Zimmer Biomet Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet second quarter 2023 earnings conference call. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded today, August 1st, 2023. Following today's presentation, there will be a question and answer session. At this time, all participants are in a listen-only mode. If you have a question, please press the star followed by the one on your push-button phone. I would now like to turn the conference over to Carrie Maddox, Chief Communications and Administration Officer. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Zimmer Biomet's second quarter 2023 earnings conference call. Joining me today are Brian Hansen, our Chairman, President, and CEO, EVP and CFO, Suki Upadhyay, and COO, Yvonne Tornos. 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. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties in addition to the inherent limitations of such forward-looking statements. Additionally, the discussions on this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included within our Q2 earnings release, which can be found on our website, ZimmerBiomet.com. With that, I'll turn the call over to Brian. Brian?

All right. Thanks, Carrie, and thanks to everyone for joining us on the call this morning. You know, it's always good to be with you. But I would say it's even a little better and certainly more fun when we have great performance in the quarter. So we're pretty happy about the results that we get to discuss today, and I can tell you we're looking forward to the dialogue. And I'll start things off as we normally do. I'll talk about our Q2 performance and the key drivers inside of the quarter. But I think also really important is to talk about the key drivers that we see continuing to move this business forward. And then Sookie will walk us through the financial details of the quarter. and importantly discuss how we are, again, raising our full-year financial guidance. And then, of course, we'll close things out with a Q&A session, and we look forward to answering your questions and having a dialogue in that session. Okay, to kick things off, I'm just going to take a step back, which I've been doing now for the last handful of quarters, and I think deservedly so, because I want to say thank you. I want to say thank you to each and every one of our team members around the world, because it's your hard work, it's your dedication to getting the job done that is moving this business forward. And I gotta tell you that I'm proud to say that you have delivered another very strong quarter while once again making ZB a certified great place to work. And you've done all of this while improving our scores and as a result of that our rankings on the environmental, social, and governance front. So I think simply stated we are doing well while also doing good. And that means for our team members, our patients, our customers in our communities, and even our planet. So once again, I want to say thank you to our team for all that you do for ZB and to move our mission forward, and most importantly, for doing it together as one team, one ZB team. Now let's talk about the second quarter. And I'm just going to say simply, we delivered another strong quarter, again, beating our own expectations. And that performance positions us to, again, raise our financial guidance on both the top and bottom lines. And this is in the face of some pretty significant macro factors that are impacting us and the entire market. Ongoing supply challenges are very real, and I'll talk about those in a minute, but also inflationary pressure, a tough labor market, and a geopolitical landscape that is putting pressure on everybody. But against that, I feel very confident about our pipeline, our execution, and the team's demonstrated ability to navigate these headwinds, which gives us confidence to increase our financial outlook. Okay, with that said, let's talk about the key drivers inside of Q2, and there were some positives and there were some negatives. I'll start with the positives, and the most important one, in my view, is that our team's execution remains flawless. We're seeing significant traction, probably the best we've ever seen with our new product innovation, and that paid dividends in the quarter for sure, but most importantly is it pays dividends as we move this business forward. And I would say that procedure recovery continued in the quarter, again, showing no meaningful impact from COVID or staffing challenges. And that allowed for a tailwind from increased provider capacity. And that resulted in backlog pull through in the quarter. In terms of headwinds, I would say that the team is doing a great job of managing the supply constraint environment. But I would say that it is still very clearly a governor to our overall growth in the quarter. And it continues to be a distraction for the organization. See, if I combine these things, though, all in all, our momentum continues, and it continues to grow. And I've said before, my confidence in this business, our confidence in this business, is as high as it's ever been. And it's high for a good reason. If we just look at the knee franchise alone, our innovation strategy is working. We now have four meaningful pillars inside of this business, all of which can drive pricing stability, mixed benefit, and competitive conversions. First, let's look at the ROSA robotic platform combined with our persona cementless knee. This is a powerhouse combination that is and will continue to accelerate growth. And based on the traction we're seeing so far, we continue to believe that ROSA and persona cementless together will enhance our robotics and cementless penetration from the current mid-teen level to 50% or better, 5-0% or better. The second pillar that we're focused on is persona revision. This provides meaningful conversion and mixed opportunities inside the revision category But importantly, it also acts as a powerful tip of the spear product for conversions and primary needs. And then third, it's just the overall shift of the ZB legacy knee systems to our now fully rounded out persona portfolio. And this is a meaningful mixed benefit that we can take advantage of that I would say is somewhat unique to our business. And then fourth, on top of all this, we have the world's first and only smart knee, which is persona IQ. And I know this is still in limited launch, but already, It offers surgeons unparalleled data access and is attractive to patients, those patients who want more direct engagement with their care recovery. And we're taking on a similar approach to our HIP portfolio, where we continue to launch meaningful innovation, again, giving us the opportunity for price stability, mixed benefit, and competitive conversions. And we have four pillars of focus here as well. First, it's ROSA and HIP Insight. These are technology shifts in robotics and mixed reality that are setting up the ZB HIP portfolio for greater adoption and growth. Second is the Avenir Complete. This is our current flagship product combined with G7, which gives us a very strong position in both the attractive direct anterior and revision submarkets of HIP. And then third, this position will be enhanced with work being done on a triple taper stem which will fully round out our direct interior approach portfolio. We believe this new portfolio, combined with the G7, which is the most versatile acetabular component available, will be unmatched in the industry. And then fourth, HAMR. This is our upcoming full launch of an automated impaction system that builds on a proven need in the market, and we fully expect that this launch will create surgical efficiencies while bringing personalized precision to each and every patient. And then finally, in SET, we are being disciplined and targeting investment in our growth driver categories, upper extremities, sports, and CMFT, and each of these categories continue to perform. And given our momentum in these businesses and continued investment in innovation and dedicated infrastructure, we fully expect the SET business to be a mid-single-digit grower in a normalized market environment. So overall, we know we're very excited about our innovation momentum. You know, it's very real. You know, remember, we've called out that we have 40 planned product launches between this year and the end of 2025, with the majority in 4% plus growth markets. And that's important because these innovations will certainly drive near-term growth, there's no question about that, but also create better sustainability of that growth because of the markets they're in. This portfolio shift that we're seeing and the team's execution capabilities are clear signs that our ZB transformation has taken hold. But I can tell you right now that we're not going to stop there. The goal is to continue to enhance our growth profile through our ongoing focus on active portfolio management, and that is supported by our already strong and strengthening balance sheet. And with that, I'll turn the call over to Sukhi for a closer look at Q2 and our latest expectations for the remainder of 2023. Okay, Sukhi.