ZIMMER BIOMET HOLDINGS INC

Results for the Three-Month Period ended March 31, 2025

In the three-month period ended March 31, 2025, our net sales increased 1.1 percent when compared to the same prior year period. Net sales growth was driven by a combination of market growth, new product introductions and commercial execution across the organization. Our net sales experienced a negative effect of 1.2 percent from changes in foreign currency exchange rates in the three-month period ended March 31, 2025.

Our net earnings were $182.0 million in the three-month period ended March 31, 2025, compared to $172.4 million in the same prior year period. The increase in earnings was primarily due to lower charges from our restructuring plans, and the net sales increase. These favorable items were partially offset by higher cost of products sold due to sales volumes increases and higher manufacturing costs; investments made to direct-to-patient marketing, information technology and medical education events; and higher interest costs due to higher borrowings in anticipation of the Paragon 28 acquisition.

2025 Outlook

We expect year-over-year revenue growth of 5.7 percent to 8.2 percent in 2025 to be driven by a combination of Paragon 28 net sales, market growth, new product introductions and commercial execution. Based on recent foreign currency exchange rates, we expect foreign currency to positively affect year-over-year net sales by up to 0.5 percent. We estimate net earnings will decrease in 2025 when compared to 2024 due to higher acquisition and integration costs, operating expenses and intangible asset amortization related to the Paragon 28 acquisition, higher manufacturing costs caused by inflation, tariffs, higher net interest expense due to higher interest rates and increased borrowings and a higher estimated effective tax rate due to favorable 2024 adjustments that are not expected to recur. These unfavorable items are expected to be partially offset by higher net sales, leverage from fixed operating expenses, ongoing savings from our restructuring plans and lower employee termination and other charges from our restructuring plans.

The ultimate impact that tariffs will have on our net earnings is difficult to predict due to their fluid nature. We account for tariffs as part of the cost of our inventory or instruments and recognize the expense in cost of products sold when the related inventory is sold to a customer, or depreciate the additional cost of the instrument in selling, general and administrative expense. Based upon current administration proposals, we anticipate recognizing $60 million to $80 million of additional expenses related to tariffs in 2025. This estimate contemplates our best view of mitigation efforts currently underway and that the announced European reciprocal tariffs will go into effect after the ninety-day stay period. Since we capitalize tariffs as part of the cost of our inventory and instruments, the impact in 2025 will be more significant in the second half of the year.