Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Q2 2023 Earnings Call Transcript

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Lawrence Biegelsen: Ivan, thanks so much for that comprehensive answer. Maybe another one for you. On the Robot — for the shoulder application for the Robot. I think you just confirm that you still expect to be first to market and what need — what still needs to be done? And if you’ll give any more color on the time line? That would be great.

Ivan Tornos: I’d love to give you more color, but Bryan and Keri will shoot me. I will tell you that we remain convinced capital letters that would be first to market in Shoulder Robotics, and beyond the speed to market, what I like is what the actual platform offers. Faster surgeries, more accurate outcomes, shorter recovery. So a lot what we’ve seen, we’ve done our final validation labs with customers, both friends and family customer surgeons and also competitive surgeons and the feedback has been outstanding. Beyond the platform dynamics that I mentioned around shorter recovery, faster surgery, I just love the integration that Russia shoulder will have with the rest of the CDH ecosystem. So more than that soon.

Operator: We’ll go next to Ryan Zimmerman with BTIG.

Ryan Zimmerman: We all heard United Healthcare’s comments this quarter. It was evident in results, but it was specific to recon on Medicare. I’m just wondering if you can kind of parse out the procedure environment within S.E.T.? It’s hard to see given some of the supply chain dynamics. I’m just wondering if you can kind of speak to that environment relative to recon in your expectations for durability of its robustness, if you will? Through the remainder of this year, similar to the recon environment.

Ivan Tornos: Ryan. I’ll take that one as well. So obviously, it varies from region to region. What I will tell you here in the U.S., we saw greater backlog consumption coming from Knees and Hips. It was actually quite the opposite in EMEA. When it comes to S.E.T., a lot of those cases here in the U.S. are done in an ASC environment. And other cases, are commercial payers, and it’s been pretty consistent. But again, it varies quarter-to-quarter, geography to geography. We do believe that the backlog is going to be here for a while, and we’ll see fluctuation given ASC non-ASC in the U.S. And then again, different variables outside of the U.S.

Bryan Hanson: I think the key takeaway you just don’t see as much impact on the S.E.T. business as you do the Recon business when you think about backlog.

Ryan Zimmerman: Fair. That’s helpful, Bryan. And then we talked about Russia. Last year, it was China and the impact of BBP. I’m just wondering if you could articulate specifically what the status is in China? We’ve heard from many of your peers, China is improving. What are your expectations for China growth? As we kind of lap — as we start to lap the BBP impacts?

Suketu Upadhyay: Yes. So first of all, BBP is not a material driver for us at all in 2023. We sort of turned the corner on that between the end of ’21 and 2022. So we actually see China as a growth driver for us, albeit at a lower level, but we do believe that, that market has some very strong growth for us. I’d say pre-BBP, that market was growing in the low double-digit range. And we’d be surprised if we didn’t return to that level, if not better.

Operator: We’ll go next to Mike Matson with Needham & Company.

Michael Matson: Back to the S.E.T. business. So Bryan called out kind of the subcategories there that seem to be the area of focus. But the things I didn’t hear a mention were lower extremities, i.e., foot and ankle or trauma? So can you maybe just comment on why those were kind of left out of the comments?

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