Zimmer Biomet (ZBH) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Business performance and growth outlook

• Achieved consistent mid-single-digit revenue growth and double-digit EPS growth over the past 10 quarters, with a strong product pipeline and operational improvements since 2018.

• 2024 growth remains robust, with Q2 showing 5.6% revenue growth and 10% EPS growth, despite recent challenges.

• Committed to mid-single-digit revenue growth, EPS growing 1.5x faster, and free cash flow at least 100 basis points above EPS through 2027.

• SET and Recon (hips and knees) businesses are expected to maintain strong growth, with new product launches and increased market penetration.

• ASC (ambulatory surgical centers) segment is a major growth driver, with 40%-60% of cases shifting to this setting and a comprehensive portfolio now in place.

ERP implementation and financial impact

• Migration from legacy ERP to SAP in July led to operational challenges, primarily affecting the U.S. and Canada, with the 'other' business category most impacted.

• The ERP issue could impact up to 1% of annual sales in 2024, but mitigation plans are in place to limit EPS impact and protect critical investments.

• Confident the ERP challenges will be resolved within 2024, with service levels expected to normalize by year-end.

• No impact anticipated for 2025 and beyond, with robust growth still expected in core business areas.

Product innovation and market positioning

• Launching 50 new products over the next 30-36 months, including Oxford Partial Cementless knee (U.S. launch by summer 2025) and Persona IQ short stem.

• Regaining hip market share with new products (direct anterior stem, surgical impactors, navigation) and revised sales incentives.

• Cementless and robotic knee penetration targeted to reach 50% by 2027, with current rollouts showing strong momentum.

• ROSA Shoulder robot is a unique competitive advantage, with U.S. and European launches planned and strong clinical trial results.

• Robotics, navigation, and mixed reality form a comprehensive digital strategy, with optionality for different customer needs and ongoing investments in AI and non-robotic platforms.