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Medical device company Zimmer Biomet (NYSE:ZBH) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 1.1% year on year to $1.91 billion. Its non-GAAP profit of $1.81 per share was 2.3% above analysts’ consensus estimates.
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Zimmer Biomet (ZBH) Q1 CY2025 Highlights:
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Revenue: $1.91 billion vs analyst estimates of $1.89 billion (1.1% year-on-year growth, 0.7% beat)
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Adjusted EPS: $1.81 vs analyst estimates of $1.77 (2.3% beat)
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Adjusted EBITDA: $754.9 million vs analyst estimates of $603.5 million (39.5% margin, 25.1% beat)
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Management lowered its full-year Adjusted EPS guidance to $8 at the midpoint, a 3% decrease
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Operating Margin: 15.3%, up from 14.1% in the same quarter last year
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Free Cash Flow Margin: 14.6%, up from 4.8% in the same quarter last year
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Constant Currency Revenue rose 2.3% year on year (4.4% in the same quarter last year)
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Market Capitalization: $19.18 billion
StockStory’s Take
Zimmer Biomet’s Q1 results reflected steady product momentum, especially in U.S. Hips and the S.E.T. (Sports Medicine, Extremities, and Trauma) segment, offsetting the impact of one less selling day in the quarter. CEO Ivan Tornos pointed to strong adoption of the company’s “magnificent seven” product lineup and highlighted that new product launches, such as the Z1 Hip Stem and Oxford Partial Cementless Knee, are attracting customer conversions from competitors and driving segment penetration.
Looking ahead, management lowered its adjusted EPS guidance due to anticipated tariff-related costs and modest earnings dilution from the Paragon 28 acquisition, despite maintaining its organic constant currency revenue growth outlook. CFO Suketu Upadhyay explained that mitigation efforts around tariffs, including operational changes and sourcing, are expected to offset much of the impact in 2025. However, management acknowledged ongoing uncertainty from tariffs and integration costs as factors likely to pressure margins and free cash flow for the remainder of the year.
Key Insights from Management’s Remarks
Management described several operational and strategic shifts as key to Q1 performance and the company’s outlook. Product launches, a focus on commercial execution, and supply chain initiatives were at the forefront, with new leadership and a major acquisition set to influence the business in coming quarters.
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U.S. Hips momentum: The company’s “magnificent seven” product cycle, including the Z1 Hip Stem and OrthoGrid AI-driven surgical guidance, led to nearly 4% growth in U.S. Hips. Management noted that about half of Z1 users are new conversions from competitive accounts, underscoring the impact of targeted innovation on market share.
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Cementless Knee adoption ramping: Penetration of the Persona OsseoTi Cementless Knee surpassed 25% in the U.S., and the Oxford Partial Cementless Knee received PMA approval, with hundreds of surgeons already trained. Management expects broader adoption and accelerated growth in Knees as full-scale launches continue through 2025.
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S.E.T. segment outperformance: S.E.T. delivered mid-single digit growth globally for the sixth straight quarter, now outpacing the Hips business in size following the Paragon 28 acquisition. Management attributed this to new launches and expanding commercial resources in high-growth markets.
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Operational changes and leadership hires: The company made key leadership additions in strategy, innovation, and commercial operations, especially in Asia-Pacific and U.S. management, to bolster execution and pricing capabilities. Broader sales force optimization and incentive plan updates are underway to address underperformance in U.S. Knees.
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Paragon 28 integration progress: The Paragon 28 acquisition closed in April, with the full commercial and leadership teams retained. Management emphasized minimal disruption, ongoing product innovation, and a focus on maintaining Paragon’s entrepreneurial culture as part of Zimmer Biomet’s diversification strategy.