Zimmer Biomet Holdings, Inc.ZBH reported third-quarter 2026 adjusted earnings per share (EPS) of $1.90, which beat the Zacks Consensus Estimate by 0.5%. The adjusted figure has remained unchanged year over year.
GAAP earnings declined 13.8% to $1.00 per share from $1.16 in the year-ago quarter.
ZBH's Revenues
Net sales increased 3.1% year over year to $2.06 billion, surpassing the Zacks Consensus Estimate by 0.8%. Net sales increased 3.7% on a constant-currency basis. Foreign currency movements negatively impacted reported sales growth by 60 basis points.
Following the earnings announcement, ZBH stock rose 1% in pre-market trading today.
Zimmer Biomet's Revenues by Geography
Sales generated in the United States totaled $1.21 billion, up 3.6% year over year. The domestic business accounted for approximately 58.4% of total quarterly revenues.
International sales amounted to $857.2 million, reflecting growth of 2.4% on a reported basis and 3.9% at constant exchange rates or CER. Currency fluctuations weighed on reported international growth by 150 basis points.
ZBH's Product Category Performance
Zimmer Biomet currently reports under four product categories: Knees, Hips, S.E.T. and Technology & Data, Bone Cement and Surgical.
Kneessales declined 3.1% year over year to $767.5 million, down 2.6% at CER. U.S. Knees revenues decreased 2% to $431.3 million. International Knees sales fell 4.5% to $336.3 million, declining 3.4% at CER.
Hipsrevenues increased 6% year over year to $536.5 million and rose 7% at CER. U.S. Hips sales advanced 5.8% to $280.1 million. International sales grew 6.2% to $256.4 million, increasing 8.2% at CER.
Revenues in the S.E.T.unit, comprising Sports Medicine, Biologics, Foot and Ankle, Upper Extremities, Trauma, Craniomaxillofacial and Thoracic, increased 6.8% to $578.3 million. Sales rose 7.1% at CER.
Technology & Data, Bone Cement and Surgicalrevenues surged 11.9% to $180.6 million. At CER, sales increased 13%, marking the strongest growth among the company's product categories.
Zimmer Biomet's Margin Performance
Adjusted gross margin, excluding intangible asset amortization and inventory and manufacturing-related charges, was 71.7%, compared with 72.6% in the year-ago quarter. This represents a contraction of 90 basis points.
Cost of products sold, excluding intangible asset amortization, increased 6.3% to $594.5 million. Selling, general and administrative expenses rose 5.4% to $855 million, while research and development expenses declined 8.6% to $105.9 million.
Adjusted operating profit declined to $518.8 million from $531 million a year earlier. The adjusted operating margin contracted 140 basis points to 25.1%, reflecting continued pressure on profitability despite revenue growth.
ZBH's Cash Position
Zimmer Biomet exited the third quarter of 2026 with cash and cash equivalents of $399.9 million compared with $410 million at the end of the second quarter. Total debt was $7.50 billion, while net debt amounted to $7.10 billion.
Zimmer Biomet Holdings, Inc. Price, Consensus and EPS Surprise
Zimmer Biomet Holdings, Inc. price-consensus-eps-surprise-chart | Zimmer Biomet Holdings, Inc. Quote
Net cash provided by operating activities increased to $560 million from $418.7 million in the year-ago quarter. Free cash flow improved to $372.4 million from $277.6 million.
For the first nine months of 2026, operating cash flow totaled $1.37 billion, while free cash flow reached $926.5 million. The company repurchased $579.3 million of common stock and paid $139.2 million in dividends during this period.
Zimmer Biomet's 2026 Guidance Raised
Zimmer Biomet updated its full-year 2026 financial guidance. Reported revenue growth is now projected in the range of 4.4-4.9%, compared with the previous expectation of 3.9-4.9%. The Zacks Consensus Estimate for 2026 revenues is currently pegged at $8.59 billion, implying 4.3% year-over-year growth.
Constant-currency revenue growth is expected between 4.1% and 4.6%, up from the earlier projection of 3.4-4.4%. Organic constant-currency growth is now anticipated to be in the range of 3-3.5% compared with the prior guidance of 2.25-3.25%.
Adjusted earnings for 2026 are projected to be between $8.50 and $8.60 per share compared with the previous guidance of $8.47-$8.59. The Zacks Consensus Estimate for 2026 adjusted earnings is currently pegged at $8.54 per share.
Our Take on ZBH
Zimmer Biomet exited the third quarter with better-than-expected earnings and revenues. The company's diversified product portfolio supported quarterly growth. Hips, S.E.T. and Technology & Data, Bone Cement and Surgical delivered healthy gains, while the Knees category witnessed a decline. ZBH continues to advance its diversification strategy and commercial execution initiatives. The raised guidance for the year is also very promising.
However, the contraction in adjusted gross and operating margins remains a concern.
ZBH's Zacks Rank & Key Picks
Zimmer Biomet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive SurgicalISRG, MedpaceMEDP and GE HealthCare TechnologiesGEHC.
Intuitive Surgical, carrying a Zacks Rank #2 (Buy) at present, posted third-quarter 2026 adjusted EPS of $3.00, exceeding the Zacks Consensus Estimate by 14.94%. Revenues of $3.05 billion topped the Zacks Consensus Estimate by 5.84%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
ISRG has an earnings yield of 2.5% against the industry's negative 2.1% yield. The company's earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.12%.
Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $4.84, which surpassed the Zacks Consensus Estimate by 8.76%. Revenues of $716 million beat the Zacks Consensus Estimate by 1.02%.
MEDP has an estimated long-term earnings growth rate of 14.3% compared with the industry's 13.2% growth. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 9.77%.
GE HealthCare, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $1.34, which topped the Zacks Consensus Estimate by 10.74%. Revenues of $5.51 billion beat the Zacks Consensus Estimate by 2.87%.
GEHC has an earnings yield of 6.5% compared with the industry's 2.8%. The company beat earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 3.15%.
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This article originally published on Zacks Investment Research (zacks.com).
