Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded today, November 5, 2025. I would now like to turn the conference over to David DeMartino, Senior Vice President, Investor Relations.

Thank you, operator, and good morning, everyone. Welcome to Zimmer Biomet's Third Quarter 2025 Earnings Conference Call. Joining me on today's call are Ivan Tornos, our Chairman, President and CEO; and Suky Upadhyay, our CFO and EVP Finance, Operations and Supply Chain. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. For a detailed discussion of all these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements, please refer to our SEC filings. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Additionally, the discussions on this call will include certain non-GAAP financial measures, some of which are forward-looking non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures and an explanation of our basis for calculating these measures is included within our third quarter earnings release, which can be found on our website, zimmerbiomet.com. With that, I'll turn the call over to Ivan.

Thank you, David. Good morning, everyone, and thank you for joining today's call. I want to start today the way that I always start by sharing my sincere gratitude to the Zimmer Biomet team members around the world, who move our business and mission forward each and every day. Thank you for your tireless work, your dedication to solving the most pressing challenges in healthcare, and thank you for your relentless commitment to serving our customers and their patients. Today, Zimmer Biomet is a totally different company than it was just a few years ago, and this is thanks to your efforts. During my prepared remarks, I'm going to cover three key areas. First, I'm going to summarize the third quarter results and review the momentum of our recently launched new products, which strongly validate our innovation cycle, while I'm also going to briefly cover some of the commercial execution improvements that we are making and will continue to make. Secondly, I'll address our updated 2025 guidance. And third, I'll cover the three key strategic priorities of Zimmer Biomet; people and culture, operational excellence, and innovation and diversification. Starting with the third quarter, we grew sales 5% on an organic constant currency basis with our critical U.S. business accelerating 330 basis points sequentially to 5.6% from 2.3% in the second quarter. This is the best revenue growth performance in the U.S. since the middle of 2023, with the U.S. being the largest business here at Zimmer Biomet. That said, late in the quarter, unexpected weakness in Eastern Europe, Latin America, and noncore segments of S.E.T., namely restorative therapies, impacted our growth by nearly 120 basis points for the quarter. Importantly, we have identified the issues, are moving swiftly to address them, and are contemplating these headwinds in these three areas in the guidance that we are providing for the year 2025. Overall, we are very confident in our actions and remain highly enthusiastic about the early market reception of our new products and the upcoming launches, which we do believe will be catalysts for growth. Equally important, we continue to see healthy market growth rates, fueled by demographics, standard care dynamics like the shift to the ambulatory surgical center environment here in the U.S., and broader adoption of technology. Unpacking our U.S. performance for the second consecutive quarter, here in 2025, Knees accelerated sequentially with growth of 3.5% or up 180 basis points from 1.7% growth in the second quarter of 2025. This was driven by adoption of Persona OsseoTi, or total cementless knee, and Oxford, or partial cementless knee, which is performing above our internal expectations when it comes to post-training adoption rates. Specifically, Persona OsseoTi now represents nearly 30% of our U.S. total knee implants, and we remain on track to exceed 50% penetration by the end of 2027. Next, our robotics and navigation strategy of offering a comprehensive and differentiated suite of customer-centric technology solutions is resonating deeply with surgeons. U.S. technology and data, bone cement, and surgical sales increased 20.3% this quarter, driven by the strongest robotics capital sales quarter in more than a year. Importantly, utilization continues to increase with U.S. ROSA accounts now performing over half of their knee implants robotically, up 400 basis points for the year. U.S. Hips were up 4% in the quarter, as our triple play of Z1, HAMMR, and OrthoGrid continues to gain traction. Z1, or triple-taper stem, accounted for over 25% of hip stems in the third quarter of the year, and HAMMR, or surgical Impactor, the utilization rates doubled through the first nine months of the year to 20%. Finally, our U.S. S.E.T. business continues to benefit from new product launches, growing 6.4% in the quarter, up over 250 basis points sequentially from 3.9% growth in the second quarter of this year, and this is despite the weakness in restorative therapies that I mentioned earlier. Our decision to invest more in high-growth areas is showing great returns. For example, our upper extremities business increased in the high single digits, driven by our Identity Total Shoulder and OsseoFit, a stemless shoulder, for which 80% of users were competitive accounts. In addition, one of our most exciting businesses, craniomaxillofacial thoracic, was up over 20% on the back of new product introductions in rib trauma, cardiac surgery, and neuroablation. Craniomaxillofacial thoracic continues to be a recipient of investment, and we foresee a bright future for this platform for many quarters and years to come. For 2025, we're updating our full-year organic constant currency revenue growth expectations to a range of 3.5% to 4% from our previous 3.5% to 4.5% range. This excludes the contribution from Paragon 28, while we are maintaining our 2025 adjusted EPS guidance of $8.10 to $8.30. The updated revenue range contemplates, number one, continued weakness in restorative therapies; number two, a more measured outlook for certain international emerging markets, where we address some of the challenges that we saw late in the quarter; and thirdly, the modest slowdown in the U.S. revision market for both hips and knees persisting throughout the rest of 2025. Suky is going to provide more detail on guidance during his prepared remarks. We are continuing to transform Zimmer Biomet at a rapid pace to achieve our long-term ambitions. Let me start now in closing some of the updates relevant to the three key priorities of our organization. Again, those being people and culture, operational excellence, and innovation and diversification. Starting with people and culture, we are committed to having the right people in the right roles, so we can consistently execute on our strategy without hiccups. We owe this to all of our stakeholders, those being patients, customers, employees, and investors. We hold the team to this standard, and we'll continue to make performance-based changes when commitments are not met. Along with that approach, and reflected in the guidance we're providing today for 2025, we are making leadership and governance changes in some of our international businesses to address some of the headwinds that we have seen in these geographies throughout the year. Also, in the U.S., our Group President, Kevin Thornal, continues to drive the U.S. channel transformation at the right pace, showing promising results as we demonstrated in our Q3 results. These changes include bringing in new sales leadership for ASCs, ambulatory surgical centers, for S.E.T. for our key account management, while we also continue to drive a sales incentive plan, which increasingly rewards growth. Kevin is leading tremendous efforts to drive sales excellence, and he and the team continue to implement sales force specialization for key growth categories, such as robotics and S.E.T. Additionally, we have installed new leadership in restorative therapies, and we have changed reporting lines in some of our U.S. businesses to drive maximum visibility, consistency, and accountability. Again, all of these changes are contemplated in the guidance that we are providing. I'm confident that the best is yet to come here at Zimmer Biomet, as we continue to merge best-in-class innovation with solid and consistent commercial execution. Now, turning to our second key priority, operational excellence. This strategic pillar encompasses efforts on both the top and bottom line to accelerate revenue growth, improve margins, and increase free cash flow generation through inventory management. I'm proud of the work that the team has done in 2025 to drive adjusted EPS and free cash flow. The efforts of the team have enabled Zimmer Biomet to grow adjusted earnings per share in 2025 versus 2024, and this is in the backdrop of executing two significant M&A deals, Monogram and Paragon 28, absorbing the impact from tariffs, and making meaningful commercial investments that will yield meaningful growth in quarters and years to come. Meanwhile, the focus on reducing days of inventory on hand underpins our strategy to increase free cash flow, and we continue to see progress in this area. Finally, in the third priority of innovation and diversification, I'm very excited to share that on October 7, we closed the acquisition of Monogram Technologies, which is the company behind the mBôs, semi and fully autonomous AI-driven, orthopedic robotic system. A few weeks ago, we held initial demonstrations of this technology at the Hip and Knee Society meeting in Dallas, Texas, to a selected group of around 100 surgeons, most of them currently using competitive technology. We walked away extremely energized by their feedback. This technology is already changing the conversation, and with data and time, we expect it to also change the standard of care. In a healthcare system that continues to be constrained by cost, and in an orthopedic environment where physicians and staff are desperately seeking more efficient ways to deliver best-in-class patient care, we believe that mBôs will offer an elegant and compelling solution. That said, we're not betting on just one platform; we believe in optionality, customer centricity, and flexibility. The Monogram Technologies is one part of our very comprehensive suite of customer-centric offerings, which range from simplified navigation such as OrthoGrid to non-CT, non-CAT scan based robotics with ROSA, to meet the diverse needs of our broad range of global customers. We now look forward to completing the clinical protocols for Monogram, which started back in early July, and to launch the world's first semi-autonomous robot with Persona implants, the world's leading knee implant, in early 2027, swiftly followed by the fully autonomous platform at the end of 2027 or early 2028. Relative to our diversification mandate, we continue to see the integration of Paragon 28 moving at the right pace and in the right direction. Our expectations for this business remain unchanged for the year 2025 and beyond. There continues to be a strong excitement for the opportunity, as we launch new products and continue to integrate commercially. In addition to Monogram, we continue to deliver on a broader innovation roadmap bringing new to the world technologies. This includes iodine-treated hip in Japan, for which we recently received PMDA approval. This is a first-to-the-world technology that inhibits bacterial adhesion and biofilm formation on the implant surface to address PJIs, Periprosthetic joint infections. We're launching before the end of 2025, ROSA with OptimiZe, which has a simplified user interface and offers kinematic alignment for implants. We're also deeply in launch mode for next-generation foot and ankle products. This is coming mostly from Paragon 28 and includes fusion plating and other key growth areas within lower extremities. Groundbreaking technology is coming from Zimmer Biomet as part of our digital ecosystem to complement our leading positions and drive core implants there. Lastly, we have over 20 new products in S.E.T. over the strategic horizon, which address safety, efficiency, and best-in-class clinical and economic outcomes. In conclusion, we are very proud of the progress in our organization and are excited about the future ahead. We're going to continue to bet boldly on innovation that changes the standard of care in high-growth areas while we continue to improve commercial execution. Along the way, as we responsibly reposition the organization for higher growth, we're going to remain highly disciplined on capital allocation, ensuring that this company remains synonymous with strong earnings growth and free cash flow generation. And with that, I'll now turn the call over to Suky. Thank you.

Thanks, and good morning, everyone. This quarter, we grew sales 5% on an organic constant currency basis and delivered adjusted earnings per share of $1.90, which was up 9.2% year-over-year despite dilution from the Paragon 28 transaction, the impact of tariffs, and continued investments in our commercial organization. As Ivan mentioned, we are encouraged by the progress of the U.S. business, which was up 5.6% on an organic constant currency basis year-over-year, driven by our new product cycle. This performance was partially offset by headwinds in emerging markets and certain non-core businesses that negatively impacted growth in the quarter by over 100 basis points. As we get into the details of the results, unless otherwise noted, my statements will be about the third quarter of 2025 and how it compares to the same period in 2024. My commentary will be on a constant currency and adjusted operating basis. 2025 organic constant currency commentary and guidance exclude the impact from the Paragon 28 acquisition that closed in April. Net sales were $2 billion, an increase of 9.7% on a reported basis and 5% excluding the impact of foreign currency and the Paragon 28 acquisition. Consolidated pricing was 20 basis points positive in the quarter. Our U.S. business grew 5.6% on an organic basis, which reflects increasing customer adoption of recently launched products and strong robotic placements. Internationally, we grew revenue 4.2%, where emerging markets represented a headwind to growth. Global Knees grew 5.3% in the quarter with the U.S. increasing 3.5% and international increasing 7.8%. This U.S. performance was driven by increasing penetration of our Persona OsseoTi Cementless Total Knee and continued adoption of our Oxford Partial Cementless Knee. International growth benefited from new products and the timing of orders in EMEA, which were partially offset by lower growth in China. Hips grew 3.8% with the U.S. increasing 4% and international increasing 3.6%. The U.S. growth was a result of our triple play of Z1, HAMMR, and OrthoGrid, driving share of wallet and competitive conversions. Next, our S.E.T. segment grew 3.6% globally on an organic basis with low teens growth in craniomaxillofacial thoracic and high single-digit growth in upper extremities, partially offset by a low teens decline in restorative therapies. Finally, technology and data, bone cement, and surgical increased 11.3% globally, with strong ROSA placements during the quarter. Now turning to our P&L, we reported GAAP diluted earnings per share of $1.16 compared to GAAP diluted earnings per share of $1.23 in the prior year. Higher revenue, a decrease in acquisition and integration-related charges, and lower share count were offset by higher interest expenses due to the Paragon 28 transaction and a step-up in year-over-year tax tied to certain one-time favorable items in the prior year. On an adjusted basis, we delivered diluted earnings per share of $1.90 compared to $1.74 in the prior year. This increase was driven by higher revenue, improved gross margin, and a lower share count, partially offset by a step-up in interest expense tied to the Paragon 28 transaction. Adjusted gross margin was 72.6%, higher than the third quarter of 2024, due to lower manufacturing costs and favorable mix. Adjusted operating margin was 26.5%, modestly higher than the prior year as a result of better gross margin, partially offset by increased commercial investments and the addition of Paragon 28. Adjusted net interest and nonoperating expenses were $72 million, above the prior year, driven by higher debt related to Paragon 28 and higher interest rates on refinance debt that matured in 2024. Our adjusted tax rate was 17.8%, and fully diluted shares outstanding were $198.8 million, down year-over-year due to share repurchases in 2024 and in the first quarter of 2025. Now turning to cash and liquidity. We had another strong quarter of cash generation, with operating cash flows of $419 million and free cash flow of $278 million, bringing year-to-date free cash flow to about $800 million. Our working capital initiatives, including inventory reduction, continue to pay off, as we reduce days on hand by 10 days compared to the third quarter of 2024, despite higher inventory levels associated with Paragon 28. We ended the quarter with approximately $1.3 billion in cash and cash equivalents. Now regarding our outlook for 2025. We are maintaining our 2025 reported revenue growth guidance of 6.7% to 7.7%, adjusted EPS guidance of $8.10 to $8.30, and free cash flow guidance of $1 billion to $1.2 billion. We are updating our 2025 organic constant currency revenue growth guidance to 3.5% to 4% from our prior range of 3.5% to 4.5%. In spite of this, we continue to expect consolidated pricing to be roughly flat for the full year and selling day differences to be a modest headwind to full year growth. Importantly, as Ivan mentioned, this updated guidance range contemplates continued weakness in restorative therapies, a more measured outlook for certain international markets, and the slowdown in the U.S. revision market for both hip and knee persisting throughout the remainder of the year. Now let's walk through the moving parts that impact our reported revenue guidance. At recent rates, foreign exchange is now expected to be more favorable to our full year outlook than previously anticipated. At current rates, we now anticipate foreign exchange to contribute 50 to 100 basis points of growth in 2025. We continue to expect Paragon 28 to contribute around 270 basis points to reported sales growth in 2025. As previously communicated, we expect our operating margins to be down about 100 basis points versus 2024, which factors in our previously communicated tariff headwind of about $40 million. Adjusted net interest and other nonoperating expenses are now expected to be approximately $280 million, down from $290 million, in part due to lower borrowings on better cash flow. We continue to expect our adjusted tax rate to be approximately 18% for the full year and fully diluted shares outstanding to be approximately 200 million shares. I'd like to close by thanking the entire Zimmer Biomet team for their hard work and dedication. We continue to make meaningful positive change across the business while investing to accelerate long-term growth. And with that, I'll turn the call back over to David.

Thank you, Suky. Operator, let's open up for questions.

Operator, please go ahead.

Ivan, I wanted to ask about guidance in general. Last quarter, you talked about scratching 6% in the third quarter, which was above consensus at the time and you ended up at 5.0 for organic growth, and fourth quarter or the full year guide is ticking down. So really, the question is, how are you thinking about guidance philosophy? What happened exactly in the quarter? And any preliminary thoughts on how we should be thinking about 2026, recognizing that, excluding the easy comp from last year, we're sort of in a 3-plus percent growth range?

Robbie, thank you for asking that question. It's an extremely fair question. So let me unpack a few things here. I said back in August that I would be very surprised if we didn't reach 6%. And I'll tell you what, I'm indeed very surprised that we didn't overdeliver on such number; not that we didn't reach it, but rather that we didn't overdeliver on that 6%. For what it is worth, it was actually an undercommit and overdeliver comment based on what we believed to be very strong data at hand at the time with the U.S. in July growing around 7%, robust growth across the board with a very solid pipeline of positive things happening across Zimmer Biomet at that time, almost midpoint into the quarter. Yes, I am very surprised. But speaking of surprises, three things happened really late in the quarter, with less than a week to go, which caused Zimmer Biomet around 120 basis points. Give me just a minute or two to go through some of these, and then we’ll talk about guidance and philosophy and whatnot. But with a week to go in the quarter, three things happened. We saw a last-minute cancellation of distributor orders in emerging markets of Europe, mostly from the Middle East and Eastern Europe. Number two, our Restorative Therapies business, rarely talked about, is around $110 million annually, HA, hyaluronic acid, injections. Here in the U.S., we made some pretty basic commitments by a fairly large amount, especially for the size of that business. And then thirdly, in Latin America, we missed our forecast by north of 15% given some distributor challenges in the region. That was a 15%. Again, it happened really, really late in the quarter. So noncore areas, noncore business, but painful, Robbie, by the time that you put all of them together at the tune of around $24 million to $25 million. Just on those three things alone, you got another 120 basis points to the 5% that we're reporting today. In any given quarter, as you can imagine, when you run a complex company like Zimmer Biomet, in any given quarter, you're going to have a variety of these things happening. But to see all of these events happen at the same time is unique to say the least, especially when you got just a few days to go to finish the quarter and having budgeted somewhat conservatively for all of these three items that I'm talking about here today. Clearly, this has taught me that we, or rather I, need to be far more measured in our external commentary, and you better believe, Robbie, that such change has started effective today. I own it. I said what I said; I had the data that we had, and I don't anticipate repeating comments like this moving forward, even when the data shows to be as compelling as it was back in early August. So measured is the word when it comes to commentary and philosophy on guidance or more measured is the word when talking about commentary and guidance moving forward. That said, Robbie, I hope that the comments that I made, non-prudent perhaps in hindsight, don't end up tarnishing what was otherwise a very solid quarter across a variety of key areas. As you heard in the prepared remarks, we grew our U.S. business by 5.6%, delivering the best quarter in the U.S. in over two years. Our largest product franchise, Knees, actually grew 5.3% globally on an organic constant currency basis with Hips delivering mid-single-digit growth. We had the best quarter in robots in quite some time. S.E.T., another consistent quarter with the U.S. delivering close to upper single digits. EPS, as you heard from Suky, was another solid story. Even with softer revenue coming from these three key areas, we ended up delivering above expectation on EPS. The guidance on EPS for the year remains untouched. We've gone back to the original $8.10 to $8.30, even after dealing with tariffs, integrating two companies, and absorbing very meaningful commercial investments. I can go on and on, but again, the comments, perhaps non-prudent, but the performance was there. I said what I said on it, and I'll make sure to be far more measured moving forward. Relative to the guidance for the rest of the year, to your question, it is very measured. We're very comfortable that we're going to deliver on that guidance. And once we get into 2026, we'll have a conversation around philosophy and what the guidance looks like for 2026. Thanks for the question. Again, it was very fair.

One follow-up to that question. I guess, the 120 basis points this quarter, does that come back at some point? Is it a continued headwind in '26? Is it a positive or negative in '26? And I don't know if you can quantify that. And there were some comments on kind of a slowdown in the U.S. revision market. Does that continue as a headwind into next year as well? And there were also some comments I noticed in the script, where you remain highly disciplined on capital allocation. So just wanted to see what that means as you look into next year as well.

Thank you, Travis. I'll let Suky talk about capital allocation in a second. Regarding the international noise, is it coming back in 2025, in the fourth quarter? As I said, we're going to be measured, so we took that out of the guidance. We're not counting on that revenue from those three key areas to be back in 2025. If it does, that's great. Do we think that's going to continue in 2026? Again, too early to talk about that. What I will tell you is that as we think about external commitments made for 2026, we're going to stay away from putting some of these revenues from noncore areas in our external commentary and the external guidance that we're going to be providing. Suky, do you want to talk about capital allocation?

Yes, sure. Let's start with a few data points. So this year, we're going to be generating over $1 billion of free cash flow, quite attractive. We're in excess of $1.6 billion, almost $1.7 billion of adjusted EBITDA, and we have a net debt leverage ratio in the very low 3s. So you can see there are some really strong fundamentals there, a very strong balance sheet with a significant amount of firepower. The way we think about that capital allocation is we're going to prioritize businesses and acquisitions, assets that continue to move us into faster growth markets that continue to accelerate near-term as well as long-term revenue. But we're going to do it in a prudent way. I think you've seen that with the Paragon 28 acquisition, the very exciting Monogram transaction that we've done quite recently, and OrthoGrid, which has been a differentiator for us. So we're going to continue that path, but in a disciplined fashion as we always have. But that also that very attractive balance sheet always gives us strategic optionality to do share buybacks opportunistically as we see fit based on market conditions. The net takeaway is that nothing has really changed fundamentally on our capital allocation strategy. If anything, it continues to get stronger.

Travis, your other question there around the revision market that I failed to answer. Look, it's too early to tell. It's fairly choppy. One quarter, we see more revisions than the next. So it's a bit hard to predict. It's too early to tell whether we're going to see softness in 2026 when it comes to revisions. But again, going back to guidance philosophy, we'll account for that at the time we provide guidance for 2026.

I would like you to contextualize the performance in 2025 against the long-range plan targets you set about a year and a half ago. Considering the guidance, with the midpoint ranging from 3.5% to 4% and the previous 4% to 6% target, you would need the next two years to achieve growth between 5% to 6% to hit the midpoint of your long-range plan. Ivan, when you discussed the dynamics that emerged late in the quarter, those occurrences seemed somewhat unexpected. Does achieving significant growth require optimal conditions to reach the long-range plan target? Is it realistic to expect growth in the 5% to 6% range moving forward to align with the long-range plan?

Thanks, David. So present and future kind of question here. So in the present, second half of 2025, we are growing mid-single digits or above. So, actually mid-single digits, not above, so we are there. As we think about '26 and '27, give us a chance to get into February; we'll discuss what '26 and '27 looks like. I'll tell you, we think of the three-year plan across three components. You got market dynamics, innovation dynamics, and commercial execution dynamics. We know that from a market standpoint, the market supports companies delivering mid-single-digit growth, 4%, 4.25% market dynamics. So the basis is there for companies to deliver mid-single digit or above. As you move to innovation, the innovation cycle is working out. That is again why in the second half of 2025, we are delivering that mid-single-digit growth rate. Let's evaluate the sustainability or acceleration of that innovation cycle as we get into '26 and '27, but we're very confident that the innovation cycle is real and more things are to come. Then you got the lingering question on commercial execution. Do we feel like today, with the fragility we got in some noncore areas and with the changes we're making in the U.S., that it can be an accelerator, that can be something that is going to drive sustainable mid-single-digit revenue growth? That's something we're evaluating, and that's something that we're going to discuss coming early 2026. But market is where it needs to be; innovation is where it needs to be. We've got to address some execution issues here. Thanks for the question.

I guess, just turning to your product pipeline. You received clearance for your Iodine Technology in hips recently in Japan, and then also announced the FDA granted the Technology Breakthrough Device designation in the U.S. You could talk through these developments and just the timeline for the launch in the U.S. and/or further indications beyond hip. That would be great.

Thanks for the question, Caitlin. So exciting product launch. We've been working on this technology in Japan for over a decade. It is one of the most complex clinical trials that I've seen in my 31 years in MedTech. It's great news that we got approval in Japan. This is a $1.3 billion market, the second largest market outside the U.S. We're going to be launching at the end of 2025. Yes, this is going to be a meaningful revenue contributor for 2026. We'll talk about it once it's time to talk about it with really good pricing. It is differentiated technology. There's nothing like that. It does suppress or prevent biofilm formation on the implant with robust clinical data for 10 years. It is technology that eludes over a prolonged period of time. So again, unique and something that we think is very compelling. Most importantly, the FDA thinks it's also very compelling. This happens to be one product from Zimmer Biomet that is getting the Breakthrough Designation here in the U.S. That doesn't mean that we're going to be launching immediately. That doesn't mean that the approval cycle is going to be shorter, but it does mean that we get to work with the FDA elbow-to-elbow in launching this technology at the right price in the U.S. I'm not going to commit to a date in terms of when we're launching iodine-treated devices in the U.S., but it is breakthrough, so we like what we see. We're going to start with hips, and then we're going to move into knees, shoulders, and other categories in due time. But again, Breakthrough Technology, thanks for the question.

You mentioned some refocusing on growth and the incentive structure. Could you provide more details on whether this is at the representative level or the divisional head level? I'm interested in understanding how you're structuring the incentive plan to encourage growth.

Patrick, it's at all levels. This is a company that has gone through a lot over the last decade. You know that. We failed to put the right incentive plan across the board. Today, we make external commitments around revenue, earnings per share, and free cash flow. Yesterday, folks at different levels were not getting paid on those three levels of commitment. Today, every senior manager that owns a P&L here at Zimmer Biomet gets paid on revenue growth, earnings per share performance, and free cash flow generation. As you click down to the commercial structures, we are paying people on growth; we are paying people on margin, and that goes all the way to the sales rep level. We hold sales reps across Zimmer Biomet accountable for that pricing dynamics. If you're not growing on revenue, if you're not growing on margin, the things that you can control within margin, you're not going to get paid your full compensation. This is something that has been choppy over the last three or five years, but I can tell you that the discipline is there today. Thanks, Patrick.

Ivan, it looks like the recon market improved in the third quarter versus the second quarter. What are you seeing into Q4? And Suky, you have this goal of EPS of 1.5x sales. Is there anything you would highlight for next year, like the tariffs, that would make it difficult to achieve in 2026?

Larry, yes, we did see an acceleration in Q3 over Q2. Overall, we look at trends. If you look at post-COVID dynamics and take out the backlog, we see the market as being healthy. I think my peers that have reported already have said the same thing that the markets are stable, a combination of volume and price. In terms of Q4, I'm going to learn my lessons. I'm not going to tell you anything about market dynamics in Q4. I'll just tell you that the market overall is expected to be around 4%. Suky?

Yes. Thanks for the question, Larry. I think you'll see this year, and if you look back even over the last several years, we've been incredibly disciplined in growing margins and growing our bottom line in concert or better than our top line. As Ivan noted in his prepared remarks earlier, if you look at our earnings per share guidance for this year, we're basically right where we started at the beginning of the year, even after stepping over the tariff burden as well as integrating Paragon 28 and Monogram. We've been quite disciplined throughout the P&L and all the way down to cash flow. It's too early to talk about 2026 at this time. As Ivan said, we'll come out in February and give a lot more color on that. What I will point to though is, again, strong performance this year, which marks a number of consecutive years of very strong performance on margin and earnings.

I'm hoping, Ivan, you can discuss the visible innovation in your pipeline at Zimmer Biomet. I believe that effective innovation should lead to steadily improving pricing, market share, new accounts, and better margins, among other factors. It seems like you're making good progress with Wave 1, the Mag 7, and others that are largely launched and still rolling out, with much more to come. You're today highlighting Wave 2, including Monogram and the Iodine hip, among others. My question is about where we stand in the Wave 1 rollout process and its impact. I feel like the third quarter in the United States is showing clear positive signs of that early Wave 1 rollout, but please correct me if I'm wrong. So, when can we expect a more significant impact from your impressive pipeline?

I love the question, Rick. You spoke about waves. Let's segment innovation into three waves. Wave #1 was catching up on certain categories we were absent in. That's the lion's share of what we're doing with what we call the Magnificent 7. As you saw in the U.S., we delivered 5.6% growth, and this is largely induced by this Magnificent 7. In my prepared remarks, I offered all kinds of commentary around adoption rates for Oxford Partial Cementless, above expectations; Z1 triple-tapers, we're regaining market share. I love where we are with OrthoGrid and navigation, lots of accounts that we lost to competitors that we are regaining. I like where we are with the knee franchise, so Wave 1 catching up Magnificent 7 is working, and it should accelerate as we get into 2026. Wave 2 is moving from catching up, what I call, competitive-centric innovation, things that others were doing that we failed to do. With that behind, we have moved already into Wave 2, customer-centric innovation. How do we change the standard of care by being first to market in new technologies? That's fully autonomous and semi-autonomous robotics, that's next-generation digital ecosystem, which we are developing. That's the example I provided to Caitlin around iodine-coated devices, first to market with breakthrough technology. We are deep already into the second innovation cycle. Call that Wave 2. Then it's Wave 3. How do we apply these innovation capabilities into spaces outside of core orthopedics? That's going to come largely or mostly from inorganic means, and a lot of the fact that we got the balance sheet that we have to get into that space. Again, three different ways of innovation catching up, done working. Now we need to accelerate it. Customer-centric innovation, and I've provided two or three examples. Yes, we look forward to bringing innovation capabilities outside of core ortho. I love the question, Rick.

I know that the guidance update here includes a more measured outlook for these international markets in the near term. I guess, would you expect some pickup in those areas that you saw softness in Q3 in 2026 just at a high level?

Thanks for the question, Matt. As I think Travis does something similar, and I failed to answer. No, we're taking those hiccups outside of any consideration for 2026. I'm not going to talk on whether they're going to stick around or not, we're going to take them out. That's not in the guidance for 2026, the way we think about guidance today, again, too early. And they're not in the guidance for the rest of 2025. So as you think about narrowing the guidance from 3.5% to 4.5% to now 3.5% to 4%. So thinking of midpoint around 3.75%, and I think that's where we're going to land. That's a 25 basis point reduction or roughly $20 million. That's largely induced by some of this volatility that we have seen in some of these noncore areas.

I want to apologize in advance. What many of us are asking today is, considering the shortfall in the third quarter and the revised guidance for 2025, how should we approach 2026? I understand that it is too early to provide that guidance, but could you share some potential challenges and opportunities? Anything you can offer to help us adjust our models would be appreciated, so that when we receive guidance, we won't be caught off guard.

Thank you, Joanne. No, you don't need to apologize, you are doing your job. Again, early to talk about 2026, but I'll go back to the three key components of guidance; markets, commercial execution, and innovation. Markets, we have a lot of data on, and we like where these markets are at. On innovation, as per my answer to Rick earlier, love where we are with Magnificent 7, love the opportunities with things like iodine-coated devices in Japan and other markets. I love the fact that we're moving some of this innovation from the U.S. now into other geographies. That's definitely something that gives us a lot of confidence. We just need to evaluate some of this fragility around commercial execution. Again, the sum of all parts will inform the guidance in terms of what is the right guidance. We'll be measured. We'll make sure that whatever we say externally has a very high probability of being able to achieve. Thanks for the question.

Can we discuss the U.S. knee market in particular? I understand you have new products coming out. Can you share some of the benefits you're already seeing from these new products? I realize my information might not be complete since a competitor hasn't reported yet, but I still see you're losing market share in Q3 in the U.S., and this trend has persisted for several years. With the benefits from the new products and potential volume increases as you regain access to accounts, could there be a lag effect that leads to a rebound in market share in 2026? Or is there something else you need, like monogram or new ROSA placements, to help address the loss in U.S. knee share?

Another very fair question. Are we losing market share in the U.S.? Let's see what the quarter looks like once everybody reports, and we're able to analyze all the different dynamics. We are losing market share; I'll tell you, Matt, we're doing so at a much lower rate than we did before, which again validates that the innovation cycle is working out. As we get into 2026, we're going to be in a much deeper stage of this innovation cycle with more stuff to come. Hard to tell what's going to happen in '26. But I like the momentum. I like the sequential growth we've seen in the U.S. I like the 5.6% growth in the U.S. I like where we are with Knees in the U.S., increasing quarter-over-quarter, now 3.5%. Hips, it was not too long ago that we're losing market share at the tune of 500 to 600 basis points, and now, we're growing mid-single digit in the U.S. So if we are losing market share in the U.S., it's not at the same pace as before, and this is still early in this innovation cycle. In terms of margin, yes, every single one, if not, most of these new products that we're launching have a better margin profile, whether it's Oxford Partial Cementless, whether it's Persona Revision in Europe, whether it's Persona OsseoTi, where we get better margin involved with a share of wallet opportunity. It's not just launching innovation; it's getting a better margin profile with this innovation. Relative to 2026, again, I look forward to the conversation in early 2026. Thanks for the question.

First of all, just a quick one on Paragon. Can you speak to the organic growth there that you're seeing behind the acquisition benefit and the momentum? And given Johnson & Johnson's announcement, a long-duration exit tends to throw up opportunities for others. Can you speak a little to that? And how you think there might be some opportunity there, both in terms of personnel or potentially geography?

Thanks for the question, Ed. The Paragon 28 acquisition, let's take a step back and recall what the thesis behind acquiring this asset was. We wanted to acquire something that was growing higher. We got in a higher market, or a higher market growth rate; that's Paragon 28. This market is growing solidly in the, call it, 6% to 8% range. We wanted to build a platform, not just buying one company. We wanted to build a platform around lower extremities. We've done that, whether it's lower trauma, whether it's foot and ankle, and other components, biologics, we got that going on. We wanted to have a more meaningful presence in the ASC space. That's enabling that. I wanted to buy a company that had innovation today, but a pipeline for tomorrow, and all of that remains true with Paragon 28. The organic performance for the quarter was in the upper single-digit range. We are stabilizing some of the early contract friction that you can see in this category, but everything is looking solid. We're not touching the guidance for the year 2025. We continue to see great momentum with commercial execution and again, launching new products. We think of this asset as something that needs to be growing double digits for a period of time. There may be some hiccups every once in a while. Overall, the organic growth of Paragon 28 should remain in the teens. Sorry, relative to J&J, look, I'm not going to comment on the disruption there. I want to be respectful to my peers out there. There is disruption. Every time you go through a spin-off, divestiture, we've seen a hit at Zimmer Biomet; there is going to be some level of disruption. Customers are going to be asking whether Zimmer Biomet offers a better solution, and there may be some short-term opportunities, but again, I'm going to be respectful to my peers and don't comment too much on this.

I have a follow-up on the iodine-coated implants and a clarification regarding some issues that affected Q3. Regarding the new implant line, you mentioned the FDA's Breakthrough Designation. I'm curious if this will lead to a premium product, considering that premium products require negotiations for implant prices with hospitals and involve value assessment committees. Will this significantly drive the product mix? Or, Ivan, are you viewing this primarily as a means to increase volume due to the clinical benefits of the products you offer? Additionally, with the FDA Breakthrough Designation, is there a chance for CMS pass-through to support a price increase? I have one more quick clarification if possible.

Yes, so on iodine, yes to all of the above, Matt. Getting a Breakthrough Designation in the U.S. does enable premium pricing, better reimbursement dynamics. You go through value committees at a faster pace. The assumption is that once we have this product in the U.S., it's going to command higher pricing. But let's not talk about the future and focus on the present. This is already happening in Japan. With this approval in Japan, it's a similar dynamic. We're going to get a pretty significant price uplift in the country. It's the second largest market for Zimmer Biomet. We're going to get a level of reimbursement that is far better than other devices in the market. So the answer to iodine is yes to all of the above. Breakthrough does deliver better pricing dynamics, faster adoption opportunities through committees and whatnot. What was your second question, Matt? I apologize.

Sure. Following up on the restorative therapies, there has been a decline in orders that was lower than anticipated. Just to clarify, are you referring to bone growth stimulators or glue? Additionally, I'm aware there is some increased competition in the bone growth sector, even though it's not a focus for us currently. Was this a contributing factor? Any insights on the product lines and the dynamics surrounding them would be appreciated.

Yes, absolutely. First things first, let me simplify it. When we talk about restorative therapies, basically, we're talking $110 million to $120 million of revenue annually, and on one product, that's HA injection. So that's hyaluronic acid injections. What happened is quite simple. I would say three things. One, we didn't budget adequately. That was a mistake we're not going to repeat. We had some challenges on commercial execution because the focus has been elsewhere. Thirdly, there were some reimbursement changes in the U.S. through CMS that we thought were behind, and they're not behind. So it's a really acute element of pricing that impacts this business. I will say the sum of all parts is mostly commercial execution. As we think about 2026, I keep repeating myself, we're not going to offer commentary. But when it comes to this noncore business, we're going to be far more measured in the expectations that we have from restorative therapies going into the year.

Just a follow-up question. Ivan, you mentioned some high-level personnel changes and things like that. I'm just curious about how far into that you are and sort of how we should think about that potentially impacting the next few quarters as far as any potential disruption? Or do you feel like those are pretty easily transitional, it's not much of a transition, so we shouldn't expect any issues there?

Danielle, thanks for the question. First things first, the organization is always evolving, going back to strategic pillar #1. We're going to have the right people in the right jobs, people, folks that know how to make commitments and deliver on commitments. Once those things don't happen, we have to make changes at the right pace. Those changes are embedded in the guidance we're providing. As we think about this guidance on both revenue and EPS, the assumption of these changes is already in there. On the commercial changes in the U.S., we are going a bit faster than before, but we were working on the commercial channel for quite some time, and that's also embedded in 2025 and it will be part of our 2026. So a long-winded answer to say it's reflected in the guidance, and we look forward to making these changes. Thank you very much. My closing comments are that we continue to be proud of the evolution of this business, and the improvements that we're making. We're going to stick to the three key priorities of the organization. As we think about the rest of the year, we're very confident about achieving the guidance. For 2026, we continue to see health. When it comes to market dynamics, we are highly encouraged about our innovation cycle. We'll address the fragility that we get in some pockets when it comes to commercial execution. Thank you for your time this morning.

This concludes today's call. Thank you for your participation. You may now disconnect.