Summary: Zimmer Biomet Holdings, Inc.

Leading market position in key product categories of hips and knees and considerable scale (2017 revenues of about $7.8 billion); Substantial intellectual property assets and high barriers to entry; Competition is limited and we expect pricing pressures to continue for hip and knee implant products; Above-average EBITDA margins, compared with its medical device company peers (adjusted EBITDA margins of about 36%-37%); and Substantial product concentration in hip and knee segments (60% of 2017 revenues, combined). Estimated adjusted debt leverage of about 3.6x for 2018, declining modestly in 2019; Substantial free operating cash flow of at least $1.2 billion annually; and A shift in financial policy has resulted in a substantial appetite for growth through acquisitions, as highlighted by its 2015

...Business Risk: Strong Financial Risk: Significant + Leading market position in key product categories of hips and knees and considerable scale (2017 revenues of about $7.8 billion); + Substantial intellectual property assets and high barriers to entry; + Competition is limited and we expect pricing pressures to continue for hip and knee implant products; + Above-average EBITDA margins, compared with its medical device company peers (adjusted EBITDA margins of about 36%-37%); and + Substantial product concentration in hip and knee segments (60% of 2017 revenues, combined). + Estimated adjusted debt leverage of about 3.6x for 2018, declining modestly in 2019; + Substantial free operating cash flow of at least $1.2 billion annually; and + A shift in financial policy has resulted in a substantial appetite for growth through acquisitions, as highlighted by its 2015 acquisition of Biomet that resulted in leverage temporarily spiking to 4.8x....

Summary