Thank you, operator, and good morning, everyone. Welcome to Zimmer Biomet's first quarter 2026 earnings conference call.

Joining me on today's call are Ivan Tornos, our Chairman, President and CEO, and Suketu Upadhyay, our CFO and EVP Finance, Operations and Supply Chain. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements.

Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. For a detailed discussion of all these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements, please refer to our SEC filings.

Please note we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking non-GAAP financial measures.

Reconciliation of these measures to those directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our first quarter earnings release, which can be found on our website, zimmerbiomet.com. With that, I'll turn the call over to Ivan.

Ivan?

Good morning, everyone, and thank you for joining today's call. I would like to start as I always do by sharing my gratitude towards Zimmer Biomet team members around the world.

Your determination, your discipline, and your dedication to customers and patients are what moves our business and our mission forward. We're off to a strong start to the year strategically, operationally, and financially, and that momentum is a direct reflection of the strength of our team, the resilience of our business, and the impact that we can have when we stay focused on innovating and executing for our customers.

Once again, my sincere thanks to the Zimmer Biomet team members. During my prepared remarks this morning, I'm going to cover four key areas.

First, I'll start by summarizing our first quarter results. Second, I will provide an update on our US go-to-market changes.

Third, I will discuss our 2026 outlook. Then lastly, I'll briefly cover the progress that we continue to make across the three key strategic priorities of the company, those being people and culture, operational excellence, and innovation and diversification.

Starting with the first quarter results, I'm proud of how the team began the year, making strong progress towards our 2026 sales growth commitments, EPS, and free cash flow commitments. In the first quarter, we grew sales 2.9% on an organic constant currency basis, at the upper end of our annual 2026 revenue guidance range, and we delivered adjusted EPS of $2.09, which was up 15% year-over-year.

Notably, the first quarter saw a 20 cents benefit from tariff-related items relative to our expectations. As we get into the details of these results, unless otherwise noted, all statements on this call will be about the first quarter of 2026 and how it compares to the same period in 2025, and all commentary will be on a constant currency and adjusted operating basis.

First quarter 2026 organic constant currency commentary excludes the impact from the Paragon 28 acquisition, which we closed in April of 2025. Looking at the first quarter results in more detail, our US business increased 3.2%, while international grew 2.5%.

These results reflect healthy end markets, strong technology sales, which once again grew in strong double-digit rates, and continued momentum from our recently launched new products. Importantly, this performance was against the backdrop of changes to our go-to-market strategies in both the US and some designated international markets.

US knee growth of 2.2% in the quarter reflects a greater than 20% increase in partial knee sales driven by our Oxford partial cementless knee, the only partial cementless knee on the market in the United States. This performance was partially offset by pressure in our legacy total knee implants, such as NexGen and Vanguard, which we continue to phase out as part of our brand rationalization strategy.

International knees grew 1.3% for the quarter. Our US hip franchise grew 5% in the quarter, as we are seeing increasing traction of our hip triple play of Z1, which now represents nearly 40% of our US hip stems, OrthoGrid, our AI-based hip navigation platform, and HAMMR, our surgical impactor.

International hip sales increased by 1%. While still early in its launch, we are seeing rapid adoption in Japan, the second largest market for Zimmer Biomet, of our first-to-the-world iodine-coated hip implant, which is designed to help address the risk of periprosthetic joint infection after total joint replacement.

Our technology and data, bone cement, and surgical business grew nearly 12% in the quarter. Our strategy of offering a comprehensive suite of technology solutions is paying dividends, as we are seeing continued strong ROSA and TMINI sales across the board.

To further this one-stop shop approach, at the American Academy of Orthopaedic Surgeons in March, in New Orleans, we hosted technical evaluations of EMBOSS, our fully autonomous, AI-driven orthopedic robotic system, which we acquired via the Monogram acquisition. Surgeon feedback was overwhelmingly positive, as the potential gains in safety, efficiency, ease of use, reproducibility, and accuracy resonated very strongly with the customers that we engaged.

We recently completed enrollment in our 102-patient clinical study, and we continue to expect US approval and the launch of the semi-autonomous version in early 2027, followed by the fully autonomous version in late 2027 or early 2028. In anticipation of the EMBOSS launch, we're increasing the number of robotic clinical sales representatives, targeting to hire over 200 by the end of 2027.

Finally, SET growth of 1.6% was once again led by our US CMFT and upper extremities businesses, partially offset by continued challenges in restorative therapies and in our trauma business. Double-digit CMFT growth in the US was driven by our sternal closure franchise, which continues to perform very nicely above market.

Upper extremities increased upper single digits in the US, as both our OSSIObody stemless shoulder and our Identity total shoulder platform continue to gain momentum. Moving on now to discuss the US go-to-market changes.

In the US, the transition to a dedicated and specialized sales channel is progressing as planned. While the quarter did see some modest disruption, it was in line with our expectations, and importantly, we are seeing rapid increases in productivity in those territories that we have transitioned.

We remain on track to complete the transition by the end of 2027. Internationally, the evolution of our go-to-market models, particularly in emerging markets, is ongoing and also is performing in accordance to the plan and the expectations that we had.

While we did see an impact on growth in the quarter, this was very much accounted for internally. While our commercial changes are progressing as planned, given that it is still early in the year, we are maintaining our full year 2026 organic constant currency revenue growth guidance of 1% to 3%, with growth roughly consistent throughout the remainder of 2026.

Inside of this, our assumption of up to 100 basis points of price erosion is unchanged. We continue to anticipate an approximate 50 basis points FX tailwind to full year revenue growth, with the second quarter being about neutral at current rates, and Paragon 28 to contribute around 100 basis points to reported sales growth in 2026 before being reflected in organic growth.

As a result, our reported sales guidance also remains unchanged at 2.5% to 4.5% for the full year. We now expect 2026 operating margins to be better than anticipated, down slightly less than 50 basis points from 2025, which still contemplates lower gross margins, dilution from the Paragon 28 acquisition, and increased investments in our US commercial channel.

We anticipate operating margins in the second quarter of 2026 being down roughly 200 basis points from the second quarter of 2025, and the third quarter operating margins being down around 50 basis points sequentially from the second quarter. Our guidance for interest expense, tax rate, and end-of-year shares outstanding, which we continue to assume up to $750 million of share repurchases, remains unchanged.

Given these dynamics, we are raising both our EPS and free cash flow growth expectations for the year 2026. We now expect adjusted EPS to be $8.40 to $8.55 from the previous guide of $8.30 to $8.45, and we expect our free cash flow growth to be in the range of 9% to 11% versus the previous guide of 8% to 10%.

As I said, all in, the year is off to a very strong start, and I could not be any prouder or excited about what the remainder of 2026 is going to bring to Zimmer Biomet. Turning now to our three key strategic priorities for the company: people and culture being number one, operational excellence number two, innovation and diversification number three.

People and culture remain the key competitive differentiator for Zimmer Biomet, and we continue to focus on placing the right talent in the right roles to advance our strategy. With that in mind, I'm very pleased to share that Dr.

Jonathan Vigdorchik, a renowned surgeon from the Hospital for Special Surgery, has joined Zimmer Biomet as Chief Science, Technology and Medical Affairs Officer, reporting to me. In this role, Dr.

Vigdorchik will lead the strategy, delivery, and management of our global portfolio spanning AI-enabled robotics, software and data, smart implants, and connected technologies, while also overseeing our global medical education. On our second priority of operational excellence, we continue to make great strides in improving operating efficiency through expanding our manufacturing footprint into lower-cost geographies.

In addition, we're making very meaningful progress on reducing working capital by lowering our days of inventory on hand, while at the same time accelerating a very robust SKU rationalization program. We expect these combined efforts to strengthen our industry-leading margins while meaningfully continuing to improve our free cash flow conversion rates.

On pillar number three, from an innovation perspective, we recently committed to becoming the exclusive orthopedic investor in the Mobility Revolution Fund, a musculoskeletal venture capital fund launched through a collaboration between Deerfield Management and the Hospital for Special Surgery in New York City. This is going to give us the opportunity to invest in technology that has the potential to truly change the standard of care, from AI data applications to cartilage repair solutions.

Speaking of the latter, we are also teaming up with some of the world's leading researchers in this groundbreaking opportunity. It is inspiring to see how rapidly we're advancing our commitment to solving some of the key problems in orthopedics, whether it's awareness, safety, efficiency, and outcomes, today and in the future.

Lastly, on diversification, our recent acquisitions are all seeing positive momentum. Paragon 28 first quarter growth accelerated around 200 basis points from the fourth quarter of 2025 and is trending back towards double-digit growth performance.

OrthoGrid delivered its strongest quarter to date, with significant growth and accelerating adoption, solidifying OrthoGrid as a core driver of our digital ecosystem and anterior hip triple play. Finally, with enrollment complete in the Monogram clinical study, we remain on track to bring this very exciting first-to-the-world technology to market.

In conclusion, we are very proud of the progress that we're making so far in 2026. We continue to prioritize our go-to-market commercial transformation in the US, and we continue to focus on driving robust adoption of our new product innovation cycle.

Before I turn the call over, I want to comment on the announcement that we made this morning regarding Suketu's decision to leave Zimmer Biomet for a new opportunity in the biotechnology space. For nearly 7 years, Suketu has been a valued partner and disciplined operator, helping us in improving our WAMGR, weighted average market growth rate profile, through organic and inorganic portfolio optimization, driving a top-quartile margin profile for Zimmer Biomet, strengthening the balance sheet, and significantly improving the free cash flow conversion and growth.

I'm thankful for his leadership and contributions, and I wish him continued success in his next chapter. Above all, I'm thankful for his friendship, which I know will continue for many years to come.

During this transition, Paul Stellato, our current Controller, Chief Accounting Officer and Head of Corporate FP&A, will serve as Interim Chief Financial Officer. Paul is a seasoned business leader, bringing more than 20 years of broad financial and IR, investor relations, experience to the role.

Since he joined Zimmer Biomet in 2022, Paul has been instrumental in translating our strategy into disciplined capital allocation, including our share repurchase program and recent acquisitions, as well as leading the creation of global shared services around the world. I'm extremely confident that he is the right leader at the right time, and I'm confident he'll provide steady direction and leadership as we continue to conduct a search for a successor, and I look forward to our continued partnership.

With that, let me turn the call over to Suketu. Thank you.

Thank you, Ivan, and good morning, everyone. I'm proud of what we've accomplished together over the past 7 years.

I believe Zimmer Biomet has a clear strategy and meaningful opportunity ahead. I would also like to take a minute to thank the entire Zimmer Biomet organization for all of the hard work and dedication that you put into advancing our mission while delivering on the company's objectives.

Your dedication and resiliency are impressive. I wish you continued success.

Now turning to the results. Reviewing the first quarter results, net sales were $2,087,000,000, an increase of 9.3% on a reported basis and 2.9% excluding the impact of foreign currency and the Paragon 28 acquisition.

Consolidated pricing was 40 basis points negative in the quarter, in line with our expectations. Growth in the quarter benefited from opportunistic end-of-quarter purchases above historical levels, continued momentum from our recently launched products, as Ivan noted, and strong robotic sales.

Turning to our P&L, we reported GAAP diluted earnings per share of $1.22, compared to GAAP diluted earnings per share of 91 cents in the prior-year quarter. Higher revenue, lower restructuring costs, the previously mentioned tariff benefit, and a lower share count were partially offset by modestly higher taxes in the quarter due to geographic mix.

On an adjusted basis, we delivered diluted earnings per share of $2.09, compared to $1.81 in the prior year. This increase was driven by higher revenue, the aforementioned tariff benefit, and a lower share count, which were partially offset by increased commercial investments.

Adjusted gross margin was 73%, higher than the first quarter of 2025, driven by favorable mix and a benefit from tariffs. Notably, a portion of this tariff benefit included refunds that we had anticipated in the second half of the year.

Adjusted operating margin was 27.3%. Adjusted net interest and non-operating expenses were $71 million above the prior year, driven by higher debt related to Paragon 28.

Our adjusted effective tax rate was 18%, and fully diluted shares outstanding were 195.8 million, down year-over-year due to $250 million of share repurchases in the first quarter. Now turning to cash and liquidity.

We had another strong quarter of cash generation, with operating cash flows of $359 million and free cash flow of $246 million. We ended the quarter with approximately $424 million in cash and cash equivalents.

As Ivan had covered the rest-of-year outlook, I would like to close by again thanking the entire ZB team for their hard work and dedication. With that, I'll turn the call back over to David.

Thank you, Suketu. Operator, let's open it up for questions.

In order for us to take as many questions as possible, please limit yourself to one question. Operator, please go ahead.

Good morning, Ivan. Hi, everybody.

I'm going to miss you, Suketu. From my perspective, the year is off to a good start.

You outperformed, Ivan, in the quarter. You beat sales, strong gross margins, you beat EPS.

Just since I only have one question, but you didn't raise overall by the beat. You left sales unchanged, EPS less than the EPS beat.

I appreciate you keep talking about being more balanced and temperate as you think about guidance, but it's the start of the year. Are you seeing anything in the business or the market or competitively or in your sales transition that prompts that conservatism beyond just, again, your desire to stick with your tempered guidance?

Thanks so much.

Hey, good morning, Rick. Thanks for the question.

As you highlighted, we had a very strong first quarter. As I sit here looking at the next three quarters, the word that comes to mind is confident.

I'm very confident that we're moving in the right direction. We continue to see the sales force changes progressing as planned.

We had some disruption in the quarter early in Q2, but everything is going in accordance to plan. We have a solid pipeline in technology.

You saw the growth in technology continue to see great momentum with new products. We got a very robust list of new customer targeting strategies that are materializing.

From a revenue standpoint, I'm very confident that we are moving in the right direction. On EPS, we did raise.

We didn't raise by the entire beat. We're also investing in a variety of fronts, namely in these sales force model changes.

We did raise free cash flow. Again, very solid first quarter, everything moving in the right direction.

Why are we not raising guidance now? Because it's early in the year.

This is a year of transition. We said so.

We are making fairly substantial changes in a variety of fronts: go-to-market models here in the US, some changes in emerging markets, namely China. We're making investments in innovation at a bold pace.

We're hiring people. We're making talent changes.

We feel even though the first quarter was very strong, it's probably prudent to wait, let's call it 90 days and then have the conversation again. Again, I'll leave you with one word: confident.

Very confident that we're moving in the right direction. Thank you for the question.

Thank you.

Good morning, Ivan, and thanks for taking my question. Congrats on a nice sprint here, and Suketu, wish you the best.

Maybe one sort of high level, Ivan, on you mentioned US sales force transformation is on plan. You also made some interesting comments about you're seeing rapid increase in productivity in regions where you're seeing this transition.

Any further details that you can share on other metrics that you're tracking? Perhaps things like attrition rates, what percentage of sales force now dedicated or direct, if you will?

Sort of on that similar line, any macro impact that we need to think of outside of the sales force, reorg, anything from Middle East? Thank you.

Absolutely. Let me give you some of the key public metrics that we've been sharing.

At the beginning of the journey, early 2026, we mentioned that roughly 66%, 2/3 of the US sales force, roughly 2,500 people, were 1099s. At the end of Q1, the number is already slightly below 60%, already roughly a 10% reduction on the number of 1099s.

Obviously, that implies that these 1099s are now fully dedicated to Zimmer Biomet. No longer they're doing Zimmer Biomet, one, or two other jobs.

A fairly significant decrease in the number of non-dedicated individuals. We started the year with roughly 25% of the sales force being specialized, one of every four reps carrying a dedicated sales bag.

Another number is approaching, if not exceeding, 30, 3-0%. I believe you and I spoke about this, Vijay, we locked in the top six independent distributors, accounting for roughly 40% of sales, with an extension of no less than 7 years with Zimmer Biomet.

That was a fairly significant risk that we retired. Relative to turnover rates, we had a target of no more than 12% turnover given the changes, and our turnover rate is in the single-digit range.

Again, early in the year, only 90 days behind, but everything is progressing in accordance to plan. To the point that we're thinking that perhaps we could go a bit faster as we get into Q2, Q3, and the rest of 2026, with the commitment still being we're going to close the entire transformation by the end of 2027.

I believe you had a second question or part two of the question. Anything else, any follow-ups there?

Just on the macro, please, Middle East, any impact? Oh,

okay. Middle East.

From a macro standpoint, obviously, like everybody else, we continue to monitor what's happening in the Middle East. Today we have seen no material supply disruptions, a minor freight cost increase in the quarter that we're able to absorb.

From a supply standpoint, most of our key products are dual source, if not three sources. We got at least 1 year of poly, this is not something that we're concerned about.

We're not seeing any distribution challenges there. Again, so far life is good.

Then from a sales impact standpoint, we didn't see any impact in the first quarter. That's on the Middle East.

Then you got a variety of other macro or deals that we're monitoring, but nothing that it was impactful in the quarter and nothing that we see as being impactful in the second quarter and beyond. Thank you for the question, Vijay.

Good morning, everybody. Thanks for taking my question.

Can you hear me okay?

Yes, we can.

Great. Ivan, Vijay actually asked this, I think, in those lists of questions, but I'm not sure that you you touched on it.

You did talk to seeing increasing productivity in some of the geographies where you're doing the sales force work. I was just hoping maybe you could expand a little bit on that, just maybe in general talk to some to the extent that you're seeing any green shoots, let's call it, from the work that you've done, maybe sort of in the latter part of 2025 or maybe even early here in 2026.

That's worth, calling out that gives us confidence in the lift that you still have ahead of us, ahead of you. Thank you so much.

I appreciate the question, Matt. We probably could spend an hour going through data points.

As you can imagine, given the magnitude of the project, we're tracking all kinds of KPIs, but I'll give you maybe three or four reasons to believe. In the territories that we did switch from non-dedicated to dedicated, again a 10% reduction, we've seen fairly dramatic improvements in productivity.

Nationwide, our average rep does around seven cases. Our lead competitor is in the 16, 17 cases per week range.

In the territories where we made the switches, already are in double-digit ranges for the number of cases. That's pretty encouraging to see very quickly that improvement.

No surprise, when you go from spending 2, 3 days a week doing cases to 5 days, you can imagine the productivity is going to increase. Along with productivity increases, we've seen sales improvement in those dedicated structures.

Our upper extremities shoulder number for the quarter was strong. That is directly correlated to the number of shoulder specialists that we have added both in an in-patient HOPD structure, as well as in ASCs, and we continue to see great momentum in shoulders.

Productivity is improving, number of cases, sales is improving in those territories. The lower turnover rates that I was quoting to Vijay is mostly coming from some of these territory changes, higher engagement once they become fully part of the company.

Again, plenty of reasons to believe that we're moving in the right direction.

That's really helpful, Ivan. Really appreciate it.

Thank you.

Thank you, Matt.

Great. Good morning, and thank you for taking the questions.

Suketu, I'll add, I guess, my sadness and congratulations. You'll be missed.

Wanted to follow up, Ivan, maybe on a couple things you mentioned, and it really comes down to what is and what isn't maybe one-time in the quarter. It seems like there were some product discontinuations in knees, maybe a little bit of end-of-quarter purchasing, and then perhaps maybe some benefit in gross margin.

Wondering if you could size any of those, any other potentially one-time items in the quarter, and how to think about that resolving over the rest of the year. Thanks.

Absolutely. Thank you, Robbie.

I'll touch on US knees and what happened in the quarter, and then maybe, Suketu, you can comment on gross margins and how durable they are. Look, it was not the greatest quarter for US knees, but it was definitely in alignment towards expectations.

We knew we were going to be going through some of these changes relative to the go-to-market transformation, and we accounted for those. I would say the single largest reason why the US knee number was not higher than the 2.2% is some of the changes that we made in the US organization.

We lost two accounts in the quarter, fairly large. We believe we're going to be able to recoup some of that business, but we'll see as we get into the rest of the year.

There was a Kaiser strike in the West Coast where we have the highest share in knees. While that was disruptive for everybody, it was more disruptive for us.

In my prepared remarks, Robbie, I mentioned how we are moving from legacy brands, namely NexGen and Vanguard, to making the transfer into a one-knee franchise, that being Persona. As we went through that, we saw some disruption.

I will tell you, probably mostly in line except a couple of the accounts that we lost, and that's the bulk of it. We got to do better, and we expect to do better than growing 2.2% in US knees.

Relative to quarter-end deals, all that stuff, those are in line with what we typically do. It was not a significant one-time event.

We do strategic purchases, we try to convert ASCs, there is demand in the market for bundle deals where we include technology, implants, and what not, and we're going to continue to do those. Suketu, you want to comment on gross margin?

Yeah. Hey, Robbie.

On gross margin, we saw a very strong quarter, largely driven by the invalidation of the IEEPA tariffs, which contributed about 20 cents to our results in the quarter. We were beyond that, a little bit better on underlying performance as well.

The way you should think about the gross margin line is, of that 20 cents that we benefited in Q1, we had originally assumed about half of that would be credited in the second half, so that was a bit of a pull-forward, and so the remainder of that 20 cents drops 10 cents to the bottom line and is largely the driver of the raise on earnings per share. As you think about gross margin for the full year, we still expect it to be down modestly versus prior year at around 71%, give or take.

The way you should think about the cadence is that it's going to be roughly consistent for the remainder of the quarters. Again, underlying performance on gross margin is as expected.

The biggest driver in Q1 was the invalidation of those tariffs. Thank you.

Wonderful. Thanks a lot.

Hey, guys. Thanks for the question.

Just to follow up a little bit on Robbie's question. I guess looking at the US knees specifically, comps do get 400 basis points tougher in the back half.

Just how do we get confidence in kind of the back half acceleration in US knees? I don't know if I heard correctly, did you say in the earlier question, you saw some disruption early in Q2?

I don't know if that was a early Q1 misspeak, or maybe I misheard it wrong.

No, no. The disruption was on Q1, Travis.

When you look at the changes we made in the first quarter, another reduction on non-dedicated representatives, there was some disruption. We did lose two fairly large accounts in the quarter.

No, I did not comment on disruption on the second quarter. Your main question, what gives us confidence that we're going to accelerate our knee growth in the second half, is the ramp-up of new products, is the fact that we continue to place and sell a lot of technology, 30% growth in technology in the first quarter.

All in with the rest of surgery, bone cement is 12%, but the actual technology growth in the first quarter, that's TMINI, that's ROSA, that's ROSA Optimaize, is 30%. Once you start growing technology at those rates, obviously implants follow at some point.

The account conversions that we're seeing, the technology sales, the changes we're making from a go-to-market standpoint, new product acceleration gives us confidence that that number should increase. Thank you, Travis.

Thank you.

It didn't come up in your prepared remarks, but one of your competitors has been dealing with an issue that impacted their ability to serve customers for a few weeks at the end of the quarter. Doesn't appear to me at first glance like you've benefited much from that dynamic, but could you just talk about what you've seen in the market and whether you think that has any implications for your business either here in the first quarter or what you're expecting in 2Q?

Hey,

thank you, Chris. First things first, it's very unfortunate that companies go through those dynamics.

I'll start with that. No, we did not see any material impact.

We did not see the fact that we had a competitor going through such dynamic impacting our business in a meaningful way. Thank you.

Thank you. Good morning, everybody.

Appreciate you taking the question. Maybe we could unpack a little bit some of the trends outside the United States.

I think this is the first quarter in quite some time that OUS growth has trailed the US and likely trailed where end markets look to be performing. Could you maybe help us think through some of the factors influencing those geographies, the extent to which there might have been any type of intermittent disruption versus what might be a change in the trajectory of that franchise?

Good to hear from you, David. A couple of things.

Number one, the comps in the first half for international are more difficult than the second half. That's one part.

I never like to talk about comps, but it is definitely an element here. Secondly, we've made, as we announced at the end of 2025 and as we said in 2026 early in the year, we made and we're making some distributor changes in geographies such as emerging markets, Middle East in Europe, and China primarily, where we have gone from a large network of distributors to having one, if not two partners.

That's obviously brought some disruption. Then, thirdly, there were a couple of one-time events that happened, orders in certain geographies internationally that didn't come our way.

All of that said, the expectation is that we're going to be growing international mid-single digit in the second half of 2026. Thanks for the question, David.

Good morning. Thanks for taking the question.

I guess for my one question, Ivan, I'd love to hear about the rollout of Monogram. I know it's early, but it's an important product for you.

Once you launch the semi-autonomous system with Persona early next year, how should we think about the pace of the rollout? Will there be a limited launch initially at select centers?

How that might impact ROSA? Just help us think about that, please.

Thank you.

Larry, I love the fact that you always got technology-related questions about the future of the company. Thank thank you for that.

Very excited about Monogram. As I mentioned in my prepared remarks, we completed the the clinical trial, we are deeply focused now on the preparation of the 510(k) submission, and we continue to anticipate that we're going to be in a position to launch this new-to-the-world technology in early 2027.

What should you expect of Monogram? If what we're proving is right, the thesis remained that we're going to be launching the most efficient robot out there, in what we can do cases under 4 minutes procedure times.

We believe that it's going to have the highest amount of safety given the enhanced surgical boundaries. We believe that it's going to really democratize orthopedic cases from a technology standpoint, very consistent when it comes to procedures.

It's very reproducible, the learning curve is is very short, it is easy to use. Then again, the level of accuracy we've seen with the robot is like nothing that I've seen in my many years dealing with technology.

We believe we got a bold platform that can get scaled out fairly rapidly. To that point, we are going to invest to make sure that's the case.

We are hiring north of 200 sales reps behind the launch of Monogram, in addition to the many reps that we already got in the field. We are investing heavily on clinical evidence.

We recently announced that we hired Dr. Jonathan Vigdorchik, who happens to be one of the world's global key opinion leaders when it comes to technology, someone who's actually been an entrepreneur as well.

We're also investing in rethinking or rather thinking not just the clinical strategy, but also the economic strategy. I could spend an hour talking about it, but I would say this is going to be a very bold launch, one that we're preparing already as we speak.

What's going to happen with ROSA? We are committed to having a suite of technology solutions.

ROSA Optimaize was recently launched, one of the reasons why technology is growing 30%. We're going to keep that.

It is the number one robot outside of the US where CT scan is not CT scanning is not the preference. We like what we're seeing with our partnership with Think Surgical and TMINI.

We strongly believe that the combination of Monogram plus ROSA plus TMINI is going to give us a is going to give us a competitive advantage. Very excited about Monogram.

Thanks for the question.

thanks for taking the question. I actually wanted to ask a P&L question about the tariff impact, cuz you saw the benefit here in Q1.

I guess what are you assuming for the rest of the year with regards to IEEPA tariffs or tariffs in general, and what do you think could happen with the 232 investigation, just asking out of curiosity more than anything else?

Yeah. Hey, Matt.

Good to talk to you. We are assuming that the 122 tariffs remain intact into the second half of the year.

We are assuming that the IEEPA remain invalidated, and therefore, we took the benefit of that 20 cents in the first quarter, as I mentioned. Moving forward on the 232, I think it's still evolving and dynamic, and no material updates at this point, but the overall situation remains fluid, and we'll keep you posted as things unfold.

I'll just add, Matt, quickly, on the 232, the validation we're getting from a variety of sources is that it's not going to impact those companies that operate under the Nairobi Protocol. We're feeling pretty confident that we got a pathway to mitigate that.

Thank you.

Thank you. Thanks, guys.

Hi, thanks for taking the questions. One of the innovations that feels most innovative for you guys that's exclusively in your hands, it's the Canary smart implant that's embedded in Persona IQ.

Just noticed it doesn't get a ton of air time even on this call, and I know you had some positive clinical trial updates at AAOS for this technology. Seems like there's potential to generate real savings to the system here, better patient management post-surgery.

I know in the most recent CMS inpatient rule proposal, the CCJR is extending some of those initiatives that would seem to lend themselves in favor of a technology like this. We'd just love to hear kind of where you are on this particular product subsegment, why we're not hearing about it more, and how and if this can be leveraged as a more meaningful differentiator moving through 2026 into 2027.

Thank you.

I love the question, Richard. Thank you.

Look, early on probably we talked too much about Persona IQ without having the data. Now we're taking a different approach.

We're going to get all the data, we're going to get everything validated, and then we're going to talk about it. I will tell you, overall, everything is tracking in accordance to expectations.

As you mentioned, we did publish some very robust data on what Persona IQ brings in terms of lowering costs, improving outcomes, etc., etc. That was published I think it was 4 to 6 weeks ago.

I think with some of the changes around IPPS and the CJR expansion, this is the kind of product that can make a robust impact. There is an increase on DRGs or expenditors, as you see with DRGs 469 and 470, for those companies that perform better.

Now we would be in possession of the only implant that can in an objective way track whether our implant is performing better. Companies that have connected data before, during, and after the procedure, companies that can bring objective data around outcomes, PROMs, and what not, and they can validate they can reduce the cost of care, I believe they're going to be meaningfully rewarded.

We continue to invest in a variety of fronts to make sure that we are the company that can validate all of the above. Committed to the space, the technology, and we like what we see.

Thank you.

Hi, thanks for taking the questions. Just to touch on ROSA shoulder, any updated color on the launch, and when it will move to a broader launch?

Caitlin, thanks for the question. We are now fully on the full market release.

I was actually down in Florida where we've been demoing the technology. The feedback continues to be very strong.

It is surgeon-centered, we're not launching a technology that only certain surgeons can use. If you are an anatomic or reverse type of surgeon when it comes to technique, you can use ROSA shoulder for both types of surgery.

We are gaining really solid data around the accuracy of the platform. We can robotically do surgeries that impact the glenoid as well as the humeral.

We can do both the glenoid reaming and humeral resection. It is extremely efficient.

We already are actually working on version two that's even more efficient than the first-generation ROSA shoulder, and it is fully integrated to the rest of the ROSA ecosystem. Again, another example, going back to the question that Rich had, of collecting data before, during, and after surgery with ROSA shoulder, and being able to engage in PROMs conversations, outcomes, and what not.

Again, we moved from limited market release to full market release, and we're going to scale up the number of units that we're going to be deploying in the US and other markets. Thank you, Caitlin.

Thank you.

Hey, thanks so much for taking the questions. A follow-up on Paragon.

You mentioned some acceleration there. If you could talk about what's driving that and whether you expect to maybe exit the year on double digits, and how we should think about the timeline for another potentially Paragon-like strategic investment.

Thanks.

Hey, thanks, Matt. We exited the first quarter almost at double digit when it comes to Paragon 28, and early in the second quarter, we are in the teens.

The growth is accelerating. We also saw a 200 basis points sequential increase from Q4 of 2025 to Q1.

To answer your question succinctly, what's driving this is focus. We leaving Albert and the team alone.

They're getting robust investments behind the platform. They're launching products at a rapid pace.

They're hiring reps in a variety of fronts. Focus is what's driving the growth here.

We expect to exit 2026 strongly in the double-digit growth rates. In terms of when are we ready to do the next deal, look, we got a lot going on here.

We are changing the go-to-market model here in the US, integrating Paragon, about to launch Monogram, which is going to be very disruptive and is going to require a lot of focus, and then we got another deal called OrthoGrid, also doing really well, that we're integrating. We're going to pause.

We're going to continue to do buybacks, and at the right time, we'll execute on a deal similar to Paragon, which I think is proven to be very, very solid for Zimmer Biomet. Thanks for the question, Matt.

Thank you. Good morning, guys.

Suketu, all the best to you. Ivan, where do you think we are at on underlying hip and knee market growth?

Are there any incremental headwinds to market growth in the US that you're seeing on elective procedures or willingness of your hospital customers to purchase bigger-ticket items like ROSA?

We continue to track the market growth rates, and it's very solid. We peg the overall recon market to be growing north of 4%, if not 4.5%.

Obviously, we got to do better in knees. We are where we need to be, but we're going to accelerate in hips.

We're not seeing any material impacts. I get the question around what's happening with Medicaid, ACA, and what not.

We track all kinds of data. Medicaid is low single digit for us.

Said differently, I think it's about 1% of our revenue comes from Medicaid, less than that. Then in terms of ACAs, less than 1, 2% of all cases.

We track the top 10 accounts in the US, top 10 accounts being in hospitals like Mayo, Cleveland, HSS in New York, and other, and we continue to see waiting lists being fairly long. I would say the market is 4, 4.5%, durable.

Pricing dynamics continue to be where they need to be. We had a quarter of 40 basis points of price erosion overall, in alignment with our expectations.

We didn't see anything from a market perspective that we're concerned about. Thank you.

Thanks, Ivan.

Thank you. Good morning, guys, and thanks for taking the question.

Suketu, best of luck. Ivan, maybe on the sales transition.

I know we covered a lot of this last quarter, but I just want to make sure I'm understanding a couple things we've heard in some conversations. I think some of your reps that were not 100% dedicated, you're kind of truing up and giving them guarantees this year.

That extra stub that you may be guaranteeing some of those reps, are you excluding those costs from non-GAAP EPS and margins just as I think about how to set my model up for next year, this year and next year? Then secondly, in some of those conversations, we've heard if those guys were trued up and given a guarantee this year, it might be more next year they think about do they stay or not without that guarantee.

How are you thinking about the disruptions from the sales transition? Is that more of a '26 impact?

Could some of that continue into '27? Just wondering how you think kind of these disruptions gate out between this year and next year.

Thank you. Hey,

thank you, Jeff. Look, we go through sales force changes in a variety of ways and magnitudes often, this is not something we exclude.

Going back to why OpEx is slightly higher and where is the EPS going, we're investing in making sure that this works out. That's number one.

We have offered 2-year guarantees that are backed up from a revenue standpoint, in some cases 3-year guarantees. I will tell you, Jeff, the single largest guarantee that you can offer a sales rep is to let him or her know that there is going to be a long-term future for the employee.

Money may cover 2 to 3 years, but when you have technology that you're launching like Monogram, when you have the fullest bag in orthopedics, when you're making the investments that we're making, most reps see this as the place to be, not for the next 2 years. We can all switch jobs every other year.

Money is not going to keep you there, but having the future that they feel they have here at Zimmer Biomet is what's keeping them here. I will tell you in my conversations with sales reps all over the US, and I'm spending 70% of my time on the road visiting every single territory, that's what we hear.

If you give me a bag that is robust, if you make me part of something that is going to be great for the long term, money matters in the short term, but macro real is probably more important. Thank you, Jeff.

Thank you.

Good morning. Thanks for taking the question, and Suketu, best wishes in your future endeavors.

Just on the pricing side, Ivan, you mentioned down 40 bips in Q1, but I think you said you're sticking with the down 100 for the year. I guess why stick with the 100 bips?

Should we expect things to get progressively worse throughout the course of the year and then exit the year down even more than 100 basis points and kind of continue forward at a higher rate than we've seen historically, or are you just still trying to build in some conservatism with that metric here this year and then going forward? Thank you.

That is the range that we've been giving for a while, flat to 100 basis points. In '25, we did better than that.

There were a couple of one-time events in international markets. As we entered 2026, we got it flat to 100.

We like how we closed the first quarter, but it's a similar answer to revenue and other elements of the guidance. We're going to wait and see.

There are macro events happening. There are changes in a variety of international markets.

There is competitive pressure here in the US. We're going to wait and see.

We like where we are at the end of the first quarter. We'll update you on pricing again in the August call.

Thank you.

Sure. I want to thank everybody for joining the call today.

Most importantly, I want to thank the Zimmer Biomet team for the strong execution in the first quarter. I'll leave you with one word: confident.

I am very confident moving in the right direction, not just in terms of 2026, but most importantly how we are making this company future-proof when it comes to the strategy that we have, how we think about operating the company for the future, and the commitments that we're making. I would like Suketu, my friend Suketu here, to close the call given the fact that this is going to be the last time that he represents Zimmer Biomet as the CFO.

Suketu?

Yep. Thanks, Ivan.

I've learned and taken a lot away from you over our 7 years together, and the one thing that's most impactful is your approach to gratitude, and so I'll start there. I'd like to thank you, the ZB team, the board, and all of our many partners for an amazing 7 years.

We've accomplished a lot in a really tough environment. Ivan, we've built a strong foundation from which to grow, and I'm confident that under your leadership and with the team's execution, you will take ZB to the next level.

I wish you all the success, and I'll be cheering from the sidelines.

I'm going to miss you. Thank you.

Thanks, everybody. Bye-bye.