Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Q3 2023 Earnings Call Transcript

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Q3 2023 Earnings Call Transcript November 7, 2023

Operator: Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet’s Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today November 7. Following today’s presentation, there will be a question-and-answer session. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Keri Mattox, Chief Communications and Administration Officer. Please go ahead.

Keri Mattox: Thank you, operator, and good morning, everyone. Welcome to Zimmer Biomet’s third quarter 2023 earnings conference call. Joining me today are Ivan Tornos, our President and CEO; and EVP and CFO, Suky Upadhyay. Before we get started, I’d like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties in addition to the inherent limitations of such forward-looking statements.

Additionally, the discussions on this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included within our Q3 earnings release, which can be found on our website, zimmerbiomet.com. With that, I’ll turn the call over to Ivan. Ivan?

Ivan Tornos: Thank you very much, Keri. And good morning, and greetings, everyone from Warsaw, Indiana, the orthopedic capital of the world, welcome to our Q3 earnings call. My first call as the CEO [indiscernible] organization really grateful that all of you are joining us here this morning. I’d like to begin by sharing how truly excited I am to be in the new role. Team to be a very inspiring time, not just in musculoskeletal health, which it is, but also in med-tech in general. Simply put the space is not what it used to be just so five years ago. When you look at orthopedics, when you look at the entire category, it’s changed, it’s changed a lot. Groundbreaking technologies are shaping how procedures are done beyond the backlog and continuing femoral demographics, global demand for treatment is higher than it has historically been This is driven by better clinically reported outcomes.

This is driven by shorter episodes of care. This is driven by better, more comfortable ways to do physical therapy. This is driven by greater ways to approach different disease states. And this is driven by subtle treatment migrations like the one we see here in the U.S. with a rapid shift of cases moving into an ASC while also preserving what are very compelling volume levels in the traditional in-patient and outpatient settings. So in plain English, healthy market, great patient dynamics, new technology, disruptive innovation, a lot has changed. And I don’t see us going back to four or five years ago. So again, a very inspiring time to be in musculoskeletal health and orthopedics in general. All of these market accelerating trends are opening new doors for countless patients to benefit from what we do here at ZB, which is to drive life changing solutions.

See also 25 Most Dangerous Gangs in the US and 15 Countries that Have the Best Weather in Africa.

Q&A Session

And we do that every single day for countless patients. And the best part about it, we’re just getting started. So I could not be more excited to be here in my new role. With this encouraging market dynamics, sustainable trends, and building on the solid track record of execution that the ZB team has enabled. It’s great to be here today to report what it is, another solid quarter of a strong performance while strongly reaffirming our year-end guidance for the year 2023. Even more exciting, as I look forward to our future, I’m more convinced than ever that Zimmer Biomet will continue to lead the way on customer-centric innovation, already a competitive advantage and solid commercial execution, enabling not just the delivery of our mission, but also improving on our other key value creation drivers, those regaining and sustaining top quartile performance.

And again, this is something that we treat with a lot of rigor and something that is a mandate for the organization. We must regain and sustain top quartile performance. For today’s call, I want to first share my thoughts on my first two months as CEO of Zimmer Biomet, while also providing key insights into what I’ve learned, how my learning has shaped what are going to be my three key priorities as the new CEO of the enterprise. This will answer the question on what is fundamentally going to change around here in the next chapter of our transformation. After that, I’m going to talk about the key drivers behind the solid Q3 performance, next Suky will take over, will discuss the financials for the quarter as well as the expectations for the rest of the year, and then our favorite part of the call Q&A.

Before we move into these updates, I do want to take a moment to thank the global Zimmer Biomet team for their unwavering commitment to our purpose, to our plans. I want to thank them for their sense of urgency in driving site execution. I want to thank them for everything that they do. This is a highly engaged and focused team that is being operating at a very rapid speed and is eagerly designed to do even more, more for patients, more for customers, more for the team, more for each other, more for the company, more for the communities where we work and live, like right here in Warsaw, and frankly, far more for the shareholders. It’s a team that has gone through a lot, and a lot is a lot. This team has done a lot of heavy lifting, and now with the heavy lifting behind from a remediation standpoint, it’s great to be in a different stage and it’s great to be able to show to the world what the Zimmer Biomet team can do and will do.

Beyond proud of the organization and I’m genuinely inspired by what they do each and every day. Been doing this for a while around the world, and I can truthfully tell you I’ve never worked with a better team than the one we have here at Zimmer Biomet. And again, I can hardly wait to showcase our results in quarters to come. So thank you. I also want to thank Bryan Hanson for all that Bryan lead to bring Zimmer Biomet to this moment. We are grateful and we’re stronger because of his leadership. So thank you, Bryan. Now let me share some perspective as the new CEO of Zimmer Biomet. During my first 11 weeks or 77 days in the job, I’ve spent significant time with team members, customers, analysts, investors, or Board, my peers, healthcare executives across med-tech, government officials, and other key stakeholders in healthcare so that I could listen, I could learn and I could get the property insights.

I’ve been in every Zimmer Biomet region around the globe. I’ve interacted with every key manufacturing facility. I have visited hundreds of decision makers across every major continent, and I have collected countless pages of feedback and recommendations. Most critically, I’ve used this reflection time to ensure that we at Zimmer Biomet are boldly prioritizing what needs to get done. And this, I can assure you would be a trademark of my time as CEO of Zimmer Biomet, having the courage to say no to several things so that we can become truly great in those things that will drive the most value for the enterprise and our key stakeholders. These key priorities are purpose and people, number one. We have a winning culture. We have the absolute best talent in the industry.

It has been a foundational priority for ZB and will continue to be critical under my leadership. People, purpose, talent, culture with a very data centric organization, and we use the same level of data centricity to track how it is that we’re doing with our human capital. To that end, we track level of engagement, development, DEI, engagement across different segments and geographies, high potential ratings and everything in between. I’m really excited to report that, or the most recent engagement survey, which we completed about six weeks ago delivered the absolute best scores in the history of the company. Let me say that again. The latest engagement score for organization close to 20,000 employees showcase the absolute best scores in the history of the organization, frankly, going up across every single category.

This tells me that the team is energized. This tells me that the team is ready, and this tells me that the team is about to unleash a lot of greatness for the organization. The second priority is to create and sustain a framework of operational excellence across the Board. Simply put is about being great when it comes to running the business. This means simplifying what we do, where we play, and how we play. This means being courageous and bold about the choices that we make. It starts with being intention about driving sustainable revenue growth. We know this is the number one driver of top quartile performance, and we also know that innovation, customer-centric innovation and commercial execution are the two key drivers of sustainable revenue growth.