Zimmer Biomet Holdings Inc at Wells Fargo Healthcare Conference Transcript

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

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Sure. All right. Well, thanks for that, Ivan. Okay, I guess, starting with the news. The revenue impact, any way to quantify that today. And it wasn't clear to me, you said you identified the root cause. Is this resolved or not? Where are you?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : So if we think about it, started in August. So it's a little bit more than -- it's obviously more than 2% of sales, call it, for the second half of the year because, obviously, it didn't impact the first half. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 12:00PM, ZBH.N - Zimmer Biomet Holdings Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And you think it's going to impact sales through fourth quarter.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And do you think you will lose cases? Or will you regain those cases?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And it's less so -- it's not impacting hips and knees, it's impacting other businesses more.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And Suky, earnings impact, any preliminary color? Should we just expect -- what kind of flow through?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. But you've identified the root cause so you know how to fix the problem.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. Let me -- before I move on, questions in the audience? I'm sure I didn't think of everything on the fly here. So is there anything, people here, any questions people have on this topic before we move on that I didn't ask? Okay. All right. Anything else you expected me to ask that I didn't ask? Or Suky, anything else you expected me to ask from a financial standpoint that you want to communicate?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And geography, more US or -- more US impact than --

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And the LRP, everything is still intact? Just there's no -- this doesn't impact any of the LRP that you gave in May.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. That's helpful. Okay. Let's move on. US knees just there were some temporary issues in the second quarter in the US. Ivan, I want to just confirm that those issues that you talked about on the Q2 call are resolved.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. And while we're on knees, Ivan, when is Persona IQ going to be a material driver of growth for your US knee business and how impactful is the study, the shorter stem launch is going to be at the end of this year?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. And on hips, Ivan, I think in the past, you've said you've lost share but you have three new products coming that you think are going to help rectify that. Talk about those recent product launches and when we could expect those to be more of a growth driver for you, please?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. And then S.E.T., Ivan, how are you thinking about -- you had a good quarter in S.E.T. in Q2. Actually, this year S.E.T. has been, I think, mid-single digits at least, better performance compared to recent years. How are you thinking about each segment going forward? And can this -- once you have the ERP situation resolved, can this grow above mid-single digits?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. Ivan, the other exciting new area for Zimmer is the robotic shoulder application. You were first to market. I think you're the only one -- well, you're the only one in the market right now, but you have anatomical reverse, right? What's the early feedback been? And when is the full market launch?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. What are the clinical benefits of robotics for shoulder?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. The other -- sticking with ROSA, the other news you made on the Q2 call was about, I think you said three new ROSA modalities in the next four to eight quarters. Hopefully, I got that right.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : It sounds like there's two new versions of ROSA coming. Could you provide a little bit more color on those and any timelines, please?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. So the next version of ROSA, the 1.5, I think you called it, that's a software upgrade.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And the one, the CT scan-based ROSA, is that new hardware?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. So people who have existing ROSA --

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : I got it. And the next gen, the 1.5, comes up first.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : The other interesting thing about Q2 was you had positive pricing for the first time in a long time. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 12:00PM, ZBH.N - Zimmer Biomet Holdings Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. Suky, 2025, I mean, you have an LRP out there that's basically, I think, mid-single-digit growth on an annual basis. EPS, I think 1.5 times sales is what you've said. Help us understand a couple of things, just some of the puts and takes for next year and the ERP issue this year, conceptually how to think about that next year. Does that create easy comps? Any color on how to think about '25 would be helpful.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. So just to be clear, there's -- some of the lost sales in '24 may come back. Those aren't -- you're not assuming that they're all loss cases?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : And what -- how would that be? I mean why wouldn't someone -- why wouldn't someone just -- if they can't get a product today, you do the procedure with a different product today. Why would they wait? And why would you have catch-up sales?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Okay. That's helpful. Suky, while we have you -- any update -- or Ivan, of course, any updated thoughts on M&A? You guys have been pretty clear about deal size, about return on invested capital.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : How's the pipeline?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Pipeline of deals, I mean.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That's helpful. And diversification, you mentioned that a minute ago, how do you think -- well, how do you define diversification? . REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 12:00PM, ZBH.N - Zimmer Biomet Holdings Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Before you became CEO and many years ago, the strategy was to focus on musculoskeletal health. You have a little bit outside of musculoskeletal health with thoracic, right? Or I guess that could be still -- but how important is it? Are you still focused exclusively on musculoskeletal health?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That makes sense. And you got a question at the Investor Day on foot and ankle because I think it was a good question. There's times when I've heard you talk about being interested in foot and ankle, and I've heard other times, it sounds like it's less of a priority.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Do you still consider that a high-growth segment?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : That makes sense. And ASCs, do you have everything you need today? .

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : We talked about it a little bit yesterday, the sterilization. How significant is that? Is there really an opportunity there to help ASCs with that?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : I don't know if you're willing to comment on this, but on the Q2 call, you talked about some choppiness in the procedure volumes in the second quarter, and July was much better. If you're willing to comment, great. If not, I understand. Just in terms of like the global procedure environment, for orthopedics, if there's any color or commentary.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Ivan, any additional insight into why the second quarter you might have seen it -- I know it was only a couple of months but why the softness might have occurred in Q2 in the US..

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : But the procedures, I think you said procedure softness. Do you think you would just search a lot of territory --

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Got it.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Ivan, we've had about 2.5 minutes left. What's underappreciated, what haven't we covered that you want to share with people?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : One follow-up. Is it too early to think about applying Persona IQ into other joints?

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : All right. Ivan and Suky, thanks for being here. Thanks for participating in our conference. Appreciate it.