Zimmer Biomet (ZBH) 2 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet First Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today, May 2, 2024.

Following today's presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Keri Mattox, Chief Communications and Administration Officer. ahead. go Please

and First operator, everyone. to Welcome Thank XXXX good Earnings Biomet's Quarter Conference Zimmer you, morning, Call.

Suky Operations Joining me and Supply Finance, CEO; President our Chain, and today are CFO Ivan and Tornos, Upadhyay. and EVP

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

explanation will Additionally, measures is Reconciliation financial certain earnings included Ivan. zimmerbiomet.com. call include of non-GAAP the financial these to that, found non-GAAP be I'll directly within these our of GAAP With on over this measures most on some forward-looking measures calculating which measures. can which QX an turn release the Ivan? comparable discussions are our the basis for call of measures, and to our website, financial

the forward. to every for mission driving Thank do who each typically this your place by morning. financial that everyone, for your Keri, my start behind and we're you, of of us relentlessly commitment that in proud the team Simply -- day globe, very and here to truly making. start gives year great way thank to you work every in for members confidence one gratitude Zimmer at to that dedication, workforce I Biomet taking them, and for and joining a culture this today recognize call the show you, Thank and we here the me performance our this the gives is each have off I'd across moment your the commitments XXXX. It resilience like that put XX,XXX I'm you. strong to a and Biomet

we opening will have with coming a short Q&A Day Investor of the just my today's I keep on few briefly. quickly goal that a I'll very fact remarks weeks, up session. key into X the Given robust touch areas in moving

I'm going quarter in the versus on some own provide comments expectations. general the First, to our results

on comps progress quarterly own brief combined sustainable. sizable which performance versus difficult ahead lastly, I'll drivers ended Secondly, quarter by markets, facing growth, the expectations, and X, performance, against why being end the our our a drivers people diversification very discussing these healthy then cover and the and X.X% continuing since with excellence was strong the touch encouraged of culture, operational summary that while ago. we and rather with X day momentum our believe on And with delivering strategic revenue currency headwind saw innovation. Starting QX constant in globally. our We year results. of the those we rate a day with close the XXXX across are execution are that overstepping a been the which driven organization priorities, we'll Overall, we I'll have

with see and contributing quarter was to In fact, such adjusted business than geographies the areas the it basis, greater rate is a several our for solid reassuring to results. and growth that on of day X%

operating X% Biomet constant our adjusted confidence over the driving that basis sound sizable to to margin rate while in revenue give In points. even currency This and margin expansion X% XXX increased great adjusted XXXX growth while year tax adjusted deliver will effective expansion. and results to earnings addition drove we Zimmer the performance, start revenue grew us

XXXX. With year. This, also seen to of has and a end along, driving pace the basis patient enablers correlated which like rate the in seen flow with factors all turn, a top what color year. in that standpoint, Suky improve Key for will XXX going from is single-digit we XXXX. So in in QX half encouraging demographic faster reaffirming of growing pleased the came product free half we high that continued was main earnings the terms -- flat commitment industry in pull-through points see tailwind been of [indiscernible] saying accelerate enable is a mid-single-digit healthy year. a than QX the our to quarter the a in both pricing On while QX remain along the by we have our globally, the ramping advancements, macro XXX as revenue mid- these consistent as of later, see micro will here for this seeing the erosion we've growth our more all that, adjusted exited to of this with cash trajectory And more run historically. we've realizing new got of sustainability end, our We performance high Net-net, outcomes macro results with said pricing due ROSA to starting of to range, in reaffirm are levels dynamics. of drivers provide quarter. the to Persona. of pleased U.S. adoption in earnings. growth guidance report guidance opposed space which to macro exiting you've to results about second standpoint, technology the shifts. The or From price introduction is to were the board to areas in the XXXX us which demand. with surgical later strong across industry, where technological around it's shift but in And products markets, of driven of again, a and growth second new our behind in demand to very the better and that

particularly drivers which markets platform, CMFT also is of our sports We product. with launched medicine within SEP, solar], have rapid quickly personality, that gaining within is [ in of in and thoracic in business where the share the adoption saw [indiscernible] some our conjunction execution Craniomaxillofacial we in growth

gaining be we second of new realization Impactor, As product become as XXXX, traction that's entries, to our with as U.S. On allow top full us revenue triple going higher taper ROSA these launched which surgical we is hip market growth then the here meaningful doing launch also started recently going will recently direct on introductions better half other the a with from which in we or OsseoTi more enter product a which status to the ] that, and we're cases new Shoulder [ well entering seeing entering with to the stem, [indiscernible] of compete category. hip anterior in HAMR standpoint Persona, of

launch So the for really excited in [indiscernible] approved hips about upcoming hips. FDA the now and completed portfolio

tell long-term the quickly number these Biomet long-term success people X, operational terms New with progress and repeat meeting Further and successful absolute XXXX results, the organization. XX to resonating to I will over X now This, committed diversification to driving City. my enable key with the that for like excellence, our addition mass every Investor no earnings priorities I May come the organization. Once the And in November and In are I of across an continue doubt, would you around culture, audience in areas. York that they call you are can annual over the the CEO are will number of imperatives does provide XXXX. as X strategic as number and innovation in X world. X. again, for update in X detail to these we one, first during the in success Zimmer outlined priorities Day these

area culture, best-in-class people and operate ZimaBaomed we First, low of employee the and in to engagement metrics attrition. continue with

And almost when also been people which implemented recognized Places been no worth and comes publications, we've culture, showcased report. have it our with various Great noting disruptions of in to culture. areas that a now including area ago, across restructuring has Newsweek, Work announced recently, been quarter it's entirely Forbes. We people we and In to major to the different program, and

color third-party firms, also improvement We operational in plan. meaningful as we intensely against the initially during as to in way more in beyond for we've launches realizing executing area the made have established further accountability. In place the product strategy new DOH world, excellence, in traction XXXX excellence pricing, launched these several cadence comment second expected launched more around we've that of to the we XX this benefits expected that cost savings area programs a made best-in-class enhanced product put pricing in have to in final than and we plan critical products have operational develop the that inventory quarters. realized Biomet year launches working to increased excellence, with to implementing with committed enhance plans continue to better we're One we new we well over regard our the Day. In including operational that Again, changes our We months. progress is these come. robust and than This a post initiative, next ensure XX rapid operational product substantial achieving gained in sooner the deliver around we a release introductions in initiatives last core in agility of as products XX and earlier a the years than management in Investor enhance of to in Zimmer structural past. remain the

to diversification, of the Moving third In the strategic progress. and innovation priority. and final area we're solid making on

strong seen mentioned gaining we as to the such traction We've share with ROSA. progress in in have key brands I markets Persona continue see We where OsseoTi. already launched.

also the embody product X I'm continues gaining with where excited gain markets about And love with to space, deliver tissue we what the partake. ] continue introductions, guides share ] soft in We in [ very new we're solar seeing the to that our momentum planning we value more introductions we and XXXX, strides in franchise. the as have Signature [ CMFT products the XXXX. QX new that our end has product tremendous a to and in portfolio see with the we'll made we of dollar in today of pipeline had that twice U.S. We've new seen ASC at focused continue

in north pipeline X standpoint. above ago. the markets from products was dollar twice X value Worth XX% a X%, is the accretive what pipeline, of innovation growing it of are the in and or residing gross that them of So these reminding everyone of many margin years

to our customer-centric innovating standpoint, an commitment from ] WEMGAR of profile. and a but continue we So also see incremental profitability innovating [ increased

In we're market rate. growth on core increasing also diversifying faster-growth driving portfolio into our goal in end weighted the more markets markets, focused average attractive, of addition with results WAMGR], to our [

strategic in fact addition past made through the generation, future ] have over flow several what significant confidence optionality it both internal give us progress financial around it to firepower [ cash the time and this meet most We the hurdles balance today. right is execute the to a free the and from the years, a the And perspective. at on right our deals importantly,

the So of as again, lots organically with as pipeline. potentially size inorganically the on well going

the While EPS X we to $X come, smaller from return within billion have that upper tuck-ins favor digit capital, midsize digit to up in to years ROIC on a continue that become we single X double the invested That's deliver in the standpoint, low will flexibility deals size neutral of years. within deals. and to to price acquisition

while to to growth. This commitment in the we're to cash growing growing XXXX, of while above the come. will delivering our mentioned X% making with that tough this quarter a going that quarter earnings North basis from our It in in quarter constant a where a our is us in grew the years XXXX earnings above faster X% X.X% X% in than earlier, and of give confidence in XXX realize flow a for XXXX, winds delivering we're to for rate we I guidance strong delivering reiterate very and we're revenue QX encouraged it's that number points Day XXX results of that first day year the and comps. revenue, currency. performance, market overcoming commitment free As is Investor

great trusted announce closing her for X-plus to her continue Before Biomet and a very that IR announce I'd Biomet. ZB. and future partner on here She's firm, and executive going here hope Keri in with is of be has Mattox best A position for for a journey enabled her and the to this going at like replacement collaborator decision call, in to with interactions of search to SAG soon. wish depart is friend progress missed, has a a in we Zimmer to the leading from May. close years end lead and Keri's a Head endeavors. to been we Zimmer Biomet very Keri search the Zimmer IR things made has

continuity So far even as year we and proud excited how we for organization XXXX. place. In go. a plan very in of on are conclusion, the about confidence come we're can is more where have an Strong

Suky. mates globe, And fact and the ] the life continue that commitments of call that with that, these We Zimmer of realizing. Allow are those improving the we and on Biomet the as the to we're commitment [ I'm commitments evidenced impacting living quality were mission by make around alleviating turn the [ as I'll ] and over for evidenced aligned the results of of millions deliver and to introductions new around and world. the fact inspired the product my Suky? by team made lives patients that pain people by

Thanks, and good morning, everyone.

another driven cash track we free financial markets solid by operating XXXX the on quarter of organization. and $X expansion deliver mid-single-digit growth, end flow. over on mentioned, healthy adjusted remain execution and As margin had Ivan currency billion our across constant we guidance to good revenue with Overall,

financial conditions, going durable we current is profile believe is forward. market this Assuming a that

the about billion, Moving the sales basis to constant how on XXXX, and X.X%, currency. a on X.X% operating currency noted, increase the and impact were reported my of an basis. results. of increase period to adjusted of compares Net same foreign and my quarter $X.XXX be in excluding XXXX be and a of Unless an QX otherwise will statements will commentary it first

basis a and product Additionally, of we that same impacted the points categories selling had XXX day all about headwind regions about at level.

growing day Recon priority above in our consolidated international was as X.X% selling growth have X.X%. continues and areas driven quarter the coming in X.X% in by across launches perspective, Growth with platform. Growth sales recent portfolio basis. And X.X% be was knee in Persona U.S. performance X.X%. U.S. from the growing solid category. product [ grew excited Outside X%. and was the U.S. and robotics grown growth from by our our to impact, our We ROSA well EMEA driven business and about international remain product new portfolio Knees growth We X.X% grew Excluding international Hip constant and knee U.S. stronger-than-expected of knee the quarter accelerating currency the U.S., with segment. ] product the remain would performance the other earlier. X% on as our within SET a Ivan the saw focused with launches the category. Global Hips growth key segment in the Global in primarily growing by driven mentioned a growing regional X%. that on in OUS grew

drive category. by business digits. will average growth led category growth of we year. double SET confident areas extremities full focus the this CMFT, mid-single-digit the upper partially about low grew the sports X.X%, Next, our remain within by growing on and or SET, other This subsegments for choppiness key strong within Despite offset was above the the

category continued driven ROSA strong by grew sales. our XX.X%, Finally, other

higher the to we will Pillar growth, reported selling interest diluted prior We program. diluted the XXXX year. and [ with earnings $X.XX to year. other partially revenue pull-through revenue count $X.XX The offset as a to and by a QX move share restructuring category the adjusted driven per of is the rest lower per expenses lower in our share prior in of Higher in offset earnings reported was In share the expect QX, savings associated GAAP share step-up taxes of in higher of by primarily compared $X.XX program lower On earnings X]. $X.XX moderate compared basis, GAAP through diluted and we growth related from accelerated restructuring an count, year. expenses share we per by and costs the

of headwind when Foreign a the currency year. was in quarter prior compared $X.XX the about to

interest in margin Overall, in with and margin better was ahead by was operating costs, The and margin the Our pricing we was prior by adjusted year. sales referenced other related And line which by tax margin with prior was and adjusted in to lower at our the gross restructuring to manufacturing increase the lower driven prior were royalties. quarter, the expenses was offset operating year. Adjusted higher expectations year. program and Net our non-op million XX.X%, continue XX.X%, higher driven than rate project slightly slightly XX.X%, adjusted earlier. I were $XX higher of the gross SG&A rate full year and XX%.

cash generated and with quarter of We cash flows cash $XXX we million, flow of the million ended and million, to $XX equivalents. cash liquidity. $XXX Turning free operating and cash of

reiterating rest growth year revenue constant point the the currency growth X% or Regarding to XX for our a reported outlook headwind. are X.X% including of of currency basis full guidance, to X% we year, our with X.X%

$X to at billion to to between we cash expect that generate continue expect a $X.XX, we we $X.X be Additionally, constant perspective, and the to earnings between for flow. From to of growth currency will end mid-single-digit the still cadence the year $X.XX the free billion at of the be the end lower to first of of in growth half of half be upper growth. revenue year mid-single-digit second

or XXX to will year reminder, have QX is point and for tailwind less full As to QX due selling expected a the days selling for QX basis the about points. and impact day each and than be basis XX immaterial

line margin FX P&L, to assumed. gross the be than better with broadly and Regarding XXXX originally due our thinking adjusted than less in slightly to we expect original headwinds

gains in XXXX as are expected. step originally strength a in not dollar, down hedge the FX Given big as

will Overall, year. as gross feather be capitalize second we watermark, step from basis than the in a points costs inflationary the by margins QX to the down at of about XXX followed XXXX. first second sequential Looking half half half high continue to the expect be we higher margin, gross throughout modest

Turning adjusted margin. operating to

confident margins reiteration year. over Keri. to efforts half be about We With year our increase by the margins schedule. than of and midpoint of at I'll XXXX the that, pleased with half. second summary, operating call we outlook by our will XX delivering are ahead was that start ahead to points. In will evidenced expectations our start QX the results the to feel operating guidance. We continue delivered basis And as year we higher of first the of back good are as restructuring a the turn to for Overall, guidance, full the expect slightly the in

thanks, been Thanks, the privilege of And these kind I years, moving Suky. the for team continued be Ivan, X.X success part a words. wish team much It's such forward. Zimmer to and Biomet the

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

We'll to America. Travis go with Steed first of Bank

case? the base then just second of sustainable from of and great algorithm, Keri, Zimmer endeavors. on There's think too. basis case it for possibly revenue Is margin think out the should in the that I'll rate market? to you you and question of or EPS what's kind algorithm X% about of guys growth think X% a a kind growth And the to over we more normalized some working potential double-digit long kind your community of of to that I of with luck go good trying best growth. how just throw And next this level, just have algorithm. lot expansion low in and kind guess, a trying skepticism high on about ahead And term. investor about a kind

the a on usually sequentially. wasn't stuff, just with down titration but bit on I some color any there wanted sure day Just down of selling [indiscernible] ] any sequentially, make little to It's [ QX usually QX.

the make speaks Thanks touch Suky as on Travis, Ivan of for question. here. well. both that question, and I'll up components I'll here your sure

is Day, algorithm EPS flow. on We're and revenue, prepared you color going to this So commitment. will the but cash today, starting as free remarks, long-term Investor tell in a the the give with per I more

above going matters. gain not revenue, drivers a market, new growth. above by unpacking to we before, introductions XX as it's a EPS, So And introductions. to We're from delivering XXX it's points, we cash over product free above product innovation XX have come flow revenue basis going got next to revenue XXX making. share that is and along, only XXXX deliver the product on And all EPS said that months, here the more new new pipeline the introductions. didn't in largely to all XX we about

inventory, that's inventory pricing, components, that EPS the when differently to in it geographies. growth, OpEx, the So execution. On on run et of greatest how commercial dynamics needs management it allocation pricing to on cetera, about but how not comes get hand way inefficient days driver the addition of think flow, revenue cetera. about what mentioned this have excess we're I company we not obviously of And it when main think it inventory and driver to the et #X engaging to other management. on we is Portfolio doing margin, is be. free where when and we already cash North fact return, comes things an obsolescence prioritization we in to really quite the comes in XXX

the sustainability. I'll then give on I'll it drivers and key the are touch #X, on Suky. those So to

the happens timing We QX In what going having quarter-over-quarter, call we're ] QX. to QX other. conversations to happens get we're [ terms of Look, -- on X QX, to sequentially. not quarter to into the in to kinds gymnastics QX what of similar all

QX of Here strong. in A is in X% with. rate. north day very what I'd was currency, leave constant X.X% growth you

in the right drivers extremely that we we're As there X%, here, the guidance. the the us behind, in beginning of a year, confident were get working guidance the growth quarter on confident see at to at the looking are X% year of direction. we very The

Investor QX. Day. very And very, of Suky? the we'll part dynamics confident, talk very So again, at more about

Yes.

points to well, Ivan build here. I really some incremental think I'll so summarized just try it

have Ivan path operating that to in growth well that durable as top cash we improvements overall do line mid-single-digit as margin at expansion conversion. profile mentioned, free flow a I think

if On the guide, again, you earnings we and at this confident reiterate X%, in. feel it's our look which, outlook, year, X% to

better you headwinds well If growth out saw on The as think that on you interest FX. tax the on than X% we underlying XXX the is to basis out puts also to 'XX, there. an that on points XXX single I us basis, digits. as an you in low maybe of [indiscernible] in well that basis bottom as X%, everyone much double we digits, were And better facing -- rate if underlying kind high back underlying if step-up which in as line we what think did is look I at

there's company forward, right to our or we base As cetera, base provide case look durable. commitment. again, investment case, double-digit But make I to got wouldn't going want earnings a on it's just et profile our the pathway your think think our Day. Travis, using sure more growth. is we to And we growth expansion say low the color sure as that, to we're Analyst make about with growth, we we've that margin to revenue words

that necessarily weeks. case, more provide more say pathway there. color wouldn't just base a we're there. in I So have to we is a I'd lot going a But our go few

question we have queue? can Katie, in the next the

with & next to Oppenheimer Company. Steve Lichtman We'll go

of Can notable. benefits from some front? Keri, the that And guys. quarter, pricing I'll you the commentary. Are surprise start great. talk the on with came environment been great about working the your on where efforts I comments first that would you. positive be it's was general on guess on I Just coming sooner? Congratulations thought pricing

pricing semester 'XX, of flattish we're -- We're you. that when half Yes. comes the it price. already very Recall XXXX, the Steve, second so last in We're thank with of pleased, to 'XX, performance. very obviously,

Europe is going pretty basis have this price not be put governance, We the business in of previous XXX points change category that real a there's may anticipated. to having OUS. significant in structure are erosion helping from place. a the any So wouldn't doing say contracting. I was slightly We that surprises That's U.S., better on. introductions product in years a new put XXX we than

to going only better, kinds Suky, do predictable. here got comments? are surprises [ dynamics the We pretty to for like net-net, have all rest But the but strategy and of real any not are dramatically out. You've outlook doing the and like you tender -- no the what we comment QX a ] of We in we're great is other place. year. governance coming appointing

overall really I Zimmer favorable X years the with things some When X we've combine the you those impressed -- we're within optimistic the making we're I'm to that call cultural more than change, think company, let's environment think Biomet. I inside quite you, been, changes that's better performance tell and really ago. structural frankly, leading X, it, of are price I'll about

that points quarter, we XXX encouraging. flat. -- to that durable. In set the value be us for or thought we'd roughly when I products we're basis bring their that I to the talked As out make the expect sure I I market. year, of erosion. makes were be do That's it we to think XXX to distributors field level and the And reps desire to I to want getting

think the saw erosion back got the especially I don't happened I points basis of number given things end expect that the flat a because in now rest of under to we've profile what we at year that XXX quarter. we're of continue first the through got in create Europe up, pressure. that we've new some which later we especially sort in will on of pretty will coming some this are year, devalue price little year. Also, contracts last where increases took markets bit currencies of a sunset and that of large

ago. were the under year. But full pricing 'XX. of we nonetheless, So spot than we're rest to a continue I somewhere the overall expect much to don't profile be basis XXX in expect points again, better the for flat And through that few a year years

shoulder. follow real wanted ROSA the Great and to quickly follow-up then just -- up quickly on

the launch initial outlook this year? and Just for ramp on your

has Obviously, you. weeks very first of product solid. ago. a of of this was the is the Thank We that Feedback Yes. did at a very Clinic cases high degree excited It Mayo terms couple in product launch. anatomy. cuts the achieve was case, instrumentation accuracy interconnected in [ is rest that do standpoint. ecosystem from CVH efficient feedback of in efficiencies. an you the with the a It's fully of case over the visibility time the It ]

So short. the learning is rather curve

So very feedback. clinical solid

for set first meaningful Thanks, along the excited days. in of real Steve. the call But about end the to terms to it. the it going In product get as slowly we're the very of XXX all the impact, will you launch year. we very it, And a impact XX that to we company. closer see take I'm

with Wells Fargo. Biegelsen Larry

for to end I Keri, the This kind I thanks help to month. Day is at goals upcoming Biegelsen. revenue? will your can sense specific regard of Investor have expect Vik LRP a With basis a get me. points Chopra -- goals, to you And for your to we will XXX Larry what to had of growth for be as XXX for the so for it X relative Or in wanted the financial then above market. just market of at example, all and follow-up.

the cash EPS a in achieve Yes. we're of cover how No, commitments drivers X the terms definitely financial we'll and what free -- perspective these flow. revenue, are plan to of we making from

talk We'll cover the strategy about moving provide introductions details. allocation the So we'll product we've new We'll that. capital [ seen ] those the definitely forward. on

So it's robust. to very be going

the that's Day. So Analyst

raise EPS. some Can -- consensus about second EPS you I just guidance question by didn't on you had but $X.XX, that? color The the was you on really provide

Yes.

We year, said opening good We really in the to performance the start very flow good and saw all see better-than-expected well in his bottom. way a remarks. it had it Ivan to think the was great to through the a revenue. I

throughout we've company. the guidance us that conviction reinforces that I in discipline year. the range provided that the this this would more just love got I and say gives So we earlier

We'll go Rick next with to Stifel. Wise

miss HAMR, ask of was help share, launch. I ZX be cost, meaningful. your you'll assume I the on my they'll we'll will all particular -- but will pricing, question will operating like follow-up introductions, fixed your leverage obviously, And costs. But you, of implications help Keri. I'll Ivan, them hoping the and all new focus the in these gain same the sound time. shoulder, my robotic at and [indiscernible] help

missing that times. the bring is up You lynchpin to to margins. mean, should outlook? been my industry more pricing margins. norms? And what this to margins second that think said everything heard you and I you and sort your leveraging. all relates margin assume Why more just operating introductions, portfolio sort I of I about highlighted hip several Suky, business my on the better I make follow-up of and and share you've believe product when credible said related to about to the your gross -- product you I But about all again, and Is these

product product cover Thank products. over driven It right? here, to great is [indiscernible]. battle X or hips We've last years X and One going not category the the question, here margin. the We've transparent. what's a Suky of been by done essentially to not the win Hip when proceed you, -- and I'll comes very comes to X the Rick. of is then we'll product when not it with interrogation is one it

is and that we a way. in had. direct does a was one stem it market it a inferior stem as in not first deficiency ZXs [indiscernible] differentiated what the triple is The paper and a

So large care X now other compete direct this we the approval, anterior. with orthopedic with in companies [indiscernible]

second impact. the category procedure. how with drives efficiency, integrates treat of rest the it accuracy It cases. was It you surgical drives in The a the

as need you of in that You levels hip surgery. certain power do

the we've needed with navigation. surgical first And thing to So a was there got is and up. that we we're run true Hip. have HAMR, impact, got launched, fully we going Obviously, ROSA navigation. We modalities that have to that

only approved mixed Insight. a FDA in Hip partnership with with technology XXX(k) our are reality company We the

tens, sort ZX, interior navigation. not impactors and of Direct full the it's again, surgical some portfolio. just it's So

with do this I remain believe high company forward. we and believe confidence in our position regain that world, and our #X So still going in the growth do think a that hip We degree I the of accelerates to hips. portfolio journey going we're

Suky. to it's from you. Always Rick, And good hear

point, inflationary significantly, a in know isn't I of just good Both pretty and hostile environment. expand even and always operating margins in indicative front, able is to it margin the the our 'XX the I situation. backdrop 'XX, validation say, quite -- I'll would I the but past of On proof we're think, future, a

to the it entirety And so to it here's team. In again, of the I do again. expect say. CE we across We're P&L. kudos doing the what 'XX, entire And would

fixed growth First, through costs. our revenue and leverage

better better Secondly, that rationalize cost do through hey, optimization, some rid inventory site products, of beauty reduces a we all and can even our is the R&D to of things help customers forward. products, The getting goal some multiple margins we reduction, it of before and need allocation through cost into We're sustaining NPI. We're E&O. perspective, that rate of We're looking a unexpectedly to SG&A. we when at our other amount these then making improve sustaining or migrate on shots can go capital operating we're done improvements we inside perspective then reducing in mix debt. not have which of continue even through we've reductions margins, in more move at, a which pull this you if efficient of macro getting getting of really have it to us get of engineering, shift from levers micro to as our we portfolio, how and

we [ just the thing that's driving Ivan's one He's about thinking line, not company. think with mindset owner-operator it's entirety company top being He's area culture his as where company, and all well. bringing is the the of cash through the our really way king], P&L, quite the within I cash, company throughout love the what but so we're and you got a just in frankly, change And to confident and not it's the leave going. And feel of about bringing. I'll I

where optimistic I'm Rick. So on going, we're

with Chickering Bank. to Deutsche Pito We'll go next

Zafar Pito. This in is actually Imron for

strong the on First quarter dynamics you orthopedic quarter obviously, about competitive joint there. wards talk ROSA, placement ASC? question in also versus Can for trends robots? of is a then And hospital care, first site by

for Absolutely. question. Thanks the

will, with where terms we global ROSA. let's overall you picture, of So in with the start very if are excited

in the option is preferred robotic becoming So globally, ROSA many U.S. markets outside of the

we're around cases. approaching U.S., the in of ROSA XX% penetration in Here

in category, of a net go that do the About that's saw large because quarter, we of of that's As means all environment, does encouraging is so degree encouraging It is that of CT a not center, you accounts. of we see higher had is fact again, X/X other preplanning, ROSA ASC surprise because pull-through. ROSA very which continue the easier drive which, And preference stream future scan. there the U.S. it's an for to very a to do controllable. volume that the amount we to in is given a that you a high cost in those installs don't ROSA the sales, need surgeon in

that of where in world the So net-net, gaining we and lot right around direction everything traction in dynamic of seeing surgical U.S. ambulatory here the in the penetration, terms in markets key the are a center we're environment.

a for quick the remind what us ASC? follow-up. hospital is Can Just as mix site of you shorter recon care versus

not the in shoulders, starting we're around to the today, solar would cases to as of done terms given mix. the as position probably ] is rapidly, say ASC. both cases, But a outpatient would XX% So XX%, a [ that in are change. where the change XX% say of in CMS getting the see to XX% pretty well I are moving And moving dynamic ASC got the for the to ASC, net-net, that's around we've of reimbursement. XX% I but strong in inpatient,

with We'll go Canaccord Genuity. next to Caitlin Cronin

other further year? say the segment through strength you lower little expect the bit Suky, a on and line, that in did the touching growth you ROSA Just this in

little a asked there. question? about did other? Sorry, was ask if bit choppy the something you Could It you you Caitlin, repeat

in say the the apologies. that you year? Yes, expect Did throughout lower segment you growth

Yes. Yes.

had ROSA quarter pretty driven our in a Capital. So other strong primarily we category, by

placements sales of placements of ROSA's we The good see higher we in want quarter. very that And a capital of saw ASCs, news drove we is good. good So and installs. position level we where a revenue new is sales which saw dollar which lot a higher saw new were versus and exactly to mix the

comes with placements love also because commitment. We that longer-term a

that Our reiteration. assumed that's you we'll year, quarter from as is in step our expectation we been saw the what throughout and in guidance move first down the

And updates on Persona? Okay. then any

of kind line Go follow ahead. ahead your with follow-up. with is Go ahead a choppy. Go

And any Apologies. the Okay. Persona iQ on updates rollout?

the direction. late, Yes. accelerating, an standpoint. commercial of will right execution Caitlin. and innovation are I Thank both It's a from you, as moving in say, things

we make the So approval receive press did it on to recently release for [indiscernible] XXX(k) for the innovation, study. the

that of Persona the shorter iQ longer factor been stem use the a stem. version surgeons [ which as gating some don't ] So has for

So the that's an innovation at there. [indiscernible]

that launch of traction we objective iQ way, the how only data is similar gaining a a the with call patients is dashboard the This The quantify dynamics. has. is recovery in platform that TAM curves. a are comparison other patients doing of to very piece Persona other that what with in can Interconnects

those that innovation more in updates So are are the X right direction.

the execution of terms we designs. It's been proposition. got We've resonating. about right value we talking need. We what commercial In and journey, got been the

of We committed continue to institutions, to tech the largest the journey. are be we and in some

very you So about iQ. the for Persona question. excited Thank

Mike with to Matson & next We'll go Needham Company.

Yes.

currency be expect to guidance So the the mid-single the saying end quarter, I kind constant sort the Based just implies of revenue. you for of like of one you what implies quarter want second to X.X% to of growth, half. have benefit. selling X.X% about X% in the like kind the on at you day did that what ask first digits first in you're but low

like X% you applies why kind that my of -- quarter? the math is there? second right And So guess growth. underlying expect growth X% in that I Is only do

a et going We be noise Yes. timing, quarter-to-quarter, the to Mike, directionally, about low you look, going had right, start great there's quite as choppiness. There's the be go way to year. on think to wouldn't as cetera. contracts, based But that. I it,

We guidance. we gave continue believe guidance expected first the still to when land our and to initially half reinforce going believe is and that as we to

overall just the first particular how to this out in we cadence, nothing of but quarter that's play half So second note, expect about the year. versus half

on Okay. follow-up OsseoTi. And just then a

competitive surgeons? you share. that it's So does cemented actually Or that that gaining cannibalizing mentioned mean Does the just it's Persona? mean it's converting

coming the Persona We sizable from No. to at but of time, a platform are if business you converting the will, amount accounts. cementless upgraded, [indiscernible] definitely same or legacy OsseoTi over

number is that pretty launch, the to strong was Persona to the you've move with way, product OsseoTi and the the the we as from continue that continue gain U.S. acceleration the comes, component comes introduction quarter of heavy in by of going share. So large we're the to seen the was that a knee expectation and into of fact

new both accounts. it's existing accounts and So

go We'll next ISI. Evercore to Kumar Vijay with

for the This one-offs guide any on quarter gross margins in gross Vijay. is One you but margins. operating one guys there the margins quick raised on maintained. margin Sofia was Were first for and EPS on

the down? So think for how about of rest And we slightly margins is operating do year? the margin

material through ordinary. margin there's and in Yes. quarter, saw and both to -- puts but any No margins. to. did in in operating that operating gross or margin, We we than flow nothing a on better margin gross expected calls, bit be out given going real of the We the little

So about we start good really feel the the of year.

to step line the As with savings do and normal we year, expect as we programs progress in seasonality to step through revenue pull other margins up through. continues operating up

quarterly midpoint, we very implies the an XX operating again, that think that recall, basis And earnings at on So an you I the in guide. perspective call in margin, lift and we're still confident confident about we're where that. our last in point if said headed in from

made will look particularly have that Okay. the anything and guys you some what the one follow-up on in in that right question know -- pipeline that profile will now just one interesting are kind like. of about quick tuck-ins M&A. But comments I fit portfolio?

X. a ASC space, strategic assets of growth have And mission-centric and and the that Certainly in in areas as key mixture standpoint then more a X higher-growth high for the apply. in category which the the meet segments in always Recon. fit of in same talk and in robust depth segments once later pipeline a we X month. from a We're looking pipeline. We the about SET we'll of of But are both the Yes. optionality M&A the is

later focus X has eye key those So we keeping broader nothing an changed. diversification. Financially, while also on on areas

from like do an price X-year time we under EPS ROIC $X and flexibility be the neutral years standpoint to definitely horizon. We We the then but is single-digit to ROIC deals have acquisition in double-digit deals, billion. high larger where want to within X

filters clear very and financial there strategic optionality and is on pipeline So the and there. the is

we in to York. New more come So once meet

We'll to Robbie JPMorgan. go next Marcus with

me. a for just quarter. one on Maybe Congrats good

finer of quarter that kind talked line, second it issues year. margin had some cadence the to answered year. point a try and on last and and on we expectation cadence the about of and just kind You the But through the put top you want of avoid I

expanding. I wanted with margin commentary for was highest with operating the to and the about highest third operating would be margin a talked you quarter sequential quarter fourth sure, So year down make quarter think I would prior second the be normal seasonality. the in

we quarter say of think a ] kind all you there changes to quarter? be EPS fourth on to X another? on EPS cadence should from third, way. where maybe Street So Are at any it different for looking for is the a you moving Are second, [ comfortable with

Yes.

quarter our our a being I'm watermark should a a or in correction. be not caught operating I I just understood, margin high if to Robbie, that said. bit little perspective. say with everything said everything relative will of from sure Fourth high line you watermark revenue you So

[indiscernible], in benchmark to to margin outlook. Relative relative correlate I'm our heavily I'm -- so cadence, the of to in revenue does, not And not going many ways, going to our that. to sort

the around the due in year then in plus overall. pretty of good gross cadence restructuring given the first back second operating improving I've in half, actually half revenue about first half, half we've talked to the XXX think margins second back the half I margins color already and

color actually pretty in how So there I we've line with think traditionally transparent. out there's good been

So you hopefully, enough go to from. gives that

with next to go Chris We'll Pasquale Nephron.

than goal. points comp about first talked to little you XXX [ the that, then that's Ivan, to a we you actually of of at of and gets your the ] was really coming When to recon this and year better X% look year. market parts gains bit from points basis revenue X It quarter, growth growth X% your XXX outperformance.

pretty conservative feels X% that So at this point.

knees across little Your market. hips was a own and below performance

years, it thinking same what you get you appreciate I to the recipe in about while target and can still you're gains share to excited XXXX So pipeline your the out the about for way? are mean the

Yes. Thank you, Chris.

Certainly First I going our of all, being not stay it's not you debate that market. I reported a have a when But tell what QX, whether period or And we now below. over market. of here below to that on above is from we're in wouldn't will below is categorize performance healthy is training and right a below we're now, it standpoint time now market. everyone

start I'll with So that.

to and which ramp in get terms into as We've X.X, X%, formula In up be how get the product product the more XXXX. think later of we introductions, had introductions to I've the never X% company. full continues to earlier I never will we I don't even excited that the gaps. I'm the that have gaps introductions seen X about almost in with years any here with we don't [indiscernible], upcoming a the Europe. mentioned we in launches X portfolio. there's hips product year

U.S. not product bring we billion an in personal for over also in in revision U.S., billion we the don't to let's here Let's years have $X the cementless [indiscernible] in not X, partial the X, forget, EMEA. $X forget, That's Europe And X sales. from here almost gross last

the in portfolio, hip in strength knee the So strengths portfolio.

that's category or the seeing And SET going digit grow to where that. that quarter seen It's You've above. third we made will consecutive SET around. a [ that ], a we're as mid-single stay commitment

is X% admissible say, X% the execution strength innovation, an in and would strength commitment. to So to I in commercial us the

you following then close cementless moment? what at And the gap you and U.S.? over could [ ] And is on today stands time where the current mix up in Stryker Can the penetration your think you us your ] Okay. remind OsseoTi. [ between frame where

Absolutely.

So approaching closing XX%. the quarter QX

So it's fairly to similar robotics.

and approaching time penetration. answer that keep competitors star Investor X is down in the commitments, same the to are, at X. north some lines ambition ] of XX%, XX% robotic repeating our is the our cements be where But cementless break We'll We'll in these to penetration we XX%. have our Day. So the regard, [ range expectation, provide but is

at is the there journey. and that pretty that you XX%, we're that fact the significant we're excited today tells about upside, So

have I for the we time more question. the in Katie, for queue. one think thanks question Chris, maybe

I'll go next with to Shagun Singh RBC.

So QX up billion are follow-up Ivan, that sales changed versus -- from had market then a for a or And like any leases? better expected. seeing indicated just was it capital orthopedic anything the at uptake we Has you appetite to to and lot you your robotics standpoint stepped appreciate in tuck-ins? go to raise reason on more you bigger least with to of want be it upfront favoring average seems you how M&A. than operating the bolder specifically, mostly plan you the today capacity yet. haven't and and X% do want seen -- a from whole of commentary up tuck-ins. market growth all very weighted $X But I on that

those goes week is U.S., in cases that a a dynamics. robots with and new prevalent capital move the seen I that pretty is So will by that starting one I thing Look, you not tell is across key not ASC we where ASCs want here the ASC see today, we've be And more to opening. do purchases. We dynamic do dynamics. you by QX it. strong robotics continues And either and believe acquire a purchase saw Capital or saw is driven install to and in markets. this we

So And continuity early not I excited about as again, factor. definitely mentioned here. the a gating

to want to terms bolder, be we're In all along. at wreckless. the look, I and bigger say second of same will that time, M&A, we be on not your going question And

going got to the is going the and in act breakdown when get and and we'll going cover WAMGR, strategic Day. past we'll to And as the present stick take And money. organic the got we're Investor indicator things thresholds. So act, into well And as the not on that it. We financial the to of to means. how once combination we we to pipeline, you we're a an stand inorganic it the on we're do future. The of

in cases that if in above markets we'll mentioned that X%, So mentioned pipeline. not about growing in are products the of above are already -- the X%. pipeline XX% already I new talk XX%, some the we

] to WAMGR a some and then combination So moves the deals attacking driver that the get bolder [ that's definitely we will maybe us and of deserve.

the come more that the to regard. of come So to question. We the call. end Thanks in in for

briefly So I'm closing just to going with comments. close

Founder's [indiscernible] saying, celebrate here be it's in that Day. at to As to home our today great [indiscernible]

company quality world. May with pain very the So of and for the people started alleviate a we purpose XXXX, to clear life improve around the

just getting can just later, XX So years that say we're I started.

at So excited Zimmer time a as exciting be we see be. portfolio needs where where to to an is company. It's Biomet. are it to The

have strong commercial We execution.

for the year We guidance are very very, confident on XXXX. our

We in once and about was discuss 'XX able come the excited we 'XX are to to long-range are plan.

So thank to nothing excitement. And closing, Keri X.X with confidence I years by for before great us. want and

a trusted a been partner, friend. You've great

to You're and many to advice missed, although years you going your going be continue many, I'm to to call come. seek in

and So thanks, thank everybody. you, Keri,

all joining. today. everyone, for Thanks, to We'll you talking be of

of If you for team. this IR please to don't hesitate to Thank course, have you reach morning. the again the joining out questions, call

appreciate participation. your conclude will We today's call. That