Zimmer Biomet Announces Third Quarter 2019 Financial Results

WARSAW, Ind., Nov. 5, 2019 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended September 30, 2019. The Company reported third quarter net sales of $1.892 billion, an increase of 3.0% over the prior year period, and an increase of 3.9% on a constant currency basis. Diluted earnings per share for the third quarter were $2.08, an increase of 163% over the prior year period. Third quarter adjusted diluted earnings per share were $1.77, an increase of 8.6% over the prior year period. Net earnings for the third quarter were $431 million and $366 million on an adjusted basis.

"Our global team delivered strong results this quarter, fueled by a clear focus on our strategic priorities and key new product introductions," said Bryan Hanson, President and CEO of Zimmer Biomet. "I'm excited by the momentum across the organization and am grateful for the commitment and winning spirit from our team members around the world."

Geographic and Product Category Sales

The following sales tables provide results by geography and product category for the three and nine month periods ended September 30, 2019, as well as the percentage change compared to the prior year periods, on both a reported basis and a constant currency basis.

                                                                            
         
          NET SALES - THREE MONTHS ENDED SEPTEMBER 30, 2019


                               
            
              (in millions, unaudited)






                                                                                                                                                                           Constant


                                                                               Net                                                                                Currency


                                                                              Sales                                                 % Change             % Change




     
              Geographic Results



     Americas                                                                      $
          1,179                                                2.2 
     %                              2.3 
     %



     EMEA                                                                                  375                                                0.7                                  4.8



     Asia Pacific                                                                          338                                                8.9                                  8.8




     
              Total                                                              $
          1,892                                                3.0 
     %                              3.9 
     %




     
              Product Categories



     
              Knees



     Americas                                                                        $
          399                                                3.8 
     %                              3.8 
     %



     EMEA                                                                                  135                                                0.7                                  4.8



     Asia Pacific                                                                          118                                                7.8                                  8.5




     Total                                                                                 652                                                3.8                                  4.9



     
              Hips



     Americas                                                                              249                                                3.7                                  3.8



     EMEA                                                                                  109                                                1.1                                  5.1



     Asia Pacific                                                                          102                                                5.4                                  4.7




     Total                                                                                 460                                                3.5                                  4.3



     
              S.E.T *                                                                    438                                                5.6                                  6.2



     
              Spine & CMF**                                                              181                                              (1.9)                               (1.3)



     
              Dental                                                                      94                                                2.1                                  3.0



     
              Other                                                                       67                                              (7.0)                               (6.1)




     
              Total                                                              $
          1,892                                                3.0 
     %                              3.9 
     %








     
              * Surgical, Sports Medicine, Extremities and Trauma



     ** Craniomaxillofacial

                                                                       
           
         NET SALES - NINE MONTHS ENDED SEPTEMBER 30, 2019


                                                                                
       
                (in millions, unaudited)






                                                                                                                                                                           Constant


                                                                          Net                                                                                  Currency


                                                                         Sales                                                   % Change          % Change




     
                Geographic Results



     Americas                                                                  $
       3,588                                                     0.3           %                        0.5  %



     EMEA                                                                         1,277                                                   (3.8)                                   2.5



     Asia Pacific                                                                   992                                                     3.6                                    6.3




     
                Total                                                        $
       5,857                                                   (0.1)          %                        1.9  %




     
                Product Categories



     
                Knees



     Americas                                                                  $
       1,223                                                     1.1           %                        1.2  %



     EMEA                                                                           475                                                   (4.0)                                   2.6



     Asia Pacific                                                                   352                                                     3.5                                    6.9




     Total                                                                        2,050                                                     0.3                                    2.5



     
                Hips



     Americas                                                                       749                                                     1.6                                    1.8



     EMEA                                                                           368                                                   (4.1)                                   2.1



     Asia Pacific                                                                   307                                                     1.4                                    3.6




     Total                                                              1,424                                                                                         2.3



     
                S.E.T *                                                         1,322                                                     2.4                                    4.0



     
                Spine & CMF**                                                     550                                                   (2.8)                                 (1.6)



     
                Dental                                                            305                                                   (0.5)                                   1.4



     
                Other                                                             206                                                  (10.6)                                 (8.9)




     
                Total                                                        $
       5,857                                                   (0.1)          %                        1.9  %








     
                * Surgical, Sports Medicine, Extremities and Trauma



     ** Craniomaxillofacial

Cash Flow and Balance Sheet

Operating cash flow for the third quarter was $578 million and free cash flow was $425 million. In the third quarter, the Company paid down $330 million of debt, paid $49 million in dividends and declared a dividend of $0.24 per share.

Guidance

The Company's prior guidance remains unchanged.

Conference Call

The Company will conduct its third quarter 2019 investor conference call today, November 5, 2019, at 8:30 a.m. Eastern Time. The audio webcast can be accessed via Zimmer Biomet's Investor Relations website at https://investor.zimmerbiomet.com. It will be archived for replay following the conference call.

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.

Website Information

We routinely post important information for investors on our website, www.zimmerbiomet.com, in the "Investor Relations" section. 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. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Sales change information for the three and nine month periods ended September 30, 2019 is presented on a GAAP (reported) basis and on a constant currency basis. Constant currency percentage changes exclude the effects of foreign currency exchange rates. They are calculated by translating current and prior-period sales at the same predetermined exchange rate. The translated results are then used to determine year-over-year percentage increases or decreases.

Net earnings and diluted earnings per share for the three and nine month periods ended September 30, 2019 are presented on a GAAP (reported) basis and on an adjusted basis. Adjusted earnings and adjusted diluted earnings per share exclude the effects of certain inventory and manufacturing-related charges, including charges to terminate a raw material supply agreement and to discontinue certain product lines; intangible asset amortization; intangible asset impairment; acquisition, integration and related gains and expenses; quality remediation expenses; certain litigation gains and charges; expenses to comply with the new European Union Medical Device Regulation; other charges; any related effects on our income tax provision associated with these items, the effect of Switzerland tax reform and other certain tax adjustments.

Free cash flow is an additional non-GAAP measure that is presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.

Management uses non-GAAP financial measures internally to evaluate the performance of the business. Additionally, management believes these non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company. Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported income but that do not impact the fundamentals of our operations. The non-GAAP measures enable the evaluation of operating results and trend analysis by allowing a reader to better identify operating trends that may otherwise be masked or distorted by these types of items that are excluded from the non-GAAP measures. In addition, constant currency sales changes, adjusted operating profit, adjusted diluted earnings per share and free cash flow are used as performance metrics in our incentive compensation programs.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects. We generally use the words "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," "sees," "seeks," "should," "could," "would," "predicts," "potential," "strategy," "future," "opportunity," "work toward," "intends," "guidance," "confidence," "positioned," "look forward to" and similar expressions to identify forward-looking statements. All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements. Such statements are based upon the current beliefs, expectations and assumptions of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially from the forward-looking statements. These risks, uncertainties and changes in circumstances include, but are not limited to: the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality remediation efforts at our Warsaw North Campus facility; challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration (FDA) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; competition; pricing pressures; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures, including the impact of the U.S. excise tax on medical devices if such tax is not further suspended or repealed; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries. For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers of this press release are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary note is applicable to all forward-looking statements contained in this press release.



                                                                          
       
                ZIMMER BIOMET HOLDINGS, INC.


                                                                    
           
          CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS


                                                               
            
         FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                 
            
         (in millions, except per share amounts, unaudited)




                                                                                                                                2019                 2018




     
                Net Sales                                                                                                         $
          1,892.4          $
          1,836.7



     Cost of products sold, excluding intangible asset amortization                                                                         535.7                    529.0



     Intangible asset amortization                                                                                                          146.6                    147.6



     Research and development                                                                                                               114.4                     95.7



     Selling, general and administrative                                                                                                    830.1                    787.7



     Intangible asset impairment                                                                                                                         3.8



     Acquisition, integration and related                                                                                                   (0.9)                    17.4



     Quality remediation                                                                                                                     20.7                     32.2




     Operating expenses                                                                                                                   1,646.6                  1,613.4




     
                Operating Profit                                                                                                          245.8                    223.3



     Other expense, net                                                                                                                     (4.4)                   (2.2)



     Interest expense, net                                                                                                                 (56.8)                  (67.5)




     Earnings before income taxes                                                                                                           184.6                    153.6



     Benefit for income taxes                                                                                                             (247.4)                   (8.5)




     
                Net Earnings                                                                                                              432.0                    162.1



     Less: Net earnings (loss) attributable to noncontrolling interest                                                                        0.9                    (0.1)




     
                Net Earnings of Zimmer Biomet Holdings, Inc.                                                                        $
          431.1            $
          162.2




     
                Earnings Per Common Share



     Basic                                                                                                                             $
          2.10             $
          0.80



     Diluted                                                                                                                           $
          2.08             $
          0.79



     
                Weighted Average Common Shares Outstanding



     Basic                                                                                                                                  205.3                    203.7



     Diluted                                                                                                                                207.0                    205.4



                                                                         
       
                ZIMMER BIOMET HOLDINGS, INC.


                                                                    
          
          CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS


                                                                
           
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                 
           
         (in millions, except per share amounts, unaudited)




                                                                                                                               2019                 2018




     
                Net Sales                                                                                                        $
          5,856.5      $
           5,861.9



     Cost of products sold, excluding intangible asset amortization                                                                      1,670.4               1,688.5



     Intangible asset amortization                                                                                                         436.9                 447.9



     Research and development                                                                                                              328.2                 290.5



     Selling, general and administrative                                                                                                 2,466.8               2,380.7



     Intangible asset impairment                                                                                                            70.1                   3.8



     Acquisition, integration and related                                                                                                   20.3                 113.9



     Quality remediation                                                                                                                    63.1                 112.3




     Operating expenses                                                                                                                  5,055.8               5,037.6




     
                Operating Profit                                                                                                         800.7                 824.3



     Other expense, net                                                                                                                    (9.6)                (8.7)



     Interest expense, net                                                                                                               (174.5)              (220.8)




     Earnings before income taxes                                                                                                          616.6                 594.8



     (Benefit) provision for income taxes                                                                                                (193.5)                 71.6




     
                Net Earnings                                                                                                             810.1                 523.2



     Less: Net (loss) earnings attributable to noncontrolling interest                                                                     (0.8)                  1.3




     
                Net Earnings of Zimmer Biomet Holdings, Inc.                                                                       $
          810.9        $
           521.9




     
                Earnings Per Common Share



     Basic                                                                                                                            $
          3.96         $
           2.57



     Diluted                                                                                                                          $
          3.93         $
           2.55



     
                Weighted Average Common Shares Outstanding



     Basic                                                                                                                                 204.8                 203.3



     Diluted                                                                                                                               206.3                 204.9

                                                                
         
            ZIMMER BIOMET HOLDINGS, INC.


                                                              
         
         CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                  
         
            (in millions, unaudited)




                                                                                      September 30,                         December 31,


                                                                                               2019                                  2018




     
                Assets



     Cash and cash equivalents                                                                                 $
        512.5                  $
        542.8



     Receivables, net                                                                                              1,150.8                      1,275.8



     Inventories                                                                                                   2,362.3                      2,256.5



     Other current assets                                                                                            375.9                        352.3




     Total current assets                                                                                          4,401.5                      4,427.4



     Property, plant and equipment, net                                                                            2,055.3                      2,015.4



     Goodwill                                                                                                      9,544.9                      9,594.4



     Intangible assets, net                                                                                        7,339.9                      7,684.6



     Other assets                                                                                                    973.6                        405.0




     
                Total Assets                                                                              $
        24,315.2               $
        24,126.8




     
                Liabilities and Stockholders' Equity



     Current liabilities                                                                                     $
        1,773.9                $
        1,896.3



     Current portion of long-term debt                                                                             2,000.0                        525.0



     Other long-term liabilities                                                                                   2,109.9                      2,015.7



     Long-term debt                                                                                                6,345.9                      8,413.7



     Stockholders' equity                                                                                         12,085.5                     11,276.1




     
                Total Liabilities and Stockholders' Equity                                                $
        24,315.2               $
        24,126.8


                                                                                                              
       
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                                      
            
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                   
            
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                                                                
       
                (in millions, unaudited)




                                                                                                                                                                        2019            2018




     
                Cash flows provided by (used in) operating activities



     Net earnings                                                                                                                                                           $
       810.1      $
          523.2



     Depreciation and amortization                                                                                                                                               752.2              785.7



     Share-based compensation                                                                                                                                                     61.6               45.3



     Intangible asset impairment                                                                                                                                                  70.1                3.8



     Changes in operating assets and liabilities, net of acquired assets and liabilities



     Income taxes                                                                                                                                                              (356.3)            (58.3)



     Receivables                                                                                                                                                                 109.5              237.4



     Inventories                                                                                                                                                               (106.0)           (165.2)



     Accounts payable and accrued expenses                                                                                                                                     (162.7)              23.6



     Other assets and liabilities                                                                                                                                               (16.0)            (27.6)




     Net cash provided by operating activities (1)                                                                                                                             1,162.5            1,367.9




     
                Cash flows provided by (used in) investing activities



     Additions to instruments                                                                                                                                                  (239.5)           (203.7)



     Additions to other property, plant and equipment                                                                                                                          (155.3)           (115.2)



     Net investment hedge settlements                                                                                                                                             37.5



     Acquisition of intellectual property rights                                                                                                                               (197.6)



     Investments in other assets                                                                                                                                                (36.4)            (15.3)




     Net cash used in investing activities                                                                                                                                     (591.3)           (334.2)




     
                Cash flows provided by (used in) financing activities



     Proceeds from senior notes                                                                                                                                                                    749.5



     Proceeds from multicurrency revolving facility                                                                                                                                                400.0



     Payments on multicurrency revolving facility                                                                                                                                                (400.0)



     Redemption of senior notes                                                                                                                                                                (1,150.0)



     Proceeds from term loans                                                                                                                                                    200.0



     Payments on term loans                                                                                                                                                    (750.0)           (500.0)



     Net payments on other debt                                                                                                                                                  (5.0)             (3.9)



     Dividends paid to stockholders                                                                                                                                            (147.3)           (146.2)



     Proceeds from employee stock compensation plans                                                                                                                             125.9              103.4



     Net cash flows from unremitted collections from factoring programs                                                                                                         (15.4)            (54.6)



     Business combination contingent consideration payments                                                                                                                                       (16.7)



     Other financing activities                                                                                                                                                  (5.4)             (8.2)




     Net cash used in financing activities                                                                                                                                     (597.2)         (1,026.7)




     Effect of exchange rates on cash and cash equivalents                                                                                                                       (4.3)             (6.8)




     (Decrease) increase in cash and cash equivalents                                                                                                                           (30.3)               0.2



     Cash and cash equivalents, beginning of period                                                                                                                              542.8              524.4




     Cash and cash equivalents, end of period                                                                                                                               $
       512.5      $
          524.6






     
                (1)  2019 reflects approximately $168 million paid related to a patent litigation matter

                                                                                
         
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                   
         
                NET SALES BY GEOGRAPHY


                                                                           
      
          FOR THE THREE MONTHS ENDED SEPTEMBER 30,  2019 and 2018


                                                                                  
         
                (in millions, unaudited)




                                     Three Months Ended
                       September 30,



                   2019                                 2018            % Inc                                     Volume                       Price               Foreign
                                                                                                     / Mix                                                Exchange




     Americas                $
              1,179.2            $
     1,153.6                                              2.2                     %        5.7    %             (3.4) % (0.1) %



     EMEA                                  374.6                 372.1                                              0.7                              6.7                  (1.9)   (4.1)



     Asia Pacific                          338.6                 311.0                                              8.9                             11.2                  (2.4)     0.1




     Total                   $
              1,892.4            $
     1,836.7                                              3.0                     %        6.8    %             (2.9) % (0.9) %


                                                                                          
        
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                         
        
                NET SALES BY PRODUCT CATEGORY


                                                                                   
       
          FOR THE THREE MONTHS ENDED SEPTEMBER 30,  2019 and 2018


                                                                                            
        
                (in millions, unaudited)




                                    Three Months Ended
                      September 30,



                  2019                                 2018                    % Inc /                                      Volume                      Price                Foreign
                                                                         (Dec)                                 / Mix                                                Exchange




     Knees                   $
              651.9               $
       627.9                                                       3.8                    %         7.5    %               (2.6) %  (1.1) %



     Hips                                460.2                    444.8                                                       3.5                              6.9                    (2.6)    (0.8)



     S.E.T                               437.7                    414.6                                                       5.6                              8.2                    (2.0)    (0.6)



     Spine & CMF                         181.3                    184.9                                                     (1.9)                             1.3                    (2.6)    (0.6)



     Dental                               94.2                     92.3                                                       2.1                              3.9                    (0.9)    (0.9)



     Other                                67.1                     72.2                                                     (7.0)                            10.3                   (16.4)    (0.9)




     Total                 $
              1,892.4             $
       1,836.7                                                       3.0                    %         6.8    %               (2.9) %  (0.9) %


                                                                                       
        
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                          
        
                NET SALES BY GEOGRAPHY


                                                                                
        
          FOR THE NINE MONTHS ENDED SEPTEMBER 30,  2019 and 2018


                                                                                         
        
                (in millions, unaudited)




                                     Nine Months Ended
                       September 30,



                   2019                                2018                  % Inc /                                       Volume                     Price               Foreign
                                                                       (Dec)                                  / Mix                                              Exchange




     Americas                $
              3,587.6           $
     3,578.0                                                        0.3                   %        3.6    %              (3.1)  %  (0.2)  %



     EMEA                                1,276.5              1,326.3                                                      (3.8)                           4.6                   (2.1)     (6.3)



     Asia Pacific                          992.4                957.6                                                        3.6                            8.5                   (2.2)     (2.7)




     Total                   $
              5,856.5           $
     5,861.9                                                      (0.1)                  %        4.6    %              (2.7)  %  (2.0)  %


                                                                                      
       
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                      
       
                NET SALES BY PRODUCT CATEGORY


                                                                               
        
         FOR THE NINE MONTHS ENDED SEPTEMBER 30,  2019 and 2018


                                                                                        
       
                (in millions, unaudited)




                                    Nine Months Ended
                      September 30,



                  2019                                2018                  % Inc /                                      Volume                     Price                 Foreign
                                                                      (Dec)                                 / Mix                                                Exchange




     Knees                 $
              2,049.5            $
     2,044.2                                                       0.3                   %          5.5    %               (3.0)  %   (2.2)  %



     Hips                              1,423.8               1,423.7                                                                                       5.3                    (3.0)      (2.3)



     S.E.T                             1,322.0               1,290.7                                                       2.4                              5.5                    (1.5)      (1.6)



     Spine & CMF                         550.0                 566.2                                                     (2.8)                             1.0                    (2.6)      (1.2)



     Dental                              305.2                 306.8                                                     (0.5)                             2.7                    (1.3)      (1.9)



     Other                               206.0                 230.3                                                    (10.6)                           (1.2)                   (7.7)      (1.7)




     Total                 $
              5,856.5            $
     5,861.9                                                     (0.1)                  %          4.6    %               (2.7)  %   (2.0)  %


                                                                         
              
                ZIMMER BIOMET HOLDINGS, INC.


                                                               
              
                RECONCILIATION OF REPORTED NET SALES % CHANGE TO


                                                                          
              
                CONSTANT CURRENCY % CHANGE


                                                                                  
              
                (unaudited)






                                      
       
              For the Three Months Ended


                                        
       
                September 30, 2019



                                                                                                                       Foreign                   Constant


                                                                                                                       Exchange                  Currency


                                             % Change                                                                   Impact                   % Change




     
                Geographic Results



     Americas                                    2.2                           %                                                        (0.1) %             2.3  %



     EMEA                                        0.7                                                                                    (4.1)               4.8



     Asia Pacific                                8.9                                                                                      0.1                8.8



     
                Total                          3.0                           %                                                        (0.9) %             3.9  %



     
                Product Categories



     
                Knees



     Americas                                    3.8                           %                                                              %             3.8  %



     EMEA                                        0.7                                                                                    (4.1)               4.8



     Asia Pacific                                7.8                                                                                    (0.7)               8.5



     Total                                       3.8                                                                                    (1.1)               4.9



     
                Hips



     Americas                                    3.7                                                                                    (0.1)               3.8



     EMEA                                        1.1                                                                                    (4.0)               5.1



     Asia Pacific                                5.4                                                                                      0.7                4.7



     Total                                       3.5                                                                                    (0.8)               4.3



     
                S.E.T                          5.6                                                                                    (0.6)               6.2



     
                Spine & CMF                  (1.9)                                                                                   (0.6)             (1.3)



     
                Dental                         2.1                                                                                    (0.9)               3.0



     
                Other                        (7.0)                                                                                   (0.9)             (6.1)



     
                Total                          3.0                           %                                                        (0.9) %             3.9  %

                                                                          
             
                ZIMMER BIOMET HOLDINGS, INC.


                                                                
              
               RECONCILIATION OF REPORTED NET SALES % CHANGE TO


                                                                           
             
                CONSTANT CURRENCY % CHANGE


                                                                                  
             
                (unaudited)






                                      
       
              For the Nine Months Ended


                                        
       
                September 30, 2019



                                                                                                                      Foreign                     Constant


                                                                                                                      Exchange                    Currency


                                             % Change                                                                  Impact                     % Change




     
                Geographic Results



     Americas                                    0.3                           %                                                        (0.2)  %             0.5  %



     EMEA                                      (3.8)                                                                                   (6.3)                2.5



     Asia Pacific                                3.6                                                                                    (2.7)                6.3



     
                Total                        (0.1)                          %                                                        (2.0)  %             1.9  %



     
                Product Categories



     
                Knees



     Americas                                    1.1                           %                                                        (0.1)  %             1.2  %



     EMEA                                      (4.0)                                                                                   (6.6)                2.6



     Asia Pacific                                3.5                                                                                    (3.4)                6.9



     Total                                       0.3                                                                                    (2.2)                2.5



     
                Hips



     Americas                                    1.6                                                                                    (0.2)                1.8



     EMEA                                      (4.1)                                                                                   (6.2)                2.1



     Asia Pacific                                1.4                                                                                    (2.2)                3.6



     Total                                                                                                                             (2.3)                2.3



     
                S.E.T                          2.4                                                                                    (1.6)                4.0



     
                Spine & CMF                  (2.8)                                                                                   (1.2)              (1.6)



     
                Dental                       (0.5)                                                                                   (1.9)                1.4



     
                Other                       (10.6)                                                                                   (1.7)              (8.9)



     
                Total                        (0.1)                          %                                                        (2.0)  %             1.9  %

                                                                                                                                                                                         
          
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                                                                                                                    
          
            RECONCILIATION OF REPORTED TO ADJUSTED RESULTS


                                                                                                                                                                                
          
            FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                                                                                                                                           
          
                (in millions, unaudited)






                                                                                                                                                                                     
          
            FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

                                                                                                                                                                                                              ---

                                     Cost of               Intangible      Research and           Selling,           Acquisition, Quality                    Benefit for     Net Loss                        Net Earnings                               Diluted
                                      products                            asset                            development                        general and                integration                                                           remediation                     income      attributable      of Zimmer                 earnings
                                        sold,                         amortization                                                          administrative               and related                                                                                            taxes           to             Biomet                 per common
                                      excluding                                                                                                                                                                                                                                           noncontrolling     Holdings,                   share
                                     intangible                                                                                                                                                                                                                                              interest           Inc.
                                        asset
                                    amortization



                   As Reported                   $
      535.7                                $
        146.6                                      $
              114.4                                 $
          830.1                                                          $
       (0.9)              $
              20.7           $
         (247.4)             $
         0.9  $
            431.1  $
             2.08


      Inventory and manufacturing-
       related charges(1)                           (11.6)                                                                                                                                                                                                                                                                   6.8                                     4.8             0.02


      Intangible asset
       amortization(2)                                                                       (146.6)                                                                                                                                                                                                                        27.0                                   119.6             0.58


      Acquisition, integration and
       related(4)                                                                                                                                                                                                                                                      0.9                                                  (0.1)                                  (0.8)


      Quality remediation(5)                         (0.8)                                                                                                                                                                                                                                        (20.7)                     4.8                                    16.7             0.08



     Litigation(6)                                                                                                                                                                              (42.8)                                                                                                                      8.7                                    34.1             0.16


      European Union Medical Device
       Regulation(8)                                                                                                                                (11.4)                                                                                                                                                                   2.1                                     9.3             0.05



     Other charges(9)                                                                                                                                                                           (22.2)                                                                                                                      5.5                     0.1             16.6             0.08


      Switzerland tax reform(10)                                                                                                                                                                                                                                                                                           263.8                                 (263.8)          (1.27)


      Other certain tax
       adjustments(11)                                                                                                                                                                                                                                                                                                       1.2                                   (1.2)          (0.01)


                   As Adjusted                   $
      523.3                            
     $                                                 $
              103.0                                 $
          765.1                                                       
     $                   
     $                               $
         72.4              $
         1.0  $
            366.4  $
             1.77


                                                                                                                                                           
              
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018

                                                                                                                                                                                         ---

                              Cost of                     Intangible    Selling,            Intangible         Acquisition, Quality                  Other   Benefit for                              Net                             Diluted
                                        products                         asset                           general and                       asset                 integration                                                  remediation                       expense,        income        Earnings                     earnings
                                          sold,                      amortization                      administrative                   impairment               and related                                                                                       net           taxes        of Zimmer                   per common
                                        excluding                                                                                                                                                                                                                                               Biomet                       share
                                       intangible                                                                                                                                                                                                                                             Holdings,
                                          asset                                                                                                                                                                                                                                                  Inc.
                                      amortization



                  As Reported                      $
     529.0                           $
        147.6                                    $
            787.7                           $
              3.8                                                    $
           17.4              $
              32.2              $
           (2.2)               $
           (8.5)    $
           162.2    $
             0.79


     Inventory and
      manufacturing-
      related charges(1)                              (5.0)                                                                                                                                                                                                                                                                                 18.4             (13.4)            (0.07)


     Intangible asset
      amortization(2)                                                                    (147.6)                                                                                                                                                                                                                                            19.7              127.9               0.62


     Intangible asset
      impairment(3)                                                                                                                                                                   (3.8)                                                                                                                                                  0.9                2.9               0.01


     Acquisition,
      integration and
      related(4)                                                                                                                                                                                                                                     (17.4)                                                                                  7.6                9.8               0.05


     Quality remediation(5)                           (2.0)                                                                                                                                                                                                                       (32.2)                                                     4.9               29.3               0.14


     Litigation(6)                                                                                                                          (14.0)                                                                                                                                                                                         (5.9)              19.9               0.10


     European Union Medical
      Device Regulation(8)                                                                                                                   (0.8)                                                                                                                                                                                                             0.8


     Other charges(9)                                                                                                                       (24.9)                                                                                                                                                            (0.7)                          8.5               15.7               0.09


     Other certain tax
      adjustments(11)                                                                                                                                                                                                                                                                                                                       20.5             (20.5)            (0.10)



                  As Adjusted                      $
     522.0                       
     $                                               $
            748.0               
              $                                                                
     $                        
     $                            $
          (2.9)                $
           66.1     $
           334.6    $
             1.63


                                                                                                                                                                                                                
        
                ZIMMER BIOMET HOLDINGS, INC.


                                                                                                                                                                                                           
          
          RECONCILIATION OF REPORTED TO ADJUSTED RESULTS


                                                                                                                                                                                                        
         
          FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                                                                                                                                                                  
        
                (in millions, unaudited)






                                                                                                                                                                                                            
          
          FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

                                                                                                                                                                                                                                  ---

                                      Cost of                Intangible     Research and           Selling,          Intangible Acquisition,                    Quality Benefit for               Net Loss                     Net Earnings                               Diluted
                                       products                             asset                           development                          general and                asset                                          integration                                            remediation        income         attributable                   of Zimmer                    earnings
                                         sold,                          amortization                                                           administrative            impairment                                        and related                                                                taxes              to                          Biomet                    per common
                                       excluding                                                                                                                                                                                                                                                                   noncontrolling                  Holdings,                      share
                                      intangible                                                                                                                                                                                                                                                                      interest                        Inc.
                                         asset
                                     amortization



                   As Reported                    $
     1,670.4                                $
        436.9                                       $
              328.2                      $
       2,466.8                                                               $
              70.1                  $
              20.3                  $
            63.1             $
          (193.5)             $
         (0.8)    $
             810.9   $
              3.93


      Inventory and manufacturing-
       related charges(1)                             (47.7)                                                                                                                                                                                                                                                                                                       19.8                                          27.9               0.14


      Intangible asset
       amortization(2)                                                                         (436.9)                                                                                                                                                                                                                                                             85.0                                         351.9               1.71


      Intangible asset impairment(3)                                                                                                                                                                                                                                  (70.1)                                                                                        5.5                                          64.6               0.31


      Acquisition, integration and
       related(4)                                                                                                                                                                                                                                                                                      (20.3)                                                       5.2                                          15.1               0.07


      Quality remediation(5)                           (1.5)                                                                                                                                                                                                                                                                           (63.1)                      14.9                                          49.7               0.24



     Litigation(6)                                                                                                                                                                     (48.0)                                                                                                                                                                      7.9                                          40.1               0.19


      Litigation settlement gain(7)                                                                                                                                                       23.5                                                                                                                                                                     (5.2)                                       (18.3)            (0.09)


      European Union Medical Device
       Regulation(8)                                                                                                                                   (18.1)                                                                                                                                                                                                       3.2                                          14.9               0.07



     Other charges(9)                                                                                                                                  (4.3)                           (84.0)                                                                                                                                                                     19.1                       1.3                 67.9               0.33


      Switzerland tax reform(10)                                                                                                                                                                                                                                                                                                                                  263.8                                       (263.8)            (1.27)


      Other certain tax
       adjustments(11)                                                                                                                                                                                                                                                                                                                                             12.6                                        (12.6)            (0.06)


                   As Adjusted                    $
     1,621.2                            
     $                                                  $
              305.8                      $
       2,358.3                                            
              $                                      
     $                       
             $                          $
          238.3                $
         0.5    $
            1,148.3   $
              5.57


                                                                                                                                                       
              
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

                                                                                                                                                                                    ---

                              Cost of                     Intangible  Selling,            Intangible       Acquisition, Quality                  Other Provision                          Net Earnings                            Diluted
                                        products                         asset                         general and                     asset              integration                                                   remediation                        expense,       for income      of Zimmer                    earnings
                                          sold,                      amortization                    administrative                 impairment            and related                                                                                         net            taxes          Biomet                    per common
                                        excluding                                                                                                                                                                                                                                         Holdings,                      share
                                       intangible                                                                                                                                                                                                                                            Inc.
                                          asset
                                      amortization



                  As Reported                      $
     1,688.5                         $
        447.9                                $
          2,380.7                        $
             3.8                                                      $
           113.9              $
              112.3              $
           (8.7)               $
            71.6    $
            521.9    $
              2.55


     Inventory step-up and
      other inventory and
      manufacturing-
      related charges(1)                               (24.7)                                                                                                                                                                                                                                                                            9.9               14.8                0.07


     Intangible asset
      amortization(2)                                                                    (447.9)                                                                                                                                                                                                                                        80.1              367.8                1.80


     Intangible asset
      impairment(3)                                                                                                                                                           (3.8)                                                                                                                                                      0.9                2.9                0.01


     Acquisition,
      integration and
      related(4)                                                                                                                                                                                                                               (113.9)                                                                                  24.2               89.7                0.44


     Quality remediation(5)                            (13.5)                                                                                                                                                                                                                (112.3)                                                    24.8              101.0                0.49


     Litigation(6)                                                                                                                      (15.5)                                                                                                                                                                                         (5.2)              20.7                0.10


     European Union Medical
      Device Regulation(8)                                                                                                               (1.6)                                                                                                                                                                                           0.1                1.5                0.01


     Other charges(9)                                                                                                                   (46.8)                                                                                                                                                            (0.7)                         14.7               31.4                0.15


     Other certain tax
      adjustments(11)                                                                                                                                                                                                                                                                                                                   34.2             (34.2)             (0.17)



                  As Adjusted                      $
     1,650.3                     
     $                                           $
          2,316.8            
              $                                                                 
     $                         
     $                             $
          (9.4)                $
          255.3     $
         1,117.5     $
             5.45


     
      
      (1)           In the 2019 periods, inventory and
                           manufacturing-related charges include
                           a $20.8 million charge incurred to
                           terminate a raw material supply
                           agreement recognized in the second
                           quarter, excess and obsolete inventory
                           charges on certain product lines we
                           intend to discontinue and other
                           inventory and manufacturing-related
                           charges.  The 2018 charges primarily
                           relate to the excess and obsolete
                           inventory charges on certain product
                           lines we intend to discontinue and
                           other inventory and manufacturing-
                           related charges.   The excess and
                           obsolete inventory charges on certain
                           product lines are driven by
                           acquisitions where there are competing
                           product lines and we have plans to
                           discontinue one of the competing
                           product lines.




     
      
      (2)           We exclude intangible asset
                           amortization from our non-GAAP
                           financial measures because we
                           internally assess our performance
                           against our peers without this
                           amortization.  Due to various levels
                           of acquisitions among our peers,
                           intangible asset amortization can vary
                           significantly from company to company.




     
      
      (3)           In the second quarter of 2019 and third
                           quarter of 2018, we recognized $70.1
                           million and $3.8 million,
                           respectively, of in-process research
                           and development ("IPR&D") intangible
                           asset impairment due to the
                           termination of certain IPR&D projects.




     
      
      (4)           The acquisition, integration and
                           related gains and expenses we have
                           excluded from our non-GAAP financial
                           measures resulted from our merger with
                           Biomet in 2015 and other various
                           acquisitions.  The acquisition,
                           integration and related gains and
                           expenses include the following types
                           of gains and expenses:


                          -- Consulting and professional fees
                           related to third-party integration
                           consulting performed in a variety of
                           areas, such as tax, compliance,
                           logistics and human resources, and
                           legal fees related to the consummation
                           of mergers and acquisitions.
                -- Employee termination benefits related
                to terminating employees with
                overlapping responsibilities in
                various areas of our business.
               -- Dedicated project personnel expenses
                which include the salary, benefits,
                travel expenses and other costs
                directly associated with employees who
                are 100 percent dedicated to our
                integration of acquired businesses and
                employees who have been notified of
                termination, but are continuing to
                work on transferring their
                responsibilities.
                -- Contract termination expenses related
                to terminated contracts, primarily
                with sales agents and distribution
                agreements.
               -- Other various expenses to relocate
                facilities, integrate information
                technology, losses incurred on assets
                resulting from the applicable
                acquisition, and other various
                expenses.




     
      
      (5)           We are addressing inspectional
                           observations on Form 483 and a Warning
                           Letter issued by the U.S. Food and
                           Drug Administration ("FDA") following
                           its inspections of our Warsaw North
                           Campus facility, among other matters.
                           This quality remediation has required
                           us to devote significant financial
                           resources and is for a discrete period
                           of time.  The majority of the expenses
                           are related to consultants who are
                           helping us to update previous
                           documents and redesign certain
                           processes.




     
      
      (6)           We are involved in routine patent
                           litigation, product liability
                           litigation, commercial litigation and
                           other various litigation matters.  We
                           review litigation matters from both a
                           qualitative and quantitative
                           perspective to determine if excluding
                           the losses or gains will provide our
                           investors with useful incremental
                           information.  Litigation matters can
                           vary in their characteristics,
                           frequency and significance to our
                           operating results.  The litigation
                           charges and gains excluded from our
                           non-GAAP financial measures in the
                           periods presented relate to product
                           liability matters where we have
                           received numerous claims on specific
                           products and commercial litigation
                           related to a common matter in multiple
                           jurisdictions.  In regards to the
                           product liability matters, due to the
                           complexities involved and claims filed
                           in multiple districts, the expenses
                           associated with these matters are
                           significant to our operating results.
                           Once the litigation matter has been
                           excluded from our non-GAAP financial
                           measures in a particular period, any
                           additional expenses or gains from
                           changes in estimates are also
                           excluded, even if they are not
                           significant, to ensure consistency in
                           our non-GAAP financial measures from
                           period-to-period.




     
      
      (7)           In the first quarter of 2019, we
                           settled a patent infringement lawsuit
                           out of court, and the other party
                           agreed to pay us an upfront, lump-sum
                           amount for a non-exclusive license to
                           the patent.




     
      
      (8)           The European Union Medical Device
                           Regulation imposes significant
                           additional premarket and postmarket
                           requirements.  The new regulations
                           provide a transition period until May
                           2020 for currently-approved medical
                           devices to meet the additional
                           requirements.  For certain devices,
                           this transition period can be extended
                           until May 2024.  We are excluding from
                           our non-GAAP financial measures the
                           incremental costs incurred to
                           establish initial compliance with the
                           regulations related to our currently-
                           approved medical devices.  The
                           incremental costs primarily include
                           third-party consulting necessary to
                           supplement our internal resources.




     
      
      (9)           We have incurred other various expenses
                           from specific events or projects that
                           we consider highly variable or that
                           have a significant impact to our
                           operating results that we have
                           excluded from our non-GAAP measures.
                           These include costs related to legal
                           entity, distribution and manufacturing
                           restructuring as well as our costs of
                           complying with our Deferred
                           Prosecution Agreement ("DPA") with the
                           U.S. government related to certain
                           Foreign Corrupt Practices Act matters
                           involving Biomet and certain of its
                           subsidiaries.  Under the DPA, which
                           has a three-year term, we are subject
                           to oversight by an independent
                           compliance monitor, which monitorship
                           commenced in August 2017.  The
                           excluded costs include the fees paid
                           to the independent compliance monitor
                           and to external legal counsel
                           assisting in the matter.





      
      (10)           Switzerland passed the Federal Act on
                           Tax Reform and AHV Financing (TRAF),
                           effective January 1, 2020. Certain
                           provisions of the TRAF were enacted in
                           the third quarter of 2019, resulting
                           in provisional adjustments to our
                           deferred taxes, generating a net tax
                           benefit.





      
      (11)           Other certain tax adjustments relate to
                           various discrete tax period
                           adjustments, including changes in tax
                           rates on deferred tax liabilities
                           recorded on intangible assets
                           recognized in acquisition-related
                           accounting and adjustments from
                           internal restructuring transactions
                           that provide us access to offshore
                           funds in a tax efficient manner.

                                                               
             
                ZIMMER BIOMET HOLDINGS, INC.


                                                         
          
               RECONCILIATION OF NET CASH PROVIDED BY OPERATING


                                                               
             
                ACTIVITIES TO FREE CASH FLOW


                                                       
       
             FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                 
             
                (in millions, unaudited)






                                                                              Three Months Ended                                                  Nine Months Ended
                                                                                                                                    September 30,
                                                                              September 30,



                                                             2019                                        2018                                        2019                        2018




     Net cash provided by operating activities                    $
              577.9                                         $
              484.1                      $
           1,162.5  $
          1,367.9



     Additions to instruments                                              (94.7)                                                   (77.6)                              (239.5)         (203.7)



     Additions to other property, plant and equipment                      (58.6)                                                   (61.5)                              (155.3)         (115.2)




     Free cash flow                                               $
              424.6                                         $
              345.0                        $
           767.7  $
          1,049.0


                                                                             
             
                ZIMMER BIOMET HOLDINGS, INC.


                                                                       
       
             RECONCILIATION OF GROSS PROFIT & MARGIN TO ADJUSTED GROSS


                                                                                  
              
                PROFIT & MARGIN


                                                                     
       
            FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                               
             
                (in millions, unaudited)






                                                                                               Three Months Ended                                                            Nine Months Ended
                                                                                    September 30,                                                         September 30,



                                                                             2019                                           2018                                        2019                            2018




     Net Sales                                                                    $
              1,892.4                                         $
     1,836.7                                      $
       5,856.5        $
       5,861.9



     Cost of products sold, excluding intangible asset amortization                           535.7                                              529.0                                           1,670.4             1,688.5



     Intangible asset amortization                                                            146.6                                              147.6                                             436.9               447.9




     Gross Profit                                                                 $
              1,210.1                                         $
     1,160.1                                      $
       3,749.2        $
       3,725.5





     Inventory and manufacturing-related charges                                               11.6                                                5.0                                              47.7                24.7



     Quality remediation                                                                        0.8                                                2.0                                               1.5                13.5



     Intangible asset amortization                                                            146.6                                              147.6                                             436.9               447.9




     Adjusted gross profit                                                        $
              1,369.1                                         $
     1,314.7                                      $
       4,235.3        $
       4,211.6








     Gross margin                                                                              63.9                         %                     63.2                  %                           64.0    %           63.6   %



     Inventory and manufacturing-related charges                                                0.6                                                0.3                                               0.8                 0.4



     Quality remediation                                                                                                               0.1                                                                    0.2



     Intangible asset amortization                                                              7.9                                                8.0                                               7.5                 7.6




     Adjusted gross margin                                                                     72.4                         %                     71.6                  %                           72.3    %           71.8   %


                                                                        
              
                ZIMMER BIOMET HOLDINGS, INC.


                                                  
          
                RECONCILIATION OF OPERATING PROFIT & MARGIN TO ADJUSTED OPERATING PROFIT & MARGIN


                                                       
              
                FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                          
              
                (in millions, unaudited)






                                                                      Three Months Ended                                                                         Nine Months Ended
                                                           September 30,                                                                         September 30,



                                                    2019                                            2018                                                       2019                                 2018




     Operating profit                                     $
              245.8                                            $
              223.3                                                    $
       800.7          $
        824.3



     Inventory and manufacturing-related charges                     11.6                                                          5.0                                                          47.7                 24.7



     Intangible asset amortization                                  146.6                                                        147.6                                                         436.9                447.9



     Intangible asset impairment                                                                                3.8                                                                  70.1                 3.8



     Acquisition, integration and related                           (0.9)                                                        17.4                                                          20.3                113.9



     Quality remediation                                             21.5                                                         34.2                                                          64.6                125.8



     Litigation                                                      42.8                                                         14.0                                                          48.0                 15.5



     Litigation settlement gain                                                                                                                                                   (23.5)



     European Union Medical Device Regulation                        11.4                                                          0.8                                                          18.1                  1.6



     Other charges                                                   22.2                                                         24.9                                                          88.3                 46.8




     Adjusted operating profit                            $
              501.0                                            $
              471.0                                                  $
       1,571.2        $
        1,604.3








     Operating profit margin                                         13.0                           %                             12.2                         %                                13.7    %            14.1   %



     Inventory and manufacturing-related charges                      0.6                                                          0.3                                                           0.8                  0.4



     Intangible asset amortization                                    7.9                                                          8.0                                                           7.5                  7.6



     Intangible asset impairment                                                                                0.2                                                                   1.2                 0.1



     Acquisition, integration and related                                                                       0.9                                                                   0.3                 1.9



     Quality remediation                                              1.1                                                          1.9                                                           1.1                  2.1



     Litigation                                                       2.3                                                          0.8                                                           0.8                  0.3



     Litigation settlement gain                                                                                                                                                    (0.4)



     European Union Medical Device Regulation       0.6                                                                                                                               0.3



     Other charges                                                    1.0                                                          1.3                                                           1.5                  0.9




     Adjusted operating profit margin                                26.5                           %                             25.6                         %                                26.8    %            27.4   %


                                                                           
             
                ZIMMER BIOMET HOLDINGS, INC.


                                                            
          
               RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE


                                                              
          
               FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018


                                                                                   
              
                (unaudited)






                                                                              Three Months Ended                                                                  Nine Months Ended
                                                                September 30,                                                                   September 30,



                                                                        2019                                   2018                                                2019                      2018




              Effective tax rate                                    (134.1)                         %                          (5.5)                         %                     (31.4)        %   12.1    %



              Inventory and manufacturing-related charges;            150.6                                                      22.0                                                  48.6              6.5
    intangible asset amortization; intangible asset
    impairment; acquisition, integration and related;
    quality remediation; litigation; litigation settlement
    gain; European Union Medical Device Regulation;
    other charges; Switzerland tax reform and other
    certain tax adjustments




              Adjusted effective tax rate                              16.5                          %                           16.5                          %                       17.2        %    18.6   %


                                           
         
                ZIMMER BIOMET HOLDINGS, INC.


                                         
         
               RECONCILIATION OF DEBT TO NET DEBT


                                       
         
           AS OF SEPTEMBER 30, 2019 and DECEMBER 31, 2018


                                             
         
                (in millions, unaudited)






                                                    September 30, 2019                              December 31, 2018




     Debt, both current and long-term                                   $
              8,345.9                          $
        8,938.7



     Cash and cash equivalents                                                    (512.5)                               (542.8)




     Net debt                                                           $
              7,833.4                          $
        8,395.9


View original content to download multimedia:http://www.prnewswire.com/news-releases/zimmer-biomet-announces-third-quarter-2019-financial-results-300951232.html

SOURCE Zimmer Biomet Holdings, Inc.