Elective Procedure Recovery Drives Momentum

The core driver of Zimmer Biomet’s performance remains the sustained rebound in large joint reconstruction. Fourth-quarter net sales climbed to $2.24 billion, a 10.9% increase year-over-year. The Knee portfolio grew 6.9% on a constant currency basis, while Hips advanced 4.9%. This volume growth suggests that the post-pandemic normalization of hospital staffing and patient scheduling is largely complete, allowing the company to capitalize on demographic tailwinds—specifically, an aging population increasingly willing to undergo joint replacement earlier in life.

Strategic M&A and the “S.E.T.” Surge

Beyond the legacy joints business, the company’s pivot toward higher-growth areas is yielding results. The Sports Medicine, Extremities, and Trauma (S.E.T.) category posted a remarkable 18.7% growth in constant currency. This surge was significantly bolstered by recent acquisitions, validating CEO Ivan Tornos’s strategy of portfolio diversification. For Israeli investors tracking the med-tech space, this move mirrors trends seen in local hubs like Caesarea—where Zimmer Biomet maintains a presence—where digital health and surgical robotics (like the ROSA platform) are becoming central to value creation rather than just hardware sales.

The 2026 Outlook: Prudence over Promise

Despite the operational beat, the stock faced headwinds in early trading due to its 2026 guidance. Management forecasted full-year adjusted EPS of $8.30 to $8.45, missing the consensus target of $8.48. Revenue growth is pegged at a modest 2.5% to 4.5%. This conservative stance likely factors in potential foreign exchange volatility and the implementation of a new direct sales model in the U.S., signaling to investors that while the fundamental demand is intact, operational transitions may compress near-term margins.

Looking ahead, investors should monitor the integration of the new U.S. sales structure, which carries execution risk but promises higher long-term profitability. Additionally, with the Board authorizing a new $1.5 billion share repurchase program, the company offers a defensive “value” proposition. For the Israeli portfolio, ZBH remains a lower-beta diversifier against the high-volatility tech sector on the TASE, provided it can navigate the inflationary environment without eroding its pricing power.