Zimmer Biomet's Q2 2026 sales rose 4.8% (4.0% organic) and GAAP EPS jumped 34% to $1.03 as Paragon 28 deal costs fell away, but adjusted operating profit slipped 3.3% and adjusted EPS stayed flat at $2.07; full-year guidance was raised.
Revenue
$2.2B
+4.8% YoY
Net income
$198M
+29.8% YoY
Diluted EPS
$1.03
+33.8% YoY
Operating margin
15.0%
How ZBH compares with Health Care peers
Figure
ZBH
Peer median
Rank
Revenue growth (YoY)
+4.8%
+7.3%
41st of 53
Operating margin
15.0%
15.1%
28th of 53
EPS growth (YoY)
+33.8%
+15.1%
14th of 48
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Health Care companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Zimmer Biomet's second quarter of 2026 looks strong on a GAAP basis (the standard accounting rules companies must report under): net earnings rose 29.8% to $198.3 million and diluted EPS rose 33.8% to $1.03, on net sales up 4.8% to $2.177 billion. But most of that profit jump came from costs that went away, not from the business earning more. Zimmer's own "adjusted" profit measure, which strips out acquisition costs, amortization and other items, fell 3.3% even as sales grew, and adjusted EPS stayed flat at $2.07. Buybacks were the only reason it didn't fall. Management still raised its full-year sales and adjusted EPS guidance after a strong first half.
At a glance
4.0% organic growth. This strips out currency swings and the Paragon 28 foot-and-ankle business Zimmer bought in April 2025. It's a decent pace for an orthopedics company, but the company says part of it came from "opportunistic end-of-quarter customer purchases": customers stocking up early, which can borrow sales from later quarters.
Knees grew 0.1% in constant currency. Knees are the largest category, 38% of sales. Hips grew 5.1%, and the robotics-and-cement category grew 21.5%. The core knee franchise is barely growing.
Adjusted operating margin fell to 25.7% from 27.8%. That's the share of sales left as profit after running the business, before interest and tax, on Zimmer's adjusted basis. Higher manufacturing costs, lower prices and more spending on the sales force absorbed the extra revenue.
Q2 2026 results
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$2,177.0M
$2,077.3M
+4.8%
Organic constant-currency sales growth
+4.0%
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S.E.T. = sports medicine, upper extremities, foot and ankle, trauma, craniomaxillofacial and thoracic. Adjusted figures and free cash flow are the company's non-GAAP measures from its Aug. 5 earnings release.
Where the growth came from
Zimmer splits its sales growth three ways. Volume and product mix added 5.5 percentage points, of which the Paragon 28 acquisition contributed 0.7 points. Prices took away 0.8 points, and currency added 0.1 points. The 10-Q gives two reasons for the lower prices: "pricing pressure from local hospitals, health systems, and governmental healthcare cost containment efforts," and volume discounts Zimmer offered to get customers to buy. Implant makers like Zimmer lose a little on price every year and make it up on volume, so a 0.8-point hit is normal.
This was the last quarter with any acquisition effect. The Paragon 28 deal passed its one-year anniversary in April 2026, so from Q3 on, reported growth will be organic apart from currency. That growth slowed to 4.0% this quarter, from 7.0% reported for the first half.
By product category:
Knees (+0.1% constant currency). U.S. knees grew 1.4%, and international knees fell 1.5% in constant currency. Management credits "opportunistic end-of-quarter customer purchases, market growth and new product introductions" for the growth in knees and hips. For knees, those factors added up to almost nothing. Zimmer is the largest seller of knee implants, so a flat knee business drags on the whole company.
Hips (+5.1% constant currency). Hips were healthier: U.S. hips grew 5.9% and international hips grew 4.2% in constant currency.
S.E.T. (+6.4% reported, +3.4% organic). Paragon 28 supplied 2.8 points of the reported growth. Upper extremities and craniomaxillofacial/thoracic products (skull, face and chest-wall fixation) drove the rest.
Technology & Data, Bone Cement and Surgical (+21.1%). This was the fastest-growing category. The 10-Q attributes it "primarily" to "strong net sales of our ROSA® Robot and bone cement products." ROSA is Zimmer's surgical robot. Hospitals pay for the robot as a one-off capital purchase, and it is meant to tie those hospitals to Zimmer's implants. During the quarter Zimmer won FDA clearance for a next-generation ROSA Shoulder System. Robot sales are lumpy, though: a strong quarter of placements doesn't repeat automatically.
By geography, U.S. sales grew 5.6% (4.6% organic) and international sales grew 3.7% (3.1% organic).
Where the extra revenue went
Sales grew $99.7 million, but adjusted operating profit fell $18.8 million, from $578.5 million to $559.7 million. The 10-Q names three causes:
Cost of goods rose to 29.2% of sales from 28.5%. The 10-Q cites "higher manufacturing costs," lower prices, and a larger accounting charge on Paragon 28 inventory. Under acquisition accounting, that inventory was revalued up to fair value, so it now costs more when sold ($12.0 million this quarter vs. $7.9 million a year ago). Adjusted gross margin fell to 71.1% from 72.3%.
Selling, general and administrative (SG&A) costs rose to 41.3% of sales from 39.2%. The 10-Q cites higher sales commissions and bonuses, Paragon 28 costs, "higher litigation-related expense from certain product liability matters, higher bad debt charges and investments made in our sales force." Zimmer is in the middle of overhauling how it sells in the U.S. and some international markets, and that is costing money now.
Every region's margin fell. Americas segment margin fell to 40.2% from 41.6%, because Paragon 28 earns lower margins and selling costs are higher. EMEA fell to 31.6% from 33.6%, because currency hedges produced losses this year after gains last year. Asia Pacific fell to 30.7% from 36.2%, "primarily due to a higher mix of revenues to less profitable countries and higher bad debt charges." Asia Pacific had the largest drop.
Research and development spending fell to $104.8 million from $113.3 million. Zimmer finished its one-time spending on complying with the EU's Medical Device Regulation at the end of 2025 and cut some projects. That offset part of the pressure.
What the headline numbers hide
Most of the GAAP profit jump came from one-off costs going away. Pre-tax earnings rose $30.5 million. Acquisition and integration costs fell by $60.8 million, from $78.9 million to $18.1 million, because Q2 2025 carried the Paragon 28 closing costs, including $43.4 million of accelerated stock-award vesting. Without that drop, pre-tax earnings would have fallen.
A lower tax rate added more. The effective tax rate fell to 21.8% from 31.7%. Last year's rate was inflated partly by a change in how Zimmer treated some untaxed foreign earnings. As a result, net earnings grew 29.8% while pre-tax earnings grew 13.6%.
Buybacks kept adjusted EPS flat. Adjusted net earnings fell 2.8%, from $411.2 million to $399.6 million. Diluted shares also fell 2.8%, from 198.3 million to 192.8 million, after Zimmer repurchased $500.8 million of stock in the first half. Adjusted EPS therefore stayed at $2.07. Operations did not grow earnings this quarter.
The gap between GAAP and adjusted results is large. GAAP EPS was $1.03 and adjusted EPS was $2.07. Most of the $1.04 gap comes from excluding intangible amortization: $163.4 million pre-tax, the accounting write-down of past acquisitions' patents and customer relationships. Zimmer also excluded restructuring ($29.8 million, higher this year because of a new manufacturing optimization program), acquisition costs ($18.1 million, including an $11.1 million increase in estimated earn-out payments to sellers of acquired businesses), $12.3 million of product-liability litigation charges and $6.0 million of inventory charges. Restructuring and litigation keep showing up almost every period, so readers should weigh them more heavily than a truly one-off item. Net litigation charges booked in SG&A totaled $17.8 million, up from $5.3 million.
Cash conversion was good. First-half operating cash flow was $807.2 million, 1.84 times GAAP net earnings of $437.9 million. Free cash flow, which is operating cash flow minus spending on equipment and surgical instruments, was $554.1 million, about 68% of first-half adjusted net earnings of $809.0 million. Q2 free cash flow rose 24.5% to $308.3 million, helped by lower restructuring payments, U.S. tariff refunds and lower tax payments.
The first half got a one-off tariff benefit. The U.S. Supreme Court struck down tariffs imposed under the emergency-powers law known as IEEPA. Zimmer then recorded an expected refund, which cut cost of goods by about $30 million in the first half. That benefit sits in Q1, not Q2.
Some Q2 sales may have been pulled forward. The 10-Q names customer stocking-up purchases at quarter-end as a sales driver. Receivables and inventory don't show a problem: receivables rose 3.8% since December, in line with sales. But these purchases can reduce sales in the next quarter.
Net debt went up. It rose to $7.07 billion from $6.93 billion at year-end, because buybacks ($500.8 million) exceeded free cash flow. $1.2 billion of debt is due by February 2027. After quarter-end, Zimmer also agreed to two acquisitions costing about $245 million upfront, plus up to $210 million more if milestones are met.
Takeaway: GAAP EPS rose 34%, but that came from one-off costs falling away and a lower tax rate. On Zimmer's own adjusted basis, operating profit fell 3.3% on 4.8% sales growth, and EPS stayed flat only because 2.8% fewer shares were outstanding. The sales growth is real. Profit isn't growing with it yet.
Guidance and outlook
Management raised its full-year 2026 guidance:
Full-year 2026
Previous guidance
Updated guidance
Reported revenue growth
2.5% – 4.5%
3.9% – 4.9%
Constant-currency revenue growth
2.0% – 4.0%
3.4% – 4.4%
Organic constant-currency revenue growth
1.0% – 3.0%
2.25% – 3.25%
Adjusted diluted EPS
$8.40 – $8.55
$8.47 – $8.59
The revenue range moved up by 0.4 to 1.4 points, while the adjusted EPS midpoint rose only about $0.05. Management also raised its 2026 share repurchase target to up to $1 billion. Zimmer made $4.16 of adjusted EPS in the first half, so the guidance implies about $4.31–$4.43 in the second half. The 10-Q expects operating profit to rise this year because of higher sales, tariff refunds and restructuring savings. The same document says that will be partly offset by "inflation, investments in our U.S. commercial sales channel and higher net interest expense." It also warns that "the uncertain timing of incentivized stocking orders and capital sales" could make quarterly results uneven. After quarter-end, on Sept. 8, Zimmer said the role of its Group President for Global Businesses and the Americas was being restructured and he would leave on Sept. 30. That is another sign the commercial reorganization is still under way.
Our view: Organic growth guidance of 2.25–3.25% for the full year, after 3.4% organic growth in the first half, implies a slower second half. The Paragon 28 contribution is gone, and the end-of-quarter buying may have pulled some demand forward. In Q3, watch three things. First, whether knees return to growth; a second flat quarter would point to losing market share rather than timing. Second, whether adjusted operating margin stops falling as restructuring savings build toward the targeted $175 million a year by the end of 2027. Third, whether Zimmer still has to borrow to buy back shares. If margins keep falling, the buyback is what keeps EPS up, and that has a limit when net debt is already $7 billion.
Source: Zimmer Biomet Form 10-Q for the quarter ended June 30, 2026 (filed Aug. 5, 2026). Adjusted, organic and free-cash-flow figures are from the company's Q2 2026 earnings release (Exhibit 99.1 to the Form 8-K filed the same day).