Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zimmer Biomet Holdings Inc ZBH delivered strong Q2 2026 results with net sales of $2.177 billion, exceeding expectations and achieving 4% organic constant currency growth, driven by robust US performance of 4.6%.
- The company raised its full-year 2026 organic constant currency revenue guidance to 2.25%-3.25% and adjusted EPS guidance to $8.47-$8.59, reflecting confidence in continued momentum.
- Hips segment showed strong growth of 5.1% constant currency, with US hip growth of 5.9%, driven by successful adoption of the Z1 triple taper stem, Hammer surgical impactor, and OrthoGrid AI navigation.
- The Paragon 28 acquisition is performing exceptionally well, with sales growing mid-teens and contributing 110 basis points to full-year reported sales growth, exceeding initial expectations.
- Technology and data, bone cement, and surgical segments grew 21.5%, with US technology sales up over 50%, driven by strong demand for Rosa robotics and the new Rosa Shoulder launch.
- The company is making excellent progress on its US commercial transformation, with lower-than-expected sales force turnover and customer disruption, and is on track to complete the transition by end of 2027.
- Zimmer Biomet Holdings Inc (ZBH) is advancing its innovation pipeline, including the first-to-world iodine-coated implant launch in Japan exceeding expectations and the upcoming Monogram 510(k) filing, positioning for future growth.
Negative Points
- Knees segment growth was weak at 0.1% in the quarter, with US growth of only 1.4% and international decline of 1.5%, impacted by China and core emerging markets.
- Pricing remained a headwind of 80 basis points in the quarter, within the guidance range but reflecting ongoing pressure on implant pricing.
- Adjusted gross margin declined 120 basis points to 71.1% due to increased manufacturing costs, partially offset by product mix.
- Adjusted operating margin decreased 210 basis points year-over-year to 25.7%, as the company continues to invest heavily in the US commercial organization and sales force expansion.
- International business growth was sluggish at 3.1% organic constant currency, with significant headwinds from China (declining 20% annually) and other emerging markets.
- The company faces ongoing challenges in trauma and restorative therapies within the SCT segment, which are dragging down overall growth and require strategic changes.
- The US commercial transformation is still a work in progress, with the company expecting continued disruption and investment through 2027, which could impact near-term profitability.
Q & A Highlights
Q: Can you provide an update on the Salesforce transition, its growth implications, and whether the decision to reinvest sales outperformance into higher SG&A is a conscious choice?
A: Yvonne Trancos (Chairman, President, CEO): The go-to-market changes are progressing better than expected, evidenced by 4.6% US growth and 5.9% hip growth. We are on track to complete the dedicated and specialized structure by the end of 2027. The SG&A investment is a deliberate growth strategy—we are adding 200 tech reps, locking in top distributors, and offering the best comp plan in orthopedics to recruit top talent. These investments in 2026 are expected to yield better results in 2027.
Q: The recon market appears to have slowed in the first half of 2026. What do you attribute this to, and what are your assumptions regarding ACA subsidy expirations and Medicaid cuts?
A: Yvonne Trancos (Chairman, President, CEO): We don't look at one-quarter dynamics; markets don't change that quickly. We peg the overall market at 4-5% growth. Our exposure to ACA exchanges is low single-digits, and Medicare is our largest payer. We monitor metrics like waiting lists (3-6 months at top hospitals) and cancellation rates (in the 10s, down from 40-50% during COVID), which remain stable. We are not concerned about market health, which is why we raised guidance for the second half of 2026.
Q: Can you drill into the hip market performance, particularly the US and OUS opportunities, given the noisy quarter globally?
A: Yvonne Trancos (Chairman, President, CEO): Our growth shows it's about execution. In the US, the "hip triple play" (Z1 stem, HAMMR impactor, and OrthoGrid) is taking market share, driving 5.9% growth. OUS, the iodine-coated implant launch in Japan is exceeding expectations, with demand outpacing supply. We get a 140% premium for coated implants and are converting competitive accounts. We are in active FDA discussions to bring this technology to the US.
Q: What drove the sequential acceleration in the SCT segment, and how are you thinking about it for the balance of the year?
A: Yvonne Trancos (Chairman, President, CEO): SCT grew 3.4% organically, a 180 basis point acceleration from Q1. Paragon 28 grew mid-teens, upper extremities grew upper single-digits, and CMFT grew double-digits. We have two headwinds—trauma and restorative therapies—but excluding those, US growth would be solidly upper single-digits. We expect a much better SCT growth profile in the second half of 2026.
Q: The "Other" category (bone tech and cement) grew over 20%. How much is driven by your tech strategy versus one-time events?
A: Yvonne Trancos (Chairman, President, CEO): The lion's share of growth is technology, not bone cement. US technology sales grew 53% in Q2. The CapEx environment is very healthy, and we have the most comprehensive suite of solutions (handhelds, CT scan devices, mixed reality, large and small footprint robotics). We are in the early stages of gaining market share with our best-in-class technology portfolio.
Q: What is driving the acceleration in growth through the year, and what are the specific factors for 2027 (better or worse)?
A: Yvonne Trancos (Chairman, President, CEO): Real growth accelerated from 3.6% in H1 2025 to 4.2% in H2 2025. We are confident in delivering similar or better acceleration in H2 2026 due to go-to-market changes, new product momentum, and easing supply challenges. For 2027, we expect improved performance as go-to-market changes are mostly complete, China headwinds (2% of revenue, declining 20% annually) ease, and emerging market noise dissipates.
Q: How do you think about coalescing your multiple robotic platforms into a strategy to drive revenue growth, and how do you balance support costs?
A: Yvonne Trancos (Chairman, President, CEO): We are a technology company, not just a robotics company. Only 20% of US surgeons use robots, so we offer surgical guidance for non-robotic users. We provide optionality—CT scan, imageless, portable, cordless, large and small footprint—to cater to different preferences. We may prune the portfolio as standards evolve, but currently, the comprehensive suite is driving 53% growth in US technology sales.
Q: Can you provide an update on the Rosa Shoulder launch, its rollout, uptake, and differentiation?
A: Yvonne Trancos (Chairman, President, CEO): Rosa Shoulder is going better than expected. It's the only system that can perform both reverse and anatomic procedures and can resect both the glenoid and humeral sides. Shoulder arthroplasty is fast-growing, with only 20% of doctors performing it due to complexity. The next-generation version (1.1) has a simpler interface and is moving into full market release. We expect robotics penetration in shoulders to grow faster than it did in knees 10-12 years ago.
Q: Pricing headwinds have increased over the last three quarters. With Medicare as your largest payer and proposed PFS rate cuts for 2027, do you expect pricing pressure to increase?
A: Yvonne Trancos (Chairman, President, CEO): Pricing remains within our guidance of flat to 100 basis points of erosion. In the ASC environment, implants are only 14-15% of overall cost, so the conversation is about efficiency and outcomes, not just implant price. Implant cost as a percentage of DRG is at its lowest point. With 85% of our book contracted, we have visibility into 2026 and 2027 and remain confident in our pricing guidance.
Q: What are your latest thoughts on M&A, including deal size and whether you'd go outside your verticals?
A: Yvonne Trancos (Chairman, President, CEO): Our M&A strategy remains consistent across three vectors: higher-growth segments of Recon (e.g., technology, infection), higher-growth areas within SCT (e.g., foot
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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