ZBH - Earnings call transcript Q2 2021 | Zimmer Biomet Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, August 3, 2021.

Following today's presentation, there will be question and answer session. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Keri Mattox, Senior Vice President, Investor Relations and Chief Communications Officer. ahead. go Please

Keri Mattox

and all operator, second everyone. hope I XXXX Thank and good safe. are well conference Biomet's Welcome you earnings you, call. morning, to quarter Zimmer

are Upadhyay. and today Joining Chairman, Hanson, and Suky EVP President me CFO, CEO; Bryan and our

no started, to update materially to these refer assume remind Please results get the for these due by statements or forward-looking SEC to limitations from during Please addition of those our a you Actual inherent our statements. forward-looking statements. materially. to risks like of include actual obligation of we statements in uncertainties. will indicated forward-looking even and note, call detailed forward-looking discussion I'd risks future a results if we expectations to that comments Before uncertainties filings change such this may and variety differ the

discussions Additionally, our that, be Reconciliation to our With these I'll measures on will Bryan. financial measures website, over Bryan? the found non-GAAP now included to call directly financial measures. the which call include zimmerbiomet.com. can of earnings GAAP release is most this the on certain turn comparable QX within

Bryan Hanson

for All morning. and Carrie, Great. to us thanks this right. our for call everyone Thanks, joining

even returned I As call, world The to seen still it last us, that, is obvious recently, and imagine. some not aware, very can our given we're real that's but since and closely, COVID we're we've normalcy returning. all travel very to the given has news But watching obviously, progress is much with think as yet, everybody. you

the in Diego. personally about I month looking in members team AAOS We San have more and offices, a am forward in attending meeting to our

forward looking that really to So meeting.

making that going that be commitment the to lot able ZB all as a just as vein, in can. team to safety, going thank, want really there it's and person and same and offices their dedication our board, We of be manufacturing technology thank just facilities a their to to again, across safe have of possibly I happy really finally. again for to great we our to showcase we're

members to to investor community to course, force driving take customers that hopefully have begin our and we that our a serve. turn safely, to consistently is care into to I yet, can more highlights. pipeline active we stay and our few receive months over a to be hope customers environment, anyway the focus we to certainly make this to encouraged doing patients patients are remarks, quick with a complete communities couple QX see last we as our for for in provides And back few a keep product this I'm all sure and they spend out continuing for QX advantage just a do information. this XXXX as but in obviously, on You, normal say we our single turn this call. we've the lead us travel I'm part think view But basis. Also, I'll of the minutes We're after wait to happening and we're it of regions. supporting a good some And and know moving in that most there who's as going that, And well. doing in every call deeper beginning, portfolio Today, day, you're our on think that going seen overall, Suky, our to the organization and not over isn't to our our with our view I I facilities the family some to on have, safe they then come is here results. are of updates it's importantly, then procedures been forward. and this just us management into I'll that they the they want to big going a mission-driven the able and to of an go-forward the team that progress friends. and right so deserve. to own that our can for close a guidance get travel he I This and And guidance in of that opportunity are there

across quarter quarter our him to pretty that meaningfully little this set just first regions in from and me saw we pandemic the right as moving categories. improved the procedure our hold, continued say was year, to product in just from and performance And that take the global of So direction. recovery up also much a let bit, all in is recovery overall, the that

continuing, some that do the anticipate the direction. ongoing hospitals, throughout thanks be build the going close and out we sequentially I'll the in for it a with of over hospital's continue turn certainly the pressure, then vaccine and back will the of believe we it's minutes believe, with back update, we half to but COVID be the yet, rollout XXXX. COVID Q&A. you and expect patients half before our of the I'm And we to the will recovery year, ability these through moving Again, Suky While right be think again, few the out manage manageable call to it by second going wood we in to manageable not to financial currently that, to better to

Suky Upadhyay

everyone. Thanks, and morning, good

third XXXX updates discuss and to the provide call, our morning's our through the year to quarter. QX fourth around financial our this current expectations and color for full made guidance we've I'm walk results, For going

regional on a constant same of basis, on quarter sequential XXXX. impact XX.X% slightly Net will better net currency XXXX versus we relevant second revenue sales compares billion, second period our not Asia-Pacific from compared the to on a as have the consolidated selling were growth P&L growth call, $X.XXX Moving in in with versus forward, will constant XXXX in and constant days. my Overall, is a in increase commentary the reported a XXXX, or in adjusted than be an my be the constant And the did we XXXX XXXX. results revenue to unless otherwise statements of how were basis. noted, second and and quarter expectations and EMEA. material quarter. it same quarter the currency and were flat provided think and currency versus sales improvement Americas for Also, a we basis currency on of last XX.X% more period increase the about quarterly a and this that When I'll provide comparison

For Americas X.X% the or XXXX. versus up the quarter, increased XX.X%

by pressure We the region XX.X% X.X% and back improvement EMEA being that country year. U.S. versus variability factor. to continue We the XXXX, or in to expect with with trend EMEA a we grew XXXX. continued versus continue growing the through we X.X% within the did down this COVID quarter, XX.X% see half as or through see moved of

Asia-Pacific headwinds. versus Lastly, XXXX spite unexpected of some in or X.X% grew XX.X%

advance rollout has knee procurement China. the recent quarter by in impacted stable region second in and been inventory our in was of in the channel VBP. contraction volume-based or of quarters, the it categories While largely hip late within

COVID-XX a the growth. headwinds, including Japan. In in Despite region number of addition, these markets, we increase saw to and of a post continued resurgence

knee The categories. knees business business flat versus our increased XXXX. to or XX.X% In XX% XXXX. was Turning increased the X.X% global down or U.S., versus

normalized continue back in Still, we to encouraged joints, for procedural we of by sequential market and growth longer improvement strong bit be expected. a to Persona volumes in are the the large than While execution seeing Knee. ongoing path the team's is taking ROSA recovery momentum and most

In U.S., platinum X.X% and which down extremities. hip versus XX% and category by continued adoption grew increased and versus upper global solid versus sports for Strong the up favorable extremities and in X.X% Avenir XX.X% feedback trauma sports, or medicine, Our XXXX. XX.X% up increased for the hip CMFT Hip, accounts. XXXX. Complete driven The both XXXX, continues demand XX.X% business or growth gold or

the surgical see system One Signature registrations continue for planning shoulder strong We procedures. to of surgeon

Our grew or versus dental recovery in up fueled dental. XX.X% and X.X% by spine category 'XX,

contributions execution digital business. with and and better the implants products New in strong in dental commercial drove our quarter solutions growth from

category both launch revenues sequentially improvements versus ROSA reflects strong This 'XX. ongoing XXXX and demand Finally, We the partial QX quarter. from XXX.X% our the Robotics for knee units X.X% saw grew as the versus due or sold increased up of our application. to capital other well in purchases in as software

P&L. the to on Moving

of GAAP reported we per quarter, the earnings $X.XX. share diluted For

spending levels was quarter higher quarter. Our reported the reported GAAP a IPRD significantly in within up year-over-year revenue, investments loss in earnings GAAP of were GAAP share when of share compared earnings by XXXX. The normalized increase $X by diluted offset to driven second per the per and diluted

onetime margin of line share the of per not of On in than GAAP quarter the the charges that in XX.X% expected Adjusted some earnings of significantly elective as driven was addition, XXXX was second diluted pandemic prior higher In year, since $X.XX by procedures quarter second adjusted trough recovery did the repeat. with the basis, had an and XXXX. expectations. gross

year. first increased discretionary expenses infrastructure slight due operating spending the selling performance than improvement in stepped Improved sales innovation to operating offset and sequentially to quarter to commercial of and first and this our rate quarter versus margins, stable variable investments revenue higher the higher with The spending adjusted in through expectations. support line tax adjusted expenses up quarter a gross was margins more XX.X% $XXX R&D. of related Our million higher the XX.X% in to of over drive

Turning and to cash liquidity.

cash and robust $XXX.X second free quarter, we and flows cash million, just equivalents of cash were billion. and quarter $XXX.X $X million, was ended cash over the operating For the flow at with

deleveraging the on another million We continue quarter. the good repayments in third and make sheet make debt $XXX in to to balance progress expect

Moving to guidance. our financial

our outlook. As XXXX morning's have full noted press in updated year we this release,

COVID. half We range We year-to-date due procedure more but informed by that are financial potential view elective There not be performance the guidance. our recovery reflect tightening a assume COVID to linear our the no recovery may of worsening the and of our some that category. and and/or year, procedure volume in by underpin region XXXX to assumptions continues impact of key trends better product are guidance second of

to expect impact fourth seasonality third in to have years. observed prior as the also and we see We quarter

to of expecting year. to basis now improvement to guidance the XX.X% continue grow the reported compared QX in are points currency and versus impact of QX for we revenue fourth quarter. a we expect narrowing at constant about range, our over that full On for be to tailwind a the currency basis, the unchanged XX.X% of to XXXX, foreign XXXX, growth with With sequentially XXX

P&L. the to Turning

XX.X% be now full to XX% per of we our to the is in operating adjusted projection earnings share narrowed range and $X.XX have diluted to the adjusted for Our year. margin $X.XX,

Our balance QX the discretionary the updated our guidance expectation of consistent reflects performance growth through our improved operating to of and year. expenses the that date, EPS half with in second remained

expected to revenue While operating second overall operating second line decline stronger sequentially margins. half quarter, margins and versus half margins be third in sales expect are levels steady than investment operating lower to first quarter, the we the with in

Our flow XX.X% cash free adjusted in full for XX% tax of our range the to at year. rate is billion. million the projection estimates to unchanged $X.X remain $XXX And finally,

the market remainder summarize, We better expectations of second have slightly year. performance that our as to we To communicated on was you through through our we dynamics will continue QX the quarter. expectations and move in than to update financial you the

COVID pressure, some we I'll against momentum recovery more ability the that, in to of to Bryan. While execute turn backdrop. ongoing our have call over With back that the we and confidence anticipate the

Bryan Hanson

we I'm move Thanks, now going And All topics to Suky. before just hit to right. Q&A. three

you, ultimately for third obviously; inside deliver going portfolio is talk want long-term be is about to that then about able we that highlights against to the a active and under progress category; execution second, we're going growth innovation. we and which of some shareholders. product value our our to big us, I will First, effort have pipeline to that to innovation, I'm in of believe that attractive how talk And management, drive

actually year, start let's milestones them. before, doing ZB past team with I've continue I'll and to the against QX, a this -- delivered weeks, that we've our before. April, talked of products continued early So And it, executed X.X performed execution. proud said good the our about surgery and key ZB approved ROSA we've to against for Knee things we've able the it, first say team with recent and I'm patient years, traction directly was solutions. to see Partial And was was back quarter, in our around in sizable far that as control team's most you they've it's during far. very turbulence in know, partial so feedback I that great market And significant share of for they think a is the in technology the time where And And it. position. and knees, our hit over for important a so because ZB market that us with of has the

we we kind So potential the just QX and to not area. excited get here, important. impact as that ROSA a the the And We mix traction the just across with placement ROSA did And and in U.S. the total revenue in to U.S., want internationally then strength with at look but very well also that's again about just if want of world, in not that quarter see standpoint, see see did we in surgery see but but well. we're momentum possibilities demand OUS, strong I knee as for patients broadly to overall, in another continuing of the QX. market from

We for also expenses sales much saw of our in saw to capital result QX of we back as ROSA. that, and shift upfront stronger a a being customers

budgets or them of be that that in focus ORs again, those very that robust than of solutions. our real. our result they a of that bringing forward-looking pipeline capital connected way. part is get suite QX for clear speaks the continues ROSA strategy. just to ZB would momentum, is is and what there's what demand arrangements. buy in we more But strength ones, for So other as of Either be be they our acquire that's And see. is systems one way, to to the of And hospitals to typically them that a that cornerstone, a people's robotic in real their outright a whether desire key happened of through Edge of going big because robotics to And

on coming we terms overall saw quarter, enthusiasm and competitive we of great and product us, lot typical very competitive what knee revision that of in well this tip for as for for of a will Also ZB. mean momentum. indications. for spear the the of access penetration again, So conversions revision and go expansion years a strong in robotics to surgeon. get those also its a total in can continue Again, is the conversions but where use that in

to side iQ, step the us ZB and Persona larger adding we we We're count, sensor FDA. that opportunity short need market. of again, to important and it. So And is very Persona walking relatively only exciting, those the believe takes much which that in extension, door get trusted the another will give term. smart metrics the FDA going key to range their typical any us of motion progress. which X it and We're with because our technology now the other inside we're approval patient, working receive to implant but get tibial be portfolio it to to in in Canary they that and of still opportunity known mobility and which the measure And information up help on opening an But of certainly and with an not first body, has things speed implant the that it's Medical's that. And for that with have is diligently knee just on post-surgery indicators the that be certainly our to to a combination are on as the to also forward, to ultimately, combines the move line time the of design hoping will it them implant, connected revision approval conversion well. technologies, Edge about also variable is excited

do full approval, technologies the again, quarter for limited us the from a Zedge connected to move once that have technology helping close time So But when in to get look launch. two hear those or come we loop launch more into the frame, post then that that -- we would So FDA. and we we in back

Okay.

is my to move active second topic and management. around let's active portfolio portfolio our efforts management So that on

in ZB the portfolio management have We strategy place.

have capabilities right X last our the years in process built X.X forward we to have definitely over move We the to place, years. this and

as about And of this focused, that said before, we're M&A So excited phase we're we organization. on the mission-centric WAMGR-accretive. is

did an with So to seen we in gaps year sternal other late with average we last transaction truly spine smaller do course, deals the high-priority at acquisitions is designed and markets strong accretive like closure fill high-growth, us attractive And in that better organization. there's weighted profitability. market words, and markets track. a the deals, believe where and have the that These right this and in forward underway position tuck-in ASC to win already growth our again, were organization you've on sports move strategy spin-off our as that work. are businesses us of dental tuck-in fully medicine, really to illustrate portfolio size we And that selective planned of

energy be to the around continue encouraged We and the momentum NewCo. by

going how drive that move around last we be topic the our that And shareholders. you, of our innovation, growth long-term we including And our stakeholders, inside see obviously, As deliver and his attractive our that CEO we is Jamali, for strategy, our not of going stronger to just and Vafa builds the you, creates refines and to corporate customers, also believe but that to all two innovation. ability to companies his for value really have to brings shareholders. maximize value independent to and Q&A, ultimately before even All that's team of me we right. will out

And a including ZB shots that on of that have goal do define number of into implants smart of provider across number have a a focused leading term, we lot plastic of innovator. as in robotics to what metal the on would the from road also I med technology launches we tech a programs have a and over we map this, are evolving but implants. implants today, near We smart

to connected and mymobility with of of conversions. ZB edge also product and functionality partnership before, are technologies investment benefit of several other development those markets ZB And are XX% with productive and with edge tech collaborative. we future, New drive exclusive more mentioned changing believe we be really inside those that that competitive that's potentially drive for us towards in core mix of ecosystem benefit, ZB I've but our advancements, our wallet technology shift future technologies And our the than help innovation alliances patients to new just And broader share and the fundamental for benefit really forged directed Apple for I this our focus edge. connected know care ZB is. is what and coming going And and continues to that the patients. will is going paradigm

will growth the attractive it the to All is also on is to we us chance world. importantly, gives momentum us of very lives innovation And that And ZB you. to allow right. the the to front. drive real and change most So think long-term around ultimately the it patients really

Let me I and ZB the saying highly to team in business be momentum. that continue confident close by our

I'm pandemic And absolutely of our a the excited uncertainty our our be for success. to truly The cannot underway, can to about drive business continues the we there believe working. that we strategy we that is on value go-forward well are is and I positioned well While basis. transformation and shareholders for ready due control, global

the time that want take make I ZB to thank sure also the entire Now to team. I

on and going your unmatched with incredibly dedication on Keri? I'm accomplishing we're what is back daily. turn what and to it we're for And session. that, Q&A our critical and remain to you safety accomplishing proud it do to together. of Keri is Your our focus mission I delivering

Keri Mattox

first Bryan. Instructions]. question, Thanks, With we the that, [Operator operator, have may please?

Operator

first [Operator Our from Jennings Cowen. with Josh comes question Instructions]

Josh Jennings

be do up has U.S. about acceleration technologies any mix the just and market hip Zimmer years? tracking and as your post enabling spin, Biomet's U.S. mid-single WAMGR that share revision journey progress do growth the was shift of share internally the you next would been or revenue positive then of novo Bryan, evolving team accelerating in joint large knee into I envision the how you see and segments And and the U.S. growth could helpful. how your coming hip in breakout De introduction think you and you hoping markets sensor digits? Or driving the expanding knee

Bryan Hanson

No Yes. Josh. problem,

in your just start maybe areas absolutely me journey. data interconnected OrthoIntel, and sensors, actually robotics, do comes the sensors would question curve as beyond full I those mymobility, the in knees when is forth, really Let will to so with those and technologies, say ZB hips because believe technologies the of we so on as for just including and proliferate would growth body, the well that part we knees do edge, bend the second what it in which We rate other beyond define patient because that hips.

orthopedics share So by enhance or folks get up from growth it's really right us take do an benefit us provide and believe to opportunity two that, we the two, it just to one, in I unique believe for wallet because is does I because to of competition organization that mix reasons: as benefit that the rate share an technology, procedure; our do for sets believe do I now can being which us. that absorbed

share time inside but ultra get market, think something it individual any times. abnormally too we it. or pay just not the turbulent on about second about that said, five just four is quarter, I individual a we're And variables to I But last I'm look And it I the and we're excited that focused because an we performance. share, whether ultra itself normal a take at growth do quarter that's too or So between competition I'm tell is particularly this try player to we I'm got now. depleted think focused This see And that when to see we've as but on large that gives didn't regular the losses every four the both of in in quarters results four we in quarter market as had over in particularly every because the we on on quarter, When seen forward. share spreads we market on ahead took large and out. And market. attention about it's competitor inside preceding versus COVID. There's of many experiencing the would difficult to times, When And focused of we to the QX, I this, I quarters, definitely our a move enhance confidence think what joint quarters, market question, market, QX, yes, this, and understand. in beat rolling just rate. performing that large in that This would to turbulent as rolling our that our knees of hips. imagine. to do us is because I to the on well prior the turbulent We pretty very top us very you way thing quarters a speaks being able joints. were focused obviously bottom during the based every a gains every I'm

believe I of try to provided quarter look that data the really track public the that launching I all five do that we're four been believe over I with to positive we just for though over forward. the from a whether determine going even that period technology it's rolling going do at are quarters, share. to is that to major it us, And and I So not us enhance companies that's taking those we're is

Operator

Our Kumar ISI. next question Evercore with Vijay from comes

Vijay Kumar

the comments your on different my made here trends discrete et Why I advantages Maybe the backlog that I to trends your more your versus about ease of the one sequential some my perhaps seeing peers? questions bit Zimmer the But key cetera. focused you put one. Back throughput. gains here. is a being of of versus ROSA, use, think both near-term Bryan, I think guess, into burn little for is prior second share in be question perspective on would of And is, comments the higher system us? slower, market.

appreciating are backlog, a speed increased perhaps is that customers And what does advantage there a base or share total to gains Given here this or you of for translate traction ROSA? installed seeing Zimmer?

Bryan Hanson

Yes.

maybe any a the did characteristics flow, I thinking they us. procedures. the to to the has that the the And environment. we're spent throughput. not benefited focus non-COVID that as me, surgeons do on one dramatically And There's to disrupt their times and ROSA add a matter lot of and we the ROSA environment So want to procedure. wouldn't time surgical design question. primary are I'll And not COVID That to is something surgical things time pursuing. you of the probably to not no mean, with or very want a much certainly start it's make it our increasing whether that of disrupting that in is appreciate fact we it's remember, is we did about sure not flow

a for a whether COVID benefit again, just really environment that's I benefit. not, in So that sure. a us is don't you're matters think or it And for

all share has this along. outlook again, most we that many you there happen looked what when saw long One QX position. significant pretty deferred sizable this was what state. got be appropriately, now backlog, the we're what think plays patient our now. on no this becomes me population and that I out that about gone and vaccine challenging And of that variables continues shift year time -- of virus just to that still my just last say analyzed with in at relative what I'd people dealing too If would in that of But a view I be anyone a to subsiding. with, parts patients, joints that a to just when relatively quickly. just consistent and we thought that, deferred of pretty at return how significant just a right we such are as And given that as been the to think population, unprecedented know anyone we gains we added result really what patients seems anyway. in view, us you structural -- QX than like there's else saw there. things when size described was now about year. more the It point, said, deferred that like to equation. the just in we there's to available, That's saying we've don't any talked And based would is what different I on. believe It's with And the really large our last probably who have we we've would deferred in say of been with disease this And that on QX, assume when that's originally the share

happen that assumed just we So year. this would

of fast materializing time be and vaccine doesn't at that over current deferred pace period our as forward now. for a to out data more gradual more a here, And will become seem more thinking as consistent patient today, that demand this are is data anybody. such, like Now a be result. And the current and longer-term we've probably and right got more is points playing

top way. I revenue When of in but would the most need we pacing back current of think think the say, half just by would recovery. implied the range, range at the of that for people that the year, about the the see what of that provided, I to change really we're actually think contemplating the that's as you we midpoint a range

get increases in see be So by top matched to end deferred patient it in that to increase reflect would range. the capacity to words, other you'd of have that demand an also

Operator

Jefferies. from next Our question Petrone with Anthony comes

Anthony Petrone

Hope quick everyone it on then does pent-up the assume, backlog. a a that you're from safe for is And there iQ certainly doing to could few and And sounds even checks demand It follow-ups our that's perhaps maybe sensing capability. beyond to a where us headed. like sort bit. least Persona XXXX, sound $XXX million quick just maybe opportunity that is on of that perhaps extend Bryan, but a well. at follow-up into Is still it's

few to recorder? iQ full on Do a will implantable time? advantage drive of So need ZB here. reimbursement edge take surgeon you And actually be questions additional the Persona to over standardize

Bryan Hanson

Sure.

to the think result start that's thinking that is technology to need we before, backlog market to iQ, of us, full too yes, but to obviously actually a you the size but beneficial, my coming approval, excited I answer. have I yes, going right because that is infrastructure the that. as don't And likely really demand soon. be And at just could advantage want based leave there like have to I goal with to in try would And deferred And it's have that as take it, a indicate the the That's but mymobility the it's to we of to feeling no look believe pending do I'll still that have be do as at X to change concert there's is with at don't that about And on in it. that launch. that What combination have would do monitoring. this you it's to those don't know is while should mymobility, do the it. us you through the and a collection just structural I'll that that do glad to a on maybe to iQ of time, excited based the size about gone people see be but put components a through want is assumption iQ size to -- it or not able big. is patient provided, maybe and but unprecedented I'll to And between we're it's that, And to be because us combined need behind because we're ZB we're data, able certainly, data all try we I the because we be All concert change on don't launch, believe monitor. edge the coming it well, the the input try be for this. got cannot and how FDA should would idea the mymobility because we it. you're with getting even data take Persona situation in. long. whole what But just make want and available I pent-up hearing would current just for to simpler said on to role of in points Through that I don't that remote to with that, are the you any decisions points to I'm remote to the that patient iQ data that our disease move now. extremely feel that the So patient Relative say we for do -- to I don't be have this That able are patient. it. slower we implant. group work

have And required looking we're surgeons. That's the that believe components for not we to reimbursement of for on it do end decision the that's we so we not, have our whether day, at the make way available we it be happens get what to believe would that a the a but to today. surgeon or RPM. At

Operator

comes Our next with Oppenheimer. question Lichtman Steven from

Steven Lichtman

about reported we Obviously, ask I'll two sequentially ROSA. the the talked upfront. momentum my in that Bryan, saw you in numbers.

to to are of pull-through us placements then, just of you in gross competitive expectations As And second opportunities, year? accounts Suky, sense ahead that going you upside was the are on of your gross first margin where percent I or give original to the of on which last we see in Do half think think low for XXXX. half about second the with be line about share. of implant have what a can the as you ones follow-up an margin, a XXXX accounts half

Bryan Hanson

Great.

important, it traction excited the patients. ahead the major seeing. look that, we're do because And believe because two ROSA about with we're significant to ROSA, just I then truly technology this, So change we're off excited I'll be start that say is traction Suky, I think, the you. that's orthopedics the for and I just it's the again, seems really and not for I'll question, yes, to with I would at pass go way as the there a reasons. to And technology. in One, openness seeing for care I'm paradigm going

it. still they're that You're the going procedure. patients confidence patients in which funnel, happy if to with you good have Remember, I will because me happening, I result And for is sitting the a the believe technology, would get that are enter the believe the reduce of outcome. better of to outcomes funnel not And included. we higher can that got going XX% through there's everybody, have more patient when on you've patients side that as enter

even platinum. we we momentum very it's X to The technology be happy I'm So see two most in between the just adoption We when difference those to ROSA, see happier spend And in And would but our in of in focus large both gold major time because accounts. about orthopaedics placements, platinum areas. would interesting be of I'm and our think accounts accounts. overall. very

we ROSA. and have are We areas gold, with lower And edge we a mostly two higher position. those in share a concentrate ZB the that have But share position.

what's that into in platinum that homogeneous a account, that go the we very have account. rare it's interesting about would we even Now though is usage when new

us into have And competitive platinum customer the of ROSA because thing. we those knee, surgeons accounts. same get gold typically you accounts, that using when So course, get we in ROSA, in conversions a in you even competitive to move to is get

ROSA. very So us it's way provides for an the to a almost rarely hopefully, every get competitive placement otherwise, with we that helps And about have that opportunity conversion. we're thinking

Suky Upadhyay

Yes. Stephen, Suky. it's

gross there half right? We being not we because for quarter the we XXXX, of said talked may declining margin. that or about about would that gross stable broadly that to line back are each variables with same margin for impact XXXX, years it many it it When stable. a talked right. said lot off You're be be comes And gross of margins. But we of in

first step it's actually that So in and good seeing a stability.

encouraged year, by was little a First the we're better of and so half last that. than fortunately back bit half

in half expect of half last the second the second line stronger previously year a full that half this year suggest should be average second better what saw We back in of of When being the with you consistent this half first slightly half the to so in last very how line, two we've than those year be with little would the together, pretty being the of guided. that year. year, we much in

efficient really of recognize seeing lot to down and a as well cost to just we're efforts commercial the for what do team our chain strategically at and thank looking team I by more on encouraged great we're the become So want cost for goods P&L there. opportunities initiatives, just supply more as our in looking of overall.

progress seeing good some so So far.

into that's So guidance moving it, encouraged, our forward. thought how we about that's and what's we're and baked

Operator

question with Wells next Biegelsen from Fargo. comes Our Larry

Larry Biegelsen

cadence. and QX about X%. is Suky, to down revenue last I be When half I'm And make QX look your XXXX, XX% I to of on guidance typically would quarter-over-quarter. or six XX% it, guidance. X% about would five is your to second get understanding but comments I typically just years, QX want the XX% QX up the Based sure midpoint I before say be earlier, thought up, kind down sequentially maybe call you your heard of to back

And So seen. XXXX you typically expect it's of versus trends? of half a seen? better bit to that seasonality comment I than you've the on historically we've kind second think Can July better little what am right you in

Suky Upadhyay

absolutely. Yes,

XXXX. were earlier versus my in the comments So really call

year. And up. ultimately the the was And quarter back all suggested, expect about the for absolute seasonality to recovery, mentioned of half for again absolute you of We We half seen again, well. better do of tends do then other so an QX, I'll and through we've to in to as that that's as third underpins year versus that what where we on this earlier where well. generally for expect in play guide little flat, XXXX. versus our second answer. QX as the to bit see expect than continued again, kind step 'XX, play for up be this lower QX, do basis, we sales underpins of half sequentially as And which that the than to is QX for We a step expect year this

that's And today. already pretty that What early based continued on provided that on individual far, So seen earlier going in in see again, so QX, how talk in QX. underpins and what through we to about much months not we've supports this seen recovery of we we've what currently But it. it's we've the as we've move specific year. seen or rest we're July

Bryan Hanson

and you news over us time the day the about same past. that certainly assumption that just kind any seem me just just confidence color Suky virus think got says didn't There all I look seen significant just surge, not half. in and pretty a surges of that that. revenue be guidance at a into news, And is might that that worse in let doesn't that through virus the I what I we've Suky, it's get we've Larry, the give the seen our range and translating builds two something are it first question, proof same seeing assumption. COVID can't past but the recovery about -- in when add referenced but to some translating helping pressure doesn't into assume the disruption But things are that that see of speak revenue the even we're during kind would recent and that. the your that mean, not maybe second we're we've that that There's some the to seeing, not significant one us, with we really to in little points the more. disruption

actually patient assumption point to proof of this the think I we impacting vaccines the kind world, available. the And get can though second It's it. a and better. wants is is And face there, this stalled the likely that's the sick. get way be to it motivator because an Delta I out with vaccine I bit people believe of available a do got But as us people the Anybody come to let's who as seem mean they that even when waiting managing globally more the range, that. it thought get I associated may educated that vaccine. and which certain inside about is feel for -- for get we've I population guidance That believe on it. people also, when parts that good obviously, been risk be in more anywhere. have variant hospitals believe the truly So do just in

in kind the are those of And we have us confidence the so continued points the back half. give proof that recovery should see that we that

Operator

Our next question Guggenheim. comes from Chris with Pasquale

Chris Pasquale

Two Questions.

the pieces understand to the better. trying some quarter moving of little in a Just bit

China the First, all seem knees quantify the hips and versus consensus at inventory the source can impact the you shortfall quarter. in this drawdowns? Asia was of of It did like Pacific

can understand then better. any you And be a bit numbers quarter. contribution just would around little put So it there magnitudes this ROSA great the to

line revenue a was upside driver. other big The

your be that of that the came increased volume much versus know in between how purchases preference placements shift and to customers? system Just for helpful upfront from

Bryan Hanson

Yes.

VBP don't on Suky, it don't I impact. want ROSA talk the about I maybe to at then ROSA enough big was the dollar speak it a you shift to on the pass a I'll and But So to probably amount, to why obviously, but it. us piece take shot specifically side, for

what contract, customer, were would long-term that But competitive it, in is link XX% a normal like -- go tell I seen mind. this your us going is that to which either in it a forward them. actually that flip. very upfront continue. we budgets to that there of sure were arrangement. we purchases I pull-through don't see And and the going result in the we size with XX% to the we're budgets I Hey, which way that you quarter, of for as saw to mean than could does people, through because customers available it of has happy that's flexed a that quarter, usually just The it is as done and those we've is we move different being placements be a What know I'm they commitment kind is continue. think would you sure help to might We're that we about typically what that support to So what there flexible make way our better is that clearly, place our past. higher ROSA. in than I than

well. preference, upfront Our in sale long-term said but contracts, I've take is an as past, those I'll as the

VBP on helps the side then on So it pass you Suky, and I'll the that ROSA to hopefully, impact.

Suky Upadhyay

hit would that like about, really manage was we the Bryan. by grow impacted region And some sales Asia-Pacific continue to that both slowdowns expect headwinds we sure. of Zealand in despite were slowed second second some that business. But ahead half surges noted, Australia that did also able Yes, of and in in much of One Japan the recon VBP quarter contraction the our encouraging this little as quarter was to well essentially things. late impact inventory Yes, the two And and some of back And we New was we is in our actually growth the bit we of markets and pretty a the talked through as some those of across down. our distributors expectation. that those which it see year. Thanks, as were growth taking that ahead VBP larger that in VBP.

as was we're performance reasons, only We're a competitive not for not mentioned. going in VBP, contributor. in China I that. It that Regarding size to Asia-Pacific, the contributor

but the we the issued today, is another was to that's time. material about again, represented forward. lot We've shift. in based of don't expect what volumes around, going Again, from see say the forward. continue what's a coming pricing learn seeing we at did number scenarios this And to looked Asia-Pacific more moving But about impact China, that be I our based be and it it VBP months, on this we're there grow going to update that a expected has fundamentally to inventory at few do done also, we timing as demand. could know going know and But aren't great thing we again, think would more. rules, change think to through a and months, call And on very let's learn been important VBP over within shifting that. strong But so guidance how we I it you for we're forward? final what we'll

that was leadership And the position we're see and and And market progression so good in the forward. China market we be impacted strength know, within as to by first recover, to was move maintain that obviously, it COVID-XX, to and and that expect we to a continue you first market. as leader

Operator

our Miksic Suisse. Matt next Credit question take with We'll from

Matt Miksic

on a follow-up and could. one S.E.T have just if on ROSA, I I

ROSA. at So driving upside on sports of estimates And as could that follow-up some you that a little business you on trauma, strength? was mentioned, extremities? I on strength, is one where was least of Was our the Suky, it if or have sort it saw smaller, but color within the Bryan, some provide to of was S.E.T, that some components the I

Bryan Hanson

that than everybody course, has the believe across Yes, that's recover business strength just very about quarter. I showed revenue little heavily large one extremities in was was in good year, and of of happy trauma thoracic to I've and look And we of large upper continue we think been slower our we said, for been to our when to other that, have saying us And through as a strong was board, we sure business, at pretty been performance. that CMFT have. solid, of the Clearly, recognizing penetrated joints think for some that's the well. highlights sports, is categories quite joints. the business we the us. were saw solid are see overall what we in the as half I the for when And our our Standouts back going

whole just ASC, excited And out sports product right had we're we expected. launches, to also the that the that out And the were did acquisitions now. some tuck-in providing right, we playing they're CMFT in way to acquisition that that then of is we that in that really portfolio. and benefits the did product see out that also we fill filling in was the gaps idea, So

fight As out win. result to and a playing a that, a have right right and And fight now. have of that's

given more S.E.T, So being we're go-forward have that in feeling what confidence basis we in on good have in able about to now a probably the continue just strength portfolio. the

in expect would to continue. that and happy very strength So see S.E.T, we to that

Matt Miksic

And ROSA. just a on follow-up

a little long-term the robots So seems shift the the back of stable. I other cash could think seeing I'm of accounts, that ASCs putting bit capital of versus it's mix any of change you're the commitment like about the kind It there's many mix into And the been contracts? preference payment to wondering And some maybe you mix talk folks might in centers. or of are don't pretty the if larger that seeing. driving if be maybe to that field for

Bryan Hanson

XX-XX for of dramatic sure. U.S., number the Yes, this in instance, this of that I no shift. OUS, way, split we quarter. about do, of not just if always was I mean a kind aggregate look do and but them, it's OUS, we kind quarters U.S., I at exactly and typically think consistent Really, typically if even pretty

that in us, right customer see the base believe that we budget capital again, don't because drove people a it's our more now shift that on see side. I shift. did have For it. mainly We

me. just to flex have it. stands the capital that People they just that capital like It's available. for was nothing more So out when there

And some long-term buy they'd don't of just it. customers obligation, piece capital rather in, the bringing contractual just want a

really that's I've And nothing think the that seen. I corporate, so there's beyond that,

as we to was to relative change disruptive would any nothing pay mix but way certainly placements. it have we'll in attention go that changed in that that Now forward,

Operator

Stifel. with Our from Wise next comes question Rick

Rick Wise

to Do do you we And and robots implants, Bryan, Do freestanding incremental you XX, et top accretive listed to more highlighted of with I you have you Or priority. technologies and think remains do X, obviously lot you ask opportunities? targets. that next about of you I'll M&A, to the a Do start you feel envision about no, just it's months? like the have a enable that maybe I you M&A faster? WAMGR that areas. some question. a you XX the And mean accelerate? lot et heard you feel about that? smart How then acquiring like or And feel a you're moving like ready larger about cetera. cetera, mentioned you're for second something enabling we achieve points technologies

Bryan Hanson

going to and here, the I'm funding of quickly just pass M&A as the Maybe day, at Suky it Okay. end as to the is because the it. strategy for good only

He firepower But standpoint, focused what give but both we're moving we're an pass there. on how give also to would forward. the looking Suky. color obviously, M&A on me some can color we're So about for let it this on from I our you same maybe feeling

Suky? So

Suky Upadhyay

Yes, absolutely.

consistent win, that we of think, are strong things continue to sense, tuck-in to build potential XXXX, through consistent of with how synergy with those pleased So and out, far did we're back are at Very progressing. an so strategically right we makes very integration the I have end mission-centric attractive pipeline very sort targets. where are level what the financially and said about we have the with deals of Bryan a earlier disruption process, which low of the

XX position about where billion and We're another our say, really year, over made So we're for than improved team. so very stronger seeing we great significantly. a from which we're thing of on firepower pandemic, out cliff second progressing with our we on our we look a I financials good are corner this of that. progress that the know, XXXX, our EBITDA us, and and the last on forward at as you a trough, sheet, his similar you those. the going not-too-distant significant to moving our feel been to that. private is feel turned I opportunities of months if quarter with good BofA to the we're for in And continue And recovery the as our overall file has with will, this team ratio. we've up letter the the with we're how $X the And on also to really was been spin We've continues balance XXXX, have big EBITDA the And building component to transaction. on is would back hope build. combine and which done the how step with we ruling, to pretty of a pleased you debt second private carve-out basis. seeing leverage committing with go-forward that formulating rolling When EBITDA we're nice in big the the sunset half debt so in XXx, Good a the paydown in the We've of and number a strategy quarter in with in we improvement a our progress EBITDA. tax number our future SEC on paydown XX-month to the far, we're progress

So with has just back the last of at in how those overall, handled really transactions the team also did end impressed really, we integrating year. this of the backdrop

that the now. been out of years really playing over building we've last So couple right benefit our capability muscle, is that to that

Rick Wise

Got Go you. ahead, Bryan. ahead. Go

Bryan Hanson

have that to we that and when out did and to example pulling A say, obviously you spending I relationship right, of the and and is at time that's that that's areas it flex are right then other the mean much sports And thoracic going accretive also now of to be created, recently we're we'd great looking areas. where targets, going body those Yes, said, that as would bolt-in like a areas in confident well. are begin technology. look profitable. to from win. weighted very seen are we growth today. looking overall market the that at as we'll us They right Suky things be a they're our Those near ASC, feel just knee, are two we're targets then and we been And you've and sensors IQ what firepower that what we but average adjacencies up enabling and in at to for opens around with of spin in areas to Canary lot firepower

Rick Wise

opening cetera, flesh continuing maybe competitive I door I that -- about was here. comment your capability rollout specifically to just revision ROSA, mean, you iQ about your follow-up, conversions. just et cetera. could specifically I that Bryan, said revision so help, where reflecting get comments I on will well the out was -- you but Persona as now so reflecting, et a I it of

a is, question on share is everything? about that kind should imagine? you'd of as it totality of trying and us to are the thinking the understand my gain, thinking competitive next about reflect have execution? these the Just we you biggest it focus of incremental XX Is products? Just or about X, months, Is what we something driver where on concept? What XX it conversions as

Bryan Hanson

have would okay? hear What beauty is my share -- of goal. to you we because to the tell of Can four gains as quarters you is kind see me have situation spot. last that's confidence many that I the continue we're just that we shots why high so the going That's over the on

that's about the think in knee has ROSA is that spin-off launched. Persona get revision but typical out If particular, ROSA and traction you getting the strong. to opportunity still And there just been momentum great out, Partial we have very was a knee. is total already while, for

conversions. have still mymobility You driving

launched yet. You Persona haven't even iQ

from of And then revision the use the business, like much try system. typical revision in we your your standard portion larger surgeon they surgeon a that of spear that a And many to which tip is convert us pursue to knee. to as competitive comes knee. gets create the competitive not reason So for love times, is total house more is us XX% mix you and because the the gain And with customer that of these practice, the in the on for revenue provision, revision, our also conversions. environment but or provide all differentiated to opportunity I opportunity bring give it's of an it overall specifically and share gain, a only that about a XX% somebody's get why up associated that typically

share. competitive that's that to going we back total system, a attention now revision kind certainly to, knee conversions, it's paying the where us that gives give and much pretty we're we go ground opportunity is those have have and all these. not only to but the opportunity of that get keep that, a that great So significant to I to, to area would us of take It's a why using dollars customer hunting a

Keri Mattox

have time maybe more for Lauren, one we question. probably

Operator

Matthew Piper we Up with next, Sandler. have O'Brien

Matthew O’Brien

here. Thanks

a the knee knee when several the last the bit right little two, you're seems out side the bit what I things. a So share. like saying last a down on side you're your direction. in more of the terms at things in look it But over about When on at know little I quarters, just I trending actually of have look Bryan, bit. not, If little flattened numbers, you're

player I'm down so some accounts here market? especially things Are little you actually you things in side because in bigger that a slowed that's vacation? the wondering, has just that the more volume we've what versus biggest the versus you in U.S., for knee there 'XX from hot on that specifically on are peers? training guys QX. seen COVID in And of partial are the spots your Are Are there higher impacting down are you bit some

Bryan Hanson

crazy I to even are quarter, a in never or look before much times, too at things share And spend look impact I and performance hard market. I was versus say. so why gain time can when referencing specific your that's things many loss, on the at It's typical. so these But when

given too because you any is do in others. whether I worse COVID be challenged competition specific or right not the be meaningful quarter. that a share up So than again, instance, county better for about country to the try part I worked by more mean be. can It the or could state particular get than fact to now of could

feel that I to take feel want the quarter there's disappointed. win we this should trend, didn't. always I these "noise" one again, still single -- continue we're that shape don't at and reason noise, more things that eliminates that those of through the And the look more to confident hotspots. That's believe every put I'm quotes have care going which But when quarter. look just four I we confident we're around And a more I'll and at net specific specific shots quarter, impact I quarter. to quarter eliminates of a why would share over I and usually in that why But a takers. trend in basically all share. that could hey, good at on taking on the trend that That's So look air the I that really more those a in with period the from take more of why that share the that's be comfortable to going time goal say we future. what prediction I of I'm nutshell, is. I

Matthew O’Brien

just on quickly ROSA And placements. then really

you -- a line think I better mentioned side. the more on trend OUS

into going seeing a what things And or the internationally what where the in accounts And in about some far are talk just even you're ASC ASC you volume terms as you or talk the can in even seeing So little into of higher of things? ROSA been some are inpatient in moving here that on ROSA terms placements, getting ASCs. just then you're there's about side bit states, of these placements as go?

Bryan Hanson

fact all momentum that the taking robotic efficient an loves distribution. the Yes, that they're about that's The advantage in system a nice good We're really thing. in I ASC ASC. of feel ASC. about absolutely efficiency our we're the

seen been there's it a We've East Middle well. well Africa there globe around as as benefit hospital seen So the and for as Asia-Pacific. for us We've sure. in the it Europe, in

across the let's XX-plus technology because platinum of percent globe. where always, very big our attention, the and I'm time we call it, goals the spend that's And those focus time. those to our with pretty you're sites in spending larger the distribution accounts. if pleased again, much the going is We're of not in and time accounts the payback So just but care around all of

I been focused good. has distribution for mean it's region, across settings, sure. and been we've So the been accounts again, across the larger on

Keri Mattox

before up. I'll think Bryan, brings you turn it I over to the any for Thanks for wrap X:XX. closing we question. that And back us Matt to just remarks

Bryan Hanson

on imagine, COVID result. dependence in can our given expectation we back still seen move And reflected or or I half say, probably Thanks, updated Yes. And that outsized have try COVID happen again, peers procedures. down because pretty an on as on here is And to analyzing I wouldn't And we've up the what versus And this in this first our dependence things procedures prudent of you And rapidly time as why here that seen to certainly mind because this. impact couple think thanks I flows. electric remain was there. We companies. procedures. to of med a all, comments of an and morning. just because been the rapidly hand Keri. here. us dependence there and us for pretty that our range cap want guidance we a would everybody. really elective as for this We've competitors, just particularly of of business a making tech setting time is can that a and implied outsized are it. first spending ebbs obvious it very sensitive to result, large spend move to our wide any pretty elective with We're has we're lot

and this short more challenges Number from the Suky Now of direction. very relative hey, before, had COVID in one, but the that think QX and it's I even moving important, is specifically, term, better-than-expected is which to right delivered in we unexpected the quarter, some things. results, to said the two recovery important with this speaks we

say, two, of it's the is at back of the I it's nonetheless. our don't long guidance. benefit growth, deferred very need clearing deliver Now execute see were these for but between, with the started organic got things anybody. talking in about COVID and from without any through a queue. with X% path years end to patient way where a recovery right the and And updated and both continued to been X% ago, few moving gives it to in happening given the we as is X% I And XXXX you X% for continues delivering control growth just of not we think for customers against just I just considered at the I proud position. material things going I losses is this confidence the one, And putting not with consistent the to the patients. now, not our flat in the happen. for But super and definitely in this ZB forward direction, anticipated. term, and we for important, talking team think for to it but a it, look that year to we And our can team company. share to is negative to And about this deeply we've us half our

forward With the Okay. go talking call, we'll end ahead so Thanks and we look to and much. that, you again soon. to

Operator

again you Thank today's for call. conference participating in

You may now disconnect.

Zimmer Biomet (ZBH) 3 Aug 212021 Q2 Earnings call transcript