Zimmer Biomet (NYSE: ZBH) raises its outlook, yet GAAP EPS drops 13.8%

Posted by James Quigley on Nov 4th, 2026

What happened

Zimmer Biomet Holdings, Inc. (NYSE: ZBH) raised its full-year 2026 outlook and reported third-quarter sales of $2.06 billion, up 3.1%.

The company reported on Nov. 4 for the quarter ended Sept. 30. Sales rose 3.7% at constant currency. Diluted earnings per share under U.S. GAAP fell 13.8% to $1.00 from $1.16. Adjusted diluted EPS of $1.90 matched the prior-year quarter.

Operating cash flow was $560.0 million and free cash flow was $372.4 million.

Key numbers

Metric	Latest	Change	Source
Third-quarter net sales	$2.06 billion	from $2.00 billion, +3.1%	SEC 8-K
Third-quarter GAAP diluted EPS	$1.00	from $1.16, -13.8%	SEC 8-K
Third-quarter adjusted diluted EPS	$1.90	from $1.90	SEC 8-K
Third-quarter operating profit	$307.6 million	from $351.3 million, -12.4%	Calculated from SEC 8-K
Third-quarter free cash flow	$372.4 million		SEC 8-K
2026 adjusted EPS guidance range	$8.50 to $8.60	+$0.02 at midpoint	Calculated from SEC 8-K

Where the growth came from

Three of the four product categories grew faster than the company as a whole. Knees went the other way. Hips sales rose 6.0% to $536.5 million. S.E.T., which groups sports medicine, biologics, foot and ankle, upper extremities, trauma and other lines, rose 6.8% to $578.3 million. Technology Data, Bone Cement and Surgical rose 11.9% to $180.6 million.

Knees, the largest category, fell 3.1% to $767.5 million, or 2.6% at constant currency. U.S. sales rose 3.6% to $1.21 billion. International sales rose 2.4% to $857.2 million, or 3.9% at constant currency.

Ivan Tornos, chairman, president and CEO, said Hips, S.E.T. and Technology Data, Bone Cement and Surgical grew at upper single-digit or double-digit rates. He described those franchises as two-thirds of the company's book of business.

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What the guidance raise changes

Zimmer Biomet lifted and narrowed all three of its revenue ranges. Organic constant-currency growth is now 3.0% to 3.5%, up from 2.25% to 3.25%. That measure excludes the Paragon 28 acquisition, which the company put at about 110 basis points. Constant-currency growth is 4.1% to 4.6%, up from 3.4% to 4.4%. Reported growth is 4.4% to 4.9%, up from 3.9% to 4.9%.

OptimistFi's midpoint calculation puts organic constant-currency growth at 3.25%, against 2.75% before. The adjusted EPS range is now $8.50 to $8.60, from $8.47 to $8.59, so the midpoint moves just two cents. Currency is now expected to add 0.25% to reported growth, down from 0.5%.

Tornos said the broad-based performance gave the company confidence to raise its organic constant-currency sales growth and adjusted EPS guidance.

Why reported earnings fell

Operating profit fell 12.4% to $307.6 million from $351.3 million, even with higher sales. Selling, general and administrative expense rose 5.4% to $855.0 million, faster than sales. Cost of products sold, excluding intangible asset amortization, rose to $594.5 million from $559.3 million. Research and development spending fell to $105.9 million from $115.9 million.

A one-time swing also hurt the comparison. The acquisition, integration, divestiture and related line was a $19.6 million expense this quarter and $34.4 million of income a year earlier. Within it, changes in the estimated value of contingent consideration were a $6.0 million expense, against $55.1 million of income. Adjusted results leave these items out.

Adjusted net earnings fell 3.8% to $362.8 million from $377.0 million. Adjusted EPS stayed flat because the diluted share count shrank to 191.4 million from 198.8 million. Stock repurchases were $579.3 million in the nine months, up from $237.0 million a year earlier.

Why it matters

OptimistFi has argued that Zimmer Biomet needs to prove growth is no longer being bought with margin and EPS erosion. This quarter is mixed on that test. The sales gain and guidance raise help. Expenses grew faster than sales, and flat adjusted EPS came with fewer shares.

Cash generation supports the constructive side. Nine-month operating cash flow was $1.37 billion, against $1.18 billion a year earlier. The caveat is that operating profit fell while sales rose, so the top-line gain did not reach GAAP earnings.

What's next

Zimmer Biomet scheduled its third-quarter investor conference call for 8:30 a.m. ET on Nov. 4, with an archived webcast to follow.

The next quarterly report will show whether full-year adjusted EPS lands inside the raised range. It will also show whether selling, general and administrative costs keep growing faster than sales. Nine-month adjusted EPS stands at $6.06, against $5.78 a year earlier.