Zimmer Biomet Holdings, Inc.

Second-quarter net sales were $2.177 billion, up 4.8% reported and 4% organic constant currency; U.S. organic constant currency growth was 4.6% and international growth was 3.1%. Hips grew 5.1% constant currency, Knees were up 0.1%, S.E.T. grew 3.4%, and Technology/Bone Cement/Surgical grew 21.5%. GAAP diluted EPS was $1.03 versus $0.77 in Q2 2025; adjusted EPS was $2.07, in line with last year. Adjusted gross margin was 71.1%, down 120 basis points year over year, and adjusted operating margin was 25.7%, down 210 basis points year over year. Operating cash flow was $448 million and free cash flow was $308 million, up 18% and 24%, respectively. For 2026, the company now expects organic constant-currency revenue growth of 2.25%–3.25% and reported sales growth of 3.9%–4.9%; adjusted EPS is expected to be $8.47–$8.59. Management continues to expect gross margin around 71%, operating margin to decline a little more than 50 basis points, free cash flow growth of 9%–11%, and about 193 million fully diluted weighted-average shares outstanding, with up to $1 billion of share repurchases planned.

Ivan Tornos framed the quarter as evidence that Zimmer Biomet's commercial transformation is working better than expected. He emphasized the company's three strategic priorities—people and culture, operational excellence, and innovation/diversification—and said the U.S. sales-force specialization is already improving productivity and should make the company stronger through 2027. His tone was confident and upbeat, especially around product launches like iodine-coated hips in Japan, ROSA Shoulder, and the broader pipeline of more than 50 new products over the next 36 months.

Paul Stellato highlighted that Q2 adjusted EPS of $2.07 was flat to last year because higher revenue and a lower share count were offset by Paragon 28 dilution and investment in the U.S. commercial organization. He noted adjusted gross margin of 71.1% was down 120 basis points and adjusted operating margin of 25.7% was down 210 basis points, both in line with expectations, while pricing was an 80 basis point headwind, within the full-year range of up to 100 basis points. He also pointed to strong cash generation of $448 million in operating cash flow and $308 million in free cash flow, $410 million in cash and cash equivalents, and a larger capital return plan with up to $1 billion of share repurchases in 2026.

Analysts focused on the U.S. sales-force transition, market growth, pricing pressure, the hip and S.E.T. franchises, technology/robotics strategy, and what the setup looks like for 2027. Management said the sales-force change is going better than expected, with lower attrition and higher productivity, but acknowledged the company is still in the second stage of a multi-stage transition that should be completed by the end of 2027. On market concerns, Ivan Tornos said Zimmer Biomet is not seeing a deterioration in orthopedic demand, believes the overall market remains around 4% to 5%, and sees pricing staying within the flat-to-100-basis-point erosion range despite payer and ASC concerns.