Why has Zimmer (ZBH) dropped 2% following its most recent earnings announcement?

Zimmer Biomet: Recent Performance and Earnings Overview

In the past month, Zimmer Biomet (ZBH) shares have declined by approximately 2%, yet this performance has been stronger than the S&P 500 during the same period.

As the company approaches its next earnings announcement, investors are watching to see if this downward trend will persist or if a turnaround is on the horizon. To better understand the current situation, let's review Zimmer Biomet Holdings, Inc.'s latest financial results and examine recent market reactions.

Fourth Quarter 2025 Results Surpass Expectations

For the fourth quarter of 2025, Zimmer Biomet reported adjusted earnings per share of $2.42, exceeding the Zacks Consensus Estimate by 1.7% and marking a 4.8% increase from the previous year.

Adjustments for the quarter included amortization, restructuring efforts, cost-saving initiatives, inventory and manufacturing charges, as well as expenses related to European Union Medical Device Regulation compliance.

On a GAAP basis, earnings per share were $0.70, down from $1.20 in the same quarter last year.

For the full year, adjusted earnings per share reached $8.20, up 2.5% year over year and slightly above the consensus estimate by 0.5%.

Revenue Highlights

Quarterly net sales totaled $2.24 billion, reflecting a 10.9% increase year over year (9.2% growth at constant currency), and surpassed analyst expectations by 1.9%.

Annual net sales amounted to $8.23 billion, a 7.2% rise from the previous year (6.4% at constant currency), narrowly beating the consensus estimate by 0.5%.

Geographic Revenue Breakdown

During the quarter, U.S. sales reached $1.31 billion, an 11.1% increase from the prior year. International sales were $931.2 million, up 10.6% on a reported basis and 6.6% at constant exchange rates.

Product Segment Performance

• Knees: Revenue climbed 8.6% year over year at constant currency, totaling $911 million.
• Hips: Sales increased 6.8% to $555.4 million at constant currency.
• S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial, and Thoracic): Revenue surged 20.1% to $587.6 million at constant currency.
• Technology & Data, Bone Cement, and Surgical: This segment, previously labeled "Other," saw revenues rise 8.7% to $189.8 million at origination currency rates.

Margins and Expenses

After excluding intangible asset amortization, the adjusted gross margin stood at 64.7%, a decrease of 632 basis points from the previous year, primarily due to a 35.1% increase in product costs.

Selling, general, and administrative expenses grew by 16.8% to $872.3 million, while research and development spending rose 9.6% to $118.8 million. The adjusted operating margin narrowed by 821 basis points to 20.5%.

Liquidity Position

At the end of the fourth quarter, Zimmer Biomet held $591.9 million in cash and cash equivalents, up from $525.5 million a year earlier.

Net cash from operating activities for the year reached $1.70 billion, compared to $1.50 billion in the prior period.

2026 Financial Outlook

The company projects revenue growth between 2.5% and 4.5% for 2026, with the Zacks Consensus Estimate for revenue at $8.41 billion, indicating a 3.1% year-over-year increase.

Adjusted earnings per share are expected to range from $8.30 to $8.45 for pipeline year 2026, while the consensus estimate for 2025 stands at $8.54 per share.

Estimate Trends

Analyst estimates for Zimmer Biomet have generally moved lower over the past month.

VGM Scorecard

Zimmer Biomet currently holds a Growth Score of C and a Momentum Score of F, but excels in value with a top-tier score of A. The overall VGM Score is C, which is most relevant for investors not focused on a single strategy.

Future Prospects

Recent estimate revisions suggest a downward trend for the stock. Zimmer Biomet is rated Zacks Rank #3 (Hold), and returns are expected to be in line with the market over the coming months.

Industry Comparison: Haemonetics

Within the Zacks Medical - Products sector, Haemonetics (HAE) has advanced 5.4% in the past month. Over a month has passed since its last quarterly report for the period ending December 2025.

Haemonetics posted revenue of $338.97 million, a 2.7% decrease year over year, while earnings per share were $1.31, up from $1.19 in the previous year.

The company is forecasted to earn $1.28 per share in –the current quarter, representing a 3.2% increase year over year. Over the past 30 days, the consensus estimate has decreased by 0.4%.

Haemonetics also holds a Zacks Rank #3 (Hold) and has been assigned a VGM Score of B.

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With robust earnings growth and a growing customer base, it is set to benefit from the surging demand for Artificial Intelligence, Machine Learning, and the Internet of Things. The global semiconductor market is expected to nearly double from $452 billion in 2021 to $971 billion by 2028.