What Zimmer Biomet (ZBH) Said on Its Q3 Earnings Call

Key Points

• Zimmer Biomet raised its 2026 organic constant-currency sales growth outlook to 3%–3.5% and adjusted earnings forecast to $8.50–$8.60 per share, citing stronger performance across several businesses.
• Hip sales grew 7% and technology-related sales rose 13% at constant currency, while knee sales fell 2.6%; management attributed most of the expected knee underperformance to commercial execution, including the U.S. sales-force transition.
• The company expects to submit its Monogram robotic system for FDA review soon and now targets a launch in the first half of 2027, ahead of its prior timeline. Third-quarter free cash flow rose about 34% year over year, even as adjusted gross and operating margins declined.

Zimmer Biomet NYSE: ZBH raised its 2026 sales growth and adjusted earnings outlook after third-quarter growth in hips, surgical specialties and technology offset continued weakness in its knee business.

The orthopedic device maker reported net sales of $2.063 billion, up 3.1% on a reported basis and 3.7% at constant currency from a year earlier. Excluding the impact of a distributor network consolidation in China, constant-currency growth would have been 4.7%, Chairman, President and CEO Ivan Tornos said on the company’s November 4 earnings call.

Zimmer Biomet now expects organic constant-currency sales growth of 3% to 3.5% for 2026, compared with its previous range of 2.25% to 3.25%. It also raised its adjusted earnings forecast to $8.50 to $8.60 per share from $8.47 to $8.59.

Hips and Technology Offset Knee Weakness

Global hip sales grew 7% at constant currency, including 5.8% growth in the United States and 8.2% internationally. Tornos attributed U.S. growth in part to newer products, including the Z1 triple taper hip stem and the HAMMR surgical impactor. He also said the company’s iodine-coated hip products in Japan had exceeded expectations.

The company’s S.E.T. business grew 7.1% at constant currency, supported by franchises including foot and ankle, sports medicine, cranio-maxillofacial thoracic products and upper extremities. Sales at Paragon 28, the acquired foot and ankle business, grew more than 18% in the quarter. Trauma and restorative therapies declined as expected, Tornos said.

Technology and data, bone cement, and surgical sales rose 13% at constant currency. Tornos cited demand for robotic offerings, including ROSA with OptimiZe and the TMINI system.

By contrast, global knee sales fell 2.6% at constant currency, with a 2% decline in the U.S. and a 3.4% decline internationally. Tornos pointed to the U.S. sales force transition and competition in knee implants, along with pressure in China. Without the China headwind, global knee sales would have been flat year over year, he said.

Asked about concerns over slower procedure growth, Tornos said he was not ready to declare a structural market slowdown. He attributed roughly 90% of Zimmer Biomet’s expected knee underperformance to commercial execution.

Monogram Launch Target Moves Forward

Zimmer Biomet expects to submit a 510(k) application to the Food and Drug Administration for its Monogram robotic system soon. Tornos said the company now anticipates launching a surgeon-guided, fully autonomous version in the first half of 2027, rather than in 2028 as previously expected.

He cautioned during the question-and-answer session that filing the application does not mean the product has been approved. Tornos described Monogram as a potential catalyst for 2027 but declined to quantify its expected contribution.

The company also recently announced a multi-year limited distribution and supply agreement with THINK Surgical for an exclusive version of the wireless handheld TMINI robotic system compatible with Zimmer Biomet’s Persona Knee implant.

Sales Force Transition and 2027 Outlook

Tornos said more than 75% of the U.S. sales force is now fully dedicated and specialized, three quarters into what the company describes as an eight-quarter transition. Disruption has been lower than initially anticipated, he said, although the knee franchise has been affected.

The company has completed the lower- and moderate-risk stages of the reorganization and is early in the higher-risk third stage, Tornos told analysts. He said benefits from changes made in 2026 could emerge in 2027, but it was too early to quantify them against potential disruption. Management did not commit to a quarter in which U.S. knee sales would improve.

Tornos said 2027 should be a better year than 2026, citing the expected anniversary of the China headwind in January, the potential Monogram launch and a full year of organic growth from Paragon 28. He did not provide 2027 guidance and said the company would discuss headwinds and earnings leverage early next year.

Margins and Cash Flow

Third-quarter GAAP diluted earnings were $1 per share, down from $1.16 a year earlier. Adjusted earnings were $1.90 per share, unchanged from the prior-year quarter. Interim Chief Financial Officer Paul Stellato said higher revenue and a lower share count were offset by commercial investments and higher manufacturing costs.

Adjusted gross margin fell 90 basis points to 71.7%, while adjusted operating margin declined 140 basis points to 25.1%. Operating cash flow and free cash flow rose approximately 34% year over year to $560 million and $372 million, respectively.

For the full year, Zimmer Biomet expects reported sales growth of 4.4% to 4.9%, up from its earlier range of 3.9% to 4.9%. It also raised its adjusted gross margin expectation to approximately 72% and said it remains on track for about $1 billion in share repurchases during 2026.

About Zimmer Biomet (NYSE:ZBH)

Zimmer Biomet Holdings, Inc develops and manufactures medical devices and technologies used in musculoskeletal care. Its products support orthopedic procedures involving the hip, knee, shoulder, and extremities, as well as trauma care, sports medicine, and related surgical applications.

The company also offers surgical technologies, including robotic and digital solutions designed to assist clinicians with planning and performing procedures. Its products and services are used by hospitals, surgeons, and other healthcare providers.

Headquartered in Warsaw, Indiana, Zimmer Biomet traces its history to Zimmer, founded in 1927.

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