Zimmer Biomet (ZBH 7.99%), an orthopedic medical technology company, reported its earnings on August 7, 2025. The company announced GAAP revenue of $2.077 billion, beating analyst estimates of $2.057 billion. Adjusted earnings per share (EPS), a profitability metric that excludes certain non-recurring items, came in at $2.07, which was ahead of the consensus of $1.98 non-GAAP EPS. These results reflect a year-over-year revenue growth of 7.0% on a reported (GAAP) basis and a 3.0% increase in adjusted EPS. The quarter demonstrated progress in new product launches and strength in several core business units, though some margin pressure and segment challenges remain.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $2.07 | $1.98 | $2.01 | 3.0% |
| Revenue (GAAP) | $2.08 billion | N/A | $1.94 billion | 7.0% |
| Operating Profit | $300.0 million | $351.3 million | (14.6%) | |
| Free Cash Flow (Non-GAAP) | $247.7 million | $251.5 million | (1.5%) | |
| Gross Margin | 63.8% | 64.1% | (0.3 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Profile and Strategic Focus
Zimmer Biomet operates in the global medical technology sector, specializing in orthopedic devices, implants, and related technologies. The company provides products such as joint replacements, surgical tools, and robotic-assisted surgical systems. Its offerings help improve mobility and quality of life for patients undergoing procedures like hip and knee replacements.
In recent years, Zimmer Biomet has focused on innovation, particularly in digital and robotic systems. It invests in research and development to remain competitive and to introduce products that address unmet healthcare needs. Success factors include strong relationships with surgeons, global sales presence, supply chain efficiency, and navigating complex regulations in multiple markets.
Quarter in Review: Key Financial and Operational Developments
Zimmer Biomet delivered GAAP revenue of $2.077 billion, beating analysts' expectations on a non-GAAP basis. Growth was especially strong in the S.E.T. segment, which covers Sports Medicine, Extremities, and Trauma devices, with S.E.T. net sales increasing 4.9% on a constant currency basis compared to the prior year. S.E.T. sales reached $550.6 million, up 17.3% over the prior year for S.E.T. net sales (GAAP), driven by new product launches and the integration of Paragon 28, a recently acquired company focused on foot and ankle solutions.
Knee products, a core segment, showed muted U.S. growth at 1.7% (GAAP) with total segment sales of $826.0 million. Management flagged ongoing challenges in the U.S. Knee market but expects improvement in the second half of 2025 due to continued launches of Persona OsseoTi cementless knees and Oxford Partial Cementless knees. To boost adoption, Zimmer Biomet ramped up customer training, with nearly 400 Oxford trainees by the end of Q1 2025, aiming for over 1,000 by year-end 2025.
The company’s hip line saw U.S. sales growth of 5.2% (GAAP, reported basis), supported by new implant designs like the Z1 Hip Stem and Triple-Taper stems. Approximately half of new Z1 users in the U.S. switched from competitors as of Q1 2025, a sign of competitive traction. Internationally, both Hips and Knees delivered steady gains, while the S.E.T. segment is now expected to surpass Hips in size due to strong momentum and the Paragon 28 integration.
Gross margin (GAAP), which represents the percentage of revenue remaining after production costs, dipped slightly from 64.1% to 63.8%. This reflects pressure from integration costs. Operating profit (GAAP) dropped to $300.0 million compared to $351.3 million in Q2 2024, a 14.6% decrease in operating profit compared to Q2 2024, mainly due to increased selling, general, and administrative expenses and acquisition costs. Adjusted net income was relatively stable compared to Q2 2024, and the adjusted effective tax rate remained unchanged from the prior year.
Outside product sales, the Technology, Data, Bone Cement, and Surgical category declined 0.2% on a GAAP basis, partly due to comparisons with a strong previous-year quarter and a shift to more product installations over outright sales. Pricing gains flattened, with average selling prices showing only a modest 0.1% increase compared to higher rates in prior quarters. Management expects pricing to remain flat for the rest of 2025.
The company’s cash position improved to $556.9 million, while Net debt rose to $7.02 billion after recent acquisitions. Free cash flow (non-GAAP) totaled $247.7 million, just below last year’s $251.5 million figure. Inventory days on hand remain elevated but are targeted for reduction.
Product Family Highlights: Robotic Innovations and Market Moves
Zimmer Biomet places a strong emphasis on innovation, especially in robotic and digital surgery. One flagship system is ROSA, a robotic knee platform. The company submitted post-market regulatory filings for ROSA Knee V15, aiming to enhance its competitive standing against leader Stryker’s Mako system. New features target improved surgical precision and ease of use. Zimmer Biomet also announced an agreement to acquire Monogram Technologies, which focuses on artificial intelligence-driven orthopedic robotics, broadening its technology portfolio.
Hips saw further uptake of Z1 and Triple-Taper stems, designed for durability and better patient outcomes. These hip implants help surgeons accommodate different patient anatomies. In knees, the Oxford Partial Cementless and Persona OsseoTi lines are gaining traction. Oxford Partial Cementless knee is the only product of its kind in the U.S. with PMA (premarket approval) designation, backed by extensive clinical data showing 93% survivorship at 10 years, based on nearly 15,000 patients in the National Joint Registry for the UK. Increased training and contract penetration are expected to accelerate adoption in coming quarters, with contract penetration targeted to reach approximately 70% to 80% in the second half of 2025.
Acquisitions remain a key strategy. With its full U.S. sales force and leadership joining Zimmer Biomet, the deal strengthens the company’s S.E.T. segment and is expected to contribute significantly to overall growth.
Regionally, the company continues to expand in ambulatory surgery centers (ASCs), a fast-growing channel. About 20% of U.S. sales now flow through ASCs, compared to just 2–4% before the COVID-19 pandemic. Management projects this could reach as high as 40–60% of sales over the next five years. This transition is driven by demand for outpatient procedures and new product compatibility with the ASC environment.
Outlook and Guidance
Zimmer Biomet raised its full-year guidance following the strong quarter. It now expects reported revenue growth of 6.7%–7.7%, up from the previous 5.7%–8.2% range. Adjusted diluted EPS guidance was increased to $8.10–$8.30, compared to the earlier forecast of $7.90–$8.10. The company expects organic constant currency revenue growth between 3.5%–4.5% for the full year, with the Paragon 28 acquisition contributing about 2.7 percentage points to total growth. Management also announced it expects adjusted operating margin to be down by 100–150 basis points versus 2024, mainly due to acquisition and tariff-related costs.
Looking ahead, management’s focus is on accelerating U.S. Knee performance, integrating new acquisitions, and expanding its digital and robotic offerings. The company is closely watching tariff effects, which are expected to be manageable for 2025 but could become more significant in 2026. Inventory reduction, pricing strategy, and continued growth in the ASC channel will be key areas to monitor over the coming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
