Zimmer Biomet Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet first quarter 2025 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, May 5th, 2025. Following today's presentation, there will be a question and answer session. At this time, all participants are in a listening 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 David DiMartino, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Zoomer Live, its first quarter 2025 earnings conference call. Joining me on today's call are Ron Tornos, our President and CEO, and Sukhiya Patia, our CFO in UDP Finance, Operations, and Supply Chain. 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. For a detailed discussion of all these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements, please refer to RCC filings. Please note, we assume no obligation to update these forward-looking statements, even if actual results or future expectations change materially. Additionally, the discussions on this call will include certain non-GAAP financial measures some of which are forward-looking non-GAAP financial measures. Reconciliation on these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our first quarter earnings release, which can be found on our website, ZimmerBioMed.com. With that, I'll turn the call over to Yvonne. Yvonne?

Good morning, everyone, and thank you for joining today's call. I would like to start today the way that I always do, by taking a moment to recognize and to show my gratitude to the over 17,000 Zimmer Biomed team members who move our business and mission forward every day. Thank you for your tireless work, your strong performance, and most importantly, thank you for your commitment to serving our customers and our patients. As I always say, the Zimmer Biomed workforce and the culture that we have truly is one of our key competitive advantages. Through my prepared remarks this morning, I'm going to cover four things. First, the first quarter results of 2025. Secondly, our drivers of performance for 2025 and beyond. Thirdly, the usual update on our three strategic priorities. And then I'll close with an update on the recently completed Paragon 28 acquisition. After this, Suki is going to cover our financials in more detail. I will make sure to leave plenty of time for questions at the end of the prepared remarks. To begin, we grew first quarter sales 2.3% constant currency, with the standard results in US HIPs, which were up nearly 4%, amid single-digit growth in SET. This performance was against the backdrop of one less selling day in the quarter, which, as we mentioned in the past, represented a meaningful headwind. The US HIP performance highlights the opportunity with our magnificent seven-product cycle, and the impact that these products will have in accelerating our position as the global leader in hips and knees. Specifically in the U.S., the combination of Z1, or triple taper hip stem for direct anterior procedures, Hemer, or surgical impactor, and OrthoGrid, or AI-driven surgical guidance system for total hip replacements, has put us on the offensive once again. Notably, roughly half of Z1 users in the U.S. are conversions from competitive accounts, a trend that we expect to continue. In U.S. NIS, we expect Persona Oshetai, or Cementless NIS, and the Oxford Partial Cementless NIS to drive accelerating growth throughout 2025. We have now passed 25% penetration with Cementless NIS in the U.S. and expect that trend to accelerate now that we have performed widespread customer and sales rep training and have ample supply to drive increased penetration. Similarly, the European launch of persona revision, the leading revision knee implant in the U.S., should continue to gain traction throughout the year. Looking at 2025, we are maintaining our full-year organic constant currency revenue growth expectations of 3% to 5%, which excludes contribution from the Paragon 28 acquisition. We anticipate Paragon 28 to contribute 270 basis points to sales growth in 2025. We are updating our 2025 adjusted EPS guidance to $7.90 to $8.10 from the previous $8.10 15 cents to $8.35, which contemplates, first, the impact from tariffs being fully offset, primarily by the weakening of the U.S. dollar, shifts in discretionary spending, and other operational strategies that our team is undertaking. And then secondly, modest dilution of less than 3% from the Paragon 20 acquisition, as was previously mentioned. Suki's gonna provide more detail on guidance in his prepared remarks. As we progress throughout 2025, our priorities have not changed. We're gonna continue to over-index on people and culture, operational excellence, and innovation and diversification. Firstly, in the priority of people and culture, we're gonna continue to ensure that we have the right people in the right jobs. To that end, at the senior leadership level of the organization, we recently added two new leaders to take over the key functions of strategy, innovation, and business development, as well as communications. In addition to that, we have also hired new commercial leaders in key countries in Asia Pacific, have made changes in US general management in key geographies, and have hired strong capabilities in pricing. As we move towards the end of the year, We plan to make additional changes in the U.S., knowing that we've got to do better, ensuring that every territory is led by a strong player who's solely focused on driving Zimmerbaum's performance in the assigned geography. Secondly, in alignment with our strategic priority of operational excellence, we remain committed to elevating our performance in the very critical U.S. market, and to that end, are making changes to optimize our U.S. sales channels. We're going to continue to specialize our SET field team to ensure that we're capitalizing on the high growth opportunity that this market represents while bolstering our leadership position in the ASC through expanded product offerings and capabilities and are also meaningfully expanding all robotic platforms through innovation and committing additional commercial resources. As a reminder, all of these changes are contemplated within the giving guidance range for the year from both a revenue and EPS standpoint. In addition to driving sales growth, we continue to prioritize margin improvement while also reducing inventory needs. That way we can increase our free cash flow generation. We like what we are seeing when it comes to DOH, days on hand, and reduction that we've seen in DOH. and expect to move from around 370 days today to a much lower number in the quarter years to come. As a reminder, our DOH number was north of 400 early in 2024. In our third priority of innovation and diversification, now that we have no gaps left in our core portfolio after the introduction of the magnificent seven products, we are now refocusing our innovation efforts in addressing unmet needs within musculoskeletal health and adjacent areas. Four key problems that we're gonna solve for. Number one is awareness. Less than 5% of patients address their osteoarthritis. To empower patients to seek treatment, we're executing a bold direct-to-patient program in partnership with our chief movement officer, Arnold Schwarzenegger. During the first quarter of 2025, we launched our new You'll Be Back campaign and we continue to partner with key societies to educate patients around the world about joint replacement, while also expanding our digital marketing program in key geographies and territories. The second problem we're trying to solve is safety. Very prosthetic joint infections, or PJIs, occur in roughly one to two percent of primary cases, and around four to five percent of revision joint replacement procedures, and can be devastating. As a matter of fact, mortality rates, once you do get these PJIs, can be higher than some cancers. We committed to addressing this unmet need through technology, such as iodine surface-treated implants, to prevent bacterial colonization and biofilm formation. Excited to be launching the first iodine surface-treated hip stem in Japan later this year. And at some point, it will come to the U.S., where the opportunity is pretty large. Beyond iodine surface devices, we're investing in technology that aims to drive faster surgeries to reduce exposure to infection while in the operating room. Our one team acquisition, executed late 2024, is an example of this strategy. The third key area where we're going to focus our innovation efforts is around efficiency. One aim of our innovation engine is to lessen the burden of care for all key stakeholders. By capturing patient data with smart implants, making a CT scan an option for robotic implants with our platform ROSA, and by reducing surgical times through utilizing AI technologies such as OrthoGrid, we target to improve the quality of life for patients, reduce the cost of care for payers, and providing doctors more time to perform other surgeries. We believe we can be faster and smarter when it comes to the episode of treatment for the multiple patients that can benefit from our devices. The fourth key area where we are focusing our innovation efforts is around outcomes. We strive to continually improve patient satisfaction. With the recent PMA approval of the Oxford partial cementless knee, patients in the United States now have access to a partial knee backed by robust clinical data. data on nearly 15,000 patients from the National Joint Registry for the UK, demonstrated 93% survivorship at 10 years. This is a statistically significant improvement over the 90% with cemented partial implants. We have now trained several hundred customers on Oxford partial cementless and expect robust adoption as we exit 2025. In addition to internally developed solutions, we will also look to address these needs through inorganic opportunities that fit our strategic, financial, and risk-return metrics. And we do remain committed to our aspiration of achieving a 5% WEMGAR weighted average market growth rate environment by the end of 2027. As a reminder, today's WEMGAR here at Zimmer Biomed is around 4 to 4.25%. We have built best-in-class integration capabilities at Zimmer Biomed and are ready to take on the right opportunities at the right time. Speaking of successful integrations, I want to end today discussing the closing and integration of the Paragon 28 acquisition. As of April 21st, Paragon 28 is now part of the Zimmer Biomed family, and we're very proud of this achievement. This successful integration of the acquisition has been and will continue to be a top priority And I'm very happy to report that Paragon 28's chairman and CEO, Albert Acosta, as well as his entire senior commercial leadership team, have now joined the Zimmer Biomed family. Albert and the team have created a highly energetic, entrepreneurial, and committed culture, which we intend to preserve here at Zimmer Biomed. I could not be more excited to have the Paragon 28 team on board. I love what they bring to CB, and I look forward to the ongoing journey. In addition to adding the senior leadership of Paragon28, the entire US sales channel of Paragon28 has now signed up for the Zimmer Biomed journey, creating minimal disruption to the success that they have achieved over so many years. In conclusion, we are very proud of the progress in our organization, and we look forward to continuing to execute and build momentum as we move throughout the year. I love the fact that we're impacting the lives of millions of people, and I'm deeply inspired every day in knowing that my teammates and I are living the Zimmerbaum mission of alleviating pain and improving the quality of life for people around the world. And with that, I'll now turn the call over to Suki. Thank you very much.