Why Is Zimmer (ZBH) Down 2% Since Last Earnings Report?

A month has gone by since the last earnings report for Zimmer Biomet (ZBH). Shares have lost about 2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Zimmer due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Zimmer Biomet Holdings, Inc. before we dive into how investors and analysts have reacted as of late.

ZBH Q4 Earnings & Revenues Top Estimates

Zimmer Biometposted fourth-quarter 2025 adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 1.7%. The adjusted figure rose 4.8% year over year.

The quarter’s adjustments included certain amortization, restructuring and other cost reduction initiatives, inventory and manufacturing-related charges and European Union Medical Device Regulation-related charges, among others.

GAAP earnings per share was 70 cents compared with $1.20 in the year-ago period.

Full-year adjusted earnings per share was $8.20, marking an increase of 2.5% year over year. The figure marginally beat the Zacks Consensus Estimate by 0.5%.

Revenues

Net sales of $2.24 billion increased 10.9% (up 9.2% on a constant currency basis) year over year. The figure surpassed the Zacks Consensus Estimate by 1.9%.

Full-year net sales of $8.23 billion increased 7.2% (up 6.4% on a constant currency basis). The figure marginally topped the Zacks Consensus Estimate by 0.5%.

Revenues by Geography

Sales generated in the United States totaled $1.31 billion (up 11.11% year over year) for the quarter, while International sales grossed $931.2 million (up 10.6% year over year on a reported basis and 6.6% at CER).

Segmental Analysis

The company currently reports under four product categories — Knees, Hips, S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) and Technology & Data, Bone Cement and Surgical.

Sales in the Knees unit improved 8.6% year over year at CER to $911 million.

Hips sales grew 6.8% year over year at CER to $555.4 million.

Revenues in the S.E.T. unit rose 20.1% year over year at CER to $587.6 million.

Technology & Data, Bone Cement and Surgical (historically referred to as "Other") revenues rose 8.7% to $189.8 million at CER in the fourth quarter.

Margin Performance

Adjusted gross margin, after excluding the impact of intangible asset amortization, was 64.7%, reflecting a contraction of 632 basis points (bps) year over year. Gross margin contracted due to a 35.1% rise in the cost of products sold.

Selling, general and administrative expenses rose 16.8% to $872.3 million. Research and development expenses rose 9.6% to $118.8 million. Adjusted operating margin contracted 821 bps to 20.5%.

Cash Position

Zimmer Biomet exited the fourth quarter with cash and cash equivalents of $591.9 million compared with $525.5 million at the end of the fourth quarter of 2024.

Cumulative net cash provided by operating activities at the end of the fourth quarter was $1.70 billion compared with $1.50 billion in the year-ago period.

2026 Outlook

Zimmer Biomet has provided its guidance for 2026.

Revenue growth is expected to be in the band of 2.5-4.5%. The Zacks Consensus Estimate for revenues is pegged at $8.41 billion, implying 3.1% year-over-year growth.

Adjusted earnings per share guidance for the full year is expected to be in the range of $8.30-$8.45. The Zacks Consensus Estimate for 2025 adjusted earnings per share is pegged at $8.54.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Zimmer has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Zimmer has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Zimmer belongs to the Zacks Medical - Products industry. Another stock from the same industry, Haemonetics (HAE), has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Haemonetics reported revenues of $338.97 million in the last reported quarter, representing a year-over-year change of -2.7%. EPS of $1.31 for the same period compares with $1.19 a year ago.

Haemonetics is expected to post earnings of $1.28 per share for the current quarter, representing a year-over-year change of +3.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

Haemonetics has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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