ZBH changes
Pick any two versions below to diff them.
- Price
- $94.98 → $107.47(+13.2%)
- Discount category
- Well below intrinsic value → Below intrinsic value
- Next earnings
- Nov 4, 2026 → Feb 4, 2027
- Next earnings is estimate
- No → Yes
- About
- Zimmer Biomet makes implants and tools for orthopedic surgery. Its largest products are knee and hip replacements, which gave removed: $828.9 added: $767.5 million and removed: $562.7 added: $536.5 million of the removed: $2.177 added: $2.063 billion of net sales in removed: Q2 added: Q3 2026. It also sells products for sports medicine, extremities, trauma, foot and ankle, and the face and chest (the S.E.T. category), and the ROSA surgical robot, data tools, bone cement and surgical products. Hospitals and surgery centers buy its products, mostly through its own sales teams and independent agents in the US and through distributors in some other countries. It operates in more than 25 countries and sells in more than 100. It bought Paragon 28, a foot and ankle company, in April 2025. added: In July and August 2026, it bought three smaller companies: the Iovera pain management business, Monteris Medical and Alafair Biosciences.
- Thesis
- The market doubts that Zimmer Biomet can grow as fast as the market for joint replacements. Knees are its largest business, and knee sales removed: were flat in Q2 2026, up only 0.1% added: fell 2.6% at constant removed: currency, with sales outside the US down 1.5%. Organic constant currency removed: growth was 2.9% in removed: Q1 and 4.0% in Q2 added: Q3 2026, removed: and full-year guidance is 2.25% to 3.25%. added: with US knee sales down 2.0%. The company removed: is changing how it sells added: said that its US sales force changes, competition in the US and added: distributor changes in removed: other markets, added: China caused the fall. Other businesses grow faster: at constant currency, hip sales rose 7.0% and removed: it said these changes reduce added: S.E.T. sales added: rose 7.1% in added: Q3 2026. added: The company raised its 2026 guidance to 3.0% to 3.5% organic constant currency growth and $8.50 to $8.60 of adjusted EPS. Leadership changes add to the doubt. The CFO left in April 2026 and an interim CFO still served removed: in August, added: on November 4, 2026, and the head of the Americas and global businesses left on September 30, 2026. For the gap to close, three things must be true. Knee sales must return to growth, with help from the ROSA robot and new removed: products such as the ROSA Shoulder System cleared in 2026. added: products. Organic growth must removed: reach at least the top of the 2026 guidance and rise in 2027 after the sales changes are complete. Adjusted EPS must reach the guided removed: $8.47 added: $8.50 to removed: $8.59 added: $8.60 for 2026, and free cash flow must removed: fund the planned $1 billion of added: pay for buybacks removed: in added: and the 2026 added: purchases while debt stays stable. The removed: first check is the Q3 added: full-year 2026 removed: report on November 4, 2026. The added: results and the 2027 guidance in early 2027 removed: is added: are the main check. If knee sales and organic growth improve, the gap can close over the next four to six quarters. If growth stays below the market, the gap can stay.
- Risks
- Knee sales do not grow. Knees gave removed: $828.9 added: $767.5 million of removed: Q2 added: Q3 2026 net sales and removed: grew only 0.1% added: fell 2.6% at constant currency, removed: with sales outside added: in the US removed: down 1.5%. added: and in other markets. The changes to how Zimmer Biomet sells in the US and other markets can lose sales reps, agents or customers. The company said that these changes reduce 2026 sales. In China, distributors affected by the changes made legal claims, and the company cannot yet estimate the possible loss. Leadership changes can slow execution. The CFO left in April 2026, and an interim CFO still served at removed: August 5, added: November 4, 2026. The head of the Americas and global businesses left on September 30, 2026. Debt was removed: $7.48 added: $7.50 billion at removed: June added: September 30, 2026, and removed: $1.20 added: $1.29 billion of it is due within 12 months. Interest cover was about removed: 4.5 added: 4.1 times in removed: Q2 added: Q3 2026. removed: Buybacks added: Buybacks, a deferred payment of removed: up to $1 billion added: about $186 million for Alafair in removed: 2026 added: Q1 2027 and payments based on targets for recent purchases leave less cash to pay down debt.
- Balance sheet
- Cash: removed: $410M added: $400M Debt: $7.5B Net debt: $7.1B Interest cover: removed: 4.5× added: 4.1× Undrawn credit line: $1.5B, to June 2031 Debt due within 12 months: removed: $1.2B added: $1.3B Last debt due: 2045 Zimmer Biomet funds itself with unsecured notes of the parent company in US dollars, euros and Swiss francs. At removed: June added: September 30, 2026, debt was removed: $7.48 added: $7.50 billion at carrying value: removed: $1.20 added: $1.29 billion due within 12 months and removed: $6.28 added: $6.22 billion long-term. The current part is added: the 2.425% euro notes due 2026 of removed: $571.5 added: $567.7 million, added: the 4.700% notes due February 2027 of $600 million and removed: $30 added: $120 million on an uncommitted credit line. The other notes mature from 2027 to 2045. Cash is cash and cash equivalents at removed: June added: September 30, 2026. Interest cover is operating profit of removed: $326.1 added: $307.6 million divided by net interest expense of removed: $72.9 added: $74.9 million in removed: Q2 added: Q3 2026. removed: On June 26, 2026, added: Nothing was drawn on the removed: company signed a $1.5 billion five-year revolving facility to June 2031 removed: and a added: or on the $1.25 billion 364-day facility to June 2027. The facilities require debt of no more than 4.5 times EBITDA. Free cash flow was removed: $308.3 added: $372.4 million in removed: Q2 added: Q3 2026. In the first nine months of 2026, added: the company spent $579.3 million on share buybacks and added: $359.4 million on three purchases, and $924.7 million of its buyback authorization remained. A deferred payment of about $186 million for Alafair is due in Q1 2027. On November 5, 2026, the company removed: plans up to $1 billion added: started offerings of removed: buybacks added: new notes in removed: 2026. added: US dollars and euros, which can repay part of the notes due 2026 and 2027. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Nov 4, 2026: Q3 2026 results: knee sales and organic growth. removed: Pending. added: Failed. Watch: Knee sales that grow again and organic growth at or above the top of the 2026 guidance pass; flat or lower knee sales or a cut to the guidance fail. added: Outcome: Knee sales fell 2.6% at constant currency, although the company raised its 2026 guidance to 3.0% to 3.5% organic constant currency growth. Feb added: 4, 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: 2027 guidance with organic growth higher than in 2026 and a permanent CFO in place pass; guidance for growth below the 2026 level fails. Q2 2027 (estimate): US sales changes complete. Pending. Watch: Stable sales teams and higher US knee and hip growth after the changes pass; lost agents or lower US growth fail.
- Recent events
- added: Nov 5, 2026: Zimmer Biomet started offerings of new notes in US dollars and in euros. It plans to use the money for general corporate purposes, which can include the repayment of part of its notes due 2026 and 2027, share buybacks and acquisitions. Nov 4, 2026: Zimmer Biomet reported Q3 2026 results. Net sales were $2.063 billion, up 3.1%, or 3.7% at constant currency. At constant currency, knee sales fell 2.6%, hip sales rose 7.0%, S.E.T. sales rose 7.1% and Technology & Data, Bone Cement and Surgical sales rose 13.0%. Adjusted EPS was $1.90, the same as a year earlier, and free cash flow was $372.4 million. It raised its 2026 guidance to 3.0% to 3.5% organic constant currency growth and $8.50 to $8.60 of adjusted EPS. Oct 13, 2026: Zimmer Biomet and THINK Surgical extended for several years their exclusive agreement for the TMINI handheld robot, which works with the Persona Knee System. The companies did not give the financial terms or the exact length. Oct 6, 2026: Zimmer Biomet said that it will report Q3 2026 results at 6:30 a.m. ET on November 4, 2026, with a call at 8:30 a.m. ET. Sep 8, 2026: Zimmer Biomet changed its Americas and global business leadership to speed up its US sales changes. Kevin Thornal, Group President of Global Businesses and the Americas, left on September 30, 2026. From October 1, Gary Campbell leads the Americas, Brian Hatcher leads Recon, S.E.T., CMFT, Neuro and Biosurgery, and Bradley Kessler leads Americas robotics, technology and data. Aug added: 24, 2026: Zimmer Biomet bought Alafair Biosciences, the maker of a soft-tissue protection device, for $112.6 million in cash at closing, plus a deferred payment and payments based on targets. On August 11, it bought Monteris Medical, the maker of a laser therapy system for brain tumors and epilepsy, for $193.3 million at closing. On July 31, it bought the Iovera pain management business of Pacira BioSciences for $74.6 million at closing. Aug 5, 2026: Zimmer Biomet reported Q2 2026 results. Net sales were $2.177 billion, up 4.8%, or 4.0% on an organic constant currency basis. Knee sales were flat at constant currency, and hip sales grew 5.1%. Adjusted EPS was $2.07, the same as a year earlier. It raised 2026 guidance to 2.25% to 3.25% organic constant currency growth and $8.47 to $8.59 of adjusted EPS. It also received FDA clearance for the next-generation ROSA Shoulder System. Jun 26, 2026: Zimmer Biomet signed a new five-year $1.5 billion revolving credit facility, to June 2031, and a new 364-day $1.25 billion revolving credit facility, to June 2027. May 12, 2026: Zimmer Biomet said that it now expects to buy back up to $1 billion of its stock in 2026, $250 million more than planned, under its $1.5 billion authorization from February 2026. Apr 28, 2026: Zimmer Biomet reported Q1 2026 results. Net sales were $2.087 billion, up 9.3%, or 2.9% on an organic constant currency basis. Adjusted EPS was $2.09, up 15.5%. On April 22, CFO Suketu Upadhyay said that he would resign on April 28 to take a new job. Controller Paul Stellato became interim CFO while the company searches for a permanent CFO.