Zimmer Biomet Holdings (ZBH) Q3 2026 Earnings Report

The call was broadly positive. Zimmer Biomet reported solid third-quarter growth, strong performance across Hips, S.E.T. and technology, significant cash generation, progress in its commercial transformation and multiple increases to its 2026 outlook. The main challenges were declining knee sales, China-related headwinds, margin pressure from manufacturing costs and ongoing investment in the U.S. sales force. Management expressed confidence in the long-term strategy and expects improved knee performance and additional growth catalysts in 2027.

Zimmer Biomet raised its 2026 organic constant currency sales growth guidance to a range of 3% to 3.5% from 2.25% to 3.25%, adjusted earnings per share guidance to $8.50 to $8.60 from $8.47 to $8.59, and reported sales growth guidance to 4.4% to 4.9% from 3.9% to 4.9%; foreign exchange is expected to be an approximate 25 basis point tailwind, Paragon 28 to contribute 110 basis points, China-related headwinds to total nearly 100 basis points in the fourth quarter and roughly 50 basis points for the full year 2026, adjusted gross margin to be around 72%, adjusted operating margin to decline a little more than 50 basis points year-over-year, net interest and other nonoperating expenses to be $300 million, the adjusted tax rate approximately 18%, share repurchases approximately $1 billion, fully diluted weighted average shares around 193 million, and free cash flow to grow 9% to 11%; pricing is expected to be flat to 100 basis points of pressure, the company aspires to a 6% WAMGR by the end of the decade, expects 2027 to be a better year compared to 2026, and anticipates Monogram can launch in the first half of 2027, pending approval.