Zimmer Biomet Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert Marcus - JPMorgan Chase & Co - Analyst : Great. Good morning, and congrats on the good quarter. I want to start on the topic du jour of tariffs. I would say that's a much smaller impact than most were expecting on EPS. So maybe, Suki, if you don't mind walking through what the mitigation efforts are? How you're offsetting the tariff headwind? And you made the comment about the 2025 run rate is not a good exit trajectory to calculate '26 tariffs. Maybe you could just expand on that and help us understand what the right run rate is. Thanks a lot.

Question: David Roman - Goldman Sachs Group, Inc. - Analyst : Good morning, and thank you for taking the question. I'm struggling a little bit to put some of the moving parts together in the quarter and the outlook. Certainly appreciate that Q1 matched your expectation was very consistent with what you presented in February. But the absolute level of growth is still below what we saw last year, pretty much in most of the quarters before ERP disruption. At the same time, you're highlighting the positive impact of new products powered by what appears to be performance related commercial leadership changes. But how long should it take to digest all these variables? And what are you seeing specifically today that you can exit the year above 5% growth to get to the midpoint of the guidance you're issuing for organic revenue?

Question: Chris Pasquale - Nephron Research LLC - Analyst : Thanks. Ivan, you highlighted a nice performance in US Hips, which was certainly encouraging. Just wanted to clarify, when you say that 50% of Z1 users today have been competitive accounts, are those true new to Zimmer surgeons or does that include surgeons who were maybe already customers on the Knees side? And then just to put a finer point on that second half growth driver list you just ran through, should we expect to see the impact from new products on the Knees side start to come through as soon as third quarter, or is it going to be later than that? Thanks.

Question: Matthew O'Brien - Piper Sandler & Co. - Analyst : Good morning. Thanks for taking the question. I wanted to ask a little bit about pricing, excuse me. So last four quarters of pricing have been up 80 basis points, 70 basis points, 60 basis points, and now up 10 basis points. And I'm just wondering, if -- and that plus 10 is off a flat Q1 of '24. So are we to the point now where the tailwinds we're seeing on the pricing side are largely behind us? Are we going to start to see that rollover and get negative like we've seen historically? And I guess with all these new products coming out that are higher priced than this ASP tailwind you should be getting, is it going to make it more difficult to really sell those products in an environment where pricing starts to get a little bit tougher? Thanks.

Question: Matthew Taylor - Jefferies Financial Group Inc. - Analyst : Hi. Thank you for taking the question. I did want to just follow up on the tariffs and clarify, when you said the $60 million to $80 million headwind for 2025 includes some mitigation. I guess I just wanted to ask, if you could give us about what the headwind would have been without mitigation. And maybe just talk through some of the main sources of this headwind so we can understand assuming things continue to change, how your exposure may continue to change with the policies around different geographies.

Question: Larry Biegelsen - Wells Fargo Securities - Analyst : Thank you for taking the question. Just, Suki, one clarification. Your commentary on 2026 wasn't clear on the net impact of the tariffs and the tailwinds you mentioned. And just for my question, Ivan it's Stryker's recon growth, particularly its US Knee growth, continues to be a lot higher than the other three competitors and we can all see that obviously. We did a lot of channel checks around AAOS, and we continue to hear that the difference is really just still [Mako]. So, how much do you think that's the case, and what are you doing to make ROSA more competitive? Talk about the three new modalities coming and the implications. Thank you.

Question: Joshua Jennings - TD Securities (USA) LLC - Analyst : Hi. Good morning. Thanks for the question. Ivan, I was hoping your team could help us think through ZB's performance in the ASC versus the hospital channel. Should we be thinking that S.E.T. and Joints are performing kind of relatively similar in those two channels, or is one -- is ZB's outperforming in one versus the other? Just wanted to get a handle on that, as this ASC migration is taking a bigger interest? Thanks a lot.

Question: Travis Steed - BofA Securities, Inc. - Analyst : Hey. Thanks for taking the question. I wanted to ask about Q2. The slightly higher comment was that higher than the 2.3% constant currency, or are days adjusted? And then any quantification on the shift of orders from Q2 into the second half? Is that worth 50 basis points or more or less? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 12:30PM, ZBH.N - Q1 2025 Zimmer Biomet Holdings Inc Earnings Call

Question: Joanne Wuensch - Citigroup, Inc. - Analyst : Good morning, and thank you for taking the question. Your other category was relabeled Technology & Data, Bone Cement and Surgical. I'm always curious when people change the name of things, I'm curious why you chose to do that and how do we think about those bits and pieces? Is this an area also for when you talk about portfolio optimization or M&A? Thank you.

Question: Caitlin Cronin - Canaccord Genuity Corp. - Analyst : Hi. Thanks for taking the question. Just to touch on the Paragon acquisition. I mean any kind of early news there, and kind of updates on the timeline for the integration?

Question: Richard Newitter - Trust Securities, Inc. - Analyst : Thanks for taking the question. I wanted to just ask -- I thought I heard early in the prepared remarks something about a sales force reorganization or optimization. If you could just elaborate a little more on what exactly that is, what prompted it? It sounds like that's new. And is there any negative impact that's contemplated in -- granted, you reiterated your constant currency guidance for the year. Is there anything that's implicitly contemplated from a headwind on that standpoint incrementally now?

Question: Shagun Singh - RBC Capital Markets - Analyst : Great. Thank you so much. I was wondering if you can elaborate on your appetite for M&A post the Paragon 28 acquisition. More specifically, how are you thinking about further boosting your position in the ASCs, and then also expanding potentially into new adjacencies maybe in and out of the hospital, as you think about raising your weighted average market growth further beyond the mid-single digits?

Question: Rick Wise - Stifel, Nicolaus & Company, Incorporated - Analyst : Hi. Good morning. Hi, Ivan. I was hoping you would expand a little more on your progress with the Oxford Partial Cementless Knee. You sound excited. You've trained several hundred customers. My impression, if I remember correctly from AUS that you hope to train maybe 1,000 by year end. Are you on track with that? And talk about the training and interest, and how long do you think it takes for the Oxford Cementless here in the US to match the 60% of the mix in Europe. Thank you.

Question: Jeffrey Johnson - Robert W. Baird & Co. Incorporated - Analyst : Thanks. Good morning, guys. Maybe two clarifying questions, just if I could squeeze them into one, if possible. So, Suki, you talked about opportunistic price increases. Just any kind of color you could provide there. I would assume that's probably more on the capital side, maybe than on the implant side, but any clarification there? And then just again, not to go back to the 2026 tariff, but I'm going to just as I hear your kind of explanation, thinking about your inventory turns, you talk about greater than 50% of that $60 million to $80 million in the fourth quarter. If you were us on the sell-side, we have to put models out. I know you're not quantifying. Would it be crazy to run kind of an absolute $40 million a quarter throughout 2026 as the tariff impact just as a starting point to have something that's holding placed on our models? Thank you.

Question: Michael Matson - Needham & Company - Analyst : Yeah. Thanks. Ivan, I wanted to ask about the antimicrobial technologies and iodine coding. I mean, this seems like something that could potentially really differentiate Zimmer Biomet. I don't know if any of the other companies are really working on this stuff. So, can you maybe just talk about what you're hearing from the FDA in terms of iodine coatings, what you're going to have to do to get that launched in the US? And then are you willing to look at any kind of outside technologies in terms of acquiring or partnering with other companies? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 12:30PM, ZBH.N - Q1 2025 Zimmer Biomet Holdings Inc Earnings Call