Ivan Tornos
President and Chief Executive Officer at Zimmer Biomet
Thank you,. Good morning, everyone, and thank you for joining today's call. I would like to start today the way that -- that I always do by taking a moment to recognize and to show my sincere gratitude to the over 17,000 Biomet team members who each and every day across the globe move for business and our mission forward. Thank you for your commitment. Thank you for your tireless work, your strong performance. And most importantly, thank you for what you do every day-to serve our customers and patients. Thanks to your efforts, in 2024, we at Biomed were able to impact the lives of over 4.3 million patients. This is a phenomenal data point that are now continues to inspire all of us to the core, 4.3 million patients. As I said in the past and as I will continue to say, the workforce and the culture that we have here truly is one of our key competitive advantages. During the call today, I'm going to cover three things. First, I'll provide a general overview of the 4th-quarter and broad market dynamics. Secondly, I'll talk about our 2025 outlook and the drivers of performance for the year and beyond 2025. And then lastly, I'll briefly talk about the recently-announced Paragon 28 acquisition. After this, Suki is going to cover all financials in more detail, and we'll make sure as always to leave plenty of time for your questions. To begin, I'm very happy to report that in the 4th-quarter of 2024, we grew sales nearly 5% constant-currency. This marks the 12th consecutive quarter of mid-single-digit or better constant-currency revenue growth for Biomed. This performance in the quarter was driven by mid-single-digit growth in hips and knees as well as upper single-digit growth in. These results are particularly noteworthy given the backdrop of the ERP implementation challenges outlined in September. In-line with our expectations, we have now exited 2024 at pre-ERP shipping levels as evidenced by the large-volume of shipments that we saw in the quarter. Beyond commercial execution and the outcomes of innovative product launches, our performance was fueled by mid-single-digit growth in our end-markets, which we anticipate will continue based on all the analytics that we have at hand involving both primary and second-party sources, an aging and increasing active population, technological advancements, improving patient-care dynamics around the world, the shift of procedures to outpatient settings like the ASC here in the US as well as data showcasing best-in-class clinical outcomes will continue to provide tailwinds to these market dynamics and the growth should continue in the coming years. So again, we see these markets as being very healthy and we do not expect these markets to slow-down. It is important to note that with a solid closing of the 4th-quarter, despite some of the challenges in the year 2024, including the already mentioned ERP disruption, we were able to manage the business consistent with Auto regional 2024 financial guidance. So this means delivering near 5% constant-currency revenue growth, $8 in adjusted earnings per share and free-cash flow of $1.50 million. As we look into 2025, we are providing full-year financial guidance of constant-currency revenue growth of 3% to 5% and adjusted earnings per share of $8.15 to $8.35, which excludes any impact from the Paragon 28 acquisition. These financials are aligned with the LRP loan range plan, commitments that we highlighted at our investor event in May of 2024 in New York, which as a reminder, involves growing revenue at mid-single digits over the planned period, while ensuring that EPS is growing faster than revenue and free-cash flow is growing at least 100 basis-points faster than EPS. Again, revenue in the mid-single-digit range, EPS growing faster than revenue and free-cash flow growing at least 100 basis-points faster than EPS. Suki is going to provide more details in his prepared remarks coming up. As we enter 2025, our priorities have not changed. We're going to continue to over-index on people and culture, priority number-one, operational excellence, number two; and thirdly, innovation and diversification. Today, I want to break-down these three priorities in a more specific fashion in what we call a four-point plan across the three key priorities of Biomed. Firstly, in the priority of people and culture, we're going to continue to ensure that we have the right people in the right jobs. To that end, we have added new leadership in key categories across the enterprise like a new President for Global Hips, a new President for Global, a new appointed President for business and a new leader for global medical education. Secondly, in alignment with our strategic priority of operational excellence, we are committed to elevating our performance in the critical US market. We know that our performance has not been consistent and we're going to do a far better job in this regard. This means specializing more aggressively in SET, ensuring that we have the right go-to-market formula in all key franchises with the right productivity and the right talent, adding new capabilities and expanding the portfolio and partnerships in the ASC environment, we like where we are, but we want to be bolder in ASCs and continue to launch innovative solutions in robotics while ensuring that we also have the right number of headcounts to drive growth in this viral area. In the background of all of this, we have now announced the boldest direct-to-patient program in the history of the organization. We knowledge that Arnold Schwarzenegger himself as a Chief Movement Officer. Much more to come in this area, truly are excited about the potential here in the US. Thirdly, in the area of innovation and diversification, we plan to launch over 50 new products in the next 36 months with several of these products being new to the world product launches. So it's not just the quantity of products, but it's the quality and the disruption associated with these products that excites us here at Zimmer. To touch on a few of those, starting with knees, our US portfolio was strengthened in 2024 with the approvals of the Oxford Parcel cementless knee, the clearance of the 30 millimeter store version of Persona IQ and some other plays in our knee portfolio. We anticipate and Persona IQ to contribute to growth in the second-half of 2025. These products, combined with a the steady adoption of our persona osotide cementless knee, will position us strongly in the US market. We're very excited in terms of our knee portfolio and we really look-forward to acceleration of the growth in needs, especially as we enter the second-half of 2025. Internationally, late last year, in 2024, we received the CEMR for personal revision. This is already the leading revisioning implant in the US and we expect these launch to accelerate throughout 2025. 2024 was also a transformational year for the heat franchise. We launched Z1 or triple taper Stem and-or Surgical impactor. These two products, in addition of the closing of the Orthogrid acquisition, which enables best-in-class AI navigation to surgeons as well as our HIP Insight portfolio, the only FDA clear mix reality that are going to position us to grow in a very meaningful way as we enter 2025. I also like that with the acquisition of Orthogrid, in conjunction with heap insights and ROSA heap navigation, we now have the broadest navigation portfolio in hip surgery. So again, very excited about where we are with and where we are with HIPS now having the most robust portfolio in Recon since the merger of and Biomed going back to June of 2015. While we could not be more excited with our knee and hip products, Zimmer Biomed is today much more than just large joints. Said, Rosa has the potential to meaningfully expand the shoulder arthroplasty market by improving the accuracy and reproducibility of the procedure. Rossa Solder was the first robotic soldier system in the world and it is the only robot in shoulders that can perform both anatomic and reverse procedures. Additionally, in November of last year, we received FDA clearance for Solder, the first asymmetric stainless solder system in the US. We are in-full launch mode as we speak and are receiving great feedback from customers all across the US. Finally, Zimmer Biomed continues to innovate within robotics. We're going to be introducing a number of new ROSA applications in the short to mid-term, including CT scan capabilities, kinematic alignment for niche and a posterior heap robotic approach, which is a huge need in the growing international markets. Rosa is already the leading orthopedic robot in Europe and with these updates, we anticipate continued global share gains. While we continue to launch innovative solutions to address the needs of our growing markets, we also going to continue to look for responsible inorganic opportunities that fit our strategic, financial and risk-return metrics, which we need to do in order to diversify XIMER Biomed and in order to realize our aspiration of in a 5% WEMGAR environment by the end of 2027. The fourth point in our plan touches on the strategic priority of operational excellence and specifically on how Zimmer Biomed plans to drive margin improvement over the planned period, while also reducing inventory needs, hence increasing our free-cash flow generation. The plan is already in motion. We achieve results according to our expectations in 2024, and we shall see an acceleration as we progress through the year 2025. The execution of these four points mentioned above is going to undoubtedly set Biomet for success not just in 2025, but also in years to come. And by executing on these four things, we'll make sure to deliver on our revenue, earnings per share and free-cash flow goals in accordance with the commitments highlighted in our long-range plan. I want to close today's call discussing the very exciting news that we shared recently on the M&A front. To complement our product cycle on January 28th, we entered into a definitive agreement to acquire Paragon 28, which is a leader in the rapidly-growing $5 billion food and ankle space. I could not be more excited about this partnership. We maintain our desire to diversify into higher-growth segments through disciplined M&A and this transaction checks the growth, accretion dilution and all the strategic boxes that we've been discussing for quite some time. Strategically, once the transaction closes, currently anticipated to be in the first-half of 2025. Paragon 28 is expected to expand our foot and ankle deformity offerings while bolstering our existing fracture and trauma as well as joint replacement portfolios. It is going to move for in the right direction. It is going to complement Biomed global footprint, existing infrastructure with 20 expensive portfolio and it's going to help us drive our US growth and international growth. One very exciting area of this partnership is going to be the ability to expedite all penetration opportunities in the fast-growing ASC market where food and ankle procedures carry a very beneficial reimbursement reimbursement that we're not capitalizing on today, while also creating cross-selling opportunities. Lastly, this partnership is going to strengthen Zimmer Biomed's leadership position across masculoskeletal health and lower extremities. I could not be more excited about how we enter in 2025, and we very much look-forward to welcoming the great leaders of Paragon 28, including the Chairman and CEO, Albert Acosta, to the CIMER Biomed family. In conclusion, we are very proud of the progress of organization and we very much look-forward to continuing to execute above and beyond expectations. We have a very simple yet compelling plan and we will execute on it. 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 mission of alleviating pain and improving the quality-of-life for people around the world. And with that, I'll turn the call now over to Suki. Thank you very much.
