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    ZBH
    Earnings call· Mar 2026(Q1 FY26)

    ZIMMER BIOMET HOLDINGS Q1 FY26 earnings call ZBH

    Apr 28, 2026 Source

    Executive summary

    Zimmer Biomet Q1 FY26 — Strong Start with Sales Growth and Raised EPS Guidance

    Zimmer Biomet delivered a strong start to the year, exceeding expectations on sales growth and raising full-year EPS and free cash flow guidance, driven by robust technology sales and new product momentum. The company is confidently progressing with its U.S. go-to-market transformation, despite some expected near-term disruption, and is making strategic investments in innovation and operational efficiency to secure future growth.

    Highlights

    5

    • Organic constant currency sales grew 2.9%, at the upper end of annual guidance.

    • Adjusted EPS increased 15% year-over-year to $2.09, benefiting from tariff-related items.

    • Technology sales grew in strong double-digit rates, with ROSA and TMINI sales continuing strong.

    • U.S. hip franchise grew 5%, driven by the hip triple play and OrthoGrid adoption.

    • Adjusted EPS guidance raised to $8.40-$8.55 and free cash flow growth guidance raised to 9%-11%.

    Concerns

    3

    • U.S. knee growth was 2.2%, partially offset by pressure in legacy implants and some account losses.

    • Operating margins in Q2 FY26 are expected to be down roughly 200 basis points YoY.

    • Consolidated pricing was 40 basis points negative in the quarter, with full-year expectation of up to 100 bps erosion.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2026 organic constant currency revenue growth
    1% to 3%
    high materiality
    High
    Full-year 2026 price erosion
    up to 100 basis points
    medium materiality
    High
    Full-year 2026 FX tailwind to revenue growth
    approximate 50 basis points
    low materiality
    High
    Full-year 2026 Paragon 28 contribution to reported sales growth
    around 100 basis points
    low materiality
    High
    Full-year 2026 reported sales growth
    2.5% to 4.5%
    high materiality
    High
    Full-year 2026 operating margins
    down slightly less than 50 basis points from 2025
    high materiality
    High
    Q2 2026 operating margins
    down roughly 200 basis points from Q2 2025
    medium materiality
    High
    Q3 2026 operating margins
    down around 50 basis points sequentially from Q2
    medium materiality
    High
    Full-year 2026 adjusted EPS
    $8.40 to $8.55
    high materiality
    High
    Full-year 2026 free cash flow growth
    9% to 11%
    high materiality
    High
    Full-year 2026 share repurchases
    up to $750 million
    medium materiality
    High
    Full-year 2026 adjusted gross margin
    around 71%
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    U.S. Business
    Reflects healthy end markets, strong technology sales, and continued momentum from new products, against the backdrop of go-to-market changes.
    		—3.2%——
    International Business
    Impacted by go-to-market model evolution, particularly in emerging markets, and more difficult comps in the first half. Expect mid-single digit growth in H2 FY26.
    		—2.5%——
    U.S. Knees
    Driven by Oxford Partial Cementless Knee, partially offset by pressure from legacy Toran Knee implants (NextGen, [indiscernible]) being phased out. Impacted by go-to-market changes, loss of 2 large accounts, and Kaiser strike.
    Partial knee cells growth: >20%
    		—2.2%——
    International Knees
    Growth impacted by go-to-market changes and difficult comps.
    		—1.3%——
    U.S. Hip Franchise
    Seeing increasing traction of hip triple play (OrthoGrid, HAMMR).
    Hip triple play of one representation: nearly 40% of U.S. Hips temps
    		—5%——
    International Hip Sales
    Rapid adoption in Japan for first of the warm iodine core hip implant.
    		—1%——
    Technology and Data, Bone Cement and Surgical Business
    Continued strong ROSA and TMINI sales across the board, supporting a comprehensive suite of technology solutions.
    ROSA and TMINI sales: strong double-digit ratesTechnology growth (ROSA, TMINI): 30%
    		—nearly 12%——
    SCP
    Led by U.S. CMFT and Upper Extremities businesses, partially offset by challenges in restorative therapies and trauma. Double-digit CMFT growth driven by external closure franchise. Upper extremities increased upper single digits driven by OCF stemless shoulder and Identity total shoulder platform.
    		—1.6%——
    Paragon 28
    Trending back towards double-digit growth performance. Almost double-digit growth in Q1, in the teens in early Q2. Driven by focus, investments, rapid product launches, and hiring reps.
    		—accelerated around 200 basis points from Q4 2025——

    Operational metrics

    18
    Adjusted EPS
    $2.09up 15% YoY
    Q1 FY26

    Driven by higher revenue, tariff benefit, and lower share count, partially offset by increased commercial investments.

    Adjusted gross margin
    73%higher than Q1 FY25
    Q1 FY26

    A portion of the tariff benefit included refunds anticipated in H2.

    Adjusted operating margin
    27.3%
    Q1 FY26
    Adjusted net interest and nonoperating expenses
    $71 millionabove prior year
    Q1 FY26
    Adjusted effective tax rate
    18%
    Q1 FY26

    Modestly higher due to geographic mix.

    Fully diluted shares outstanding
    195.8 milliondown YoY
    Q1 FY26
    Cash and cash equivalents
    $424 million
    Q1 FY26

    Ended the quarter with approximately $424 million.

    Share repurchases
    $250 million
    Q1 FY26

    Executed in the first quarter.

    Consolidated pricing
    -40
    Q1 FY26

    In line with expectations.

    1099 sales force percentage
    slightly below 60%down from 66% (early 2026)
    Q1 FY26

    Roughly a 10% reduction in the number of 1099s, implying they are now fully dedicated.

    Specialized sales force percentage
    approaching, if not exceeding 30%up from 25% (early 2026)
    Q1 FY26

    One of every four reps carrying a dedicated sales bag.

    Sales force turnover rate
    single-digit rangebelow target of no more than 12%
    Q1 FY26

    Mostly coming from territory changes and higher engagement.

    Cases per week in transitioned territories
    double-digit rangesvs national average of ~7 cases
    Q1 FY26

    Dramatic improvements in productivity seen in territories switched from nondedicated to dedicated.

    Robotic clinical sales representatives hiring target
    over 200
    FY27

    In anticipation of the mBos launch.

    Monogram procedure time
    under 4 minutes
    future

    Expected efficiency for Monogram robot.

    Overall recon market growth
    north of 4%, not 4.5%
    current

    Market remains very solid.

    Medicaid revenue contribution
    low single digit
    current

    Approximately 1% of revenue.

    ACA cases percentage
    less than 12%
    current

    Percentage of cases from ACA.

    Industry KPIs

    8
    MetricValueDetails
    Tariff impact$0.20USD
    Pricing realized price-40bps
    New product launch rampfull market release
    Procedure volume growthnorth of 4%, not 4.5%%
    FCF conversion leverage guidance9% to 11%%
    Segment franchise organic growth2.9%%
    Sales force commercial capacity buildover 200reps
    Pivotal trial clinical evidence milestonescompleted enrollment

    Product announcements

    1
    ProductTypeDetails
    ROSA Shoulderlaunch

    Deals & partnerships

    1
    Mobility Revolution Fund (Deerfield Management and Hospital for Special Surgery)Exclusive orthopedic investor in a musculoskeletal venture capital fund.

    Collaboration between Deerfield Management and the Hospital for Special Surgery in New York City.

    Risks & headwinds

    7
    U.S. go-to-market transformation disruptionQ1 FY26, ongoing through 2027

    modest disruption in Q1, in line with expectations

    Mitigation: Rapid increases in productivity in transitioned territories, turnover rates in single digits, commitment to complete transition by end of 2027.

    Pressure in legacy U.S. knee implantsQ1 FY26, ongoing as legacy products phased out

    partially offset U.S. knee growth of 2.2%

    Mitigation: Brand rationalization strategy, transitioning to Persona franchise.

    Loss of large accounts in U.S. KneesQ1 FY26

    lost 2 accounts in Q1, fairly large

    Mitigation: Company expects to recoup some business, but will monitor.

    Kaiser strike impactQ1 FY26

    disrupted for everybody, more disruptive for ZBH due to highest share in knees

    Mitigation: External event, no specific mitigation stated beyond monitoring.

    International go-to-market model evolution disruptionQ1 FY26, ongoing

    impact on growth in Q1, accounted for internally

    Mitigation: Changes from large network of distributors to fewer partners in emerging markets, Middle East, Europe, and China. Expect mid-single digit growth in H2 FY26.

    Middle East macro eventsQ1 FY26, ongoing monitoring

    minor freight cost increase in Q1, no material supply disruptions or sales impact

    Mitigation: Most key products are dual-sourced, at least 1 year of poly. Not a concern for supply.

    232 investigation (tariffs)ongoing

    still evolving and dynamic, no material updates

    Mitigation: Validation from IT sources suggests it won't impact companies operating under Nairobi protocol; pathway to mitigate.

    What to watch in Q2 FY26

    5

    U.S. Knee Growth Acceleration

    H2 FY26
    Current2.2% in Q1 FY26
    TargetIncreased growth in H2 FY26

    Why it matters

    U.S. knee growth was below expectations in Q1 due to sales force changes and account losses; acceleration is critical for overall segment performance and meeting full-year targets, especially with tougher comps.

    Your main question, what gives us confidence that we're going to accelerate our net growth in the second half is the ramp-up of our new products is the fact that we continue to place and sell a lot of technology...

    Q&A highlights

    7

    Why didn't ZBH raise full-year guidance by the full Q1 beat, given the strong start?

    Ivan Tornos expressed confidence in the business momentum, citing progressing sales force changes, a solid technology pipeline, and new product acceleration. He attributed the conservative guidance to it being early in the year and the ongoing significant transitions (go-to-market, innovation investments, talent changes), preferring to wait 90 days for an update.

    “I'm very confident that we're more in the right direction. We continue to see the sales force changes progressing as planned. We had some disruption in the quarter early in Q2, but everything is going in accordance to plan.”

    asked by Frederick Wise · answered by Ivan Tornos

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Overview

    Zimmer Biomet reported strong Q1 FY26 results with 2.9% organic constant currency sales growth and 15% adjusted EPS growth to $2.09. This performance was supported by healthy end markets, double-digit technology sales, and momentum from new products, despite ongoing U.S. go-to-market changes. The company raised its full-year adjusted EPS and free cash flow growth expectations.

    02

    U.S. Go-to-Market Transformation

    The transition to a dedicated and specialized sales channel in the U.S. is progressing as planned, with modest disruption in line with expectations. Productivity in transitioned territories is rapidly increasing, with a significant reduction in 1099 (nondedicated) sales force members from 66% to slightly below 60%, and an increase in specialized reps from 25% to nearly 30%. Turnover rates are in the single digits, below the 12% target. Ivan Tornos spends 70% of his time on the road visiting territories to support this transformation. The company aims to complete the transition by the end of 2027.

    03

    Innovation and Technology

    Zimmer Biomet is seeing strong adoption of its technology solutions, with ROSA and TMINI sales growing significantly (30% in Q1). The company completed enrollment for its Monogram clinical study and expects U.S. approval and launch of the semi-autonomous version in early 2027, followed by the fully autonomous version in late 2027 or early 2028. Investments are being made in robotic clinical sales representatives (targeting over 200 by end of 2027) and clinical evidence to support this launch. ROSA Shoulder has moved to full market release, showing strong feedback and accuracy.

    04

    Strategic Priorities and Talent

    The company continues to focus on people and culture, operational excellence, and innovation/diversification. Dr. Jonathan [indiscernible], a renowned surgeon, joined as Chief Science Technology and Medical Affairs Officer to lead strategy for AI-enabled robotics, software, smart implants, and connected technologies. Operational improvements include expanding manufacturing into lower-cost geographies and SKU rationalization, expected to strengthen margins and improve free cash flow conversion.

    05

    Acquisition Momentum

    Recent acquisitions are showing positive momentum. Paragon 28's growth accelerated by 200 basis points sequentially from Q4 FY25 and is trending towards double-digit growth, almost reaching it in Q1 and in the teens in early Q2. OrthoGrid delivered its strongest quarter to date, solidifying its role in the digital ecosystem. The company is pausing on further M&A to focus on current integrations (Paragon, Monogram, [indiscernible]) but will continue share buybacks.

    06

    Tariff Impact and Outlook

    The Q1 results benefited from a $0.20 EPS impact due to the invalidation of IEEPA tariffs, with a portion being a pull-forward📎 of about half from anticipated H2 credits. The company assumes 122 tariffs remain intact and IEEPA invalidated for the rest of the year. Management is monitoring the 232 investigation but expects it will not materially impact companies operating under the Nairobi protocol, indicating a pathway to mitigation.

    AI-generated summary of the company’s earnings call. Not investment advice.