Zimmer Biomet Holdings, Inc.

Second quarter net sales were $2.177 billion, up 4.8% reported and 4% on an organic constant currency basis; U.S. organic growth was 4.6% and international organic growth was 3.1%. GAAP diluted EPS was $1.03 versus $0.77 in Q2 2025, and adjusted EPS was $2.07, flat year over 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, Zimmer Biomet now expects organic constant currency revenue growth of 2.25% to 3.25% and reported sales growth of 3.9% to 4.9%; adjusted EPS is guided to $8.47 to $8.59. The company still expects gross margin around 71%, operating margin to decline a little more than 50 basis points, free cash flow growth of 9% to 11%, and about $1 billion of share repurchases this year.

Ivan Tornos framed the quarter as evidence that the company’s transformation is working, saying the U.S. dedicated sales-channel changes are progressing as planned and are already improving productivity. He emphasized three strategic priorities: people and culture, operational excellence, and innovation/diversification, and repeatedly pointed to stronger execution, new product momentum, and commercial discipline as the main drivers. His tone was notably confident and upbeat, with repeated comments that the company is on track for a stronger 2027 once the transition is more complete.

Paul Stellato highlighted the core financial drivers: higher revenue, lower acquisition-related costs, and a lower share count lifted GAAP EPS, while adjusted EPS was held flat by Paragon 28 dilution and U.S. commercial investments. He said pricing was an 80 basis point headwind, adjusted gross margin was 71.1%, adjusted operating margin was 25.7%, net interest and other nonoperating expense was $71 million, the tax rate was 18%, and fully diluted shares were 192.8 million after $500 million of repurchases in the first half. He also noted strong cash generation, with $448 million of operating cash flow and $308 million of free cash flow, and said the company plans to repurchase up to $1 billion of shares in 2026.

Analysts focused on whether the U.S. sales-force transition is creating a temporary SG&A burden, how much growth is coming from new products versus execution, and whether pricing could worsen given payer and ASC dynamics. Management said the sales transformation is going better than expected, is being intentionally reinvested in to build a stronger channel, and should be completed by the end of 2027. They also pushed back on market-health concerns, said they are not assuming a major deterioration in pricing or demand, and pointed to low exposure to ACA-related patients, stable waiting lists and cancellation rates, and continued confidence in the underlying orthopedic market.