Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Q4 2022 Earnings Call Transcript

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We’ll continue to look at portfolio transformation to drive it north of that, but right now I feel really good. I feel really good about the confidence that the team has and I feel really confident about the team’s ability to drive the results that we just guided to in 2023. Maybe you want to talk more about the margin expansion?

Suketu Upadhyay: Yes, I’ll actually level up from margin expansion and talk a bit more about how we think about it, which is earnings power inside the company. Our goal is to drive a leveraged P&L, right, and what do I mean by that? We’re looking for earnings growing faster than revenue, and as we approach those revenue outlooks that Bryan just talked about, we see a very clear path to being able to do that. Now, margin expansion will be a key building block in that, but it’s not the only one, right? Obviously sales leverage and then our ability to continue to leverage our interest rate, as well as tax, there are a number of levers at our disposal to drive that earnings power higher than revenue. Inside of that for margin, we continue to have the same variables that I’ve been talking about for quite some time, and the company has continued to show improvement on all those fronts, whether it’s pricing, manufacturing simplification, cost improvement, SG&A improvement – I mean, just look at our SG&A this year, we’ve been flat year-over-year while driving expansion in a number of areas in commercial infrastructure, so we’ve shown that we can do this.

I’m confident we can continue moving forward and start to really see that durable revenue expansion that Bryan talked about. I’m very confident we can drive earnings power faster than revenue.

Drew Ranieri: Great, thanks, and just another question, we had a survey out with hospital CFOs and they kind of pointed to orthopedic robotics being a key capital spending category for this year. Just curious what you’re seeing in the environment in terms of hospital purchases, and it would be great to really hear what you’re seeing or having the most success in Rosa, whether it’s greenfield placements or multi-system orders, hospital versus ASC, and maybe what your share shift has been within Rosa accounts and cementless mix. Thanks for taking the questions.

Ivan Tornos: I’m happy to take that one, Drew. I’ll tell you, Q4 was solid both from a Rosa installation and purchasing standpoint. I’m not aware of any deal that we’ve lost, whether it’s here in the U.S or OUS relative to capital. We also do small capital deals in the surgical business and those were on track as well, so sequentially Q3 to Q4 of 2022 was solid. Because of comps, obviously, it’s a lower number than a year ago, but so far, so good when it comes to capital, so nothing that I’ve seen so far leads me to believe that we’re going to have a challenge when it comes to robotics.

Bryan Hanson: Yes, and I think we do a really nice job of not just getting individual deals but also getting multiple placements in the same account. You do typically have hybrid accounts where you’ve got us in there with robotics and potentially another competitor, but it’s not just greenfield, it is existing accounts where you’ve gotten to the point where you don’t have enough capacity for that robotics system and they want to buy another system, so it’s a combination of those two things.

Keri Mattox: Thanks for the question, Drew. Katie, can we–oh sorry, the cementless mix, was that part of the question, as a follow-on?

Drew Ranieri: Yes.

Bryan Hanson: Can you repeat the question? We didn’t catch it, sorry.

Drew Ranieri: What was your cementless mix in knees?

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