke about that openly in the Q3 call, that our HA business in the US has been struggling. We exited the year more or less in line with our expectations, but those expectations were very low.
Ivan Tornos: Sure. Sure. Thanks for the question. So net-net, in the year, SET delivered mid-single digit growth again. So now there has been a cadence of quarters and years in what we've seen this business perform. To your point, CMFT mid-teens growth, shoulders upper single digit, if not double digit, sports in and out of the upper single digit territory. Obviously, foot and ankle is double digit given Paragon. But we do have two problem children: our trauma business and our restorative therapies business, HA injections here in the US. So those are the two headwinds that we got. We spoke about that openly in the Q3 call, that our HA business in the US has been struggling. We exited the year more or less in line with our expectations, but those expectations were very low.
Speaker #19: Thank you .
Speaker #20: Sure , sure .
Speaker #1: Thanks . question . Thanks for the So net net in the year CT delivered mid-single digit growth . Again . So now there has been a cadence of quarters and years in what we see in this business perform to your point , Cmft mid-teens growth shoulders upper single digit if not double digit sports in and out of the upper single digit that territory .
Speaker #1: Obviously foot and ankle is double digit given Paragon , but we do have two problem children or trauma business and or restorative therapies business .
Speaker #1: Ha injections in the US . So those are the true . Those are the two headwinds that we got . We spoke about that openly in the Q3 call that business in the US has been struggling .
Ivan Tornos: So as we enter 2026, we're going to continue to invest in the four key growth drivers. We are in a ton of reps in shoulder with expanding our CMFT, cranial maxillofacial thoracic sales force. We put in new processes, new people to make sure that the true problem children, trauma, restorative therapies don't become the headwind in 2026 that became in 2025. Thank you.
Ivan Tornos: So as we enter 2026, we're going to continue to invest in the four key growth drivers. We are in a ton of reps in shoulder with expanding our CMFT, cranial maxillofacial thoracic sales force. We put in new processes, new people to make sure that the true problem children, trauma, restorative therapies don't become the headwind in 2026 that became in 2025. Thank you.
Speaker #1: We exited the year more or less in line with our expectations . But those expectations were very low . So as we enter 2026 , we're going to continue to invest in the four key growth drivers .
Speaker #1: are in a ton of We reps in shoulder with expanding our cmft Craniomaxillofacial thoracic sales force , and we put in a new processes , new people to make sure that the true problem children , trauma and restorative therapies don't become the headwind in 26 .
[Analyst]: Thanks.
Chris Pasquale: Thanks.
Operator: We'll take our next question, excuse me, from Caitlin Roberts with Canaccord.
Operator: We'll take our next question, excuse me, from Caitlin Roberts with Canaccord.
Speaker #1: That became in 2025 . Thank you .
Speaker #10: Thanks .
Operator: Hi. Thanks for taking the questions. So how do you see ASCs as a part of your revamped US strategy? And where did you end the year with ASC penetration in hips, knees, and shoulder?
Caitlin Roberts: Hi. Thanks for taking the questions. So how do you see ASCs as a part of your revamped US strategy? And where did you end the year with ASC penetration in hips, knees, and shoulder?
Speaker #4: We'll take our next question. Question. Excuse me, from Caitlin Roberts with Canaccord.
Speaker #21: Hi . Thanks for taking the questions . So how do you see ASCs as a part of your revamp ? U.S. strategy ? And where did you end the year with ASC penetration and hips , knees and shoulder ?
Ivan Tornos: Thank you, Caitlin. So we ended 2025 on knees and hips. I do not know, to be honest with you, the final number for shoulder. But we exited 2025 in the 20 to 22% range. So 20% to 22% of all the hips and knees that we did in the US were done in ASC. And I speculate the shoulder number is higher than that, but right now, I don't recall that number, so I don't want to mislead you. In terms of our strategy, we've spoken about the fact we need to have dedicated people. We need to have the portfolio. I need to have the partnerships. And speaking of people really excited about the additions that we brought to the team in 2025, new president for ASCs, who's a superstar, Greg Ziller.
Ivan Tornos: Thank you, Caitlin. So we ended 2025 on knees and hips. I do not know, to be honest with you, the final number for shoulder. But we exited 2025 in the 20 to 22% range. So 20% to 22% of all the hips and knees that we did in the US were done in ASC. And I speculate the shoulder number is higher than that, but right now, I don't recall that number, so I don't want to mislead you. In terms of our strategy, we've spoken about the fact we need to have dedicated people. We need to have the portfolio. I need to have the partnerships. And speaking of people really excited about the additions that we brought to the team in 2025, new president for ASCs, who's a superstar, Greg Ziller.
Speaker #20: Thank you . Kaitlin .
Speaker #1: So we we ended 25 on knees and hips . I do not know to be honest with you , the final number for shoulder .
Speaker #1: But we exited 2025 . In the 2,022% range . So the and knees that we did in US 20 to 22% of all the hips were SC done in speculate an and the shoulder number is higher than that .
Speaker #1: But don't recall right now I the number . So I don't want to mislead you in this strategy . We spoken about the fact we need to have dedicated people .
Speaker #1: We need to have the portfolio . We need to have the partnerships . And speaking of people really excited about the additions that we brought to the team in 2025 , new president for ASCs , who's a superstar Greg Miller .
Ivan Tornos: He's brought in great people across the entire US while actively hiring people into the ASC channel. As Suketu mentioned, it's not just specialization. It's also augmentation. So I think we are rapidly getting the right amount of people and the right type of people to win in ASCs. As far as the portfolio, there are no gaps whatsoever. We're really excited about the opportunity that Monogram will bring to an ASC environment where speed, efficiency, and accuracy matter most. But in addition to that, we got another 7 to 10 products that make a lot of sense in the ASC. In the partnerships, we continue to see great momentum with our partnership with Getinge. We are doing new contracts. We got a couple of large groups that we are actively involved in final negotiations. So we're very bullish when it comes to our ASC strategy.
Ivan Tornos: He's brought in great people across the entire US while actively hiring people into the ASC channel. As Suketu mentioned, it's not just specialization. It's also augmentation. So I think we are rapidly getting the right amount of people and the right type of people to win in ASCs. As far as the portfolio, there are no gaps whatsoever. We're really excited about the opportunity that Monogram will bring to an ASC environment where speed, efficiency, and accuracy matter most. But in addition to that, we got another 7 to 10 products that make a lot of sense in the ASC. In the partnerships, we continue to see great momentum with our partnership with Getinge. We are doing new contracts. We got a couple of large groups that we are actively involved in final negotiations. So we're very bullish when it comes to our ASC strategy.
Speaker #1: brought in He's great across people the entire US with actively hiring people into the into the channel ASC , as you mentioned , is not just specialization .
Speaker #1: also It's augmentation . So I think we are rapidly getting the right amount of people and the right type of people to win in ASC .
Speaker #1: As far as the portfolio , there are no gaps whatsoever . We're really excited about the opportunity that to an monogram will bring environment where speed , efficiency accuracy and most matters .
Speaker #1: But in addition to that , we got another a lot of sense 7 to 10 products that make ASC in and in the partnerships we continue to see momentum with great our partners .
Speaker #1: Garrincha With , we doing are contracts . We of got a new large couple that we are groups actively involved in final negotiations , so we're bullish when it very comes to our ASC strategy , and we'll follow up with you on the on the number four penetration for shoulder .
Ivan Tornos: We'll follow up with you on the number for penetration for shoulder. Thank you.
Ivan Tornos: We'll follow up with you on the number for penetration for shoulder. Thank you.
Operator: Awesome. Thank you.
Caitlin Roberts: Awesome. Thank you.
Operator: We'll go next to Joanne Wuensch with Citibank.
Operator: We'll go next to Joanne Wuensch with Citibank.
Speaker #1: Thank you .
Speaker #10: Thank you Awesome .
Suketu Upadhyay: Good morning. Thank you for taking the question. I'll put two right up front. I'm sorry. I'm only allowed to ask one. One, AAOS, what should we be expecting there? And I suspect this is where you'll be showcasing the mBôs system. How do you anticipate folding that into your robotics portfolio and platform? Thank you.
Joanne Wuensch: Good morning. Thank you for taking the question. I'll put two right up front. I'm sorry. I'm only allowed to ask one. One, AAOS, what should we be expecting there? And I suspect this is where you'll be showcasing the mBôs system. How do you anticipate folding that into your robotics portfolio and platform? Thank you.
Speaker #4: go Wuensch . We'll Joanne with Citibank .
Speaker #4: next to
Speaker #22: morning and thank you for taking the Good question . I'll two right up put front I'm sorry I'm only to ask allowed one .
Speaker #22: What one should we be expecting there? And I suspect this is where you'll be showcasing the embossed—how do you system.
Ivan Tornos: Thank you, Joanne. And as far as I'm concerned, you can ask 50 questions if you want, so. But anyway, what should you expect at the Academy meeting in New Orleans? We're going to have a lot of new products there. We're going to showcase, again, the Mach 7. We're going to show next-generation SET products. But to your point, the main event is going to be mBôs, the fully autonomous and semi-autonomous robotic platform that we acquired from Monogram. This is technology that we strongly believe that will change the standard of care. It's definitely the step of moving from guided robotics to smart robotics. It has best-in-class ease of use. The registration speed that we've seen in the clinical trials is better than anything that is in the market today. You can literally do the cases. And I hope you come to the booth in a hands-free approach.
Ivan Tornos: Thank you, Joanne. And as far as I'm concerned, you can ask 50 questions if you want, so. But anyway, what should you expect at the Academy meeting in New Orleans? We're going to have a lot of new products there. We're going to showcase, again, the Mach 7. We're going to show next-generation SET products. But to your point, the main event is going to be mBôs, the fully autonomous and semi-autonomous robotic platform that we acquired from Monogram. This is technology that we strongly believe that will change the standard of care. It's definitely the step of moving from guided robotics to smart robotics. It has best-in-class ease of use. The registration speed that we've seen in the clinical trials is better than anything that is in the market today. You can literally do the cases. And I hope you come to the booth in a hands-free approach.
Speaker #22: folding that into your anticipate robotics and platform ? Thank portfolio you
Speaker #22: . far as I'm
Speaker #1: And as
Speaker #1: concerned , you Thank you . Jane . 50 questions if So . you want . But can ask anyway , what should you expect ?
Speaker #1: Academy, the meeting in Orleans, New? We're going to have a lot of new products there. We're going to showcase again the Max Seven.
Speaker #1: We're going to show next generation CT products . But but to your point , the the main event is going to be embossed .
Speaker #1: The fully autonomous semi-autonomous and robot that robotic platform that we acquired from monogram . This is technology that we strongly believe that will change the standard of care .
Speaker #1: It's definitely the step of moving from guided smart robotics to robotics . It has best in class of ease use , the registration speed that we're seeing in the clinical trials is better than anything that is in the market today .
Ivan Tornos: The workflow is as streamlined as it gets. And again, it's highly accurate, extremely reproducible, and it's got all the right guardrails to make it the safest robot out there. So we'll be talking about all of that. We debuted mBôs at the Hip and Knee Society meeting in Dallas. And since then, we've gotten just tremendous feedback. We expect to have a large group of surgeons when it comes to New Orleans. So looking forward to sharing this experience with you and the other investors. But beyond that, we'll have our entire suite of technology. And we'll be describing why it makes sense to have this category depth. Second part of your question, how you expect to integrate it? Look, we got the optionality of integrating all things into one platform if we choose to do that.
Ivan Tornos: The workflow is as streamlined as it gets. And again, it's highly accurate, extremely reproducible, and it's got all the right guardrails to make it the safest robot out there. So we'll be talking about all of that. We debuted mBôs at the Hip and Knee Society meeting in Dallas. And since then, we've gotten just tremendous feedback. We expect to have a large group of surgeons when it comes to New Orleans. So looking forward to sharing this experience with you and the other investors. But beyond that, we'll have our entire suite of technology. And we'll be describing why it makes sense to have this category depth. Second part of your question, how you expect to integrate it? Look, we got the optionality of integrating all things into one platform if we choose to do that.
Speaker #1: You can literally do the cases , and I hope you come to the booth in a hands free approach . The workflow is streamlined as as it gets .
Speaker #1: And again , it's highly accurate . Extremely , extremely reproducible the right it's got all . And guardrails to make it the robot out there .
Speaker #1: So we'll be talking about all of that with debuted at the embossed hip and Society meeting in Dallas . And since then we've gotten just tremendous feedback .
Speaker #1: We expect to have a large group of surgeons when it comes to New Orleans . So looking forward to sharing this excitement with you and the the other investors .
Speaker #1: beyond But that , we'll have , you know , our entire suite of technology . And I will be describing why it makes sense to have this category depth question , .
Ivan Tornos: But so far, the data and the feedback validates that since not all customers are created equal, not all technologies will be created equal. We believe in optionality. We believe in large footprint robotics, small footprint robotics. Sounds like our competitors do as well now. We believe in CT scan for some customers that want to have a CT scan. But we also have a large percentage of customers, namely outside the US, that want to use imageless. We got some surgeons that want to be more in control of the surgery. And you got some that are okay with semi and fully autonomy. So we have the optionality to integrate at the right time. But right now, we like to have the category breadth that we have. And so far, as you saw in the results in Q4, it seems to be working out.
Ivan Tornos: But so far, the data and the feedback validates that since not all customers are created equal, not all technologies will be created equal. We believe in optionality. We believe in large footprint robotics, small footprint robotics. Sounds like our competitors do as well now. We believe in CT scan for some customers that want to have a CT scan. But we also have a large percentage of customers, namely outside the US, that want to use imageless. We got some surgeons that want to be more in control of the surgery. And you got some that are okay with semi and fully autonomy. So we have the optionality to integrate at the right time. But right now, we like to have the category breadth that we have. And so far, as you saw in the results in Q4, it seems to be working out.
Speaker #1: how do you expect to Second part of your integrate Look , it ? we got optionality of the integrating all things into one platform .
Speaker #1: If we choose to do that . But , so but far the data and the feedback validates that not all customers are created equal .
Speaker #1: Not all technologies will be created equal . We believe in optionality . We believe in large footprint robotics , small footprint robotics , sounds like our competitors do as well .
Speaker #1: Now we believe in CT for some scan customers want to that but we also have a CT scan , have a of percentage large customers , namely outside the US .
Speaker #1: That want to use . We surgeons got some that want to be more in control of the surgery . And you got some that are okay with semi and fully autonomy .
Speaker #1: So we had the optionality to at the right integrate time . But right now we'd like to have the category breadth that we have .
Ivan Tornos: Thank you so much, Joanne.
Ivan Tornos: Thank you so much, Joanne.
Speaker #1: far And so as you saw in the results in Q4 , it seems to be working out . Thank you so much , John .
Operator: We'll go next to Matt Miksic with Barclays.
Operator: We'll go next to Matt Miksic with Barclays.
[Analyst]: Hey. Thanks so much for taking the question. Just maybe looking at some of the strength in knees in the quarter geographically, and maybe talk a little bit about pockets of strength where you're seeing success, the sort of cadence of the iodine-coated launch in Japan, sort of the geographic breakdown. And any color you could provide would be great. Thanks so much.
Matt Miksic: Hey. Thanks so much for taking the question. Just maybe looking at some of the strength in knees in the quarter geographically, and maybe talk a little bit about pockets of strength where you're seeing success, the sort of cadence of the iodine-coated launch in Japan, sort of the geographic breakdown. And any color you could provide would be great. Thanks so much.
Speaker #4: We'll go next to Matt Miksic with Barclays .
Speaker #23: Hey , thanks so much for taking the question . Just maybe looking at some of the strengths in these in the quarter , geographically and maybe talk a little bit about about pockets of strength where you're seeing success , you know , the sort of cadence of the the of iodine coded launch in Japan , sort of that the geographic break down and any color you can provide me .
Ivan Tornos: Thanks, Matt. Look, great quarter. Q4 was a great quarter. So we delivered 6% growth in US knees and 8.2% for international. In the US, it's the combination of all the things that I mentioned in my prepared remarks. Oxford Partial Cementless continues to do better than expected and is really early in the journey. Recall, it's the only FDA-approved partial cementless knee, which is gaining tremendous adoption in an ASC setting. Our Persona OsseoTi or cementless platform exited 2025, somewhere around 35% penetration, again, with very rapid adoption in an ASC setting as well. And internationally, we saw great momentum with Persona Revision in Europe exiting 2025. Recall that this is only two, three quarters into the launch. So we think that the ramp-up can be very compelling as it has been here in the US. In terms of iodine, we had minimal sales of iodine in Q4.
Ivan Tornos: Thanks, Matt. Look, great quarter. Q4 was a great quarter. So we delivered 6% growth in US knees and 8.2% for international. In the US, it's the combination of all the things that I mentioned in my prepared remarks. Oxford Partial Cementless continues to do better than expected and is really early in the journey. Recall, it's the only FDA-approved partial cementless knee, which is gaining tremendous adoption in an ASC setting. Our Persona OsseoTi or cementless platform exited 2025, somewhere around 35% penetration, again, with very rapid adoption in an ASC setting as well. And internationally, we saw great momentum with Persona Revision in Europe exiting 2025. Recall that this is only two, three quarters into the launch. So we think that the ramp-up can be very compelling as it has been here in the US. In terms of iodine, we had minimal sales of iodine in Q4.
Speaker #23: Thanks Great . so much .
Speaker #20: Thanks , Matt . Look .
Speaker #1: quarter Great , Q4 was a great quarter . So we delivered 6% growth US in needs . And 8.2 for international in the US is the combination of all the things that I mentioned in my prepared remarks .
Speaker #1: Oxford continues to do better than expected . And is really early in the journey . Recall is the only FDA approved partial cementless knee which is gaining tremendous adoption in an ASC setting or persona osseous or cement platform .
Speaker #1: Exited 2025 . So at around 35% penetration . Again , with very rapid adoption in an AC setting as well , and internationally we saw great momentum with persona revision in Europe exiting Recall that 2025 .
Speaker #1: this is only two three quarters into the launch , so we that the ramp think up can be very compelling been here in the in the , in the US in terms of iodine , we had minimal sales of iodine in Q4 .
Ivan Tornos: The real launch has happened here in Q1. This is a product that we've been working on for 10 years with robust data out of the University of Yokohama in Japan. We expect to have a very meaningful contribution out of this product internationally in 2026. We're doing cases pretty much every day now. We get a 40% price uplift when it comes to iodine versus non-iodine. And again, the data around prolonged elution, the fixation stability, how this product reacts to bacteria, it's just very, very, very compelling. So really excited about iodine, and we look forward to bringing this product to other geographies down the road. Thank you.
Ivan Tornos: The real launch has happened here in Q1. This is a product that we've been working on for 10 years with robust data out of the University of Yokohama in Japan. We expect to have a very meaningful contribution out of this product internationally in 2026. We're doing cases pretty much every day now. We get a 40% price uplift when it comes to iodine versus non-iodine. And again, the data around prolonged elution, the fixation stability, how this product reacts to bacteria, it's just very, very, very compelling. So really excited about iodine, and we look forward to bringing this product to other geographies down the road. Thank you.
Speaker #1: The real launch is happening here in in Q1 . This is a product that we've been working on for ten years robust with data out of the University of Yokohama in Japan expect to have a .
Speaker #1: very meaningful We contribution out of this product in international in 2026 . We do in cases pretty much every day now . We get 40% price uplift when it a comes to iodine versus non-iodine .
Speaker #1: And again , the data prolonged around elution , the fixation stability , how this product reacts to to bacteria , it is very , very , very compelling .
Speaker #1: So really excited iodine . And we about forward look to bringing this product to other geographies than the road . Thank you .
Operator: This concludes the question and answer portion of this call. I would like to turn the call over to Ivan Tornos for any closing remarks.
Operator: This concludes the question and answer portion of this call. I would like to turn the call over to Ivan Tornos for any closing remarks.
Ivan Tornos: Thank you. I'll close the way that I started with gratitude. Thanks to all of you for being here today. And thank you to the Zimmer Biomet team. Great exit to 2025. Love the performance that we saw in Q3 and Q4. Really encouraged about the opportunities we have ahead. Excited about 2026. While there'll be some disruption associated with the US go-to-market transformation, we strongly believe this is the right step to take at the right time so that we can create a company that we all aspire to create. Thank you for your time this morning.
Ivan Tornos: Thank you. I'll close the way that I started with gratitude. Thanks to all of you for being here today. And thank you to the Zimmer Biomet team. Great exit to 2025. Love the performance that we saw in Q3 and Q4. Really encouraged about the opportunities we have ahead. Excited about 2026. While there'll be some disruption associated with the US go-to-market transformation, we strongly believe this is the right step to take at the right time so that we can create a company that we all aspire to create. Thank you for your time this morning.
Speaker #4: question concludes the This and answer portion of this I would like to turn call . the call over to Ivan Tornos for any closing remarks .
Speaker #20: Thank you .
Speaker #1: I'll close the way that I started, with gratitude. Thanks to you for being here today, and thank you to the Zimmer Biomet team.
Speaker #1: Great exit to 2025 . Love the performance that we saw in Q3 and Q4 . Really encouraged about the opportunities we have ahead excited , about 26 .
Speaker #1: there be While some disruption associated with the US market transformation , we strongly believe this is the step right to take at the right time .
Speaker #1: So that we can create a company that we all aspire to create . Thank you for your time this morning .
Operator: Thank you again for participating in today's conference call. You may now disconnect.
Operator: Thank you again for participating in today's conference call. You may now disconnect.
