Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

ZBH · Q3 2025 Earnings

Zimmer Biomet

Reported November 5, 2025

30-second summary

Zimmer Biomet missed its own "scratch 6%" Q3 FY2025 organic growth bar at 5.0%, narrowed the FY2025 organic constant-currency guide by 50bps at the top (3.5–4.5% → 3.5–4.0%), and held EPS and FCF flat — a configuration that says revenue is softer than the August story implied but margins and cash are intact. The more important signal is CEO Ivan Tornos's explicit repudiation of last quarter's "very surprised if we don't scratch 6%" framing and his commitment to a more "measured" guidance philosophy. One quarter after the most confident Zimmer call in years, management is rebuilding credibility through under-promising.

Headline numbers

EPS

Q3 FY2025

$1.90

Revenue

Q3 FY2025

$2.00B

+9.7% YoY

Operating margin

Q3 FY2025

17.5%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$2.00B	+9.7%	$2.08B	-3.7%
EPS	$1.90	—	$2.07	-8.2%
Operating margin	17.5%	—	14.4%	+310bps

Guidance

Company narrowed organic constant currency and constant currency revenue growth guidance for FY2025 by 50bps at the high end while maintaining EPS and FCF targets, citing persistent weakness in restorative therapies and measured international outlook.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Constant Currency Revenue Growth	FY 2025	6.2% - 7.2%	6.2% - 6.7%	high end narrowed by 50bps	Lowered
Organic Constant Currency Revenue Growth	FY 2025	3.5% - 4.5%	3.5% - 4.0%	high end narrowed by 50bps	Lowered

Reaffirmed unchanged this quarter: Reported Revenue Growth (6.7% - 7.7%), Adjusted Diluted EPS ($8.10 - $8.30), Free Cash Flow ($1.0 billion - $1.2 billion)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
Knees	$0.792B	+6.3%
Hips	$0.506B	+5.1%
S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic)	$0.542B	+19.2%
Technology & Data, Bone Cement and Surgical	$0.161B	+12.5%
S.E.T. Revenue Growth (Reported)	19.2%	—
Knees Revenue Growth (Reported)	6.3%	—
Hips Revenue Growth (Reported)	5.1%	—

Other KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
United States	$1.164B	+10.6%
International	$0.837B	+8.5%
Organic Constant Currency Revenue Growth	5.0%	—
U.S. Organic Revenue Growth	5.6%	—
International Organic Constant Currency Revenue Growth	4.2%	—
Adjusted Diluted EPS Growth	9.2%	—
Operating Margin	17.5%	—

Management tone

Q1 customer acceleration → Q2 "very high confidence" in H2 → Q3 explicit retreat to "measured" guidance philosophy.

One quarter ago CEO Ivan Tornos said he would be "very surprised" if Q3 organic growth did not "scratch 6%." Q3 printed 5.0%. Tornos's response on the call — "I'm having budgeted somewhat conservatively for all of these three items...Clearly, this has told me that we, or rather I, need to be far more measured in our external commentary" — is unusually direct accountability and signals that the prior quarter's repeated confidence language was tactical optimism that management now regrets having put on the record.

The follow-through is structural, not rhetorical. Tornos committed that "measured is the word when it comes to commentary and philosophy and guidance" moving forward, and that 2026 commentary will exclude revenue from "non-core areas" — meaning restorative therapies and emerging-market distributor channels will no longer be embedded in headline guides. This is a deliberate reset of the bar before next year's number is set.

The innovation narrative survived but lost its standalone weight. Last quarter the Magnificent Seven launches were positioned as the engine of acceleration; this quarter Tornos's framing is conditional: "with the fragility we got in some non-core areas...can [innovation] be an accelerator...That's something we're evaluating." The U.S. Knees acceleration to +3.5% organic validates the product cycle is working, but management is no longer willing to extrapolate from it.

International went from a contributor to being the source of the guide cut in Q3. Tornos's instruction to analysts — that non-core international revenue will be stripped from 2026 commentary entirely — is the cleanest tell that emerging markets are now treated as an unmodelable headwind rather than a growth contributor.

The U.S. revision-market language hardened from implicit confidence to explicit duration: "the slowdown in the U.S. revision market for both hip and knee persisting throughout the remainder of the year," with Tornos adding it is "too early to tell whether we're going to see softness in 2026 when it comes to revisions." Two quarters ago this market was not mentioned as a risk.

Recurring themes management leaned on this quarter:

U.S. momentum driven by innovation cycle (Magnificent Seven)Late-quarter international disruption creating guidance conservatismCommercial execution improvements offsetting near-term headwindsEPS resilience despite revenue miss and cost headwindsShift to measured, defensible guidance philosophyRobotics and navigation adoption accelerating faster than expected

Risks management surfaced:

Emerging markets volatility (Eastern Europe, Middle East distributor cancellations)Restorative therapies underperformance ($24-25M impact; non-core HA injection market)Latin America distributor channel challenges (>15% miss on forecast)U.S. revision market slowdown persisting into 2025 and beyondTariff headwinds ($40M annual impact) and pricing pressure in non-core segments

Answers to last quarter's watch list

Did Q3 organic constant currency growth print at or above 6%? No — 5.0%. Management had guided to "scratch 6%"; the actual print missed by ~100bps. Per CEO commentary, three late-quarter items (Eastern Europe/Middle East distributor cancellations, restorative therapies softness, and a >15% Latin America miss) cost ~120bps. This miss triggered the FY guide narrowing and the "measured guidance" reset. Status: Resolved negatively.

Knees recovery trajectory. U.S. Knees organic accelerated from +1.7% in Q2 to +3.5% in Q3 (+180bps sequential), driven by Persona Osseotide and Oxford partial cementless adoption. Global Knees organic of +5.3%. The Magnificent Seven launches landed where the bull case needed them. Status: Resolved positively.

Tariff figure stability around $40M. CFO Patia reaffirmed "$40 million" tariff headwind — unchanged from Q2's revised estimate. EPS guidance was held flat, consistent with no tariff drift. Status: Resolved positively.

Magnificent Seven product cycle traction. Confirmed via U.S. Knees acceleration and management's framing that the innovation cycle "is working." Persona Osseotide now represents nearly 30% of U.S. total knee implants, on track to exceed 50% by end of 2027. Status: Continue monitoring.

Monogram integration milestones. Acquisition closed October 7, 2025; initial surgeon demonstrations held at HEEP/eSociety meeting in Dallas. Clinical protocols underway since early July; semi-autonomous launch with Persona implants targeted for early 2027, fully autonomous platform end of 2027 or early 2028. Status: Resolved positively.

What to watch into next quarter

The 2026 guide framework. Management has pre-committed to excluding restorative therapies and emerging-market distributor revenue from external commentary. Watch what the initial 2026 organic growth range looks like and whether it embeds the same "measured" philosophy Tornos committed to — a midpoint at or below 4% would confirm the reset; anything above 5% would suggest the discipline pledge was rhetorical.

Does Q4 FY2025 organic constant currency growth land inside the new 3.5–4.0% FY range? The math implies Q4 organic decelerates meaningfully from Q3's 5.0%. A clean beat at the new bar starts rebuilding credibility; a second consecutive miss compounds the August damage.

U.S. revision-market commentary. Management called the slowdown "persisting throughout the remainder of the year" and refused to commit on 2026. Watch whether Q4 prepared remarks extend the slowdown call into early 2026 or signal stabilization.

Hips trajectory. U.S. Hips +4.0% organic with revision-market weakness flagged as a persistent drag. Watch whether revision exposure pulls Hips lower in Q4.

International ex-distributor underlying growth. Reported International +8.5% vs organic +4.2% — the 430bps wedge is FX. Watch whether the underlying organic figure stabilizes or deteriorates further as Eastern European and Latin American distributor channels reset.

Free cash flow conversion. FY FCF guidance held at $1.0–1.2B despite organic growth narrowing; YTD FCF is ~$800M. Watch whether the implied Q4 FCF range remains credible.

Sources

Zimmer Biomet Q3 FY2025 Press Release (SEC EX-99.1): https://www.sec.gov/Archives/edgar/data/1136869/000119312525265649/zbh-ex99_1.htm
Zimmer Biomet Q3 FY2025 earnings call prepared remarks and Q&A transcript (November 5, 2025)

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