Zimmer Biomet (ZBH) 2 May 232023 Q1 Earnings call transcript

Good morning, ladies and gentlemen. And welcome to the Zimmer Biomet First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today May 2, 2023.

Following today's presentation, there will be a question-and-answer session. At this time, all participants are in listen-only mode. Instructions]. [Operator

like Officer. conference Please now Mattox, to turn Communications Chief go to would over the Keri I ahead.

to headquarters Thank everyone. you, first are quarter Indiana conference Zimmer We're morning, you happy and joining you XXXX Welcome operator from our Biomet's and to be with good call. today. earnings Warsaw

Bryan Chairman Upadhyay President are Ivan Tornos. COO, and CEO; EVP me Joining and Hanson, our Suketu and CFO,

remind SEC Actual you, obligation future will of detailed we discussion may that filings actual update to uncertainties. comments uncertainties of statements forward-looking of results Before these like get those no call statements. risks expectations I'd even addition limitations risks we during forward-looking to from Please include materially to or materially. inherent and to forward-looking the the if statements, results our for assume change started, differ in this and by a note such a these our to indicated Please due statements. forward-looking variety refer

the comparable on financial these most can earnings found measures. which the include zimmerbiomet.com. measures website, is to on Reconciliation directly certain non-GAAP release, this Additionally, financial within our of measures be included QX call our GAAP will discussions

the to call With that, I'll turn Bryan, Bryan? over

And often. All We the call don't for right. this Thanks, thanks too joining Keri. morning. do to get everyone to us this on the opportunity

a about bottom it. line I'm is Suke raising that better we this going just significantly and full went a minute. And going in our year of Upadhyay of to call advantage much as top which result just take momentum, phenomenal a was importantly, to talk And outlook, saying to quarter, are by expected. the going simply I'm where So than everything start pretty

then will our taking With Suke a for And about performance. into call, the forward addressing. and the that save that for to maybe more I'll financial your we'll performance plenty the we And rest for and of for and drivers look talk then year. that get details quarter guidance importantly, also we our more step QX time of make today's the said, of sure back, which questions

we the and And I just truly want team. minute just it of to say directly personally to a say do before speak ZB thank But really to you. any thank that, you, take

yet frankly is For challenges. you doing environment have expectations. And an And with impressive this And proud it daily environment it still fluid. what navigating again, us that team improving, delivered seem navigate very now. like there's improving, you're our right to it beyond while question presents that is quite of truly it's is challenges that no I'm how

in most proud I'm the each to world. living I'm week, roles that and mission But pain a ZB really the that truly around and about seven day, the it's you're what the making how proud mean to quality-of-life eight we we improve together and is and a And every of resilience dedication, the I people seconds, do difference. bringing hours first every very alleviate days your It thinking is we do day. And a place. together, which the XX innovative of as all know, for the are

patients, importantly, do for what Thank every customers thank what for serve what most we day. patients all, do for for of you you and do the you most you So you. ZB, you and our that thank our for

headwinds that that our on COVID-related from and procedures a pressure guidance first into now assumed the elective staffing as Okay, experienced at QX recall year, so the both felt quarter. of look the but quarter. take during easiest comp And also would have the challenges would may you of we let's some year, coming the some put

in the pressure be would there We that also assumed first of pretty quarter. supply a level high

the believed also less But all QX impact variables outside three that the bumpy. to year of be the improve comp, business. these then providing of assumptions then Our easy would throughout would headwind pretty

so we has excellent putting leveraging second, no some managing considerably than was first And procedure we supply muscle pressure constrained that job But anticipated, And Well, better no environment, past. or why a much from originally expected? on is it happened better the team than supply stronger environment Okay, in the the the real it's and done manage material meaningful foremost, in impact was Make we having quarter? what challenges an mistake, problem. And we than business. staffing probably or from memory really COVID almost recovery actually the quarter. anticipated. this

third, is even And of our to to innovation because really And anticipated. our execution product benefit team's it's think I with stronger to importantly, going new continue then rest important traction the and we provide that's the year. than and

knee we another of in global And ex-FX and this, year-over-year quarter of large an businesses saw on XX% XX% approximately basis. so growing our because and hip very joints, with positive momentum

headwinds from headwinds our that about then business, of Our more overall than half anniversary remember, that should by offset we are expected, you headwinds as from will back which these in sports, therapies and by partially in this low-double-digit reimbursement our driven restorative anniversary, was we've these S.E.T. strong they being have where S.E.T. business, CMFT performance year. as this before the talked drivers upper and X%, growth grew change category extremities. in And

then finally, XX% the category other quarter. And our in grew

If this this form to a And officially factor confidence extremely inter rounding an out we think our operative with surgeon. the do portfolio. Persona the pretty new it's knee the that is launched anatomic stable. Persona this that And tray the good family family new real this it momentum versatile, alone, really reason knee decision this a is strong Persona it's cementless strategically is just in the adding our design OsseoTi, it and is and quarter. high. needless because to And there's is keel you quarter And say or only cementless it's was business about and for competence. So we possible extremely and cemented procedure for can

potential this can to there. big a quality cementless far that's the reason, extremely been they the We to ability this And for the then because back bone of as have go with And has quality so for to penetration, the but isn't as bone a into deal. believe this surgeons launched reasons, we've pivot feedback cement questionable enhance cementless, lot procedure and intent product. it other use a customer will that positive,

And know, truly this do as so. premium we're is product And doing already that or already And cementless in is we can higher to about ZB that. accelerate mid-teens. believe can growth we for get penetration. But penetration XX% you the this believe that that our may and excited

It's still early days.

year for as company. sets full is is for no franchise, the become a middle of the Our knee mistake, Make planned driver for real overall our more this but this available. not launch just

we're excited. So very

we business. this back remember, growth a very in gives that And and we our our our have closed sports, helps dedicated that global of that you confidence Embody, which this place and And market, sports commercial expand with us and into to February, combined this better. serving put strong pipeline in channel we very continued innovative access pipeline also As ZB's also our sports acquisition customers innovation patients for providing high in in franchise. market, attractive is presence products this investment while medicine our an differentiated in

Hammer you the you're surgeon designed AAOS would reproducible our if on strike, dial individual to hip for at that up actually depending seen product, differentiates force the ensure the back on be the procedures, the Hammer and And And have need. devices while which to or of dial the other previewed to versus meeting, compaction we consistent this ability more personalized, is market. compaction patient allowing

We this our the Hammer about consistency which third in important could now. actually we're this surgeons, differentiated current of expectation really say, to to increase also for only believe the is right this needless the is And procedure product. So quarter excited but year. launch efficiency, not

that if these we've Hip than Persona introduced products talked building Shoulder at the we've through other about XXXX majority we're be with between new launched that more continue year here XXXX, Identity growing of planned system, actually And and launches this XXXX, products XX faster. this end products growth just XX of you those stop product to with to is again, coming in launches end combined of on total, another the in the or the And products, markets. the those X% in Insights, and markets doesn't momentum, of with geared X%-plus IQ, from majority the look

sustainable the and transformation our that mid-single-digit company result average of mix ultimately, shift portfolio, it because gives portfolio that to for positions term but markets continues product our our weighted And also revenue not of confidence as a improves our And market growth, short growth. growth. more to us this only

our And our with positioned to around and a value future strength our members' and team to this in well as balance today pipeline, and company. be of mission kind increasing ZB the sheet, execute, product ability our deliver traction achieve continues to of

with I'm our at take for QX look and expectations And closer turn a going to Suke call that, the to over XXXX. to latest

Suke. Okay,

good everyone. and morning Thanks,

quarter than we mentioned, Bryan As results. with had an better excellent expected

are As a narrowing year result of our increasing strength financial the full our and and outlook. performance, of normalization we continued market

same updated currency first commentary my that, be noted, With period how my adjusted and it operating guidance. quarter will our a the will let's constant And full XXXX. to and be in year the about to results turn otherwise on statements Unless in basis. compares

increase excluding Net increase sales basis an of XX.X%, billion, $X.XXX of currency. and XX.X% the were a impact of an reported on foreign

rates, about back and As driven expected execution benefited from easing we last from elective procedures chain normalization we've product the by on a Overall, comps, of cancellation recapture. staffing had points faster lighter uptake. day basis we call, headwinds, new strong noted quarter. related some tailwind this of and than commercial Also, business selling of backlog recovery and the supply of our XXX

ahead supply teams pre-pandemic these U.S. a we continue XX.X% of great of job procedure headwinds, volumes macro to to and cancellation face have elective challenges. well doing levels. expectations rates mitigating been recovering returning was growth with While procedure our our

and APAC, by ahead both China XX%, our saw we developed anticipated, International results some as And EMEA sales strength and grew pressure but line growing expectations. faster expectations, across in generally of with markets. in in emerging driven were recovery

knees growing us business and with XX.X% category XX.X. growth performance, the global at grew XX.X% Turning international

regions. that all and in the full Primary, are form cementless line. results We we across we Specifically, Partial, very and Persona, strong now uptake the factor. And our encouraging saw Revision full portfolio out cementless options have rounding product seeing new Persona product traction OsseoTi across

also This full and continued benefit, improves mix enhances but Persona product line the supports utilization pool and not our through. of associated only Rosa product

by international up Global the driven early of up the the along U.S. encouraged Rosa across launch. XX.X% XX.X%, And ongoing Avenir and GX hips of traction product hips grew uptake Insight continued impact XX.X% we with lines, Hip and by hip. are with

driven offset the which key category This across which parts continued S.E.T. of this will performance and medicine grew grew The by CMFT, all by therapies teens. X.X% S.E.T., anniversary was upper that partially reimbursement in strong restore sports our of focus in growth of lower the changes in other year. includes mid extremities, areas

XX.X% our some orders surgical Finally, time. driven repeat not and may over larger by grew other category which partially products

Moving P&L. to the

$X.XX, For at towards $X.XX the share the year. we quarter, share in of per diluted reported prior GAAP GAAP earnings earnings per diluted compared

infrastructure revenues the investments ZimVie. margins to improve increased, losses this in earnings driven related net commercial higher by in year and and While quarter were R&D prior gross

Adjusted share and first XXX On per These by XX% were earnings an points performance a year. the margin quarter was to was favorable gross represents the large in XX.X%, from up from basis adjusted mix prior currency results related foreign increase gains. impacted joints $X.XX positively diluted XXXX. hedged $X.XX, of basis

our margin broadly with gross line was underlying items, to these expectations in inflation. Excluding related

buying incremental seeing We're has pricing, inflationary and pressure overall from stabilized. largely manufacturing but some spot pressure contract

primarily first better margin XXX profile. around was revenue gross discipline continued margin points Our adjusted up and operating quarter XX.X%, for our by investment basis the driven

and in Interest with XX.X% of were million non-operating expectations. tax of expenses broadly adjusted our our $XX line rate in

cash cash free equivalents quarter of totaled and cash million. million. flows approximately million the liquidity. $XXX cash We $XXX and ended and flow with Operating $XXX Turning to were cash

We're revenue on and results ongoing currency QX narrowing and And to for our basis moving execution, of range expected expected expecting with now X% $X.XX. headwind adjusted strong growth financial to raising XXXX. updated Constant strong points. $X.XX Based to is guidance our to X% versus year our full updating outlook foreign exchange now XXXX we XXXX, our be XXX are EPS outlook. currency also an

operating the operating would margins will gave this slightly tandem we confidence your While flat to or be an we expand that QX in gives improved initially us color better that margin outlook results XXXX, year. rest adjusted of with in

We with be tax previous continue commentary. our non-operating to expect interest expenses, our along line and to with other in rate

of to to free expect a to for Finally, $X flow we now increase $X.X range billion the billion. cash year

throughout growth In terms day QX will innovative from should products, cadence which our quarterly of quarter improving lighter Again, year. of basis well tougher points. and are day the unchanged. QX benefit selling year, as will about selling about QX contribution XXX days by selling of comps and followed expectations supply net be expected basis remain be and the QX, the from tailwind highest revenue as a XXX neutral net a headwind and given growth for points. quarters to have full impact new a

the second margins first operating follow revenue adjusted half better than margin half. to largely with slightly expect We operating being

while posting strong we delivered results, summary, earnings excellent in beating category In internal every performance. very adjusted expectations nearly top-line

pipeline feel our our we forward. as is and confident move executing well real. business Our very is delivering We momentum is

back With Q&A. to Keri the the start to that I'll call over turn

Suke. Thanks,

the a possible we Before yourself have please? one we so question a the reminder and operator, first call. we can during that, many just limit quick that With the as follow-up start session, please Q&A to questions question, get as may single through to

first Lichtman We'll Oppenheimer. from with question take our Steve

congratulations start market. strong market. And for first the hip guys. very and the guess, I the and for one, to want knee morning, quarter. on Good ZB I Obviously, on

of bit and as you was about a pricing here growth I play As if what market where procedure and of think is, stands noted you sort a underlying sort comps you wondering talk well? maybe little growth talk could about part.

Steve. Thanks and call. the on Sure, hello everyone the This question. Suey is to for

the it first I'd and as regions, our flowed all very quarter, really had a we thing was step including our of can see The P&L. the just of And across all segments, through that overall, business the back, good first through you results. from way all

of the really entire happy So execution quality and the about the team.

We gave always had think We in XXXX. a you about was guidance back still drivers. the talked be comp were when year. Omicron the our would that did dealing XXXX. QX that we quarter with growth is initial That strongest we key two for Clearly, quarter. first strong really our versus of benefit One

a day about talked of we points. tailwind Secondly, rate basis XXX

out year-over-year knew segments, see that we strong But better than every we our business really as So and of I achieved would growth. across we pointed that one earlier.

volume to staffing We chain our and supply continue were challenges where and thought expectations would recall But before. headwinds. also we see procedural some challenges

pressure. that underpinned didn't previous actually we guide. to macro So much our But overachieved or as see relative those just COVID factors. Where staffing we

We marketplace. also come the saw some backlog into

a And expected. also our was then better so from And standpoint, strong. incredibly execution it was macro than we

across also innovation Our but strong was very chain. supply commercial

think sort we happy with really going for quarter. everybody that, executed where store that And of So forward. the will

in rates. question on look, Relative overall I to market specific growth. say, would growth not your we're yet the just market normal

some comp there, tailwinds. very choppy have to challenge course, year. a going face and real by supply some clearly relative partially chain be we're headwinds comparisons prior think to continue versus still to continue staffing do to out of offset continues backlog We some You the to

So are again I would and and But we're very think, normalizing, very say they're normal but encouraged the about they're they're strong, I where anything markets, going. yet. improving

being XXX a Pricing this always with it we than kind bit in in erosion basis of right with to XXX expected bit, that of that We where And talked XXX little in be. the the points year we've basis say, seen quarter would expected traditional where line to was was we about a line better be. at historically. to I points

is you a give on you could on was is maybe for particularly launch product, the on is thoughts product Thanks. outlook us going limited updated Persona proposal. how new one that, on side thoughts NTAP if the after I And benefiting thanks. wondering your yet the IQ. and your that the Great, that latest

Steve, you, here. Thank Ivan

of late excitement lots So Persona IQ. of as on

XXXX, we're clinical additional advancing Journal of the October Wall attention. were we points. is a again, nature We've got of of data contracts of the kicking in rapidly lot As indication release, than gained now in that NTAP we north a XXX more late, with got And of in past, said the over all limited featured the We that U.S. lot commercial. obviously, million signed got excitement. as Street market which our in that's

four is tell release. What it do the are, this to In we of proposition. where nothing product I'll this believe be market two comes best by we the Number marketplace? terms is We're limited launch all changed. we'll to to key you when way clinical as as position value speed do data? a of on position the proposition has product with this the working understanding end XXXX. We in value What things commercial in well the

bit Number two, a make imagine, it, all do data out as the back and this is the best you a forth we utilize how with component, there can data. ownership, of of do we how

So can it. that this regard. lot I tends in act would we with a say And on

making involves is to customer is four, that, And number is involves sure This that then this three, this device. the is how we caregiver going overall, the sure We're make education. education, best-in-class monetize seamless. a Number do experience patient experience.

we've areas, a in So at the we're I position to to advancements. the four believe going tremendous launch in those of end be made year. key do And

just difference. to market breakthrough benefit going that patients market, The every it's another technology, And are that to reminder first is NTAP single reimbursement. is impact make the a additional a it's to but to that will going sizable not this from patient, of amount again, new

So we guys you is forward updating the look the down high, to and exigent road.

Ivan. you, Thank

the next to question? Operator, so Thanks Steve. go much, we can

Singh We'll go next RBC. to with Shagun

strong trends. around taking and just I congratulations on so QX question. And a guess guidance you print thank here. much really for the a Great, question

in How X% stack FX Can us shed that QX. on X% guidance to you versus light walk expect ex is April through up around expectations your cadence, perhaps for business? about So trends just XXXX. you some your to

I for X.XX, was think sales your implies prior to the looking QX. strength guidance obviously X.XX consensus and respectively, and EPS call, of beyond

any color there? So

does term, is it for really what X.X%. believe for longer forward mean I then And growth the for XXXX versus around consensus? profile Zimmer going

Thanks would so So there great. any be color much.

through. you Suke. to good up FX. that coming guide the a definitely And rest Yea. X% the in in you saw year first our I for we're it's to think X% very Thank year to and expecting question. quarter, that quarter the carry in We of Shagun, would see momentum ex

From a quarterly growth about goes overall rates from step Steve's in on tailwind also rate that first I the that about standpoint, have comp here to of the cadence from the but each quarter. expect one to quarter. back would in And basis it down talked question, quarter benefit I first the day first XXX we that quarter in really points

first being perspective the being net fourth little being growth So you comps the on based second the a highest rate and quarter just day think again, from tougher second and should lighter a that the headwind. highest about, third a quarter bit and

should how about And you that's think so cadence.

our that about you lifting Maybe of through Bryan, by the guidance pulling we than rest we're as actually do want more raise. to growth of definitely, underlying But talk outperformance. move first the just part forward. momentum as the the that year We're quarter

exactly level continues grower we're X%-plus do I market. Suky but grow markets. a that our higher. It's stated that talked believe as our the about is obviously, performance right before. normal now, even mean, it confidence confidence We in based in And today, we've right on not to our before, we're just normal

build scale to attractive design. more submarkets our in confidence and We continue

on any April just And color trends?

increase guidance. say, continue would I in support our to

had So an continue the throughout our year. of to assumption initially guidance -- improvement or things showed

that guide well in prove Our early out. in April increase to that continuing days the assumes in current as

Thank you.

to Thanks, Shagun. question, go we Operator, the please? can next

We'll Jefferies. go next to Matt Taylor with

hear you me Can guys. Hey, okay?

We can.

Great.

We I know your excess work have want Because gives to to now that don't of a Suke, with. ask maybe you But you to you fortunate exactly. about So this margin you're a lot growth. question margins. point,

drop progress. it. And And are our so you But excess to excess going growth are how margin? care about talked to you what if is you people use you a is this I I going through? to to about use it know of thinking ultimately, a while, you that? lot What you've enjoy going for Or in about to that's the margin going think, Are terms how let reinvest? are how

thing the margin put position the feels it a I'd is be additional right, the good first Yeah. that in to the from profitability growth where that. optionality, to where comes deciding that in you upside of going or say have you're that

We be We're a strong, innovative invest against submarkets right We're faster-growth have profiles. about, to the in to very going good disciplined a profitability pipeline. to expand and and in going to continue make in robust continue the way. to to continue that way, have business choices continue focused

We strength line shift believe growing over line. still of that driving in make discipline And we really bottom that do that profile still expanding we're the and in the and margins the top sure that the while efficiency comes investment growing can team time. while from overall mix the to

So we time. think do can over both we

one And Great. follow-up.

no that for one is growth, while. the what's from may knows that, so happen there be best like here, And a for it of organic And a you comes excess going margin to But have type demand seems while. may some right? right? excess quite that So

about can So a longer, then grower, that long You how how guess, does last? but if thinking clearly, a, X% And then it yourself talk a business? outperformed does change you by you I the that that? that last mean just as you are how b, And I about run how lot.

Yeah.

sort to remember Just about. X% point that to underpinning your talking QX there, we've beyond large going driver key been overperformance comp that the to benefit X% of was back in relative a

to that good clarity we've around want got sure make just So that.

number, be able that normalized again that do and normalization disappointed if confidence X we execution, Bryan weren't in that, the achieve is based more Having a to and based to have X on about, on we talked now even think we'd markets. as our markets on pipeline, durable said of our based

So over time. that, that's we think sustainable

if reinvested I the driving want provides still about, then as talked the right? we into we And where while profitability upside That that can story all a was that's be, a back ago, revenue leverage, business mean that to be to margin margin underpinning beginning the expansion be do the business. to which do few way and back the our in while high-quality investing is it through back to expansion. years able way this to

guys. Yeah, you. Thank

next Thanks so we have much. Operator, please? can question

take Vijay with our from We'll next Evercore ISI. Kumar question

Congrats is perhaps Thank backlog now catch-up some here. product like pull of really a on share a the first you on of feel growth here. you, with I'll that have, debate do as forward My this strong. in versus in start Do market you and the gaining your guys. industry? against one as portfolio perhaps you see here, is forward demand also Bryan, there Zimmer pulled being market demand

to, Well, backlog think I'll which about maybe talk standpoint, us pull could I about just see say talked quickly you maybe forward market. what speak And you consumption. when then from versus I you a market

So maybe backlog. about talk you could

From those us a versus basis, the sequential our market depressed eight-quarter at is we key at, on always we not order as specific perspective, competitors. look any or look basis, an vectors. specific talked across year-over-year about trend it But about stack a What try we felt a any good this Obviously, about, quarter. to basis overexuberant too in versus do three quarter. pretty get I've

very versus started. truly about I and I order position XXXX, of QX I to back way market. And feel trend, we're our at the believe consistent look just all that good getting go I If

from better I So market good, and over only it I versus perspective, will feel time. us get think

the If you what think to about backlog, we maybe in could the saw you quarter. speak

Yeah.

performance. the original our for expectations, less of talked good of again, we So saw the that, navigate about outsized lot a above We we year-over-year supply pressure able talked backlog. than that factors and variables, expected. to we inside about, but were chain were execution. are I some a commercial and quarter there drove I including number

expectations relative into change smaller to the backlog as our of That's overall to that the performance I the would do the probably forward. move say in component guidance rest was year. We QX. built of we continue our expect for

bit to And to that the marketplace. tailwind so of or some a yeah, good seeing in offset of challenges relative have we're the it's an other

I Understood. Can expansion? what points in you. drove China BP, And on of just XXX this sequential And the And Gross us you impact for up margin margins what sequentially. et was cetera, margins on basis look points at I one gross Suky, QX? think, by X%. revenue basis remind inflation, margin operating guidance, from of up when expansion basis the Clearly, implies XXX leverage? gross all midpoint, operating Is raised coming EPS your at versus XX margins that it points. by north

Yeah.

the So thanks for question question -- second here, Vijay.

The is first a to going step I'm bit. back little just thing

part SG&A, on would revenue margins balance earnings our then growth, story, stabilize as the next ability As out we we that which of would the about to Zimmer better company. expand expansion us give platform margin increase Biomet, from gross overall the of leverage to margins 'XX talked Side for a the few years.

So XXXX. seeing the play think that you're just I to that be strategy and and to continues story, here out

still pressure was going as our Remember, year. to 'XX. points in That talked into we of true. basis roughly That this about capitalize we P&L remains inflationary came in XXX 'XX,

putting In fact, on pressure. We're doing spot some of I inflation. prices. for probably pressure areas It's certain seeing chain still a additional incremental of bit a contract and of amount talked raw materials. some modest manufacturing little buys supply about supply incremental

again, just Nothing this But stabilized. XXXX. something largely to has our the and keep for significant, of rest year into want eyes on inflation we but

find versus and offset that, definitely able be margins So year-over-year. me, largely a in that we've is done to points gross XX% excuse headwind on despite line, incremental to right? the XXXX, said that basis XXX teams would But that coming are So in we 'XX that. be way going to relatively

Now that versus first exceptional variables but in the three did our versus in volume mix especially led see pronounced expectation. world. also There around the drive are S.E.T. category FX growth say a U.S. of quarter, outsized of biggest joints and hedge given the quarter the but are we also and that. some right, and pretty rest gains, a of also other sequentially, performance I'd benefit, number versus But year-over-year the the large Saw also that year-over-year. us gains our

are So three that going dynamics are the of on. kind those

think In quarter, through still first at but level, same the a three the okay? impact, the not we expect we So to -- those we as of positive the go year, play variables rest XXXX. rest way the gross this QX, is year in about year the the will step than higher down but the for to it overall will be still was versus margin for of

being an in gross about a prior 'XX So consistent okay? underlying underlying So definitely with on you should margin think line XXXX, still with still tailwind, basis, year. it is

margin that is think of and directionally you're off The think our gross right that, is the primarily upside to that from way I coming implying EPS about operating margin. guide

So are underpin EPS building the blocks our that year. the raise for of some those

question? Operator, can next we the have

take question We'll Marcus next our from Robbie JPMorgan. with

growth dive hoping us market from was better you and on and growth definitely just you understand and drivers for of question, It coming products impressive, how could quarter. the mix knee was Thanks the Great. some to Maybe really of nice a of from robotics, into help Thanks. dive the growth behind maybe into the could was start, is hoping there? really than rate. congrats much new I some drivers

morning. to a Hey. the details with down number break introductions product Robbie. performance. to Thank innovation. in and new bucket and maybe what. clearly, And two, probably the the commercial two had I I do you what's this lot Slide on execution Good I'll all driving start areas: you, with performance won't But talking will key

is with factor know, we break Las Persona traction. down customers also penetration are But And you, you is OsseoTi, competitive robotics. again, We've OsseoTi As tell new cases size ROSA. that our the form for all won't that we've seen done one third Persona with launched that and platform, increase. I I'll OsseoTi cementless an that of accounts. increasing roughly Persona during personas gaining seen the in and combination, of increase in robotic Vegas,

overall, Persona Persona iQ, too driver obviously, gaining the across globe. So primary there. definitely traction a ROSA but early with is

or in Asia CV the Pacific. gaining momentum. you're that's or implants whether ecosystem, the the Europe of and you interconnectivity The U.S. is in And momentum hit

it lot again, unpack So innovation. to a comes to when

team growing very supply On people incentive We in regard. were knees very plans sure commercial Around in the flawlessly. asset. pulling we're not while are has in got around of 'XX think, and what execution, in in we XXXX. challenges, proud place making And that new hips, effectively, executing done that that I navigated

incentives in EMEA very and have We again, new APAC. other is I geographies going commercial the well. around execution would And say,

The doing is past, one we're the talk is in grade. last This ASC. area not thing the I'll other where about

lot three our in of about people, is hundreds. there. thinking The number people portfolio. contracts a in We have gaps, contracting and and people ASCs of added definitely We major group the portfolio the they're

today, very ASC around our growing XX% So the nicely. sales and that's XX% of come to from

again, the of this commercial level innovation comes and buckets performance. it are execution to So key two when

of size get it latest thought competitors them And your right faster-growing we've helpful. valuations about for to M&A, for market. others. to in and thoughts heard about and of maybe the you're of some specific M&A from out markets a ability into diversify thoughts of Thanks. just talk using diversify Really Suke, about Bryan be on there maybe you more the it how and Zimmer, your parts M&A now. from I on past in talk than to lot away terms your thinking would core great There's your

Yeah.

as into -- on much as assets out I seeing expensive. valuations, in quickly there I our valuations get as not things we combination. a not that, with Maybe see think recently, as the say expensive So more necessarily is little to And areas. before we expected. focus still good for. then not come capital by little I certainly look would great that I'd are downward today. pretty fact pressure combined better is maybe a being at a were that as hoping have just We're but

That said, try going that we're still to we opportunities there's think pursue. to

We absolutely the in X Phase of are transformation.

many portfolio are technologies times, to the organization. X As that we Phase able focused is be using on capital said attractive to transformation to acquire

important extremely and a we're to it's going That's organization. disciplined, this not not one, on number mission focused very to if look centric. target at very the we're And

ultimately and point a space our and we're a that in a to see we needs growth. faster organization, WAM to a as that, us need already or if need We at average forward. move growth are We leadership to space. then drive our result path mission-driven accretion, EPS so to target into We market weighted that helping increasing that our see move mission and some growth of revenue

the So deals. of types those are

want there's of the inside grow may fast then recon, in to in And faster the through exciting, acquisitions enhancing market we way. some we that, overall we're our which a super so seem that but position looking at scale in growth consistent subcategories build can growth that fact of fast not is than subcategories

going also we're diversify. look to then And to

kind acquisitions, orthopedics of looking of at in outside for and less category Eventually near diversify which again shown would say our orthopedics. to we So about outside to in and that's would or grow category. are smaller to revenue outside set faster say of look And give us of of term, put in $X us. the opportunity parts likely that looking of diversify we procedures the forms that would other we at midsized in electric already would growth, most we've business orthopedics billion us to deals, other to in quantify that mainly

a near probably in vest term. would we And stay in the the Orthopedics to closer little

thinking we're right So that's the about it now. way

want Anything add else you to that? to

period the hard debt improving a We've strengthened in work through I the would done years, just down all really say sheet. team last paying performance, the few that financial challenging COVID. to even the balance has over

now, support perspective. somewhere And to Right everything great can debt traveling a leverage we're around capital high-Xs net our so the thing from Bryan mid- ratio that spoke is the about. to structure

half amount there's you EBITDA, to be billion turn, that see a of firepower to relative on would us. substantial from would EBITDA available the those adjusted billion a And only if numbers $X and turn M&A of target. to took that you $X.X by So augmented

way Bryan saying about. got we've got sheet that to the talked So capital a structure, what balance support we've of the long

key wanted Ivan organization We the put humming. transformation. about we phases this. into what's That just was to, we like very executing business the was organization the It's have. base spoke about And who were we disciplined that, to make that sure

Our very level is confidence high.

move only that to into do to now it. balance we are transformation. do the X So ready not We Phase sheet have

capability. the have We

the business. base of place in and we the team right have execution have We the

So we're excited about Phase X.

Thanks for the question.

question next in the get queue. we can the Operator, Yeah.

Piper O'Brien Sandler. go Matthew We'll next to with

a How three through taking you've years? for new Ivan, products years. over question. talked think product Thanks number that the lot said to XX introduced about does next and of the the compare Brian the you I introductions. past you And three

start to listening got probably us I sense are are general set product want But to specifically? much. touching going those And you've with traditional guess, areas power kind then new And they alleys, Are give just competitors going those going give where to know outside to don't some you too go your you of us I a your introductions. can maybe of into go?

your Matthew. for thanks question, Yeah,

XX commitment So to also first product But quantity, the through in things next do it's we referenced new from launches new at is quality. is the I past, XX. least XX first, Not around the not every XX XX products it's over think new we just created And equal. the months. the product launched

instances, they first products so In accretion to in WinGuard above. growth or market. excites of what are is that areas They're differentiated. them that, that most they of launch is, drive Matthew, And X% me for the are And many are this again, going are. to about type

I'll is to are excited in getting three already about new In but it minutes the you that is traction. about terms less, of about I'll as ago a keep tell are cementless where where portfolio, they're up -- already going, on in months full spoke go market to through it everything hour will take to or pipeline. maybe an things or we Persona of two-three we with OsseoTi me

the to is We in definitely and X-X. the goal. XX%, at that is penetration deserve range, be XX% cementless Our

robotic is IQ, generation next partial I about think, relaunched system of that. that we spoke summer Excited or about getting plenty parcel XXXX.Persona is ROSA

can at we a to the Partial will Persona is ton next I in QX is have As saw product in Revision the hardly comment growth for you a has U.S. markets. that XXXX on Oxford in XX I cementless Revision Robbie legacy look that tremendous only didn't That available Persona about Europe. one, that performance. In markets gets a the product when U.S. XX U.S. That of wait asked all into months, gained here it again. is

some the traction. is to mixed come on hips, category, hip launched reality tremendous direct In at market, the That only that gaining we are point. Hip the interior posterior company Shifting to ROSA something we with insights. is

frankly, That remarks or accuracy. a Product efficiency can in an that efficiency the the taking product. room, an and device a implanting that drives variable in making You spoke control. is accuracy impact. hologram It I operating regard. got and in It that better. HAMR ability has market drives Bryan, an patient can existing it in the cap. a spend better is opening case of a Again, It It's the energy actual instrumentation. with hour about lower driving also see of in surgical is anatomy.

announced recently cap tendon it's whether in in [Indiscernible], tissue Sports We organic. need is is a that and products it's sizeable advantage closed deal. We soft us a rotator repair, got well. giving injury On acquisitions performing inset or that we that competitive got That medtech. we whether everything through of we Embody the very

Shoulder. introduction in new We product have a

I Again, there happening will think but done, lot you, tell implant from a standpoint technology a that both minutes standpoint. almost three I from solutions are happening data an is and is happening it's

product you, So we I you seat at to competitive updating look Biomet. at upcoming an tell now truly innovation but is forward a will Zimmer advance fair,

I can Thank enthusiasm it. question you for Suke. appreciate the hear there. A

I down side, think QX. pricing you bps XXX said in the On

it's little they're little and the neutral that I And seen of a can are point competitor the bit night, less maybe you of Thanks. the this diversified. marketplace? you year, a a guys guys on for or a more report stream historically? But more last side part little they said two pricing year headwind as had you've more know strategy? as the different. You like what far a in at Is versus next actually be pricing concessions this over

things market the potentially than had if Even Hey, in level pricing have market will Yeah. headwind I historically. don't will seen tell in But think that that so over of that so definitely could our overall think remain the I pricing we that pressure Biomet it erosion the time. less to same place you, is I Zimmer intensify will to worsens. we've Matt, historically. performance, ensure at idiosyncratic that do pricing putting be we're we've a

XXX that So travel for at think near than we XXXX in can basis term the to less least that. and continue we points beyond here

the to please? question, Matt. we next Thanks, go Can

We'll Joanne Citi. next Wuensch from take our question with

And morning. nice Good quarter. very

make think a on you maybe it? I give some call, bit. forever a growth revenue normal. what Just expects a these just on get it strategy you quarters a rates your little back given and I and that basis. to approach cash strategic new flow would it's decisions basis does don't go anyone on of way summing But changes to strong these as really breathability the What you kind

through, flow as Probably driving are let on can headroom also be before to to no and major point, this will you create flow Yeah. optionality of guide, and some we tell highly by referenced honest. gives as revenue focused through, change, invest, our but to To your some us that we're let it it it growth. to going which,

that We've EPS of growth. TSR, companies in tech clear research those lot are very leading And than performers that the companies it's med aren't. second is those that And behind space. that grow consistently top a thing quartile the done in faster

in first revenue we make ultimately be So going result we're this a continue as that EPS no business headroom, as that and foremost, growth to to investing focused, when well. get growth on sustained the mistake, drives to drive of

we've have going would So we than maybe be always optionality to that little balance with the a more had otherwise. it's

And then my follow-up. as

same, we'll around of just are niggling there may You color out it, on Is sort some be? Are go what and issues put issues are maybe what the Or us intensifying those a way sight chain those call are mention that that, give that make to easing? -- away. did line there. supply they they of a staying some, there would

sterilization that effectively. tell I would I is of issues. key three problem: What areas XX% navigating will those I for we're say, going and they to will away. are issues you the very shortage, go when that I There Material say Absolutely. wish are labor account

materials better. situation On the is

come out materials. second validated with have We We've new sources.

So it it's let's I say ago. months would six probably than XX say, was, to better that

to the we On labor continue people. in here hire constantly Warsaw,

definitely would I than in position also better but bottleneck. were mistake, could more much we're a a say we have So ago. better, six-XX months much is be make no it better It getting capabilities. We Sterilization in again, a is position. will

needed it and the the manage as in reflected has can be. grow what business position that to quarter, said, to continue That a been It's us supply the we put business. in

In I it's terms of when managed But this goes well away, do that think of I have as no today. idea.

Yeah.

negative The is impacting you've it other up pretty pressures referenced. course, then, factor is got these that's substantially. our demand that all going just Ivan And of

I expected coming I in And my but I remarks, team. challenging. that demand than compliment environment to it much in prepared higher face pretty said want the that's we to I want the of know is -- the in just So again, signal

the doing These lot the is job needed. of trust where work. frustration me, lot team it's And a a It's of the to are excellent teams the day been get sure they're cases And make commercial fighting we product that globe. just XX to It's with effort. an I'm a wonderful positive of I've a really guys they're that, job. hours around lot doing of but a indeed.

question. the for thanks Bryan,

from our Fargo. next take We'll Lawrence Biegelsen with question Wells

A Good morning, quarter really here. my I'll congratulations. echo guys. nice

one Ivan Bryan. one picture, one person, big for for Just

what on for you reimbursement What And IQ, I have guys you are Do setting? And can you for expect see payers? you percent pass-through commercial for payment put a with follow-up had do Medicare. happening patients the for them Ivan, us, the filed So for knee of us context NTAP outpatient into in context to follow? Persona into one Bryan.

XX first. NTAP, Thank you. in The knee. indication. decision to you of for so The continue keep additional can with Bryan. technology the the or in, in, October around additional October add-on up years. and both enables so things an in payment last $XXX $X,XXX per payment But actually 'XX for it new kicks kicks I'll knee, short, first approval

So it's pretty material.

done. by -- it's the way, terms not In of and

components. requesting we're station be for payments and So additional other to going these base the

upside So just be I these some may to there numbers additional that quoted.

of the XX% between is to terms this be Medicare We In estimate XX%. inpatient. that percentage of patients, to for

the part we will of Relative that to question, think commercial follow. the payers do second

think data the to I data. to comes down clinical that the

but will As technology, we this care, claims to not standard this patients. going of that benefit we're clinical become expand commercial of Medicare new we from able a validate validate, will just able the that number to also of course, we're impact that and patients, the think this patients to

think question you Bryan. for So a had I follow-up

setting, payment? And file just for you Ivan, pass-through outpatient the on did

not that, no, don't We're right in as but we have now, that the process of we have evaluating any. of done

ask to question Okay. And way. a asked a in similar question. people have Bryan, I'm different this going

So running the now, hot Pre-COVID, clearly XX% recon the by in recon QX. grew market is our X% market X%. math to

the Thanks the market a return you for your point you to eventually increase that So urgency more question. rate recon the does a, do to you asking to are And expect do future? taking to for good. diversify for its things while date. some create historical I'm and M&A growth [Indiscernible] at not some in b,

Yeah.

just hey, everybody, us, important the board. it's not the That that's think recon say, indicative market. of quarter but just easy go and an I not to to for is across first back comp

But very the to market, now. it at kind without you it's performance even that haircut comp. and a have by to point look hot outsized So your right of that,

these that everybody with we things that be should with some are here think Recon I you what about there But connects that might associated are for a know But will we've eventually And time. while. things away. I that just And don't the past. saying. a here's we're Backlog sustainable. would of for there be see. think what that, recovery But certain talked period are about in go

just If I that pace. technology at think a a shift. getting And in we're very associated by about way, it. shift that's benefit with market a rapid has in significant technology really pretty Orthopedics occurring started total, there's the That with mixed

patient. So you don't new need one

market that the of growth and need innovation, technology the and just creates better because in stability. overall to pricing come You lifts that

to that. things, So and recon view, those is market elevate the going the durable in sustainable growth, and of combination advantage my we're overall take two of certainly to

areas we benefit recon area that for in this have in other are that specifically The we're investing faster us growth. disciplined that is very in

average the doing growth overall weighted pricing. said, for Recon. growth creates growth outside as market Suky then That of we're a that for than a company. And and in our fast above-market be market and So benefit. job will big the And growth us, sustainability better to better specific that's more much on

does that can I So finally, then in innovation, average Recon about stay if also our below if do we differentiated. elevate believe historical it's we business. our think And pricing our

So market take innovation. we to also opportunity that an through share have

That's do So be do believe because really Recon sustainable. going growth. and the we quarter not believe to it It's type we abnormal be But elevated. of is of first comp. could attractive

to they to perspective now, the of make don't analyzing of We're right for patient going seeing that through looking kind we're because the Which really also COVID. behavior us changing or procedure. the whether days. it the We're feedback we're changes is some get would that potential three This into on things we a but procedure. may early get that positive patient there's be do that a think decision be is

is that going people what see away, is not to confidence giving first to funnel. good. do. the of people A more procedure is because one procedure to afraid wanted be going fear people the procedure the advancements enter do goes the of lot get don't the the they technology are outcome The If that they're you may

The the faster. the second out hospital you're getting or is of that ASC

hours of So to that turnaround lot for used XX procedures times be the a dates.

then less also patient. that inconvenient the is for So

attractive. then hospital don't less is ASC setting where of to a feel safer. attracted And think ASC we get I mean I to sick by are. the setting overwhelming, go people itself bunch And to to is are it. people a more procedure want knee a The

got thing out final now. pretty you've rampant the That's flexwork right there. And is

also and confident in work. And feel staying comfortable, so people more rehabbing more

continue three market. And continue elevate the So recon things opportunity and look to to think of really going it take we're at those advantage the it. to we have to

you. Thank

Larry. Thanks,

time more in think one queue. for we have question I the

of our take next Steed Bank question We'll America. from with Travis

momentum on Hi, carry QX thanks improvement questions. you the I taking I all hear for post through guess the throughout and strong to year.

typically before in QX. on the funky Maybe And flat comps given think like and dollars, QX slightly knees pandemic to down. about so the were maybe hips

up dollar you or so And I basis, can be it go hips a actually needs and think don't QX sequentially. know on still flat if if would

the the kind Just you of through have year? thinking about momentum going

Yeah.

a step think seasonality. QX. down an see dollar should absolute I standpoint, in That's typical on you expect to

So XQ yet year-over-year for growth in be going XQ, should between are QX. historic sort traditional see rates the wonky absolute to to step expect you sequentially or dollars but and down of

Okay. clarification. Appreciate that some clarity. And I did then want

a then was there you. that's it know of the if sure quarter. think on I understood color use on I Thank would looks year year-over-year. wanted momentum was full heard stock still make And say new don't be any for given QX. flat the I for that, million bought in the flat like if of every $XXX kind gross year you it you back why of capital margin you. still to I I

beyond not XX%. on But same because to equivalent thank margin they continue in neutralizing if gross gross actually, the that's you. want to that year mix Thanks will thought year on versus I just underlying last higher would to and sure I will it absolute XXXX, make the be by you driven hedge that But higher margin. component Yeah, be because question at gains. gross clear. for about primarily FX those margin intended be say margin, level, terms, this may versus the XXXX gross year Travis, this

million the we from QX standpoint. Very where between perceptive $XXX of split year. $XXX a of I some buy be transaction, shares back, that year, share equity Embody structuring deal structured in on with did buyback. That the think, this last about advantageous million to gets We

cadence more so on equity shares buy And going So the that shares. from annual is any back normal deal back, then will dilution forward avoid dilution we bought to our those to second from be brands.

thanks much. Perfect, so

question. us through the the X:XX. wraps for think Yeah. and much that up And at so we're queue, Thanks I

go through for any So and obviously feel out the your we available the free to questions. team as is thanks, and Please IR we'll your The continue everyone, day. reach today, others. comments conversations with

in for today's you Thank participating again on call. conference

now disconnect. You may