10q10k10q10k.net

What changed in Zimmer Biomet's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Zimmer Biomet's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+254 added−241 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-23)

Top changes in Zimmer Biomet's 2024 10-K

254 paragraphs added · 241 removed · 195 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

42 edited+9 added−11 removed82 unchanged
Biggest changeYi joined the Company in March 2013 as Senior Vice President, Asia Pacific and was promoted to President, Asia Pacific, in June 2015. Prior to joining the Company, he served as Vice President and General Manager of St. Jude Medical for Asia Pacific and Australia from 2005 to 2013. Prior to that, Mr.
Biggest changeMr. Yi was appointed Group President, Asia Pacific, in March 2021. He is responsible for the sales, marketing and distribution of products, services and solutions in the Asia Pacific region. Mr. Yi joined the Company in March 2013 as Senior Vice President, Asia Pacific and was promoted to President, Asia Pacific, in June 2015.
The guiding principles are: 9 • Respect and show gratitude for the contributions and diverse perspectives of all team members • Commit to the highest standards of patient safety, quality and integrity • Focus our resources in areas where we will make a difference • Ensure the company’s return is equivalent to the value we provide our customers and patients • Give back to our communities and people in need.
The guiding principles are: • Respect and show gratitude for the contributions and diverse perspectives of all team members • Commit to the highest standards of patient safety, quality and integrity • Focus our resources in areas where we will make a difference • Ensure the company’s return is equivalent to the value we provide our customers and patients • Give back to our communities and people in need.
Data Privacy Laws We are subject to evolving supranational, national, state and international data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, location, storage, disposal and protection of health-related and other personal information, including laws and regulations that regulate and restrict cross-border data transfers.
Data Privacy Laws We are subject to evolving national, state, international and other data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, location, storage, disposal and protection of health-related and other personal information, including laws and regulations that regulate and restrict cross-border data transfers.
While we strive for engagement scores to sequentially improve, the outcomes of the surveys can be influenced by many factors that are internal and external to the company. 10 We believe it is critical to keep our employees engaged through frequent and transparent communication.
While we strive for engagement scores to sequentially improve, the outcomes of the surveys can be influenced by many factors that are internal and external to the company. We believe it is critical to keep our employees engaged through frequent and transparent communication.
Risk Factors – If we fail to comply with data privacy and security laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. 8 Competition The orthopedics and broader musculoskeletal care industry is highly competitive.
Risk Factors – If we fail to comply with data privacy and security laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. Competition The orthopedics and broader musculoskeletal care industry is highly competitive.
He joined Xylem upon its spinoff from ITT Corporation (“ITT”) in October 2011 and served as Xylem’s Vice President Finance, Financial Planning and Analysis through August 2017.
He joined Xylem upon its spinoff from ITT 11 Corporation (“ITT”) in October 2011 and served as Xylem’s Vice President Finance, Financial Planning and Analysis through August 2017.
With sales to stocking distributors, some healthcare dealers and some hospitals, title to product passes upon shipment. Consignment sales represented approximately 85 percent of our net sales in 2023. No individual customer accounted for more than 2 percent of our net sales for 2023.
With sales to stocking distributors, some healthcare dealers and some hospitals, title to product passes upon shipment. Consignment sales represented approximately 85 percent of our net sales in 2024. No individual customer accounted for more than 2 percent of our net sales for 2024.
Failure to comply with any such data protection laws, regulations and guidance could result in government enforcement actions (which could include civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. Information regarding the risks associated with data privacy and protection laws may be found in Item 1A.
Failure to comply with any such data protection laws, regulations, directives, voluntary commitments and guidance could result in government enforcement actions (which could include civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. Information regarding the risks associated with data privacy and protection laws may be found in Item 1A.
We are subject to supranational, national, regional and local regulations affecting, among other things, the development, design, manufacturing, product standards, packaging, advertising, promotion, labeling, marketing and post-market surveillance of medical products and medical devices in many of the countries in which our products are sold. Our global regulatory environment is increasingly stringent, unpredictable and complex.
We are subject to national, state and other regulations affecting, among other things, the development, design, manufacturing, product standards, packaging, advertising, promotion, labeling, marketing and post-market surveillance of medical products and medical devices in many of the countries in which our products are sold. Our global regulatory environment is increasingly stringent, unpredictable and complex.
Our sports medicine products are primarily for the repair of soft tissue injuries, most commonly used in the knee and shoulder. Sports medicine products represented 11 percent of our S.E.T. product category net sales in 2023. Our biologics products are used as early intervention for joint preservation or to support surgical procedures.
Our sports medicine products are primarily for the repair of soft tissue injuries, most commonly used in the knee and shoulder. Sports medicine products represented 13 percent of our S.E.T. product category net sales in 2024. Our biologics products are used as early intervention for joint preservation or to support surgical procedures.
We are subject to supranational, national, regional, state and local laws and regulations concerning healthcare cost containment, including price regulation, competitive pricing, coverage and payment policies, comparative effectiveness reviews and other methods, including through efforts to reduce healthcare fraud and abuse, false claims and anti-kickback laws as well as the U.S.
We are subject to international, national, state and other laws and regulations concerning healthcare cost containment, including price regulation, competitive pricing, coverage and payment policies, comparative effectiveness reviews and other methods, including through efforts to reduce healthcare fraud and abuse, false claims and anti-kickback laws as well as the U.S.
Certain of these laws and regulations impose time-sensitive notification requirements to governmental authorities or consumers. We are also subject to emerging guidance governing data security and cyber risk management for medical devices as well as emerging guidance relating to artificial intelligence.
Certain of these laws and regulations impose time-sensitive notification requirements to governmental authorities or consumers. We are also subject to emerging regulations, directives, voluntary commitments and guidance governing data security and cyber risk management for medical devices as well as emerging regulations, directives, 8 voluntary commitments and guidance relating to artificial intelligence.
In 2023, our Total Recordable Incident Rate was 0.23 and our Lost Time Incident Rate was 0.13. These results are shared with relevant regulatory agencies as required and presented to our Board of Directors. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of February 15, 2024.
In 2024, our Total Recordable Incident Rate was 0.30 and our Lost Time Incident Rate was 0.14. These results are shared with relevant regulatory agencies as required and presented to our Board of Directors. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of February 15, 2025.
Ellingson was appointed Senior Vice President and Chief Strategy Officer in April 2018 and was designated as an executive officer in January 2021. Prior to joining Zimmer Biomet, Ms. Ellingson served as a member of the 11 executive leadership team of St.
Prior to that, she served as Senior Vice President and Chief Strategy Officer since April 2018 and was designated as an executive officer in January 2021. Prior to joining Zimmer Biomet, Ms. Ellingson served as a member of the executive leadership team of St.
Our upper extremities products represented 33 percent of our S.E.T. product category net sales in 2023. Our trauma products are used to stabilize damaged or broken bones and their surrounding tissues to support the body’s natural healing process. Trauma products represented 24 percent of our S.E.T. product category net sales in 2023.
Our upper extremities products represented 32 percent of our S.E.T. product category net sales in 2024. Our trauma products are used to stabilize damaged or broken bones and their surrounding tissues to support the body’s natural healing process. Trauma products represented 23 percent of our S.E.T. product category net sales in 2024.
In the global markets for our knees, hips, and S.E.T. products, our major competitors include the DePuy Synthes Companies of Johnson & Johnson, Stryker Corporation and Smith & Nephew plc. There are smaller competitors in these product categories as well that have success by focusing on smaller subsegments of the industry.
In the global markets for our knees, hips, and S.E.T. products, our major competitors include Johnson & Johnson MedTech (formerly the DePuy Synthes Companies of Johnson & Johnson), Stryker Corporation and Smith & Nephew plc. There are smaller competitors in these product categories as well that focus on smaller subsegments of the industry.
Biologics products represented 8 percent of our S.E.T. product category net sales in 2023. Our foot and ankle and upper extremities products are designed to treat arthritic conditions and fractures in the foot, ankle, shoulder, elbow and wrist. Our foot and ankle products represented 4 percent of our S.E.T. product category net sales in 2023.
Biologics products represented 6 percent of our S.E.T. product category net sales in 2024. Our foot and ankle and upper extremities products are designed to treat arthritic conditions and fractures in the foot, ankle, shoulder, elbow and wrist. Our foot and ankle products represented 3 percent of our S.E.T. product category net sales in 2024.
Name Age Position Ivan Tornos 48 President and Chief Executive Officer Mark Bezjak 49 President, Americas Rachel Ellingson 54 Senior Vice President and Chief Strategy Officer Chad Phipps 52 Senior Vice President, General Counsel and Secretary Paul Stellato 49 Vice President, Controller and Chief Accounting Officer Suketu Upadhyay 54 Chief Financial Officer and Executive Vice President - Finance, Operations and Supply Chain Wilfred van Zuilen 54 Group President, Europe, Middle East and Africa Lori Winkler 62 Senior Vice President, Chief Human Resources Officer Sang Yi 61 Group President, Asia Pacific Mr.
Name Age Position 10 Ivan Tornos 49 President and Chief Executive Officer Mark Bezjak 50 President, Americas Rachel Ellingson 55 Senior Vice President and Chief Administrative Officer Chad Phipps 53 Senior Vice President, General Counsel and Secretary Paul Stellato 50 Vice President, Controller and Chief Accounting Officer Suketu Upadhyay 55 Chief Financial Officer and Executive Vice President - Finance, Operations and Supply Chain Wilfred van Zuilen 55 Group President, Europe, Middle East and Africa Lori Winkler 63 Senior Vice President, Chief Human Resources Officer Sang Yi 62 Group President, Asia Pacific Mr.
CMFT products represented 20 percent of our S.E.T. product category net sales in 2023.‌ Our significant S.E.T. brands include the JuggerKnot ® Soft Anchor System, Gel-One ® Cross-linked Hyaluronate, Comprehensive ® Shoulder, Natural Nail ® System, and SternaLock ® System. Gel-One ® is a registered trademark of Seikagaku Corporation.
CMFT products represented 21 percent of our S.E.T. product category net sales in 2024.‌ Our significant S.E.T. brands include the JuggerKnot ® Soft Anchor System, Gel-One ® Cross-linked Hyaluronate, Comprehensive ® Shoulder, Natural Nail ® System, and SternaLock ® System. Gel-One ® is a registered trademark of Seikagaku Corporation. Our ROSA ® Robot is also utilized in shoulder procedures.
The research and development teams work closely with our strategic brand marketing function. The rapid commercialization of new data solutions, surgical techniques, innovative new materials, biologics products, and implant and instrument designs remains one of our core strategies and continues to be an important driver of sales growth.
The rapid commercialization of new data solutions, surgical techniques, innovative new materials, biologics products, and implant and instrument designs remains one of our core strategies and continues to be an important driver of sales growth.
The key results of surveys, and commensurate action plans, are shared with our Board of Directors and with our employee base. Employee engagement is the degree to which employees invest their cognitive, emotional, and behavioral energies toward positive organizational outcomes.
Surveys attempt to assess five drivers of engagement including purpose, culture, leadership, personal growth and belonging. The key results of surveys, and commensurate action plans, are shared with our Board of Directors and with our employee base. Employee engagement is the degree to which employees invest their cognitive, emotional, and behavioral energies toward positive organizational outcomes.
OTHER Our other product category primarily includes our robotic technology, surgical and bone cement products. We market a collective suite of our products and technologies as the ZBEdge TM Platform.
TECHNOLOGY & DATA, BONE CEMENT AND SURGICAL Through our Technology & Data, Bone Cement and Surgical product category, we market a collective suite of our products and technologies as the ZBEdge ® Platform.
Our mission is to alleviate pain and improve the quality of life for people around the world. Our commitment to patients shapes all day-to-day decisions at Zimmer Biomet. To be able to accomplish our mission, we have established guiding principles. These guiding principles are central to our human capital management policies and practices.
Our commitment to patients shapes all day-to-day decisions at Zimmer Biomet. To be able to accomplish our mission, we have established guiding principles. These guiding principles are central to our human capital management policies and practices.
We are also subject to foreign trade controls administered by certain U.S. government agencies, including the Bureau of Industry and Security within the Commerce Department and the Office of Foreign Assets Control within the Treasury Department (“OFAC”).
We are also subject to foreign trade controls 7 administered by certain U.S. government agencies, including the Bureau of Industry and Security within the Commerce Department and the Office of Foreign Assets Control within the Treasury Department (“OFAC”). In addition, exported medical products are subject to the regulatory requirements of each country to which the medical product is exported.
Bezjak held multiple roles with Teleflex Incorporated ranging from a regional sales representative to Director of Strategic Accounts from 2000 to 2008. He also held various sales representative roles with Michelin Tire Company from 1997 to 2000. Ms.
Bezjak held multiple roles with Teleflex Incorporated ranging from a regional sales representative to Director of Strategic Accounts from 2000 to 2008. He also held various sales representative roles with Michelin Tire Company from 1997 to 2000. Ms. Ellingson was appointed Senior Vice President and Chief Administrative Officer in May 2024.
Upadhyay spent the early part of his career in public accounting with KPMG. He has also served as a member of the board of directors of Vertex Pharmaceuticals Incorporated since May 2022.
Upadhyay spent the early part of his career in public accounting with KPMG. He has also served as a member of the board of directors of Vertex Pharmaceuticals Incorporated since May 2022. He holds a B.S. in Finance from Albright College and an M.B.A. from the Fuqua School of Business at Duke University.
Mr. van Zuilen was appointed Group President, Europe, Middle East and Africa in September 2023, after having served as President, Europe, Middle East and Africa since joining the Company in June 2021. He is responsible for the sales, marketing and distribution of products, services and solutions in the Europe, Middle East and Africa region.
He holds the inactive designations of C.P.A. and C.M.A. Mr. van Zuilen was appointed Group President, Europe, Middle East and Africa in September 2023, after having served as President, Europe, Middle East and Africa since joining the Company in June 2021.
We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.
Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public 12 conference calls, presentations and webcasts.
This segment also includes research, development engineering, medical education and brand management for our product category headquarter locations. The U.S. accounted for approximately 95 percent of net sales in this region in 2023. The U.S. sales force consists of a combination of employees and independent sales agents, most of whom sell products exclusively for Zimmer Biomet.
The U.S. accounted for approximately 95 percent of net sales in this region in 2024. The U.S. sales force consists of a combination of employees and independent sales agents, most of whom sell products exclusively for Zimmer Biomet. The sales force in the U.S. receives a commission on product sales and is responsible for many operating decisions and costs.
Winkler served more than 20 years with Johnson and Johnson, including its subsidiary companies DePuy and Cordis, most recently as Global Head, Human Resources Global Finance from April 2011 through November 2016.
Winkler served more than 20 years with Johnson and Johnson, including its subsidiary companies DePuy and Cordis, most recently as Global Head, Human Resources Global Finance from April 2011 through November 2016. She has served as an independent voting member of the board of directors of Family Promise, Inc., a 501(c)(3) charity focused on housing and homelessness, since August 2022.
We protect our proprietary rights through a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to proprietary information. We own or control through licensing arrangements over 6,000 issued patents and patent applications throughout the world that relate to aspects of the technology incorporated in many of our products.
We protect our proprietary rights through a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to proprietary information.
The Asia Pacific operating segment includes key markets such as Japan, China, Australia, New Zealand, Korea, Taiwan, India, Thailand, Singapore, Hong Kong and Malaysia. Japan is the largest market within this segment, accounting for approximately 50 percent of the region’s sales in 2023.
In most European countries, healthcare is sponsored by the government and therefore government budgets impact healthcare spending, which can affect our sales in this segment. Asia Pacific. The Asia Pacific operating segment includes key markets such as Japan, China, Australia, New Zealand, Korea, Taiwan, India, Thailand, Singapore, Hong Kong and Malaysia.
Human Capital As of December 31, 2023, we employed approximately 18,000 employees worldwide, including approximately 2,200 employees dedicated to research and development. Approximately 8,000 employees are located within the U.S. and approximately 10,000 employees are located outside of the U.S., primarily throughout Europe and in Japan and China. We have approximately 7,900 employees dedicated to manufacturing our products worldwide.
Approximately 7,000 employees are located within the U.S. and approximately 10,000 employees are located outside of the U.S., primarily throughout Europe and in Japan and China. We have approximately 7,000 employees dedicated to manufacturing our products worldwide. Our mission is to alleviate pain and improve the quality of life for people around the world.
We expect to continue to identify innovative technologies, which may include acquiring complementary products or businesses, establishing technology licensing arrangements or strategic alliances. 6 Government Regulation and Compliance Our operations, products and customers are subject to extensive government regulation by numerous government agencies, both within and outside the U.S.
Government Regulation and Compliance Our operations, products and customers are subject to extensive government regulation by numerous government agencies, both within and outside the U.S.
The EU MDR took effect in May 2021, replacing the European Medical Device Directive (the “MDD”). The EU MDR imposes significant additional premarket and post-market requirements. Products currently certified per the MDD regulations must be certified to the new EU MDR regulation prior to December 2027 or December 2028, depending upon the device’s risk class.
Products currently certified per the MDD regulations must be certified to the new EU MDR regulation prior to December 2027 or December 2028, depending upon the device’s risk class. The UK additionally is in the process of creating secondary legislation to implement the future medical device regulations.
In addition, exported medical products are subject to the regulatory requirements of each country to which the medical product is exported. 7 The European Union (the “EU”) has adopted the European Medical Device Regulation (the “EU MDR”), which created a single set of medical device regulations for products marketed in all member countries.
The European Union (the “EU”) has adopted the European Medical Device Regulation (the “EU MDR”), which created a single set of medical device regulations for products marketed in all member countries. The EU MDR took effect in May 2021, replacing the European Medical Device Directive (the “MDD”). The EU MDR imposes significant additional premarket and post-market requirements.
The ZBEdge Platform connects robotic and digital technologies together to collect data before, during and after surgery, that can deliver insights to surgeons to assist in making informed decisions on patient care. Research and Development We have extensive research and development activities to develop new surgical techniques, including robotic techniques, materials, biologics and product designs.
The ZBEdge Platform connects robotic and digital technologies together to collect data before, during and after surgery, that can deliver insights to surgeons to assist in making informed decisions on patient care. Bone cement is used to assist with implant fixation in orthopedic surgeries. We offer an assortment of bone cements and products for mixing and delivery.
The sales force in the U.S. receives a commission on product sales and is responsible for many operating decisions and costs. In this region, we contract with group purchasing organizations and managed care accounts and have promoted unit growth by offering volume discounts to customer healthcare institutions within a specified group.
In this region, we contract with group purchasing organizations and managed care accounts and have promoted unit growth by offering volume discounts to customer healthcare institutions within a specified group. Generally, we are designated as one of several preferred purchasing sources for specified products, although members are not obligated to purchase our products.
Yi held several leadership positions over a ten-year period with Boston Scientific Corporation, ultimately serving as Vice President for North Asia. AVAILABLE INFORMATION Our Internet address is www.zimmerbiomet.com. We routinely post important information for investors on our website in the “Investor Relations” section, which may be accessed from our homepage at www.zimmerbiomet.com or directly at https://investor.zimmerbiomet.com.
We routinely post important information for investors on our website in the “Investor Relations” section, which may be accessed from our homepage at www.zimmerbiomet.com or directly at https://investor.zimmerbiomet.com. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.
Employee Engagement We value our employees’ input and to that end, from time to time, we conduct comprehensive employee engagement surveys that ultimately inform our actions towards improving employee engagement. Surveys attempt to assess five drivers of engagement including purpose, culture, leadership, personal growth and belonging.
Our ERGs also receive funding from the Zimmer Biomet Foundation, Inc. to support communities and partnerships aligned to our Mission. Employee Engagement We value our employees’ input and to that end, from time to time, we conduct comprehensive employee engagement surveys that ultimately inform our actions towards improving employee engagement.
France, Germany, Italy, Spain and the United Kingdom (the “UK”) collectively accounted for approximately 55 percent of net sales in the region in 2023. This segment also includes other key markets, including Switzerland, Benelux, Nordic, Central and Eastern Europe, the Middle East and Africa.
This segment also includes other key markets, including Switzerland, Benelux, Nordic, Central and Eastern Europe, the Middle East and Africa. Our sales force in this segment is comprised of direct sales associates, commissioned agents, independent distributors and sales support personnel.
Generally, we are designated as one of several preferred purchasing sources for specified products, although members are not obligated to purchase our products. Contracts with group purchasing organizations generally have a term of three years, with extensions as warranted. EMEA. The EMEA operating segment is our second largest operating segment.
Contracts with group purchasing organizations generally have a term of three years, with extensions as warranted. EMEA. The EMEA operating segment is our second largest operating segment. France, Germany, Italy, Spain and the United Kingdom (the “UK”) collectively accounted for approximately 50 percent of net sales in the region in 2024.
Removed
Our sales force in this segment is comprised of direct sales associates, commissioned agents, independent distributors and sales support personnel. In most European countries, healthcare is sponsored by the government and therefore government budgets impact healthcare spending, which can affect our sales in this segment. Asia Pacific.
Added
Japan is the largest market within this segment, accounting for approximately 45 percent of the region’s net sales in 2024.
Removed
As of December 31, 2023, we employed approximately 2,200 research and development employees worldwide.
Added
We also offer a portfolio of surgical solutions used by healthcare institutions. Research and Development We have extensive research and development activities to develop new surgical techniques, including robotic techniques, materials, biologics and product designs. The research and development teams work closely with our strategic brand marketing function.
Removed
The UK additionally is in the process of creating a new medical device framework (the “UK MDR”) following its exit from the European Union. The new regulation, initially scheduled to be implemented in 2023, is anticipated to be delayed until 2025. The UK, in the meantime, continues to allow products meeting the current EU regulations to be marketed.
Added
As of December 31, 2024, we employed approximately 2,000 research and development employees worldwide. 6 We expect to continue to identify innovative technologies, which may include acquiring complementary products or businesses, establishing technology licensing arrangements or strategic alliances.
Removed
Diversity, Equity and Inclusion We believe that each of us as individuals can drive change every day. We remain wholly committed to creating, supporting and celebrating diverse and equal workplaces and communities.
Added
The first piece of the Statutory Instrument (“SI”) for post-market surveillance requirements was released in January 2025 with further SIs planned to be released later in 2025 and in 2026. These SIs will form part of the new medical device regulatory framework (the “UK MDR”) following its exit from the European Union.
Removed
Together, we will continue to foster and embrace diversity and inclusion within our team and our communities, and commit our voices and our resources to community groups, business platforms and other organizations united to driving meaningful change and sustained improvement. We believe that representation matters.
Added
The UK, in the meantime, continues to allow products meeting the current EU regulations to be marketed through June 2028 for EU MDD and EU Active Implantable Medical Devices or through June 2030 for EU MDR devices.
Removed
As of December 31, 2023, women made up approximately 35 percent of our total employee population, and approximately 26 percent of positions at Director level and above. People of Color (“POC”) made up approximately 25 percent of our total employee population in the U.S., and comprised approximately 16 percent of positions at Director level and above.
Added
We own or control through licensing arrangements over 6,000 issued patents and patent applications throughout the world that relate to aspects of the technology incorporated in many of our products. 9 Human Capital As of December 31, 2024, we employed approximately 17,000 employees worldwide, including approximately 2,000 employees dedicated to research and development.
Removed
We have established 2026 representation goals for women and POC at all levels of the organization, guided by internal data and external benchmarking. Core to our values is our commitment to stand together against hatred, discrimination and injustice, and we advance these values through our actions and investments.
Added
Team Member Inclusion Our team member inclusion efforts are intended to identify, attract and retain talent for our business. We monitor and benchmark our team member demographics at all levels of the organization. Our eight global employee resource groups (“ERGs”) continue to have substantial participation with membership representing approximately 15 percent of our workforce.
Removed
With this in mind, we have committed to the following initiatives to drive and accelerate change both within our own organization and around the globe.
Added
He is responsible for the sales, marketing and distribution of products, services and solutions in the Europe, Middle East and Africa region.
Removed
We have shared these commitments publicly and are tracking our progress against them: • Engage our 18,000 global employees in cultural awareness and inclusion programming; • Invest $1 million and provide executive sponsorship to support ongoing programs and elevate the impact of our employee resource groups; • Commit at least $5 million over five years through the Zimmer Biomet Foundation to non-profit organizations dedicated to combating racism and supporting diversity, equality and justice.
Added
Prior to joining the Company, he served as Vice President and General Manager of St. Jude Medical for Asia Pacific and Australia from 2005 to 2013. Prior to that, Mr. Yi held several leadership positions over a ten-year period with Boston Scientific Corporation, ultimately serving as Vice President for North Asia. AVAILABLE INFORMATION Our Internet address is www.zimmerbiomet.com.
Removed
The Zimmer Biomet Foundation is an independent, non-profit organization established in 2018 to address the needs of our global community; • Match, through the Zimmer Biomet Foundation, employee financial contributions to non-profit organizations, including those dedicated to combating racism and supporting diversity, equality and justice; • Expand our student and early career internship programs to attract and develop more Black leaders; and • Continue our financial support of Movement is Life, Inc., a nonprofit multidisciplinary coalition seeking to eliminate racial, ethnic and gender disparities in muscle and joint health.
Removed
She has served as an independent voting 12 member of the board of directors of Family Promise, Inc., a 501(c)(3) charity focused on housing and homelessness, since August 2022. Mr. Yi was appointed Group President, Asia Pacific, in March 2021. He is responsible for the sales, marketing and distribution of products, services and solutions in the Asia Pacific region. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

69 edited+22 added−12 removed90 unchanged
Biggest changeOur international operations are, and will continue to be, subject to a number of risks and potential costs, including: 20 • changes to trade restrictions and protection measures, new import or export requirements, new or increased tariffs, trade embargoes and sanctions and other trade barriers, which may prevent us from shipping products to or from a particular market, restrict our access to certain sources of raw materials and other inputs, increase our operating costs and disrupt our ability to collect payment for our products and services in particular markets; • changes in foreign medical reimbursement policies and programs; • differences in and changes to foreign regulatory requirements, such as more stringent requirements for regulatory clearance of products; • differing local product preferences and product requirements; • fluctuations in foreign currency exchange rates; • the effects of inflation, including the effects of different rates of inflation in different countries, on our costs and expenses, and the costs of our products; • diminished protection of intellectual property in some countries outside of the U.S.; • foreign exchange controls that might prevent us from repatriating cash earned in countries outside the U.S.; • complex data privacy and cybersecurity requirements and labor relations laws; • extraterritorial effects of U.S. laws such as the FCPA; • effects of foreign anti-corruption laws, such as the UK Bribery Act; • difficulty in staffing and managing foreign operations; • labor force instability; • increased tax liabilities under foreign tax laws or changes thereto; and • political, social and economic instability and uncertainty, including wars, other conflict and sovereign debt issues.
Biggest changeOur international operations are, and will continue to be, subject to a number of risks and potential costs, including: • changes in foreign medical reimbursement policies and programs; • differences in and changes to foreign regulatory requirements, such as more stringent requirements for regulatory clearance of products; • differing local product preferences, local product requirements and “buy local” initiatives; • fluctuations in foreign currency exchange rates; • the effects of inflation, including the effects of different rates of inflation in different countries, on our costs and expenses, and the costs of our products; • diminished protection of intellectual property in some countries outside of the U.S.; • foreign exchange controls that might prevent us from repatriating cash earned in countries outside the U.S.; • data privacy and cybersecurity requirements and labor relations laws that may add to the complexity and costs of our operations or require changes to our products or business processes; • extraterritorial effects of U.S. laws such as the FCPA; • effects of foreign anti-corruption laws, such as the United Kingdom Bribery Act; • difficulty in staffing and managing foreign operations; • labor force instability; • increased tax liabilities under foreign tax laws or changes thereto; and • political, social and economic instability and uncertainty, including wars, other conflict and sovereign debt issues.
Competition within our markets is primarily on the basis of technology, innovation, quality, reputation, customer service and pricing. In markets outside of the U.S., other factors influence competition as well, including local distribution systems, complex regulatory environments, and differing medical philosophies and product preferences.
Competition within our markets is primarily on the basis of technology, innovation, quality, reputation, customer service and pricing. In markets outside of the U.S., other factors influence competition as well, including local distribution systems, complex regulatory environments, differing medical philosophies and differing product preferences.
Demand for our products may change, in certain cases, in ways we may not anticipate because of evolving customer needs, changing demographics, changing industry growth rates, declines in the musculoskeletal implant market, the introduction of competing products and technologies, the emergence of alternative treatment methods, and evolving surgical philosophies and industry standards.
Demand for our products may change, in certain cases, in ways we may not anticipate because of evolving customer needs, changing demographics, changing industry growth rates, declines in the musculoskeletal implant market, the introduction of competing products and technologies, the emergence of alternative treatment methods, evolving surgical philosophies and evolving industry standards.
The success of our new and enhanced product offerings will depend on several factors, including our ability to properly identify and anticipate customer needs; commercialize new products in a timely manner; manufacture and deliver instruments and products in sufficient volumes on time; differentiate our offerings from competitors’ offerings; achieve positive clinical outcomes for new products; satisfy the increased demands by healthcare payors, providers and patients for shorter hospital stays, faster post-operative recovery and lower-cost procedures; innovate and develop new materials, product designs and surgical techniques; and provide adequate medical education relating to new products.
The success of our new and enhanced product offerings will depend on several factors, including our ability to properly identify and anticipate customer needs; commercialize new products in a timely manner; manufacture and deliver instruments and products on time and in sufficient volumes; differentiate our offerings from competitors’ offerings; achieve positive clinical outcomes for new products; satisfy the increased demands by healthcare payors, providers and patients for shorter hospital stays, faster post-operative recovery and lower-cost procedures; innovate and develop new materials, product designs and surgical techniques; and provide adequate medical education relating to new products.
Damage to one or more facilities from weather or natural disaster-related events, vulnerabilities in technology, cyber-attacks against our information systems or the information systems of our business partners (such as ransomware attacks), issues in manufacturing arising from failure to follow specific internal protocols and procedures, compliance concerns relating to the Quality System Regulation (“QSR”) and Good Manufacturing Practice requirements, equipment breakdown or malfunction, reductions in operations and/or worker absences, trade impediments, international sanctions, wars or other factors could adversely affect the ability to manufacture and distribute our products.
Damage to one or more facilities or related operations from weather or natural disaster-related events, vulnerabilities in technology, cyber-attacks against our information systems or the information systems of our business partners (such as ransomware attacks), issues in manufacturing arising from failure to follow specific internal protocols and procedures, compliance concerns relating to the Quality System Regulation (“QSR”) and Good Manufacturing Practice requirements, equipment breakdown or malfunction, reductions in operations and/or worker absences, trade impediments, international sanctions, wars or other factors could adversely affect the ability to manufacture and distribute our products.
In addition, many of our products require sterilization prior to sale, and we utilize a mix of internal resources and contract sterilizers to perform this service. We also provide sterilization services to certain of our customers.
In addition, many of our products require sterilization prior to sale, and we utilize a mix of internal resources and contract sterilizers to perform this service. We also provide contract sterilization services to certain of our customers.
While it is not possible to predict the outcome of patent and other intellectual 23 property litigation, such litigation has in the past resulted in, and could in the future result in, our payment of significant monetary damages and/or royalty payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our patent and proprietary rights against others, which could have a material adverse effect on our business, finances and results of operations.
While it is not possible to predict the outcome of patent and other intellectual property litigation, such litigation has in the past resulted in, and could in the future result in, our payment of significant monetary damages and/or royalty payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our patent and proprietary rights against others, which could have a material adverse effect on our business, finances and results of operations.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the 24 specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. Item 1B.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. Item 1B.
Additionally, the availability of designated European notified body services to certify compliance with the new EU MDR requirements is limited, which may delay the marketing approval for some of our products under the EU MDR (and, potentially, the UK MDR). Furthermore, regulators strictly regulate the promotional claims that we may make about approved or cleared products.
Additionally, the availability of designated European notified body services to certify compliance with the EU MDR requirements is limited, which may delay the marketing approval for some of our products under the EU MDR (and, potentially, the UK MDR). Furthermore, regulators strictly regulate the promotional claims that we may make about approved or cleared products.
Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products and could have a material adverse effect on our business, financial condition and results of operations. Our products and operations are also often subject to the rules of industrial standards bodies, such as the International Standards Organization.
Any 22 adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products and could have a material adverse effect on our business, financial condition and results of operations. Our products and operations are also often subject to the rules of industrial standards bodies, such as the International Standards Organization.
In 16 addition, given their size and complexity, these systems are vulnerable to service interruptions and to security breaches from inadvertent or intentional actions by our employees, third-party suppliers and/or business partners, and from cyber-attacks by malicious third parties attempting to gain unauthorized access to our products, systems or Confidential Information.
In addition, given their size and complexity, these systems are vulnerable to service interruptions and to security breaches from inadvertent or intentional actions by our employees, third party suppliers and/or business partners, and from cyber attacks by malicious third parties attempting to gain unauthorized access to our products, systems or Confidential Information.
Item 1A. Ris k Factors We operate in a rapidly changing economic and technological environment that presents numerous risks, many of which are driven by factors that we cannot control or predict. Our business, financial condition and results of operations may be impacted by a number of factors.
Item 1A. Ris k Factors We operate in a rapidly changing competitive, economic and technological environment that presents numerous risks, many of which are driven by factors that we cannot control or predict. Our business, financial condition and results of operations may be impacted by a number of factors.
These attacks may include phishing, state-sponsored cyber attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, payment fraud or other cyber incidents. Evolving artificial intelligence and machine learning continue to improve the capabilities of cyber attackers.
These attacks may include phishing, state-sponsored cyber attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, payment fraud or other cyber incidents. Evolving artificial intelligence and machine learning tools continue to improve the capabilities of cyber attackers.
In addition, some of our products and services incorporate software or information technology that collects data regarding patients and patient therapy, and some software and other products we provide to customers connect to our and third-party systems for maintenance and other purposes.
In addition, some of our products and services incorporate software or information technology that collects data regarding patients and patient therapy, and some software and other products we provide to customers connect to our and third 16 party systems for maintenance and other purposes.
If we fail to comply with data privacy and security laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. We process personal and personal health data in our business, particularly through our ZBEdge TM ecosystem.
If we fail to comply with data privacy and security laws and regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. We process personal and personal health data in our business, particularly through our ZBEdge ® ecosystem.
We also face competition from pharmaceutical and other therapies that may be more attractive than, or have other benefits over, our products, or that could affect the frequency, progressions or symptoms of diseases and conditions that our products treat.
We also face competition from pharmaceutical and other therapies that may be more attractive than, or have other benefits over, our products, or 13 that could affect the frequency, progressions or symptoms of diseases and conditions that our products treat.
Pricing pressure continues due to consolidation among healthcare providers, trends toward managed care, the shift toward governments becoming the primary payors of healthcare expenses, reductions in reimbursement levels and government laws and regulations relating to reimbursement and pricing generally.
Pricing pressure continues due to consolidation among healthcare providers, trends toward managed care, the shift toward governments becoming the primary payors of healthcare expenses, reductions in reimbursement levels and 18 government laws and regulations relating to reimbursement and pricing generally.
The global supply chain has been and continues to be negatively impacted by a variety of macro factors which have, in part, resulted in challenges to meet end market demand in some instances.
The global supply chain has been and continues to be negatively impacted by a variety of macro factors which have, in part, resulted in challenges to meet end market 15 demand in some instances.
We are dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems and data, including from cybersecurity events, our business could be adversely affected. We are dependent on sophisticated information technology for our products and infrastructure.
We and our business partners are dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems and data, including from cybersecurity events, our business could be adversely affected. We are dependent on sophisticated information technology for our products and infrastructure.
Any significant breakdown, intrusion, breach, interruption, corruption or destruction of these systems could have a material adverse effect on our business and reputation and could materially adversely affect our results of operations and financial condition.
Any significant breakdown, intrusion, breach, interruption, corruption or destruction of these systems 17 could have a material adverse effect on our business and reputation and could materially adversely affect our results of operations and financial condition.
These laws are administered by, among others, the DOJ, the Office of Inspector General of the Department of 22 Health and Human Services, the SEC, the OFAC, the Bureau of Industry and Security of the U.S. Department of Commerce and state attorneys general.
These laws are administered by, among others, the DOJ, the Office of Inspector General of the Department of Health and Human Services, the SEC, the OFAC, the Bureau of Industry and Security of the U.S. Department of Commerce and state attorneys general.
Our acquisitions involve numerous risks, including: • unforeseen difficulties in integrating personnel and sales forces, operations, manufacturing, logistics, research and development, information technology, compliance, vendor management, communications, purchasing, accounting, marketing, administration and other systems and processes; • difficulties harmonizing and optimizing quality systems and operations; • diversion of financial and management resources from existing operations; • unforeseen difficulties related to entering markets for which or geographic regions where we do not have prior experience; • potential loss of key employees; • unforeseen risks and liabilities associated with businesses acquired, including any unknown vulnerabilities in acquired technology or compromises of acquired data; and/or • inability to generate sufficient revenue or realize sufficient cost savings to offset acquisition or investment costs.
Our acquisitions involve numerous risks, including: • unforeseen difficulties in integrating personnel and sales forces, operations, manufacturing, logistics, research and development, information technology, compliance, vendor management, communications, purchasing, accounting, marketing, administration and other systems and processes; • difficulties harmonizing and optimizing quality systems and operations; • diversion of financial and management resources from existing operations; • unforeseen difficulties related to entering markets for which or geographic regions where we do not have prior experience; • potential loss of key employees; • unforeseen risks and liabilities associated with businesses acquired, including any unknown vulnerabilities in acquired technology, compromises of acquired data or noncompliance with data privacy requirements; and/or • inability to generate sufficient revenue or realize sufficient cost savings to offset acquisition or investment costs.
These requirements relate to quality systems, recordkeeping, labeling, promotional and marketing requirements, adverse event reporting regulations and other matters, which are subject to continual review and are monitored rigorously through periodic inspections by regulators, which may result in observations (such as on FDA Form 483), and in some cases warning letters, that require corrective action or other forms of enforcement.
These requirements relate to quality systems, recordkeeping, labeling, promotional and marketing requirements, adverse event reporting, monitoring and other regulations, which are subject to continual review and are monitored rigorously through periodic inspections by regulators, which may result in observations (such as on FDA Form 483), and in some cases warning letters, that require corrective action or other forms of enforcement.
In addition, new materials, product designs, product enhancements and surgical techniques that we develop may not be accepted quickly, in some or all markets, because of, among other factors, the need for regulatory clearance, entrenched patterns of clinical practice and uncertainty with respect to third-party reimbursement.
In addition, new materials, product designs, product enhancements and surgical techniques that we develop may not be accepted quickly or at all, or in some or all markets, because of, among other factors, the need for regulatory clearance, entrenched patterns of clinical practice, competitive factors and uncertainty with respect to third-party reimbursement.
If we fail to maintain or protect our information systems and data integrity effectively, we could: • suffer a loss of access to or alteration of all or a portion of our Confidential Information; • have difficulty meeting our compliance requirements, including with respect to data retention and reporting, QMS, quality reporting or other requirements; • have difficulty developing new or enhanced products; • lose existing customers, suppliers and business partners; • have difficulty attracting new customers; • have problems in determining product cost estimates and establishing appropriate pricing; • suffer outages or disruptions in our operations, supply chain, products and/or services, including our ZBEdge TM ecosystem; • have difficulty preventing, detecting, and controlling fraud; • have disputes with customers, physicians, other healthcare professionals and payors for our products; • have regulatory sanctions or penalties imposed; • incur increased operating expenses; • be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls; • incur expenses or lose revenues as a result of a data privacy breach; or • suffer other adverse consequences.
If we (or third parties with whom we contract) fail to maintain or protect our information systems and data integrity effectively, we could: • suffer a loss of access to or alteration of all or a portion of our Confidential Information; • have difficulty meeting our compliance requirements, including with respect to data retention and reporting, QMS, quality reporting or other requirements; • have difficulty developing new or enhanced products; • lose existing customers, suppliers and business partners; • have difficulty attracting new customers; • have problems in determining product cost estimates and establishing appropriate pricing; • suffer outages or disruptions in our operations, supply chain, products and/or services, including our ZBEdge ® ecosystem; • have difficulty preventing, detecting, and controlling fraud; • have disputes with customers, physicians, other healthcare professionals and payors for our products; • have regulatory sanctions or penalties imposed; • incur increased operating expenses; • be subject to issues with product functionality that may result in a loss of data, risk to patient safety, field actions and/or product recalls; • incur expenses or lose revenues as a result of a data privacy breach; or • suffer other adverse consequences.
In the event of a significant interruption, for example, as a result of our or a supplier’s failure to follow 15 regulatory protocols and procedures, we (or our suppliers) may experience lengthy delays in resuming production of affected products due primarily to the need for additional regulatory approvals.
In the event of a significant interruption, for example, as a result of our or a supplier’s failure to follow regulatory protocols and procedures or as a result of a bankruptcy, we (or our suppliers) may experience lengthy delays in resuming production of affected products due primarily to the need for additional regulatory approvals.
Tax law changes in certain foreign jurisdictions in which we operate conforming to Pillar Two of the base erosion and profit shifting plan (“Pillar Two”) undertaken by the Organisation for Economic Co-operation and Development will take effect in 2024.
Tax law changes in certain foreign jurisdictions in which we operate conforming to Pillar Two of the base erosion and profit shifting plan (“Pillar Two”) undertaken by the Organisation for Economic Co-operation and Development began to take effect in 2024.
There were no impairment charges during the year ended December 31, 2023, but if the operating performance at one or more of our reporting units significantly declines, including if competing or alternative technologies or pharmacological treatments, emerge, if market conditions or future cash flow estimates for one or more of our businesses decline, or as a result of restructuring initiatives pursuant to which we reorganize our reporting units, we could be required to record additional impairment charges.
There were no impairment charges during the years ended December 31, 2024 and 2023, but if the operating performance at one or more of our reporting units significantly declines, including if competing or alternative technologies or pharmacological treatments, emerge, if market conditions or future cash flow estimates for one or more of our businesses decline, or as a result of restructuring initiatives pursuant to which we reorganize our reporting units, we could be required to record additional impairment charges.
For example, we have experienced elevated charges for excess and obsolete inventory while also facing increased backorders due to unpredictable demand fluctuations across our various markets, and there can be no assurance that production mix planning or inventory allocation will match end market demand.
For example, in the past we have experienced elevated charges for excess and obsolete inventory while also facing increased backorders due to unpredictable demand fluctuations across our various markets, and there can be no assurance that production mix planning or inventory allocation will match end market demand.
For example, China has implemented a volume-based procurement (“VBP”) process designed to reduce medical spending, which has in the past resulted in, and could in the future result in, reduced margins on covered devices and products, required renegotiation of distributor arrangements, and incurrence of inventory-related charges.
For example, China has implemented volume-based procurement (“VBP”) processes designed to reduce medical spending, which have in the past resulted in, and could in the future result in, reduced margins on covered devices and products, required renegotiation of distributor arrangements, and incurrence of inventory-related charges.
In addition, we are subject to various laws concerning anti-corruption and anti-bribery matters (including the FCPA), sales to countries or persons subject to economic sanctions and other matters affecting our international operations.
In addition, we are subject to various laws concerning anti-corruption and anti-bribery matters (including the FCPA and the United Kingdom Bribery Act), sales to countries or persons subject to economic sanctions and other matters affecting our international operations.
If a regulator were to conclude that we are not in compliance with applicable laws or regulations, that any of our products are ineffective or pose an unreasonable health risk, or that we have marketed or promoted a product for use other than as indicated in the product labelling approved by the regulator, the regulator may ban such products; detain or seize adulterated or misbranded products; order a recall, repair, replacement, or refund of payment of such products; refuse to grant pending premarket approval applications; refuse to provide certificates for exports; require us to notify healthcare professionals and others that the products present unreasonable risks of substantial harm to the public health; and subject us to fines, injunctions or other penalties.
If a regulator were to conclude that we are not in compliance with applicable laws or regulations, that any of our products are ineffective or pose an unreasonable health risk, that any of our products’ long-term statistical performance does not meet regulatory expectations, or that we have marketed or promoted a product for use other than as indicated in the product labelling approved by the regulator, the regulator may ban such products; detain or seize adulterated or misbranded products; order a recall, repair, replacement, or refund of payment of such products; refuse to grant pending premarket approval applications; refuse to provide certificates for exports; require us to notify healthcare professionals and others that the products present unreasonable risks of substantial harm to the public health; and subject us to fines, injunctions or other penalties.
We expect the implementation and interpretation of Pillar Two across all jurisdictions where we do business will have an adverse effect on our effective tax rate, results of operations and cash flows. These tax law changes require profits earned in such jurisdictions to be subject to a minimum 15 percent income tax rate.
We expect the implementation and interpretation of Pillar Two across jurisdictions where we do business to have adverse effects on our effective tax rate, results of operations, and cash flows. These tax law changes require profits earned in such jurisdictions to be subject to a minimum 15 percent income tax rate.
As discussed further in Note 11 to our consolidated financial statements, in the fourth quarter of 2022, we recorded goodwill impairment charges of $289.8 million as a result of, among other factors, changes in foreign currency exchange rates in our European-based currencies, inflation and a higher interest rate environment; and in the second quarter of 2022 and 2021, we recorded $3.0 million and $16.3 million, respectively, of in-process research and development (“IPR&D”) intangible asset impairments on certain IPR&D projects.
As discussed further in Note 11 to our consolidated financial statements, in the fourth quarter of 2022, we recorded goodwill impairment charges of $289.8 million as a result of, among other factors, changes in foreign currency exchange rates in our European-based currencies, inflation and a higher interest rate environment; and in the second quarter of 2022, we recorded $3.0 million of an in-process research and development (“IPR&D”) intangible asset impairment on a certain IPR&D project.
Both before and after a product is commercially released, we have ongoing responsibilities under FDA regulations, the EU MDR and other supranational, national, federal, regional, state and local requirements.
Both before and after a product is commercially released, we have ongoing responsibilities under FDA regulations, the EU MDR and other national, regional, state and other requirements.
Business and economic conditions have adversely impacted, and may, either alone or in combination with other risks, in the future adversely impact, our business, results of operations and financial condition, the nature and extent of which impacts are uncertain and unpredictable.
Business interruptions and disruptions have adversely impacted, and may, either alone or in combination with other risks, in the future adversely impact, our business, results of operations and financial condition, the nature and extent of which impacts are uncertain and unpredictable.
Our success largely depends on our ability to attract, retain, develop and motivate our human capital, including our senior management, and on our ability to have meaningful succession plans in place to prepare for foreseen and unforeseen changes.
Our success largely depends on our ability to attract, retain, develop and motivate our human capital, including our senior management, key employees and key third parties, and on our ability to have meaningful succession plans in place to prepare for foreseen and unforeseen changes.
Future material impairments in the carrying value of our intangible assets, including goodwill, would negatively affect our operating results. Goodwill and intangible assets represent a significant portion of our assets. At December 31, 2023, we had $8.8 billion in goodwill and $4.9 billion of intangible assets.
Future material impairments in the carrying value of our intangible assets, including goodwill, would negatively affect our operating results. Goodwill and intangible assets represent a significant portion of our assets. At December 31, 2024, we had $9.0 billion in goodwill and $4.6 billion of intangible assets.
Failure to comply with U.S. and international data protection laws and regulations, and the disclosure of any data or related breach, could result in government enforcement actions (which could include substantial civil and/or criminal penalties and injunctive relief), private litigation and/or adverse publicity and could have a material adverse impact on our business, financial condition or results of operations.
Failure to comply with U.S. and international data protection laws and regulations, and the disclosure of any data or related breach, could result in government enforcement actions (which could include substantial civil and/or criminal penalties and injunctive relief), private litigation and/or adverse publicity and could have a material adverse impact on our business, financial condition or results of operations. 23 Pending and future product liability claims and litigation could adversely impact our financial condition and results of operations and impair our reputation.
We and our third-party manufacturers have manufacturing sites all over the world. In some instances, however, the manufacturing of certain of our product lines is concentrated in one or a few plants which are concentrated in a single country or region.
Interruption of manufacturing or distribution operations could adversely affect our business, financial condition and results of operations. We and our third-party manufacturers have manufacturing sites all over the world. In some instances, however, the manufacturing of certain of our product lines is concentrated in one or a few plants which are concentrated in a single country or region.
To the extent we or our contract sterilizers are unable to sterilize our products or provide sterilization services to our customers, whether caused by capacity, availability of materials for sterilization, and regulatory or other restrictions on the use of ethylene oxide or otherwise, we may be unable to transition to other contract sterilizers, sterilizer locations or sterilization methods in a timely or cost effective manner or at all, which could have a material impact on our results of operations and financial condition.
To the extent we or our contract sterilizers are or may become unable to sterilize our products or provide sterilization services to us or to our customers, whether caused by insufficient capacity; unavailability of materials for sterilization; regulatory or other restrictions on the use of certain sterilizing methods such as use of ethylene oxide; the bankruptcy or other financial constraints of the sterilizer (as we experienced with respect to one sterilization supplier in 2024); or otherwise, we may be unable to transition to other contract sterilizers, sterilizer locations or sterilization methods in a timely or cost effective manner or at all, which could have a material impact on our results of operations and financial condition.
As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of such acquisitions, and we may incur costs in excess of what we anticipate. These risks would likely be greater in the case of larger acquisitions. Interruption of manufacturing operations could adversely affect our business, financial condition and results of operations.
As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of such acquisitions, and we may incur costs in excess of what we anticipate. These risks would likely be greater in the case of larger acquisitions.
Changes in classification from independent contractor to employee can result in a change to various requirements associated with the payment of wages, tax withholding, and the provision of unemployment, health, and other traditional employer-employee related benefits.
Further, we have been subject to lawsuits challenging the characterization of these relationships. Changes in classification from independent contractor to employee can result in a change to various requirements associated with the payment of wages, tax withholding, and the provision of unemployment, health, and other traditional employer-employee related benefits.
Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, also may materially adversely affect us in future periods.
Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, also may materially adversely affect us in future periods. You should carefully consider these risks and uncertainties before investing in our securities.
Our ability to attract and retain key talent, in particular senior management, is dependent on a number of factors, including prevailing market conditions, our ability to offer competitive compensation packages and our ability to be perceived as a preferred place to work.
Our ability to attract and retain key employee and third-party talent is dependent on a number of factors, including prevailing market conditions, our ability to offer competitive compensation packages, our ability to be perceived as a preferred place to work and the contract terms we offer to third parties.
We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities.
We may have additional tax liabilities as a result of examinations and audits. 19 We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
We must also obtain and maintain regulatory approvals for such products, accurately forecast demand, manufacture the correct mix of products, distribute products to multiple global markets and market those products profitably.
To remain competitive, we must continue to identify, prioritize, develop and acquire new products and technologies, as well as identify, prioritize and improve existing products and technologies. We must also obtain and maintain regulatory approvals for such products, accurately forecast demand, manufacture the correct mix of products, distribute products to multiple global markets and market those products profitably.
Our global regulatory environment is increasingly stringent, unpredictable and complex. The products and services we design, develop, manufacture and market are subject to rigorous regulation by the FDA and numerous other supranational, national, federal, regional, state and local governmental authorities.
The products and services we design, develop, manufacture and market are subject to rigorous regulation by the FDA and numerous other national, regional, state and other governmental authorities.
Violations of foreign laws or regulations could result in fines; criminal sanctions against us, our directors, officers, employees, agents or distributors; prohibitions or restrictions relating to the conduct of our business; and damage to our reputation.
Violations of foreign laws or regulations could result in fines; criminal sanctions against us, our directors, officers, employees, agents or distributors; prohibitions or restrictions relating to the conduct of our business; and damage to our reputation. Furthermore, political tensions between the U.S., Canada, Mexico, China and certain other countries have escalated in recent years.
Our use of artificial intelligence and machine learning in our infrastructure and products exposes us to new threats, risks and uncertainties, including with respect to changing laws and regulations regarding the use of such technologies. Like other large multi-national corporations, we regularly experience cyber attacks, and we expect to continue to be subject to such attacks.
Our use of artificial intelligence and machine learning in our infrastructure and products exposes us to new threats, risks and uncertainties, including with respect to changing laws and regulations regarding the use of such technologies.
Our future performance depends, in large part, on the continued skills, experiences, competencies and services of our senior management and other key talent, including our ability to attract, retain, develop and motivate our highly skilled employees, senior management, independent agents and distributors. Competition for talent in our business is 14 significant.
Our future performance depends on the continued skills, experiences, competencies and services of our senior management, key employees and key third parties (including independent distributors and sales agents), and our ability to attract, retain, develop and motivate such talent.
Pending and future product liability claims and litigation could adversely impact our financial condition and results of operations and impair our reputation. Our business exposes us to potential product liability risks that are inherent in the design, manufacture and marketing of medical devices.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture and marketing of medical devices.
Although we believe that our independent agents and distributors are properly characterized as independent contractors, tax, labor or other regulatory authorities may in the future challenge our characterization of these relationships. Further, we have been subject to lawsuits challenging the characterization of these relationships.
We structure certain of our relationships with independent agents and distributors in a manner that we believe results in an independent contractor relationship, not an employee relationship. Although we believe that these independent agents and distributors are properly characterized as independent contractors, tax, labor or other regulatory authorities may in the future challenge our characterization of these relationships.
Given the uncertain nature of legal proceedings generally, we are not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome. We could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our financial results in any particular period.
Given the uncertain nature of legal proceedings generally, we are not able in all cases to estimate the amount or range of loss that could result from an unfavorable outcome.
If third-party payors decline to reimburse our customers for our products or reduce reimbursement levels, the demand for our products may decline and our ability to sell our products profitably may be harmed.
There can be no assurance that we will successfully manage such risks without adverse impacts to our business or financial results. If third-party payors decline to reimburse our customers for our products or reduce reimbursement levels, the demand for our products may decline and our ability to sell our products profitably may be harmed.
If the spinoff, or the subsequent divestiture of our retained interest in ZimVie, does not qualify for tax-free treatment for U.S. federal income tax purposes, the resulting tax liability to us, to our stockholders and to ZimVie stockholders could be substantial.
If the spinoff, or the subsequent divestiture of our retained interest in ZimVie, does not qualify for tax-free treatment for U.S. federal income tax purposes, the resulting tax liability to us, to our stockholders and to ZimVie stockholders could be substantial. 20 Global Operational Risks We conduct a significant amount of our sales and manufacturing activities outside of the U.S., which subjects us to additional business risks and may cause our profitability to decline due to increased costs.
Further, if the counterparties to the derivative financial instrument transactions fail to honor their obligations due to financial distress or otherwise, we would be exposed to potential losses or the inability to recover anticipated gains from those transactions. 21 Legal, Regulatory and Compliance Risks We are subject to complex and expensive laws and governmental regulations relating to the development, design, product standards, packaging, advertising, promotion, post-market surveillance, manufacturing, labeling and marketing of our products, non-compliance with which could adversely affect our business, financial condition and results of operations.
Legal, Regulatory and Compliance Risks We are subject to complex and expensive laws and governmental regulations relating to the development, design, product standards, packaging, advertising, promotion, post-market surveillance, manufacturing, labeling and marketing of our products, non-compliance with which could adversely affect our business, financial condition and results of operations. Our global regulatory environment is increasingly stringent, unpredictable and complex.
As a result of the increase in our debt, demands on our cash resources have increased; such demand would further amplify if we fund future mergers and acquisitions using debt financing.
As of December 31, 2024, our debt service principal obligations (excluding interest, leases and equipment notes), during the next 12 months are expected to be $0.9 billion. As a result of the increase in our debt, demands on our cash resources have increased; such demand would further amplify if we fund future mergers and acquisitions using debt financing.
If key participants in government healthcare systems reduce the reimbursement levels for our products, including through regulatory changes, elections and other political changes, our business, financial condition, results of operations and cash flows may be adversely affected. 18 Financial, Credit and Liquidity Risks We incurred substantial additional indebtedness in connection with previous mergers and acquisitions and may not be able to meet all of our debt obligations, and interest rate risk could adversely affect our indebtedness.
If key participants in government healthcare systems reduce the reimbursement levels for our products, including through regulatory changes, elections and other political changes, our business, financial condition, results of operations and cash flows may be adversely affected.
We intend to continue to pursue growth opportunities in sales internationally, including in emerging markets, which could expose us to additional risks associated with international sales and operations.
We sell our products in more than 100 countries and derived approximately 42 percent of our net sales in 2024 from outside the U.S. We intend to continue to pursue growth opportunities in sales internationally, including in emerging markets, which could expose us to additional risks associated with international sales and operations.
Effective succession planning is also important to our long-term success; failure to ensure effective transfer of knowledge and orderly transitions involving key employees could hinder our business. Our restructuring programs may not be successful or we may not fully realize the expected cost savings and/or operating efficiencies from our restructuring initiatives.
Failure to ensure orderly transitions involving senior management, key employees and key third parties, as well as inadequate transfer of knowledge, customer relationships and other know-how, could adversely affect our business and financial results. 14 Our restructuring programs may not be successful or we may not fully realize the expected cost savings and/or operating efficiencies from our restructuring initiatives.
You should carefully consider these risks and uncertainties before investing in our securities. 13 Risks Related to our Business, Operations and Strategy Our success depends on our ability to effectively develop and market our products against those of our competitors. We operate in a highly competitive environment.
Risks Related to our Business, Operations and Strategy Our success depends on our ability to effectively develop and market our products against those of our competitors. We operate in a highly competitive environment. Our present or future products could be rendered obsolete or uneconomical by technological advances by one or more of our present or future competitors.
Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. The results of 19 an audit or litigation could have a material effect on our financial statements in the period or periods for which that determination is made.
We are regularly under audit by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals.
Risks Related to Our Organizational Documents and Jurisdiction of Incorporation Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
We could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our financial results in any particular period. 24 Risks Related to Our Organizational Documents and Jurisdiction of Incorporation Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
If our independent agents and distributors are characterized as employees, we would be subject to additional tax and other liabilities. We structure our relationships with independent agents and distributors in a manner that we believe results in an independent contractor relationship, not an employee relationship.
The results of an audit or litigation could have a material effect on our financial statements in the period or periods for which that determination is made. If our independent agents and distributors are characterized as employees, we would be subject to additional tax and other liabilities.
We have experienced such interruptions previously, and we may experience such interruptions in the future.
We have experienced such interruptions previously (including in connection with our enterprise resource planning system implementation which negatively impacted distribution of our products), and we may experience such interruptions in the future.
In cases where our product is not selected in VBP, sales of that product are substantially impacted. Similarly, the Italian Public Administration has implemented a Pay Back Law to obtain reimbursement from the medical device industry to contribute to government overspending on medical devices beginning in 2015, which assessments we are challenging.
Similarly, the Italian Public Administration has implemented a “Pay Back” law to obtain reimbursement from the medical device industry to contribute to government overspending on medical devices beginning in 2015, which assessments we have challenged, and a “Fund for the Government of Medical Devices” applicable to revenues relating to medical devices, large medical equipment and in vitro diagnostic devices commencing in 2024, which assessment we have also challenged.
We incurred substantial additional indebtedness in connection with previous mergers and acquisitions. At December 31, 2023, our total indebtedness was $5.8 billion. As of December 31, 2023, our debt service principal obligations (excluding interest, leases and equipment notes), during the next 12 months are expected to be $0.9 billion.
We incurred substantial indebtedness in connection with previous mergers and acquisitions, and may incur substantial additional indebtedness in connection with future mergers and acquisitions. At December 31, 2024, our total indebtedness was $6.2 billion.
Many of these employees, agents and distributors have developed professional relationships with existing and potential customers because of the agents’ detailed knowledge of products and instruments. A loss of a significant number of our marketing employees, agents or distributors could have a material adverse effect on our business and results of operations.
Additionally, certain of our key employees and third parties have detailed knowledge of our products and instruments and have developed professional relationships with existing and potential customers due to this knowledge.
Removed
Our present or future products could be rendered obsolete or uneconomical by technological advances by one or more of our present or future competitors. To remain competitive, we must continue to identify, prioritize, develop and acquire new products and technologies, as well as identify, prioritize and improve existing products and technologies.
Added
We rely on certain employees and third parties for research and development; operations; quality assurance; and the distribution, marketing and sales of our products. If we fail to retain our senior management, key employees and key third parties, our revenue and profitability may decline, and our business may be otherwise adversely affected.
Removed
Moreover, we are subject to the SEC’s rule regarding disclosure of the use of certain minerals, known as “conflict minerals” (tantalum, tin and tungsten (or their ores) and gold), which are mined from the Democratic Republic of the Congo and adjoining countries.
Added
Recent legal and regulatory changes may affect our ability to enforce post-termination obligations from certain employees and third parties with respect to non-competition, non-solicitation and protection of confidential information, which may negatively impact our ability to retain employees and third-party distributors and to protect our information and relationships with our customers. Competition for talent in our business is significant.
Removed
This rule could adversely affect the sourcing, availability and pricing of materials used in the manufacture of our products, which could adversely affect our manufacturing operations and our profitability. In addition, we are incurring additional costs to comply with this rule, including costs related to determining the source of any relevant minerals, metals and other materials used in our products.
Added
Changes in the terms and conditions of employment or engagement, such as the availability of remote and hybrid work programs, benefit and perquisite programs and engagement on an employee or independent contractor basis, may affect our ability to attract and retain key talent.
Removed
We have a complex supply chain, and we may not be able to sufficiently verify the origins of the minerals and metals used in our products through our due diligence procedures. As a result, we may face reputational challenges with our customers and other stakeholders.
Added
Effective succession planning for senior management, key employees and key third parties (including independent distributors and sales agents) is also important to our long-term success.
Removed
There can be no assurance that we will successfully manage risks, such as experienced during the COVID-19 pandemic, without adverse impacts to our business or financial results.
Added
Challenges integrating, transitioning and implementing a new enterprise resource planning ("ERP") system have adversely affected our business and operations, and may in the future have further adverse effects. As a result of technology initiatives, changes in our system platforms and the ongoing integration of business acquisitions, we have been consolidating and integrating the ERP systems that we operate.
Removed
Moreover, the occurrence of any one or more risks described in these Risk Factors or 17 otherwise may have unpredictable effects on other risks, our business, financial or operational results which may be comparable to, or more adverse than, those we experienced in connection with the COVID-19 pandemic.

… 23 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+2 added−0 removed12 unchanged
Biggest changeOur CISO has over 20 years of experience in information technology security obtained in civilian and military roles, and regularly reports on cybersecurity matters to our Audit Committee. As of December 31, 2023, our Cybersecurity, Risk and Compliance team consisted of team members and contractors, many of whom 25 have advanced degrees and cybersecurity-related industry certifications.
Biggest changeAs part of our cybersecurity program, our CISO and/or our Chief Information and Technology Officer regularly report on cybersecurity matters to our Audit Committee. As of December 31, 2024, our Cybersecurity, Risk and Compliance teams consisted of team members and contractors, many of whom have advanced degrees and cybersecurity-related industry certifications.
Under the direction of our CISO, we monitor developments that could affect our long-term organizational cybersecurity strategy based on threats globally and to continually enhance our cybersecurity program in response to such developments.
Under the direction of our ITGI and CISO, we monitor developments that could affect our long-term organizational cybersecurity strategy based on threats globally and to continually enhance our cybersecurity program in response to such developments.
Risk Factors - We are dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems or data, including from data breaches and cybersecurity events, our business could be adversely affected. Governance The Audit Committee of the Board of Directors oversees our cybersecurity program.
Risk Factors - We and our business partners are dependent on sophisticated information technology and if we fail to effectively maintain or protect our information systems and data, including from cybersecurity events, our business could be adversely affected. Governance The Audit Committee of the Board of Directors oversees our cybersecurity program.
We engage third parties to enhance and strengthen our cybersecurity program, to provide additional capabilities and support and to provide annual independent assessments and evaluations of our cybersecurity program. Third parties also provide managed services for security operations, incident response, vulnerability remediation consulting, security remediation services, patching, and external audit services.
We engage third parties to enhance and strengthen our cybersecurity program, to provide additional capabilities and support and to provide annual independent assessments and evaluations of our cybersecurity program. Third parties 25 also provide managed services for incident response, proactive threat identification services, security architecture consulting, security remediation services, patching and external audit services.
Additionally, cybersecurity threats and incidents determined through our cybersecurity program to present potential material impacts to our financial results, operations, and/or reputation are required to be immediately reported to the Audit Committee in accordance with our escalation framework. Our Chief Information Security Officer (“CISO”) leads our cybersecurity program through our global information security operations team.
Additionally, cybersecurity threats and incidents determined through our cybersecurity program to present potential material impacts to our financial results, operations, and/or reputation are required to be immediately reported to the Audit Committee in accordance with our escalation framework.
Added
O ur VP, IT Global Infrastructure (“ITGI” ) leads our cybersecurity program through our global information security operations team and also leads our IT Governance, Risk and Compliance and Incident Response functions. Ou r acting Chief Information Security Officer (“CISO”) leads our security operations functions.
Added
Our CISO has over 10 years of experience in information technology security obtained in civilian and military roles and our ITGI has over 20 years of experience in information technology and cybersecurity leadership obtained in civilian roles.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed5 unchanged
Biggest changeThese local market facilities are primarily leased due to common businesses practices and to allow us to be more adaptable to changing needs in the market. We distribute our products both through large, centralized warehouses and through smaller, market specific facilities, depending on the needs of the market.
Biggest changeThese local market facilities are primarily leased due to common businesses practices and to allow us to be more adaptable to changing needs in the market. 26 We distribute our products both through large, centralized warehouses and through smaller, market specific facilities, depending on the needs of the market.
Item 4. Mine Saf ety Disclosures Not Applicable. 26 PART II
Item 4. Mine Saf ety Disclosures Not Applicable. 27 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changeCompany/Index 2018 2019 2020 2021 2022 2023 Zimmer Biomet Holdings, Inc. $ 100.00 $ 145.38 $ 150.84 $ 125.16 $ 130.55 $ 125.57 S&P 500 Stock Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 Health Care Equipment Index 100.00 129.32 152.12 181.56 147.32 160.64 Issuer Purchases of Equity Securities The following table summarizes repurchases of common stock settled during the three months ended December 31, 2023: 27 Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as a Part of Publicly Announced Program (1) Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Program (1) October 2023 - $ - - $ 591,700,271 November 2023 1,610,580 111.44 1,610,580 412,214,066 December 2023 2,160,287 118.69 2,160,287 155,805,204 Total 3,770,867 $ 115.60 3,770,867 $ 155,805,204 (1) In February 2016, our Board of Directors authorized a $1.0 billion share repurchase program effective March 1, 2016, with no expiration date.
Biggest changeDecember 31, Company/Index 2019 2020 2021 2022 2023 2024 Zimmer Biomet Holdings, Inc. $ 100.00 $ 103.76 $ 86.09 $ 89.80 $ 86.38 $ 75.61 S&P 500 Stock Index 100.00 118.40 152.39 124.79 157.59 197.02 S&P 500 Health Care Equipment Index 100.00 117.63 140.40 113.92 124.22 137.81 Issuer Purchases of Equity Securities The following table summarizes repurchases of common stock settled during the three months ended December 31, 2024: 28 Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as a Part of Publicly Announced Program (1) Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Program (1) October 2024 554,874 $ 104.62 554,874 $ 1,249,999,420 November 2024 - - - 1,249,999,420 December 2024 - - - 1,249,999,420 Total 554,874 $ 104.62 554,874 $ 1,249,999,420 (1) In May 2024, our Board of Directors authorized a $2.0 billion share repurchase program effective May 29, 2024, with no expiration date.
The graph below shows the cumulative total stockholder return on our common stock compared to the S&P 500 Stock Index and the S&P 500 Health Care Equipment Index. The chart assumes $100 was invested on December 31, 2018 in Zimmer Biomet common stock and each index and that dividends were reinvested.
The graph below shows the cumulative total stockholder return on our common stock compared to the S&P 500 Stock Index and the S&P 500 Health Care Equipment Index. The chart assumes $100 was invested on December 31, 2019 in Zimmer Biomet common stock and each index and that dividends were reinvested.
Market for the Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Market for the Registrant’s Common Equity and Related Stockholder Matters Our common stock is traded on the New York Stock Exchange and the SIX Swiss Exchange under the symbol “ZBH.” As of February 6, 2024, there were approximately 13,587 holders of record of our common stock.
Market for the Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Market for the Registrant’s Common Equity and Related Stockholder Matters Our common stock is traded on the New York Stock Exchange and the SIX Swiss Exchange under the symbol “ZBH.” As of February 10, 2025, there were approximately 12,544 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+26 added−22 removed25 unchanged
Biggest changeNet Sales by Geography The following table presents net sales by geography and the percentage changes (dollars in millions): Year Ended December 31, 2023 2022 2021 2023 vs. 2022 % Inc 2022 vs. 2021 % Inc/(Dec) United States $ 4,288.8 $ 4,012.4 $ 3,853.9 6.9 % 4.1 % International 3,105.4 2,927.5 2,973.4 6.1 (1.5 ) Total $ 7,394.2 $ 6,939.9 $ 6,827.3 6.5 1.6 Net Sales by Product Category The following table presents net sales by product category and the percentage changes (dollars in millions): Year Ended December 31, 2023 2022 2021 2023 vs. 2022 % Inc 2022 vs. 2021 % Inc/(Dec) Knees $ 3,038.4 $ 2,778.3 $ 2,647.9 9.4 % 4.9 % Hips 1,967.2 1,894.9 1,856.1 3.8 2.1 S.E.T. 1,752.6 1,696.7 1,727.8 3.3 (1.8 ) Other 636.0 570.0 595.5 11.6 (4.3 ) Total $ 7,394.2 $ 6,939.9 $ 6,827.3 6.5 1.6 The following table presents net sales by product category by geography for our Knees and Hips product categories (dollars in millions): Year Ended December 31, 2023 2022 2021 2023 vs. 2022 % Inc 2022 vs. 2021 % Inc/(Dec) Knees United States $ 1,770.6 $ 1,615.0 $ 1,487.6 9.6 % 8.6 % International 1,267.8 1,163.3 1,160.3 9.0 0.3 Total $ 3,038.4 $ 2,778.3 $ 2,647.9 9.4 4.9 Hips United States $ 1,012.3 $ 960.9 $ 921.5 5.4 % 4.3 % International 954.9 934.0 934.6 2.2 (0.1 ) Total $ 1,967.2 $ 1,894.9 $ 1,856.1 3.8 2.1 Demand (Volume/Mix) Trends Changes in volume and mix of product sales had positive effects of 8.1 percent and 7.6 percent on year-over-year sales during the years ended December 31, 2023 and 2022, respectively.
Biggest changeNet Sales by Geography The following table presents net sales by geography and the percentage changes (dollars in millions): Year Ended December 31, 2024 2023 2022 2024 vs. 2023 % Inc 2023 vs. 2022 % Inc United States $ 4,439.0 $ 4,288.8 $ 4,012.4 3.5 % 6.9 % International 3,239.6 3,105.4 2,927.5 4.3 6.1 Total $ 7,678.6 $ 7,394.2 $ 6,939.9 3.8 6.5 Net Sales by Product Category The following table presents net sales by product category and the percentage changes (dollars in millions): Year Ended December 31, 2024 2023 2022 2024 vs. 2023 % Inc 2023 vs. 2022 % Inc Knees $ 3,173.5 $ 3,038.4 $ 2,778.3 4.4 % 9.4 % Hips 1,999.1 1,967.2 1,894.9 1.6 3.8 S.E.T. 1,865.7 1,752.6 1,696.7 6.5 3.3 Technology & Data, Bone Cement and Surgical 640.3 636.0 570.0 0.7 11.6 Total $ 7,678.6 $ 7,394.2 $ 6,939.9 3.8 6.5 The following table presents net sales by product category by geography for our Knees and Hips product categories (dollars in millions): Year Ended December 31, 2024 2023 2022 2024 vs. 2023 % Inc 2023 vs. 2022 % Inc Knees United States $ 1,814.7 $ 1,770.6 $ 1,615.0 2.5 % 9.6 % International 1,358.8 1,267.8 1,163.3 7.2 9.0 Total $ 3,173.5 $ 3,038.4 $ 2,778.3 4.4 9.4 Hips United States $ 1,040.0 $ 1,012.3 $ 960.9 2.7 % 5.4 % International 959.1 954.9 934.0 0.4 2.2 Total $ 1,999.1 $ 1,967.2 $ 1,894.9 1.6 3.8 Demand (Volume/Mix) Trends Changes in volume and mix of product sales had a positive effect of 4.2 percent on year-over-year sales growth in 2024.
We review sales by these geographies because the underlying market trends in any particular geography tend to be similar across product categories, because we primarily sell the same products in all geographies and many of our competitors publicly report in this manner.
We review sales by these geographies because the underlying market trends in any particular geography tend to be similar across product categories, because we primarily sell the same products in all geographies and because many of our competitors publicly report in this manner.
We issued senior notes for $499.8 million and used those proceeds to repay amounts outstanding under our existing credit facilities and for general corporate purposes, such that we repaid a net $325.0 million on our various revolving credit facilities and $120.2 million of other debt obligations that were due in the first quarter of 2023.
In 2023, we issued senior notes for $499.8 million and used those proceeds to repay amounts outstanding under our existing credit facilities and for general corporate purposes, such that we repaid a net $325.0 million on our various revolving credit facilities and $120.2 million of other debt obligations that were due in the first quarter of 2023.
Our business is seasonal in nature to some extent, as many of our products are used 29 in elective surgical procedures, which typically decline during the summer months and can increase at the end of the year once annual deductibles have been met on health insurance plans.
Our business is seasonal in nature to some extent, as many of our products are used in elective surgical procedures, which typically decline during the summer months and can increase at the end of the year once annual deductibles have been met on health insurance plans.
The reduction in royalty expense was partially the result of agreements we entered into to acquire intellectual property through the buyout of certain licensing arrangements, which are recognized as intangible assets and result in additional intangible asset amortization expense instead of royalty expense.
The reduction in royalty expense was partially the result of agreements we entered into in 2023 to acquire intellectual property through the buyout of certain licensing arrangements, which are recognized as intangible assets and result in additional intangible asset amortization expense instead of royalty expense.
Our latest estimates indicate that we will be near the low end of that range, and the full benefits will not be realized until we complete the closure of a manufacturing facility, which is expected of occur in 2025.
Our latest estimates indicate that we will be near the low end of that range, and the full benefits will not be realized until we complete the closure of a manufacturing facility, which is expected to occur in 2025.
Goodwill and Intangible Assets - We evaluate the carrying value of goodwill and indefinite life intangible assets annually, or whenever events or circumstances indicate that the fair value is below its carrying amount. We evaluate the carrying value of finite life intangible assets whenever events or circumstances indicate the carrying value may 36 not be recoverable.
Goodwill and Intangible Assets - We evaluate the carrying value of goodwill and indefinite life intangible assets annually, or whenever events or circumstances indicate that the fair value is below its carrying amount. We evaluate the carrying value of finite life intangible assets whenever events or circumstances indicate the carrying value may not be recoverable.
In March, May, August and December 2023, our Board of Directors declared cash dividends of $0.24 per share. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change.
In March, May, August and December 2024, our Board of Directors declared cash dividends of $0.24 per share. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change.
As discussed in Note 17 to our consolidated financial statements, the IRS has issued proposed adjustments for years 2010 through 2012, for years 2013 through 2015, and for years 2016 through 2019. We have disputed these proposed adjustments and intend to continue to vigorously defend our positions.
As discussed in Note 17 to our consolidated financial statements, the IRS has issued proposed adjustments for years 2013 through 2015 and for years 2016 through 2019. We have disputed these proposed adjustments and intend to continue to vigorously defend our positions.
Percentages presented are calculated from the underlying unrounded amounts. The following discussion, analysis and comparisons generally focus on the operating results for the years ended December 31, 2023 and 2022.
Percentages presented are calculated from the underlying unrounded amounts. The following discussion, analysis and comparisons generally focus on the operating results for the years ended December 31, 2024 and 2023.
Of this amount, $55.0 million is denominated in U.S. Dollars and, therefore, bears no foreign currency translation risk. The remaining amount is denominated in currencies of the various countries where we operate. As discussed in Note 17 to our consolidated financial statements, we generally intend to limit distributions such that they would not result in significant U.S. tax costs.
Of this amount, $59.3 million is denominated in U.S. Dollars and, therefore, bears no foreign currency translation risk. The remaining amount is denominated in currencies of the various countries where we operate. As discussed in Note 17 to our consolidated financial statements, we generally intend to limit distributions such that they would not result in significant U.S. tax costs.
Under the Tax Cuts and Jobs Act of 2017, we have a $206.2 million liability remaining from a one-time tax on the mandatory deemed repatriation of post-1986 untaxed foreign earnings and profits (“transition tax”) for the deemed repatriation of unremitted foreign earnings.
Under the Tax Cuts and Jobs Act of 2017, we have a $154.6 million liability remaining from a one-time tax on the mandatory deemed repatriation of post-1986 untaxed foreign earnings and profits (“transition tax”) for the deemed repatriation of unremitted foreign earnings.
Our ETR in future periods could also potentially be impacted by: changes in our mix of pre-tax earnings; changes in tax rates, tax laws or their interpretation, including the European Union adoption of Pillar Two proposals which will begin to take effect in 2024; the outcome of various federal, state and foreign audits, appeals, and litigation; and the expiration of certain statutes of limitations.
Our ETR in future periods could also potentially be impacted by: changes in our mix of pre-tax earnings; changes in tax rates, tax laws or their interpretation, including the continued adoption of Pillar Two proposals which began to take effect in 2024; the outcome of various federal, state and foreign audits, appeals, and litigation; and the expiration of certain statutes of limitations.
Further, there can be no assurance that, if needed, we will be able to secure additional financing on terms favorable to us, if at all. Sources of Liquidity Cash flows provided by operating activities from continuing operations were $1,581.6 million in 2023 compared to $1,356.2 million in 2022.
Further, there can be no assurance that, if needed, we will be able to secure additional financing on terms favorable to us, if at all. Sources of Liquidity Cash flows provided by operating activities from continuing operations were $1,499.4 million in 2024 compared to $1,581.6 million in 2023.
We place our cash and cash equivalents in highly-rated financial institutions and limit the amount of credit exposure to any one entity. We invest only in high-quality financial instruments in accordance with our internal investment policy. As of December 31, 2023, $343.4 million of our cash and cash equivalents were held in jurisdictions outside of the U.S.
We place our cash and cash equivalents in highly-rated financial institutions and limit the amount of credit exposure to any one entity. We invest only in high-quality financial instruments in accordance with our internal investment policy. As of December 31, 2024, $436.8 million of our cash and cash equivalents were held in jurisdictions outside of the U.S.
(Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic); and Other. This sales analysis differs from our reportable operating segments, which are based upon our senior management organizational structure and how we allocate resources toward achieving operating profit goals.
(Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic); and Technology & Data, Bone Cement and Surgical. This sales analysis differs from our reportable operating segments, which are based upon our senior management organizational structure and how we allocate resources toward achieving operating profit goals.
Expenses as a Percent of Net Sales Year Ended December 31, 2023 2022 2021 2023 vs. 2022 Inc/(Dec) 2022 vs. 2021 Inc/(Dec) Cost of products sold, excluding intangible asset amortization 28.2 % 29.1 % 28.7 % (0.9) % 0.4 % Intangible asset amortization 7.6 7.6 7.8 - (0.2) Research and development 6.2 5.9 6.4 0.3 (0.5) Selling, general and administrative 38.4 39.8 41.6 (1.4) (1.8) Goodwill and intangible asset impairment - 4.2 0.2 (4.2) 4.0 Restructuring and other cost reduction initiatives 2.1 2.8 1.8 (0.7) 1.0 Quality remediation - 0.5 0.8 (0.5) (0.3) Acquisition, integration, divestiture and related 0.3 0.2 - 0.1 0.2 Operating Profit 17.3 10.0 12.6 7.3 (2.6) Cost of Products Sold and Intangible Asset Amortization Cost of products sold, excluding intangible asset amortization, increased in 2023 compared to 2022 primarily due to higher sales.
Expenses as a Percent of Net Sales Year Ended December 31, 2024 2023 2022 2024 vs. 2023 Inc/(Dec) 2023 vs. 2022 Inc/(Dec) Cost of products sold, excluding intangible asset amortization 28.5 % 28.2 % 29.1 % 0.3 % (0.9) % Intangible asset amortization 7.7 7.6 7.6 0.1 - Research and development 5.7 6.2 5.9 (0.5) 0.3 Selling, general and administrative 38.2 38.4 39.8 (0.2) (1.4) Goodwill and intangible asset impairment - - 4.2 - (4.2) Restructuring and other cost reduction initiatives 2.9 2.1 2.8 0.8 (0.7) Quality remediation - - 0.5 - (0.5) Acquisition, integration, divestiture and related 0.3 0.3 0.2 - 0.1 Operating Profit 16.7 17.3 10.0 (0.6) 7.3 Cost of Products Sold and Intangible Asset Amortization 32 Cost of products sold, excluding intangible asset amortization, increased in both amount and as a percentage of net sales in 2024 compared to 2023.
The following table sets forth the factors that contributed to the gross margin changes in each of 2023 and 2022 compared to the prior year: Year Ended December 31, 2023 2022 Prior year gross margin 63.3 % 63.5 % Lower average selling prices (0.2 ) (0.3 ) Manufacturing costs (0.1 ) (0.9 ) Volume, product and market mix and other 1.4 0.6 Inventory charges (0.5 ) (0.1 ) Changes in foreign currency exchange rates 0.3 0.3 Intangible asset amortization - 0.2 Current year gross margin 64.2 % 63.3 % Operating Expenses Research & development (“R&D”) expenses increased in both amount and as a percentage of net sales in 2023 compared to 2022.
The following table sets forth the factors that contributed to the gross margin changes in each of 2024 and 2023 compared to the prior year: Year Ended December 31, 2024 2023 Prior year gross margin 64.2 % 63.3 % Impact from selling prices 0.2 (0.2 ) Manufacturing costs (1.2 ) (0.1 ) Volume, product and market mix and other 0.7 1.4 Inventory charges 0.1 (0.5 ) Changes in foreign currency exchange rates (0.1 ) 0.3 Intangible asset amortization (0.1 ) - Current year gross margin 63.8 % 64.2 % Operating Expenses Research & development (“R&D”) expenses decreased in both amount and as a percentage of net sales in 2024 compared to 2023.
We have three reporting units with goodwill assigned to them. During our annual goodwill impairment testing in the fourth quarter of 2023, for two of these reporting units their estimated fair values exceeded their carrying values by more than 50 percent. We estimated the fair value of these reporting units using the income and market approaches.
We have four reporting units with goodwill assigned to them. During our annual goodwill impairment testing in the fourth quarter of 2024, for the three reporting units we quantitatively tested their estimated fair values exceeded their carrying values by more than 30 percent. We estimated the fair value of these reporting units using the income and market approaches.
We recognized expenses of $151.9 million and $191.6 million in 2023 and 2022, respectively, primarily related to employee termination benefits, sales agent contract terminations, and consulting and project management expenses associated with these programs.
We recognized expenses of $219.0 million and $151.9 million in 2024 and 2023, respectively, primarily related to employee termination benefits, sales agent contract terminations, and consulting and project management expenses associated with these programs.
The following discussion and analysis is presented on a continuing operations basis unless otherwise noted. The following discussion and analysis should be read in conjunction with the consolidated financial statements and the corresponding notes included elsewhere in this Annual Report on Form 10-K.
See Note 3 to our consolidated financial statements for additional information. The following discussion and analysis is presented on a continuing operations basis unless otherwise noted. The following discussion and analysis should be read in conjunction with the consolidated financial statements and the corresponding notes included elsewhere in this Annual Report on Form 10-K.
In addition, we had $1.0 billion available to borrow under a 364-day revolving credit agreement that matures on July 5, 2024, and $1.5 billion available under a five-year revolving facility that matures on July 7, 2028. The terms of the 364-day revolving credit agreement and the five-year revolving facility are described further in Note 13 to our consolidated financial statements.
In addition, we had $1.0 billion available to borrow under a 364-day revolving credit agreement that matures on June 27, 2025, and $1.5 billion available under a five-year revolving facility that matures on June 28, 2029. The terms of the 364-day revolving credit agreement and the five-year revolving facility are described further in Note 13 to our consolidated financial statements.
As of December, 31, 2023, $51.6 and $154.6 million of this amount is recorded in current income tax liabilities and non-current income tax liabilities, respectively, on our consolidated balance sheet. As discussed in Note 21 to our consolidated financial statements, we are involved in various litigation matters.
As of December, 31, 2024, $68.7 million and $85.9 million of this amount is recorded in current income tax liabilities and non-current income tax liabilities, respectively, on our consolidated balance sheet. As discussed in Note 21 to our consolidated financial statements, we are involved in various litigation matters.
The 2021 Restructuring Plan is expected to result in total pre-tax restructuring charges of approximately $180 million by the end of 2024, of which approximately $170 million was incurred through December 31, 2023.
The 2023 Restructuring Plan along is expected to result in total pre-tax charges of approximately $120 million by the end of 2025, of which $114 million was incurred through December 31, 2024.
We expect to reduce gross annual pre-tax operating expenses by $175 million to $200 million relative to the 2023 baseline expenses by the end of 2025 as program benefits under the 2023 Restructuring Plan are realized.
We expect to reduce gross annual pre-tax operating expenses by $175 million to $200 million relative to the 2023 baseline expenses by the end of 2025 as program benefits under the 2023 Restructuring Plan are realized. The 2021 Restructuring Plan was completed by the end of 2024, resulting in $169 million of total pre-tax charges.
These estimated payments related to these agreements could range from $0 to $440 million. 35 CRITICAL ACCOUNTING ESTIMATES The preparation of our financial statements is affected by the selection and application of accounting policies and methods, and also requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
CRITICAL ACCOUNTING ESTIMATES The preparation of our financial statements is affected by the selection and application of accounting policies and methods, and also requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Cash flows used in investing activities from continuing operations were $778.9 million in 2023 compared to $522.0 million in 2022. Instrument and property, plant and equipment additions reflected ongoing investments in our product portfolio, including new product introductions, optimization of our manufacturing and logistics networks, investments in enterprise resource planning software and a new corporate jet.
Cash flows used in investing activities from continuing operations were $888.1 million in 2024 compared to $778.9 million in 2023. Instrument and property, plant and equipment additions reflected ongoing investments in our product portfolio, including new product introductions, optimization of our manufacturing and logistics networks, and investments in ERP software.
However, we have had some success in reducing the negative effects of pricing due to internal initiatives and being able to pass some inflationary impacts on to customers. 30 Foreign Currency Exchange Rates In 2023 and 2022, changes in foreign currency exchange rates had negative effects of 1.0 percent and 5.0 percent, respectively, on year-over-year sales.
However, we have had success in offsetting negative effects of pricing pressure due to internal initiatives and being able to pass some inflationary impacts on to customers. Foreign Currency Exchange Rates In 2024, changes in foreign currency exchange rates had a negative effect of 1.0 percent on year-over-year sales.
As of December 31, 2023, $155.8 million remained authorized under this program. An additional 0.5 million shares were repurchased in early January 2024 for $64.1 million. As discussed in Note 5 to our consolidated financial statements, we are executing on a 2023 Restructuring Plan, a 2021 Restructuring Plan and a 2019 Restructuring Plan.
As of December 31, 2024, $1,250.0 million remained authorized under this program. As discussed in Note 5 to our consolidated financial statements, we are executing on a 2023 Restructuring Plan, a 2021 Restructuring Plan and a 2019 Restructuring Plan.
However, we do not believe these purchase commitments are material to the overall standing of our business or our liquidity. We have entered into development, distribution and other contractual arrangements that may result in future payments dependent upon various events such as the achievement of certain product R&D milestones, sales milestones, or exclusive rights to distribute a product.
We have entered into development, distribution and other contractual arrangements that may result in future payments dependent upon various events such as the achievement of certain product R&D milestones, sales milestones, or exclusive rights to distribute a product.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations On March 1, 2022, we completed the spinoff of our spine and dental businesses into ZimVie.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations On March 1, 2022, we completed the spinoff of our spine and dental businesses into ZimVie. The historical results of our spine and dental businesses have been reflected as discontinued operations in our consolidated financial statements in our 2022 results through the date of the spinoff.
Commitments and Contingencies - We are involved in various ongoing proceedings, legal actions and claims, including product liability, intellectual property, stockholder matters, tax disputes, commercial disputes, employment matters, whistleblower and qui tam claims and investigations, governmental proceedings and investigations, and other legal matters that arise in the normal course of our business.
These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. 37 Commitments and Contingencies - We are involved in various ongoing proceedings, legal actions and claims, including product liability, intellectual property, stockholder matters, tax disputes, commercial disputes, employment matters, whistleblower and qui tam claims and investigations, governmental proceedings and investigations, and other legal matters that arise in the normal course of our business.
However, as a percentage of net sales intangible asset amortization in 2023 was similar to 2022 as amortization expense and net sales increased by a similar percentage. We calculate gross profit as net sales minus cost of products sold and intangible asset amortization. Our gross margin percentage is gross profit divided by net sales.
We calculate gross profit as net sales minus cost of products sold and intangible asset amortization. Our gross margin percentage is gross profit divided by net sales.
Discussion, analysis and comparisons of the years ended December 31, 2022 and 2021 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion, analysis and comparisons of the years ended December 31, 2023 and 2022 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Exhibit 99.1 to our Current Report on Form 8-K filed on August 7, 2024.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.
Material Cash Requirements from Known Contractual and Other Obligations At December 31, 2023, we had outstanding debt of $5,767.9 million, of which $900.0 million was classified as current debt.
Material Cash Requirements from Known Contractual and Other Obligations At December 31, 2024, we had outstanding debt of $6,204.6 million, of which $863.0 million was classified as current debt that matures on April 1, 2025.
In February 2016, our Board of Directors authorized a $1.0 billion share repurchase program effective March 1, 2016, with no expiration date. In 2023, we executed share repurchases to return cash to investors as well as to limit ownership dilution from the issuance of common stock under our share-based compensation programs and in connection with our acquisition of Embody, Inc.
In 2024, we executed share repurchases under this new repurchase program as well as a previous program in an aggregate amount of $868.0 million to return cash to investors as well as to limit ownership dilution from the issuance of common stock under our share-based compensation programs and in connection with our acquisition of Embody, Inc.
The increase in 2023 was primarily driven by higher earnings, lower restructuring-related payments and lower tax payments. These favorable items were partially offset by higher investments in inventory in 2023 when compared to 2022, as well as higher bonus payments in 2023.
The decrease in 2024 was primarily due to a higher volume of accounts payable payments near the end of 2024 relative to 2023 as well as higher bonus, income tax and restructuring-related payments. These unfavorable items were partially offset by lower inventory investments in 2024 when compared to 2023.
Changes in foreign currency exchange rates had negative effects of 0.8 percent and 1.3 percent on 2023 Knees and Hips net sales, respectively. S.E.T. net sales increased by 3.3 percent in 2023 when compared to 2022. Changes in foreign currency exchange rates had a negative effect of 0.5 percent on 2023 S.E.T. net sales.
Product Categories In 2024, our Knees and Hips net sales increased by 4.4 percent and 1.6 percent, respectively, when compared to 2023 due to market growth and new product introductions. Changes in foreign currency exchange rates had negative effects of 0.8 percent and 1.4 percent on 2024 Knees and Hips net sales, respectively.
The majority of countries in which we operate continue to experience pricing pressure from local hospitals, health systems, and governmental healthcare cost containment efforts.
Pricing Trends Global selling prices had a positive effect of 0.6 percent on year-over-year sales growth in 2024. The majority of countries in which we operate continue to experience pricing pressure from local hospitals, health systems, and governmental healthcare cost containment efforts.
The 2019 Restructuring Plan is expected to result in total pre-tax restructuring charges of approximately $370 million by the end of 2025, of which approximately $320 million was incurred through December 31, 2023.
We estimate gross annual pre-tax operating expenses were reduced by approximately $190 million relative to the 2021 baseline expenses by the end of 2024. The 2019 Restructuring Plan is expected to result in total pre-tax restructuring charges of approximately $400 million by the end of 2025, of which $368 million was incurred through December 31, 2024.
The 2023 International net sales increase was similarly driven by recovery in surgical procedures as COVID-19 caused fewer disruptions across most of our major markets, but volume increases were partially offset by the negative impacts of changes in foreign currency exchange rates of 2.1 percent.
Internationally, net sales increased by 4.3 percent in 2024 when compared to 2023. The 2024 International net sales increase was similarly driven by market growth in most of our international markets, but volume increases were partially offset by the negative impacts of changes in foreign currency exchange rates of 2.3 percent.
In addition, in 2023 we incurred losses of $38.9 million on our fixed-to-variable interest rate swaps compared to losses of $4.0 million in 2022. Our effective tax rate (“ETR”) on earnings from continuing operations before income taxes was 4.0 percent and 27.9 percent for the years ended December 31, 2023 and 2022, respectively.
Our effective tax rate (“ETR”) on earnings from continuing operations before income taxes was 12.7 percent and 4.0 percent for the years ended December 31, 2024 and 2023, respectively.
We 34 believe we can satisfy these debt obligations with cash generated from our operations, by issuing new debt and/or by borrowing on our committed revolving credit facilities. For additional information on our debt, including types of debt, maturity dates, interest rates, debt covenants and available revolving credit facilities, see Note 13 to our consolidated financial statements.
We believe we can satisfy these debt obligations with cash generated from our operations, by issuing new debt and/or by borrowing on our committed revolving credit facilities.
Segment Operating Profit Operating Profit as a Net Sales Operating Profit Percentage of Net Sales Year Ended December 31, Year Ended December 31, Year Ended December 31, (dollars in millions) 2023 2022 2021 2023 2022 2021 2023 2022 2021 Americas $ 4,624.1 $ 4,295.5 $ 4,102.1 $ 1,948.9 $ 1,819.7 $ 1,726.9 42.1 % 42.4 % 42.1 % EMEA 1,592.4 1,456.6 1,477.2 524.6 404.1 405.9 32.9 27.7 27.5 Asia Pacific 1,177.7 1,187.8 1,248.0 422.6 419.6 418.3 35.9 35.3 33.5 Americas In the Americas, operating profit increased, but operating profit as a percentage of net sales decreased, in 2023 compared to 2022.
Segment Operating Profit Segment Profit as a Net Sales Segment Profit Percentage of Net Sales Year Ended December 31, Year Ended December 31, Year Ended December 31, (dollars in millions) 2024 2023 2022 2024 2023 2022 2024 2023 2022 Americas $ 4,794.8 $ 4,624.1 $ 4,295.5 $ 2,577.0 $ 2,487.1 $ 2,282.4 53.7 % 53.8 % 53.1 % EMEA 1,691.1 1,592.4 1,456.5 585.8 538.2 416.1 34.6 33.8 28.6 Asia Pacific 1,192.8 1,177.7 1,187.8 457.6 432.3 429.1 38.4 36.7 36.1 Americas In the Americas, operating profit increased, but operating profit as a percentage of net sales slightly decreased, in 2024 compared to 2023.
Based on foreign currency exchange rates at the end of 2023, we expect foreign currency to negatively affect year-over-year net sales by approximately 0.5 percent. We estimate operating profit will increase in 2024 when compared to 2023 due to higher net sales, leverage from fixed operating expenses and savings from our restructuring plans.
Based on foreign currency exchange rates at the end of 2024, we expect foreign currency to negatively affect year-over-year net sales by approximately 1.5 percent to 2.0 percent.
S.E.T. net sales growth was primarily driven by growth in CMFT, sports medicine and upper extremities products of 12.9 percent, 10.6 percent and 9.4 percent, respectively, partially offset by a 5.5 percent decline in trauma. S.E.T.’s performance was also negatively impacted by unfavorable changes in reimbursement for certain restorative therapy products.
S.E.T. net sales increased by 6.5 percent in 2024 when compared to 2023. S.E.T. net sales growth was primarily driven by net sales growth in CMFT, sports medicine and upper extremities products of 14.0 percent, 13.1 percent and 6.0 percent, respectively, partially offset by a 0.5 percent decline in net sales of trauma products.
The increases were driven by higher personnel-related costs, higher spending on our initial compliance with the European Union Medical Device Regulation, additional R&D expenses from acquisitions we made in 2023, and other R&D investments. Selling, general & administrative (“SG&A”) expenses increased in amount, but decreased as a percentage of net sales in 2023 compared to 2022.
The decreases were driven by lower spending on our initial compliance with the EU MDR as we continue to make progress on the approvals of our products, and savings from our 2023 Restructuring Plan. Selling, general & administrative (“SG&A”) expenses increased in amount, but decreased as a percentage of net sales in 2024 compared to 2023.
Asia Pacific In Asia Pacific, operating profit and operating profit as a percentage of net sales increased in 2023 when compared to 2022. In Asia Pacific, changes in foreign currency exchange rates have had a larger impact on our results than in our other operating segments.
Asia Pacific In Asia Pacific, operating profit and operating profit as a percentage of net sales increased in 2024 when compared to 2023.
We estimate the total liabilities for all litigation matters was $244.1 million as of December 31, 2023. We expect to pay these liabilities over the next few years. In the normal course of business, we enter into purchase commitments, primarily related to raw materials.
We expect to pay these liabilities over the next few years. In the normal course of business, we enter into purchase commitments, primarily related to raw materials. However, we do not believe these purchase commitments are material to the overall standing of our business or our liquidity.
The 2019 Restructuring Plan has an objective of reducing costs to allow us to invest in higher priority growth opportunities. We also have other cost reduction and optimization initiatives that have the goal of reducing costs across the organization.
In December of each of 2023, 2021 and 2019, we initiated global restructuring programs (the “2023 Restructuring Plan,” the “2021 Restructuring Plan” and the “2019 Restructuring Plan,” respectively). We also have other cost reduction and optimization initiatives that have the goal of reducing costs across the organization.
However, operating profit as a percentage of net sales decreased in 2023 due to higher carrying expenses from inventory at consigned locations, and continued investments in R&D, including personnel-related costs, which were partially offset by lower royalty expenses as a result of agreements we entered into to acquire intellectual property through the buyout of certain licensing arrangements.
The increase in operating profit in 2024 was primarily due to higher net sales driven by market growth and new product introductions, coupled with lower royalty expense as a result of agreements we entered into in 2023 to acquire intellectual property through the buyout of certain licensing arrangements.
The expenses were higher in 2022 when compared to 2023 primarily due to additional expenses related to the 2021 Restructuring Plan that had just been initiated at the end of 2021. We expect restructuring and other cost reduction initiatives expense to increase in 2024 as we further implement our 2023 Restructuring Plan.
The expenses were higher in 2024 compared to 2023 primarily due to additional expenses related to the 2023 Restructuring Plan that had just been initiated at the end of 2023 and additional expenses related to our U.S. and Canada ERP implementation. For more information regarding these expenses, see Note 5 to our consolidated financial statements.
The increase in expenses was due to selling and distribution costs that are variable expenses which increase as net sales increase. Additionally, personnel-related costs were higher due to additional headcount investments and annual merit increases, and travel and entertainment costs were higher as we have increased these activities from lower pandemic levels.
The increase in expenses was due to selling and distribution costs that are variable expenses which increase as net sales increase.
Our net sales in 2023 were tempered by a negative 1.0 percent effect from changes in foreign currency exchange rates. Our net earnings from continuing operations were $1,024.0 million in 2023 compared to $290.2 million in 2022. Our net earnings increased in 2023 driven by the higher net sales, favorable tax settlements and lower operating expenses.
For the full year 2024, we estimate this ERP implementation had less than a one percent impact to our net sales. In addition, our net sales in 2024 were tempered by a negative 1.0 percent effect from changes in foreign currency exchange rates. Our net earnings were $903.8 million in 2024 compared to $1,024.0 million in 2023.
These favorable items were partially offset by higher excess and obsolete inventory charges, inflationary cost pressures and lower average selling prices. 31 Intangible asset amortization expense increased in 2023 when compared to 2022 due to acquisitions we made in 2023, including intangible assets acquired from the buyout of certain royalty-related licensing agreements as described above.
Intangible asset amortization expense increased in amount and as a percentage of net sales in 2024 when compared to 2023 due to acquisitions we made in 2024 and 2023, the buyout of certain royalty-related licensing agreements as described above and other technology-based asset purchases in 2024.
Other (Expense) Income, net, Interest Expense, net, and Income Taxes In 2023, we incurred a loss of $9.3 million in our other (expense) income, net compared to a loss of $128.0 million in 2022.
Acquisition, integration, divestiture and related expenses increased in 2024 when compared to 2023 due to the acquisitions made in 2024 as well as the fact that the 2023 acquisitions only had a partial year of integration costs in 2023. 33 Other Expense, net, Interest Expense, net, and Income Taxes In 2024, we incurred a loss of $31.1 million in our other expense, net compared to a loss of $9.3 million in 2023.
In addition, in 2023 we paid $134.9 million related to acquisitions and $86.4 million to acquire intellectual property through the buyout of certain licensing arrangements. Cash flows used in financing activities from continuing operations were $763.5 million in 2023 compared to $775.7 million in 2022.
In addition, in 2024 we paid $276.3 million related to acquisitions and $153.0 million to acquire the ownership rights or gain access to various technologies that were recognized as intangible assets. Cash flows used in financing activities from continuing operations were $484.5 million in 2024 compared to $763.5 million in 2023.
However, as a percentage of net sales costs of products sold, excluding intangible asset amortization, declined in 2023 compared to 2022. This decline was primarily due to volume and mix shift to higher margin products and markets, higher hedge gains recognized in the current year period as part of our hedging program and lower royalty expense.
The increase in amount was primarily due to a higher volume of net sales. The increase as a percentage of net sales was due to higher manufacturing costs from inflation and other cost pressures. The manufacturing cost increase was partially offset by lower royalty expense, volume and mix shift to higher margin products and markets, and improved pricing.
Other product category net sales increased by 11.6 percent in 2023 when compared to 2022 primarily due to higher net sales for our ROSA robot.
Technology & Data, Bone Cement and Surgical product category net sales increased by 0.7 percent in 2024 when compared to 2023 primarily due to higher net sales for our ROSA robot in the first half of the year, but was partially offset by the operational challenges from our ERP system implementation.
Of our current debt, $850.0 million of senior notes mature on November 22, 2024 and the remaining $50.0 million is outstanding under an uncommitted credit facility which we expect to repay during 2024.
In 2024, we issued senior notes for $1,436.3 million and used the proceeds, along with cash on hand, to repurchase $868.0 million of our common stock, redeem $850.0 of our senior notes and repay a net $50.0 million under an uncommitted credit facility.
EMEA In EMEA, operating profit and operating profit as a percentage of net sales increased in 2023 when compared to 2022. The increases were due to higher net sales driven by continued recovery of elective surgical procedures and 33 improved pricing, lower bad debt charges and operating profit leverage from certain costs that do not increase as net sales increase.
However, operating profit as a percentage of net sales decreased slightly due to investments in instruments to support new product introductions and higher bad debt-related charges in 2024. EMEA In EMEA, operating profit and operating profit as a percentage of net sales increased in 2024 when compared to 2023.
We expect our provision for income taxes will increase in 2024 when compared to 2023 due to the European Union adoption of Pillar Two and the non-reoccurrence of favorable tax settlements. RESULTS OF OPERATIONS We review sales by two geographies, the United States and International, and by the following product categories: Knees; Hips; S.E.T.
However, we estimate these favorable items may be partially offset by higher intangible asset amortization, higher net interest expense due to higher interest rates and a higher estimated effective tax rate due to favorable 2024 adjustments that are not expected to recur. 30 RESULTS OF OPERATIONS We review sales by two geographies, the United States and International, and by the following product categories: Knees; Hips; S.E.T.
Geography The 6.9 percent net sales growth in the U.S. in 2023 when compared to 2022 was primarily driven by recovery in surgical procedures as COVID-19 caused fewer disruptions, especially in the Knees and Hips categories. Internationally, net sales increased by 6.1 percent in 2023 when compared to 2022.
Geography The 3.5 percent net sales growth in the U.S. in 2024 when compared to 2023 was driven by market growth in our Knees, Hips and S.E.T. product categories. However, net sales in the U.S. were negatively impacted by the implementation of our new ERP system which caused operational challenges in fulfilling customer orders.
Removed
The historical results of our spine and dental businesses have been reflected as discontinued operations in our consolidated financial statements in our 2022 results through the date of the spinoff and in the prior year periods. See Note 3 to our consolidated financial statements for additional information.
Added
The Current Report on Form 8-K filed on August 7, 2024 was filed solely to recast financial information and related disclosures contained in our Annual Report on Form 10-K for the year ended December 31, 2023 to reflect changes to the operating profit measures of our operating segments.
Removed
EXECUTIVE LEVEL OVERVIEW 2023 Financial Highlights In 2023, we experienced fewer disruptions to elective surgical procedures from the COVID-19 global pandemic as compared to 2022 when the Omicron variant and staffing shortages caused widespread deferrals of procedures.
Added
EXECUTIVE LEVEL OVERVIEW 2024 Financial Highlights In 2024, our net sales increased 3.8 percent when compared to 2023. Net sales growth was driven by a combination of market growth, new product introductions, positive price realization and commercial execution across the organization.
Removed
In addition, improvements in our supply chain, procedure volume recovery from patients who deferred surgical procedures related to the pandemic, new product introductions and commercial execution have contributed to our net sales growth. As a result, in 2023 our net sales increased by 6.5 percent compared to 2022.
Added
These favorable items were negatively impacted by our transition in July 2024 to a new enterprise resource planning ("ERP") software system for a significant portion of our U.S. and Canada sales and commercial operations. As a result of this ERP implementation, we experienced operational challenges which affected our ability to fulfill certain customer orders.
Removed
Operating expenses declined primarily due to lower litigation-related, restructuring-related and quality remediation-related charges.
Added
This disruption mostly affected our U.S. net sales, but our International net sales were also impacted as shipments to our international affiliates were delayed. Shipping levels returned to similar levels that existed prior to the implementation by the end of the year.
Removed
In addition, 2022 included $292.8 million of goodwill and intangible asset impairments, and a $116.6 million loss on our investment in ZimVie. 2024 Outlook We expect year-over-year revenue growth of mid-single digits in 2024 to be driven by a combination of market growth, new product introductions, commercial execution and continued improvements in product supply.
Added
The decline in net earnings was driven by higher favorable tax settlements in 2023 compared to 2024, higher charges from our 2023 Restructuring Plan which was instituted at the end of 2023 and continued into 2024, including $84.6 million in employee termination benefits-related charges recognized in 2024, and higher intangible asset amortization.
Removed
However, we estimate these favorable items may be partially offset by higher intangible asset amortization and increased restructuring-related costs to implement our plans. We estimate our net interest expense will increase slightly due to higher interest rates.
Added
These unfavorable items were partially offset by the net sales increase, savings from our 2023 Restructuring Plan and other initiatives, and lower research and development ("R&D") spending for initial compliance with the European Union Medical Device Regulation ("EU MDR"). 2025 Outlook (excludes any impacts from the proposed Paragon 28, Inc. acquisition) We expect year-over-year revenue growth of 1.0 percent to 3.5 percent in 2025 to be driven by a combination of market growth, new product introductions and commercial execution.
Removed
We saw recovery of elective surgical procedures across most of our major markets driving volume growth. In addition, new product introductions and commercial execution contributed positively to volume and mix trends. Pricing Trends Global selling prices had negative effects of 0.6 percent and 1.0 percent on year-over-year sales during 2023 and 2022, respectively.
Added
We estimate operating profit will increase in 2025 when compared to 2024 due to 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.
Removed
Product Categories In 2023, our Knees and Hips net sales increased by 9.4 percent and 3.8 percent, respectively, when compared to 2022 due to the recovery in elective surgical procedures, improvements in our supply chain and new product introductions.
Added
Market growth and new product introductions contributed positively to volume and mix trends, but were 31 partially offset by the operational challenges resulting from our ERP implementation. Market growth is being driven by an aging and active population, technological advancements, and data showcasing positive clinical outcomes among other factors.

… 32 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−1 removed12 unchanged
Biggest changeExposure to credit risk is controlled through credit approvals, credit limits and monitoring procedures, and we believe that reserves for losses are adequate. 39
Biggest changeWhile we are exposed to risks from the broader healthcare industry in Europe and around the world, there is no significant net exposure due to any individual customer. Exposure to credit risk is controlled through credit approvals, credit limits and monitoring procedures, and we believe that reserves for losses are adequate. 40
We maintain written policies and procedures governing our risk management activities. Our policy requires that critical terms of hedging instruments be the same as hedged forecasted transactions. On this basis, with respect to cash flow hedges, changes in cash flows attributable to hedged transactions are generally expected to be offset by changes in the fair value of hedge instruments.
We maintain written policies and procedures governing our risk management activities. Our policy requires that critical terms of hedging instruments be the same as hedged forecasted transactions. On this basis, with respect to 38 cash flow hedges, changes in cash flows attributable to hedged transactions are generally expected to be offset by changes in the fair value of hedge instruments.
As part of our risk management program, we also perform sensitivity analyses to assess potential changes in revenue, operating results, cash flows and financial position relating to hypothetical movements in currency exchange rates. A sensitivity analysis of changes in the fair value of foreign currency exchange forward contracts outstanding at December 31, 2023 indicated that, if the U.S.
As part of our risk management program, we also perform sensitivity analyses to assess potential changes in revenue, operating results, cash flows and financial position relating to hypothetical movements in currency exchange rates. A sensitivity analysis of changes in the fair value of foreign currency exchange forward contracts outstanding at December 31, 2024 indicated that, if the U.S.
The majority of our debt is fixed-rate debt and therefore is not exposed to changes in interest rates. Based upon our overall interest rate exposure as of December 31, 2023, a change of 10 percent in interest rates, assuming the principal amount outstanding remains constant, would not have a material effect on interest expense, net.
The majority of our debt is fixed-rate debt and therefore is not exposed to changes in interest rates. Based upon our overall interest rate exposure as of December 31, 2024, a change of 10 percent in interest rates, assuming the principal amount outstanding remains constant, would not have a material effect on interest expense, net.
Dollar uniformly strengthened or weakened in value by 10 percent relative to all currencies, with no change in the interest differentials, the fair value of those contracts would affect earnings in a range of a decrease of approximately $114 million to an increase of approximately $105 million before income taxes in periods through June 2026.
Dollar uniformly strengthened or weakened in value by 10 percent relative to all currencies, with no change in the interest differentials, the fair value of those contracts would affect earnings in a range of a decrease of approximately $85 million to an increase of approximately $84 million before income taxes in periods through June 2027.
Consequently, 37 foreign currency exchange contracts would not subject us to material risk due to exchange rate movements because gains and losses on these contracts offset gains and losses on the assets, liabilities and transactions being hedged. We had net assets, excluding goodwill and intangible assets, in legal entities with non-U.S.
Consequently, foreign currency exchange contracts would not subject us to material risk due to exchange rate movements because gains and losses on these contracts offset gains and losses on the assets, liabilities and transactions being hedged. We had net assets, excluding goodwill and intangible assets, in legal entities with non-U.S. Dollar functional currencies of $1,950.5 million at December 31, 2024.
Dollar functional currencies of $1,854.5 million at December 31, 2023. We enter into foreign currency forward exchange contracts with terms of one to three months to manage currency exposures for monetary assets and liabilities denominated in a currency other than an entity’s functional currency.
We enter into foreign currency forward exchange contracts with terms of one to three months to manage currency exposures for monetary assets and liabilities denominated in a currency other than an entity’s functional currency.
We place our cash and cash equivalents and enter into derivative transactions with highly-rated financial institutions and limit the amount of credit exposure to any one entity. We believe we do not have any significant credit risk on our cash and cash equivalents or derivative instruments.
We place our cash and cash equivalents and enter into derivative transactions with highly-rated financial institutions and limit the amount of credit exposure to any one entity.
Our concentrations of credit risks with respect to trade accounts receivable is limited due to the large number of customers and their dispersion across a number of geographic areas and by frequent monitoring of the creditworthiness of the customers to whom credit is granted in the normal course of business.
We believe we do not have any significant credit risk on our cash and cash equivalents or derivative instruments. 39 Our concentrations of credit risks with respect to trade accounts receivable is limited due to the large number of customers and their dispersion across a number of geographic areas and by frequent monitoring of the creditworthiness of the customers to whom credit is granted in the normal course of business.
Since we sell products to public hospitals in those countries, we are indirectly exposed to government budget constraints and price reduction initiatives.
Since we sell products to public hospitals in those countries, we are indirectly exposed to government budget constraints and price reduction initiatives. To the extent the respective governments’ ability to fund their public hospital programs deteriorates, we may have to record significant bad debt expenses in the future.
Removed
To the extent the respective governments’ ability to fund their public hospital programs deteriorates, we may have to record significant bad debt expenses in the future. 38 While we are exposed to risks from the broader healthcare industry in Europe and around the world, there is no significant net exposure due to any individual customer.

Other ZBH 10-K year-over-year comparisons