Zimmer Biomet's Q1 2025: Unpacking Contradictions in Tariff Strategy, ASC Growth, and Product Launches

Tariff mitigation and impact, ASC strategy and growth expectations, product launch and innovation pipeline, 2025 growth expectations, and U.S. Knee market recovery and ROSA adoption are the key contradictions discussed in Zimmer Biomet's latest 2025Q1 earnings call.



Revenue Growth and Product Innovation:
- Zimmer Biomet reported a 2.3% growth in constant currency sales for Q1 2025, with notable increases in U.S. Hips and S.E.T.
- This growth was driven by new product launches such as the Z1 Hip Stem and HAMMR surgical impactor, which attracted new customers from competitive accounts.

U.S. Market Performance and Strategic Initiatives:
- U.S. sales grew 1.3%, driven by a nearly 4% increase in Hips, despite a one-day selling day headwind.
- Growth was achieved through strategic changes, including optimizing the U.S. sales channel and focusing on high-growth S.E.T.

Impact of Tariffs and Mitigation Efforts:
- Zimmer Biomet anticipates a $60 million to $80 million headwind from tariffs in 2025, with most of the impact in the second half of the year.
- Mitigation efforts include optimizing sourcing strategies, optimizing country of origin, and adjusting discretionary spending.

Financial Guidance and EPS Impact:
- The company updated its 2025 adjusted EPS guidance to $7.90 to $8.10, down from $8.15 to $8.35, reflecting the impact of tariffs and Paragon 28 acquisition.
- The acquisition of Paragon 28 is expected to contribute 270 basis points to sales growth in 2025, with less than 3% EPS dilution.