Zimmer Biomet (NYSE:ZBH) reported fourth-quarter 2025 results that management said met its commitments on sales growth, earnings, and free cash flow despite tariff headwinds and the integration of three acquisitions during the year. Executives also outlined a major ongoing shift in the company’s U.S. commercial model and introduced 2026 guidance that reflects expected disruption from that transition.
Fourth-quarter and full-year performance
CEO Ivan Tornos said Zimmer Biomet ended 2025 at the midpoint of its original constant-currency organic revenue guidance, marking the company’s fifth consecutive year of mid-single-digit or better growth on that basis. In the fourth quarter, Zimmer Biomet grew organic constant-currency sales 5.4%, which included 5.7% growth in the U.S. and 5.0% growth internationally.
Zimmer Biomet reported GAAP diluted EPS of $0.70 versus $1.20 in the prior-year quarter. Upadhyay said higher revenue and a lower share count were more than offset by a one-time charge tied to a brand rationalization initiative, restructuring charges related to a workforce reduction, and higher interest expense associated with the Paragon 28 transaction. On an adjusted basis, diluted EPS was $2.42, up from $2.31 a year earlier.
For the full year, Upadhyay said Zimmer Biomet grew organic constant-currency sales 3.9% and delivered adjusted EPS of $8.20 alongside $1.172 billion in free cash flow. The company generated operating cash flow of $517 million and free cash flow of $368 million in the fourth quarter, ending 2025 with about $592 million in cash and cash equivalents. Upadhyay also noted the company repurchased $250 million of shares during the fourth quarter.
Product and procedure drivers in large joints, technology, and S.E.T.
Tornos highlighted several product areas contributing to the quarter’s performance. In U.S. Knees, growth of 6% was driven by increased penetration of Persona OsseoTi (cementless knee), which he said ended the year at roughly 35% penetration. He also said the Oxford Partial Cementless Knee was “delivering above expectations,” with high adoption rates post-training and competitive conversions. Tornos pointed to the company’s direct-to-patient awareness campaign with Arnold Schwarzenegger as a driver of momentum in the second half of 2025.
In U.S. Hips, Tornos said nearly 8% growth was fueled by Z1 (triple taper stem) penetration, which he said now represents more than 35% of U.S. hip stems and is gaining competitive conversions.
Zimmer Biomet also emphasized growth in its technology-related offerings. Tornos said U.S. technology and data, bone cement, and surgical cells grew more than 10% in the quarter, driven by the strongest robotic capital sales quarter in more than two years. In S.E.T., he said the U.S. CMFT business grew in the mid-teens, aided by a shift in external fixation from wires to plating, while Upper Extremities posted high single-digit U.S. growth with continued competitive conversions for Identity Shoulder and OsseoFit Stemless Shoulder.
During Q&A, Tornos said the company benefited from some additional capital sales in the quarter and a modest uptick in sales to ambulatory surgical centers, but he characterized the “lion’s share” of U.S. strength as improved execution and new product acceleration. He also noted that international knee growth benefited from some revenue shifting from the third quarter to the fourth quarter, including Middle East-related timing.
2026 guidance reflects U.S. sales channel transition and other assumptions
For 2026, Zimmer Biomet guided to organic constant-currency revenue growth of 1% to 3% and adjusted EPS of $8.30 to $8.45. Upadhyay said the guidance includes Paragon 28’s contribution to organic growth beginning in April 2026, marking the one-year anniversary of the deal closing. The company also guided to free cash flow growth of 8% to 10% in 2026.
Upadhyay said the outlook assumes end-market growth in line with 2025, the risk of disruption from the U.S. salesforce transition, continued evolution of international go-to-market models, up to 100 basis points of pricing erosion, and a stable tariff and policy environment. On reported revenue, he said foreign exchange is expected to be a roughly 50-basis-point tailwind for the full year, including about 250 basis points of tailwind in the first quarter, and Paragon 28 is expected to contribute about 100 basis points to reported sales growth before being reflected in organic growth in April.
Zimmer Biomet expects operating margins to be down about 50 basis points versus 2025, reflecting lower gross margin, dilution from Paragon 28, and increased investments in the U.S. commercial channel. Upadhyay said first-quarter operating margin is expected to be down about 100 basis points year-over-year, then improve sequentially by about 100 basis points in the second quarter as Paragon 28 anniversaries. For the full year, the company expects adjusted net interest and other non-operating expenses of about $295 million, an adjusted effective tax rate of about 18%, and year-end diluted shares outstanding of roughly 194 to 195 million.
U.S. commercial overhaul: dedicated and specialized salesforce by end of 2027
Tornos framed the U.S. go-to-market shift as the “final core initiative” in Zimmer Biomet’s multi-year transformation. The company is moving toward a dedicated and specialized U.S. sales channel, with management expecting the “vast majority” of the transition to Zimmer Biomet employees to be complete by the end of 2027. Tornos said the company has already addressed about one-third of these organizational changes and is using third-party support and project management to execute the remainder.
In response to analyst questions, Tornos detailed the rationale and mechanics of the transition, emphasizing two themes:
- Dedication: moving away from a model that includes non-dedicated sales personnel who may have multiple roles, toward a fully dedicated salesforce.
- Specialization: increasing specialization beyond what he described as a current rate of about 25%, including adding specialized coverage in higher-growth areas such as robotics, S.E.T., and ASCs.
Tornos said the company’s benchmarking shows U.S. productivity metrics are roughly half of some direct competitors, and he described performance differences between dedicated/specialized and non-dedicated territories as “night and day.” He also said disruption tends to occur early in distributor negotiations, not at the end, and indicated the company expects productivity improvements to become more evident toward the end of 2027.
Pipeline highlights and capital allocation emphasis
Tornos said Zimmer Biomet believes it has closed core portfolio gaps with what he called the “Magnificent Seven” platform and highlighted multiple innovation areas, including ROSA Shoulder, iodine-coated devices recently launched in Japan, and the mB?s semi- and fully autonomous AI-driven orthopedic robotic system acquired through Monogram. He said the company plans to showcase mB?s at the AAOS meeting in New Orleans, describing it as a shift toward “smart robotics” and emphasizing ease of use, speed of registration, and safety “guardrails.”
On Japan’s iodine-coated launch, Tornos said sales were minimal in the fourth quarter and that the “real launch” began in the first quarter of 2026. He cited a 40% price uplift versus non-iodine products and said the company expects a meaningful contribution in 2026.
Regarding Paragon 28, Tornos said the business contributed upper single-digit growth in both quarters since closing and that the company remains committed to growing it double-digit in 2026. He also said EPS dilution and integration costs were tracking “on track, if not better than expected,” and referenced plans to launch eight new products for the Paragon business in 2026.
On capital allocation, management said it plans to prioritize return of capital to shareholders over additional M&A in the near term, citing the need to focus on integrating OrthoGrid, Paragon 28, and Monogram alongside the U.S. commercial transformation. Tornos said the board approved up to $1.5 billion in buybacks, while Upadhyay’s guidance assumed up to $750 million in repurchases during 2026.
About Zimmer Biomet (NYSE:ZBH)
Zimmer Biomet (NYSE: ZBH) is a global medical device company focused on musculoskeletal healthcare. Headquartered in Warsaw, Indiana, the company designs, manufactures and markets a broad portfolio of products used to treat joint disorders, bone disorders and related conditions. Its customer base includes orthopaedic and dental surgeons, hospitals, ambulatory surgery centers and other healthcare providers that rely on implants, instruments and related services for reconstructive and restorative procedures.
The company’s product offerings span joint replacement systems for hips, knees and shoulders; trauma and extremities implants; spine and thoracic solutions; dental and craniomaxillofacial implants and prosthetics; and sports medicine devices.
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