# Zimmer Biomet (ZBH)

Sector: Medical devices

| Field | Value |
|---|---|
| Price | $94.00 |
| Fair value (Analysts) | $130.00 |
| Discount to fair value | 27.7% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Wide |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.64 |
| Data as of | 2026-10-15 |
| Next earnings | 2026-11-05 (estimate) |

## In short

Investors doubt that Zimmer Biomet can grow with its market while knee sales stall and leaders change, and better knee sales and organic growth over four to six quarters can close the gap.

## Themes and gap

- Themes: New management (management-change)
- Gap type: Can close (closable)
- Why: The Q3 2026 report and the 2027 guidance in early 2027 show whether knee sales and organic growth recover after the sales changes.

## About

Zimmer Biomet makes implants and tools for orthopedic surgery. Its largest products are knee and hip replacements, which gave $828.9 million and $562.7 million of the $2.177 billion of net sales in Q2 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.

## 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 were flat in Q2 2026, up only 0.1% at constant currency, with sales outside the US down 1.5%. Organic constant currency growth was 2.9% in Q1 and 4.0% in Q2 2026, and full-year guidance is 2.25% to 3.25%. The company is changing how it sells in the US and in other markets, and it said these changes reduce sales in 2026. Leadership changes add to the doubt. The CFO left in April 2026 and an interim CFO still served in August, 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 products such as the ROSA Shoulder System cleared in 2026. Organic growth must 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 $8.47 to $8.59 for 2026, and free cash flow must fund the planned $1 billion of buybacks in 2026 while debt stays stable. The first check is the Q3 2026 report, expected in early November 2026. The 2027 guidance in early 2027 is 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.

## Checkpoints

- Nov 5, 2026 (estimate): Q3 2026 results: knee sales and organic growth. Status: Pending. 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.
- Feb 2027 (estimate): Full-year 2026 results and 2027 guidance. Status: 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. Status: Pending. Watch: Stable sales teams and higher US knee and hip growth after the changes pass; lost agents or lower US growth fail.

## Balance sheet

- Cash: $410M
- Debt: $7.5B
- Net debt: $7.1B
- Interest cover: 4.5×
- Undrawn credit line: $1.5B, to June 2031
- Debt due within 12 months: $1.2B
- Last debt due: 2045

Zimmer Biomet funds itself with unsecured notes of the parent company in US dollars, euros and Swiss francs. At June 30, 2026, debt was $7.48 billion at carrying value: $1.20 billion due within 12 months and $6.28 billion long-term. The current part is euro notes due 2026 of $571.5 million, 4.700% notes due February 2027 of $600 million and $30 million on an uncommitted credit line. The other notes mature from 2027 to 2045. Cash is cash and cash equivalents at June 30, 2026. Interest cover is operating profit of $326.1 million divided by net interest expense of $72.9 million in Q2 2026. On June 26, 2026, the company signed a $1.5 billion five-year revolving facility to June 2031 and a $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 $308.3 million in Q2 2026, and the company plans up to $1 billion of buybacks in 2026.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/1136869/000119312526335044/zbh-20260630.htm
- https://www.sec.gov/Archives/edgar/data/1136869/000119312526333761/zbh-ex99_1.htm
- https://www.sec.gov/Archives/edgar/data/1136869/000119312526288390/d158696d8k.htm

## Recent events

- 2026-09-08: 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.
- 2026-08-05: 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.
- 2026-06-26: 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.
- 2026-05-12: 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.
- 2026-04-28: 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.

## Risks

- High: Knee sales do not grow. Knees gave $828.9 million of Q2 2026 net sales and grew only 0.1% at constant currency, with sales outside the US down 1.5%.
- Medium: 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.
- Medium: Leadership changes can slow execution. The CFO left in April 2026, and an interim CFO still served at August 5, 2026. The head of the Americas and global businesses left on September 30, 2026.
- Low: Debt was $7.48 billion at June 30, 2026, and $1.20 billion of it is due within 12 months. Interest cover was about 4.5 times in Q2 2026. Buybacks of up to $1 billion in 2026 leave less cash to pay down debt.

## Links

- Page: https://picks.kamadorueda.com/company/ZBH/
- History of changes: https://picks.kamadorueda.com/company/ZBH/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/ZBH.json

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