Zimmer Biomet (ZBH) Citi's 2024 Global Healthcare Conference summary

Strategic priorities and operational performance

• Focused on people and culture, operational excellence, and innovation/diversification as top priorities, with high employee engagement and low attrition rates achieved.

• Delivered 11 consecutive quarters of mid-single-digit revenue growth, with strong EPS leverage and free cash flow, despite ERP system challenges now largely resolved.

• Innovation pipeline doubled in value since 2019, with 50 new products planned for launch over the next 30-36 months, targeting 5% WAMGR by 2027.

• Operational challenges, particularly with ERP and inconsistent U.S. commercial execution, are being addressed with expectations for improvement in 2025.

• ERP issues are expected to have a reduced impact of 60-80 basis points on 2024 sales, with no further headwinds anticipated in 2025.

Market trends and growth drivers

• Global orthopedics market is growing 4-5%, driven by demographics, site of care shifts to ASCs, disruptive technology, and positive pricing trends.

• Price erosion has stabilized, with some segments now seeing flat or positive pricing due to innovation, rational pricing by large players, and improved pricing strategies.

• ASC pricing dynamics are comparable or better than inpatient settings, supported by efficiency gains and physician ownership models.

Robotics, AI, and product innovation

• Robotics penetration in orthopedics remains low, presenting significant growth opportunities; ROSA platform offers the broadest set of indications and three new launches are planned in 18 months.

• AI and data collection are central to competitive advantage, enabling predictive analytics and potential value-based contracting.

• Key product launches include cementless knee platforms, Persona IQ, Oxford partial cementless knee, and ROSA Shoulder, with gradual but accelerating revenue impact expected into 2025.