Zimmer Biomet Holdings, Inc. (ZBH) Earnings Call Transcript & Summary

Good afternoon. I'm Robbie Marcus, the med tech analyst at JPMorgan. I'm very happy to host my next session with Zimmer Biomet. I have the CEO, Bryan Hanson; and the CFO, Suky Upadhyay. I think I was close there. Sorry, Suky. So we're going to diverge a little bit from the format we had for some of the other sessions. We're going to do 20 minutes of Q&A that allows Zimmer Biomet to highlight some of the really key topics today, and then we're going to move into 20 minutes of a little less formal Q&A. Please feel free to submit questions or e-mail me and I can do my best to get to all of them.

But Bryan, Suky maybe to kick it off, Bryan, you've been at Zimmer Biomet for 4 years now. You've undergone this really big transformation process. Where do you sit now in the total process for Zimmer Biomet?

Yes. So it's sometimes hard to believe it's been 4 years and half that time we've had this thing called COVID hang around. But probably the best way to say where we sit is to take a look at each of the phases that we set into motion 4 years ago to transform the company. So maybe I'll just take a step back to be able to tell you where we are. We wanted to accomplish a lot, as one could imagine, right out of the gate. There was a lot to do. But we knew we couldn't do it all at once. So we set up 3 phases of the transformation for the organization. And I'll be clear that each of the phases actually have a lot of overlap, but the true mind share that we had and the amount of focus we had as a leadership team in those phases was really focused on a certain thing that, that phase was oriented around. And so when I think about first joining the organization, it was really more around hearts and minds and really the execution challenges we were having as a company. And so for the first 1.5 years almost, it was purely dedicated to creating a mission for Zimmer Biomet, a One-Zimmer-Biomet mission and culture, and we travel around the world to pretty much every single site we have and presented that mission, so that people can get behind the purpose of the organization. I did a lot of talent changes at the leadership team level. It wasn't because I didn't have good talent. It's because I wanted different thinking on how we could transform the company, I needed new people to do that. We changed 75% of the people in the first year, 1.5 years and increased diversity as a result of that from under 20% to over 70%, which really helps us with again to keep up about how we're going to transform the company. And then we tackled the execution challenges. As you probably remember as well as I do, it was pretty painful. And we had 3 warning letters when we started out in 2018. We now have one. We're working our way down on that. We are probably the worst of the bunch in orthopedics with a very high number of recalls. And now we're probably the best. We had a tenfold reduction over the past 4 years in recalls, which is, in my view, probably the biggest litmus test on how well your quality system is working. You may or may not know, but we are in the middle of a DOJ SEC monitor when I got here, and we closed that out during the last 4 years. And as you probably remember, we had significant challenges from a backward standpoint. And we had a fourfold reduction in back orders over the past 4 years, and that's been sustained. We don't really talk much about backwards anymore, which is a good thing. But then that let us then move to Phase 2 which, in reality, again, Phase 1 continues, but our shift and focus was on a longer-term strategy. We built that long-term strategy. We've been very clear about what our growth drivers are going to be in that strategy, we put an organizational structure and operating mechanisms to make sure we're held accountable for moving the strategy forward. And a big part of what that is, is around innovation. And I like to think about innovation inside the strategy in 2 ways. The first is the vitality index. That's a really important metric for a Medtech company. You want a high vitality index. That's the number of products that are driving revenue, right? The new products are driving revenue as a percentage of your total revenue. The higher that number is, the more you're doing from an innovation standpoint. And we doubled the vitality index of the company from 2018 to 2021. A lot of that coming in 2020 and 2021 actually, it takes a while to get the products out there, obviously. And we expect in our [ straw ] plan period to increase that again by another 50%. So significant strides from a vitality index standpoint. But another really important part is making sure you're investing in the right areas. And as you saw over the last 4 years, we've dramatically shifted where we spend our research and development dollars. We're now spending on more robotics and data. We've actually tripled the number of team members that have robotics and data background in research and development, and we've significantly increased our spend in that area. And where we don't increase our competency we actually work with our partners. We've got partnerships with Apple, Microsoft and Canary and it's going to continue to help us move our vitality north. And I can tell you right now, we've got to now the strongest pipeline that we've ever had, the most valuable pipeline of new products that we have yet to launch as Zimmer Biomet. That's exciting as well. And if I just look back, is it working? It can have a high vitality index but if it's not doing anything, who cares? The best way to look at that is before COVID. If you go back to 2017, the growth rate of Zimmer Biomet, as you probably remember, was 0. It was 0% organic growth in 2017. If you go just 2 years past that, the fourth quarter of 2019, before really a lot of the innovation started to hit, we did 3.2% growth as a global organization in the fourth quarter. And you wouldn't have seen it because COVID disrupted it. But the first quarter of 2020 was better than that until COVID came. So clearly, that traction of vitality index was working and COVID is unfortunately muting it. One other factoid I'd put in there, too, is ROSA was launched back in March of 2019. Hard to believe it was that long ago now, but we just had a few orders of ROSA without the disruption of COVID. But even through COVID in that disruption, we've gone from 0 placements back in March of 2019 to over close to 600 placements around the globe right now in 2021. So those are kind of the Phase II. Phase III has been a little more disruptive. Phase III is transformation of the portfolio, active portfolio management, as we call it, that's kind of where we are right now. Unfortunately, that's the whole time the Phase III has been active, we've been in a COVID environment. And the capital that we thought we would have back in 2019, we just haven't had access to. But we haven't sat around and waited. We've done a lot to transform the company. We announced the ZimVie spin, which is the spine and dental business, which will drive revenue up and margin expansion as well and create more focus in the organization. And then we also made sure that we brought things in. We've done 20 different transactions, whether they be partnerships, distribution arrangements, acquisitions of technologies that can drive us into spaces that are faster growth and/or technology in the spaces that we're already in. So COVID has been a challenge. It's been here 50% of the time we've been here as a leadership team. But it doesn't mean that we haven't moved the transformation of the organization forward. But the simple answer to your question is we're now in Phase III. But Phase II or Phase I, they continue forever.

Great. And Bryan, did that transformation process continue in 2021? Maybe spend a minute about how Zimmer Biomet navigated last year.

Yes. I mean it definitely did. And we've been pretty maniacal in our focus against what we would define as our 3 strategic pillars to drive the mission of the organization. We talked about these a lot. But as a quick reminder, one of them is to be a best and preferred place to work. That's a really important -- for us and our team members. The second is to be a trusted partner with all of our constituents. And the third, which I know everybody on this call is very focused on, as being a top quartile performer in TSR. Obviously, that one has been the most ravaged by COVID over the last 2 years in 2021 specifically, but we've made progress even inside that, real meaningful progress. And so if I look at 2021, I'm not going to go through all the things, but best for a place to work, particularly around ESG. We're on Forbes Best Employers for Diversity list, which is a big milestone for us. We put a lot of effort into diversity as a management team. We're going to continue to progress in that area but it was really nice to see us on that list. From a trusted partner standpoint, again, quality is a big one for us. It was a real challenge in the beginning. We saw continued improvement in every metric during '21 in our quality area. Another big one was a fourfold reduction from '20 to '21 in recalls, which again, I think probably puts us at the top of the list. We're invested the best in orthopedics, which is a great place to be. And even from a trusted partner from a planet standpoint, if you think about carbon disclosure project scores, we were an E back in the day. We're now a B, we have our sights on an A-. Just in '21, we had a 20% reduction in carbon emissions for our sites around the globe. So those are best and preferred place to work and trusted partner in '21. Top quartile performance, even though it was hampered by COVID. We increased our vitality index in '21 by 200 basis points. Now even in those challenging conditions, we truly and formally launched ZBEdge, which is that connected suite of technologies between robotics and data. Two new applications in ROSA for hip and partial knee. And we launched the first of its kind, smart implant. And we, again, just getting started. We now have the most robust NPI pipeline that we've ever had. And even in '21, it was a challenging year, but a transformation from a portfolio standpoint. Still happen we really progressed well on the ZimVie spin. Actually, now we're ahead of schedule versus what we communicated before. We expect to be able to do the spin before the middle of next year -- of this year. So that's a good thing. And we did multiple acquisitions and partnerships even in '21. So another big thing that we put into place given the COVID pressure on revenues is we really put a transformation focus in place on our operating model and are looking for significant efficiencies to be able to either, one, reinvest in the business for growth; or two, make sure that we can cover some of the margin misses that we're having because of the revenue challenges.

And Bryan, let's shift that focus forward into 2022 and beyond. How should investors think about Zimmer Biomet's long-term growth? Maybe how are you differentiated and positioned to compete versus peers, especially in what's appearing to be a new normal environment?

Yes. I mean I think the key is that, again, if we go back to 3.2% growth back in Q4 2019, that was on the very beginning curve of the vitality index jump. To be able to do that, we've always said 4% to 5% organic growth sustainably is something that we would like to be able to accomplish. And to be able to be there before, really, that the true innovation was coming, that tells you that the formula is there. So when I think about '22 and beyond, the formula is not going to change. The COVID pressure may continue. We would expect it to continue in 2022, but eventually, it's got to go away. And the fact is we feel very confident about our strategy. We're going to continue to be focused on revenue growth. Organically, it's going to be around robotic tech and data. That's going to be a significant spend for us. We think it can help in every category that we have. Outside of that, knees is going to be -- it's going to -- we're going to [ buy ] our spin to knees. It's not a great market from a growth standpoint but it's a huge market for us, and we need to make sure that we can win in that market and either take share or accelerate the growth of the market. And that's exactly where we're going to continue to focus on. And then S.E.T. We're going to continue to spend in S.E.T. like we've been talking about. R&D and infrastructure. To drive in extremities and sports in our CMFT business. But those would be the major areas for us probably on a go-forward basis as they happen.

Great. Maybe we could shift focus a little bit here. you haven't preannounced sales, so I won't put this on you, but any kind of high-level comments you could give on fourth quarter, especially just given all the ups and downs that took everyone by surprise at different points?

Yes. I think it probably wouldn't be surprising if I said that the fourth quarter was challenging, I think, for everybody when we think about some of the COVID pressure, some of the staffing pressure. Interestingly enough, a lot of times, we saw cancellations of procedures in the fourth quarter. It wasn't necessarily always because of capacity, but it was a patient that wanted to come in, the surgeon was ready to do the procedure. But the patient had COVID and they couldn't come in. Or staffing issues because somebody actually had COVID, they wanted to work, but they had COVID and they couldn't come in. So a lot of the disruption that we saw in the back half of the quarter was more around that, interestingly enough than even the typical capacity concerns that you had in the past. But just with that as a backdrop, maybe Suky might want to provide a little more color on what we saw in the fourth quarter and maybe what we expect going forward.

Yes. Sure, happy to, Bryan. Robbie, when we provided our full year updated guidance back on our third quarter call, the way we position that was to say we saw a pretty acute pressure from COVID and staffing shortages towards the very end of the third quarter. And we said, hey, we're going to assume that, that environment sort of sticks and that pressure sticks for the fourth quarter. Now some would have said, guidance is a little bit conservative. We thought it was prudent because what we were not going to try and do is predict what was otherwise a very elusive recovery. So we said, hey, we're going to take recency buys. We're going to say, where are we from the market landscape, and that's what we're going to project for the next quarter. And for the most extent, that's exactly what played out in the fourth quarter. And so what we're going to do going forward now is take that same approach. And what we've seen towards the back end of the fourth quarter, especially with Omicron, we are seeing that continue into January in the first quarter, and we expect that, that will continue to challenge the first quarter. And as Bryan said, we expect COVID to continue to linger well into 2022. So the way we're thinking about it is. We're going to continue to use that recency buys. We're going to say, where's the market today? That's how we're going to look at and expect the market to react for our outlook, but then we're going to put a range around that, right? And so if you think about sort of the midpoint to the bottom end of our range would sort of be okay to market environment and maybe a worsing environment. Or the midpoint to the upper end of our range would say, hey, this is the market environment, but maybe we see some recovery. So that's how we're going to play this year's guidance. It played out well for us in the fourth quarter and that's how we're going to think about our outlook for '22 when we give guidance later this year. And I would say, inside of that, again, consistent with what we did in 2021, and I think many of our peers did as well, we're probably going to have a wider guidance range just given the continued uncertainty and sort of the dynamic nature of COVID moving forward. So that's a little bit about how we're thinking about COVID into '22. But of course, we'll give a lot more details when we do provide guidance later in this quarter.

I'll say, I don't envy you having to be in the position to give guidance. It's challenging to predict the next quarter, let alone a whole year. So kudos to you. Bryan, something you used to talk about was a potential backlog and procedure recapture. And I know that's become very tricky in this market and -- is that still a potential opportunity once staffing shortages, simmer out, and we do get into my view is, hopefully, the antivirals can help keep unvaccinated patients out of the hospital later this year. Is there still an opportunity for this backlog? Or should we put that out of our minds for now?

It's one of those things where I just fundamentally believe that there has to be a backlog. I mean, it doesn't make sense to me in a logical argument standpoint to say that there isn't a backlog of patients because I truly don't believe there's been any structural shift in the disease state itself. That said, there's just been so much time that has passed. There are so many variables that play now that they're hard to keep track of, that I don't know when it will happen. And I don't know to the degree at which the capacity will flex to be able to manage it. But I do believe that I still fundamentally believe there's got to be a backlog. My view on it has changed, as I've talked about in the past. I do believe that when it does turn on, it will be more of a kind of a slow trickle versus any kind of a wave. I just assumed early on when this was happening, we would get the vaccine, this would go away and you'd see a huge -- just group of patients coming in and have been waiting. But I just don't know that I'm seeing that happen anywhere. Even in places that have not been riddled as much by the disease recently or staffing concerns. I just haven't seen a huge desire to flex up to deal with the capacity -- or capacity constraints. So my view is it's got to be there. I just have lost all confidence, I think, of being able to predict when and how fast it comes back.

What is the -- I imagine the U.S. system is different than outside the U.S. But what do you see is the U.S. and outside U.S. capacity to flex up? Are we talking 5%, 10% of extra volumes? Or is -- can some number higher than that realistically happen?

Yes. I think probably from a market standpoint, the U.S. likely if it wanted to has the best opportunity to flex up because it is something that still drives profit for a lot of institutions, so they're focused on it. But I think you're going to have staffing pressure for some period of time, whether it's COVID related or not, it's just a reality that we're going to be dealing with. So I think even if there's a desire in the U.S., I think there could be a challenge associated with flexing up. As said back in 2020, when you look at the Q3 time frame, and we started to see some recovery, we did see whole states that were 105%, 110% of typical [ volume ]. So they were absolutely flexing up at the time. But I think back then, it was less fatigue. Probably had better staffing situation, and they felt like, hey, it was a short bump. We're back in. Let's get going. I think there's real fatigue to set in right now, and I think that may change people's perspective and desire to flex up or even capability to flex up.

So there's a lot on the pipeline side I want to get to. But I would say most of my investor conversations have been focused more down the P&L. So I want to spend some time there first, and we'll definitely get back to some of the interesting pipeline products and revenue drivers. But maybe to start, something that's been coming more front of mind are inflationary pressures, both on the cost of good lines and also on the OpEx lines, especially as we came into the end of 2021. So maybe talk about how those are progressing and how we should, from a high level, think about those heading into next year, realizing that there's no formal guidance yet?

Yes, sure. So I'll take that, Robbie. We were feeling inflationary pressures in the second half of last year, but it was very modest. And our ability to offset them were pretty much there. And one of the things that really insulated us in 2021 was the notion that we had longer-term contracts around a lot of our input costs on raw materials. And so -- it wasn't until those contracts begin to renew if that inflationary pressure continued to stick on those input costs where we would start to see pressure. Now that we've come through the back end, we see that those inflationary presses are here to stay. There will be a modest level of pressure, both on the cost of goods line, but also within SG&A on labor costs. So definitely a headwind as we move into or as we are in 2022. But I would say the organization has been in front of this. We had already been well underway with a number of transformational and restructuring type initiatives to help with efficiency. We've accelerated many of those. And so we're going to look to offset the majority of those headwinds that we're seeing across input costs and labor costs due to inflation. But no doubt, it is a headwind coming into 2022.

So maybe we could take that to my next question, which is touching on some of the margin expansion targets you've put out there. You have a focus on improving top line growth and reaching margin expansion at greater than 30% or 30% or greater at some point during 2023, I believe. The latest commentary is on RemainCo. And I'm just going to stay away from RemainCo and ZimVie because of my restriction through research. But maybe just on that margin expansion comment, walk us through the ways you get there. What do you need to deliver on the top line? And how confident are you on the leverage assumptions that you can get there in this new normal?

Yes, absolutely. Great question. So when we originally put the 30% operating margin target by the end of 2023, we did that at the very end of '19, very beginning part of '20. And there are really 3 key events that happened subsequent to that target that we set: one, obviously, you have COVID, right, and all the pressures that, that brings on the top line to get leverage right with P&L through revenue growth. The second was VBP, which we've talked about in the back half of last year. And then the third element was the spin. The spin is actually a tailwind because divesting both the dental and spine business units is actually accretive to margin. When you actually look at those 3 components, the spin and VBP for Recon kind of offset one another. But you're still left with that significant challenge of COVID where when we originally set that 30% margin target, the idea was that we were going to grow at market growth and then some due to share gain or through expanding the market, as Bryan talked about. And so we really have the opportunity cost, if you will, of that foregone leverage that would have otherwise come through revenue growth that we didn't see because of COVID. And so I would say every quarter that we continue to deal with COVID pressuring our top line makes that 30% aspiration even more challenging. Now I would say, inside of that, the building blocks to get to that 30% were, if you remember, is 3 key simple ingredients. One is to stabilize gross margins versus a history of the company declining gross margins by about 100 basis points each year. The second was becoming much more efficient in our SG&A spending, diverting the majority of that spending back into investments in those key areas Bryan talked about to accelerate the top line and get that leverage. I would say on the things, Robbie, that we can control, which is the stabilization of gross margin, even in a very challenging pricing environment and inflationary environment input cost as well as the efficiencies on SG&A., I would say we're actually delivering, if not slightly ahead. So those things that we can control, we're actually performing really well. The challenge is coming back to what we pointed out, what is the new normal relative to COVID and the ability to get that leverage through the top line is becoming more and more challenging to reach that 30% operating margin target by the end of 2023. However, there is still [ cap ]. And if the revenue isn't there, as we've talked about, we have the opportunity to drop many of the savings that we're driving through efficiency to the bottom line. However, what we'll be left with is a decision point. Do we let those savings drop to the bottom line, or can we reinvest for long-term growth? And I think where we're standing today is our choice would be to invest for long term growth as opposed to trying to hit a near-term operating margin target, which could potentially put longer-term growth at jeopardy. So summarizing all that, it is becoming incrementally more challenging every quarter we go, and COVID continues to pressure our top line. But I would say, we are starting from a point of strength in operating margins. And we do believe that we can still to grow operating margins through 2023. But achieving that target will really be dependent on what we see from the top line and more specifically, how we see the recovery from the COVID from here on out.

That's a great explanation. So maybe if I had to sum it up or say it a different way, it's probably not the base case anymore, but it's absolutely still a potential outcome for Zimmer Biomet.

I think that's a really good summary.

Okay. Maybe shifting gears because I would tell you, I think -- and Bryan, you've been saying this since you first came on, and investors would probably back me up here, but I think everybody wants to see the focus on the top line. And so there's a lot of interesting and exciting drivers here. And I want to go through and give them each their due. First on iQ, I want to start off here. This, to me, has the potential to really move markets in the future. I can see this being a go-to type of innovation that can shift share in a fairly meaningful way. But the -- it seems to me more like there's more work to be done before you get to that level of confidence in the product. Am I wrong on that? Or how are you thinking about it as it impacts your revenue growth over the next, let's call it, 1 to 3 years?

Yes. So I think you've positioned it exactly right, Robbie. We wouldn't have gotten down the path and invested as much as we have already into it. And we'll continue to invest from a technology road map perspective if we didn't believe it was a game changer. It is absolutely going to be a game changer. But it will take some time because at the end of the day, what's the game-changing portion of it isn't the fact that it collects data, but it gives you data to be able to augment the way you do the procedure or potentially rehab a procedure. So we're excited about that portion of it, and that will take time to be able to collect and then make it meaningful so that we provide insights to the surgeon and ultimately the patient on how they can best go through that continuum of care. But we think it's game changing. There's no question. Out of the gate, we're going to be a slow roll, as you deal with technologies like this, make sure that we learn as much as we can and collect the data to see what it tells us and then be able to market it differently based on that data input and the output that we get from it. But make no mistake, this is exciting. I was just at [ August ] not long ago, hard to believe we had that many people together right before all the COVID stuff went crazy again. But it was one of the things that everybody was talking. It didn't matter if it was a rural hospital that I was talking to a surgeon or in one of the bigger cities, everybody wanted to talk about the data collection, the value associated with it and the potential future change in the way that they care for patients. I always try to draw a parallel even if you know where you're going, you're going to use Waze or something else because it gives you information on how to get there that might augment the way you've actually drive. This is going to be the same thing here. We really do believe that at some point, patients and surgeons will not do the procedure if they don't get that data input to help guide them. And that's what we're going to create and that's the goal with this technology.

So Bryan, how do we think about when we might see that rounded data collection that you can submit for -- or Canary would be able to submit to the FDA with a label for being able to predict whether it's infection or poor healing or whatever outcomes they're able to show? How long should we think between now and then when you can really put a claim on it?

Yes. I would say that the claim that we're looking for now, I just want to keep it as broad based as possible, is just safety, right? We just want to make sure that people know and feel confident that if you have a sensor on an implant and you have a stem on an implant as a result of having a sensor, sense there is no negative outcome as a result of that for the patient, which you feel very confident being able to do as people use stem implants all the time. So we feel confident in getting that accomplished. That's what we're going to be focused on. And then it will be the data over time. It's going to take time, particularly when you look at something like infection because it's a low percentage of patients that have an issue with it. But we do believe that even with what we're sensing today that somewhere in the future, we'll be able to begin to predict those types of things. That's the goal. That's the effort. I can't put a time frame on it, but that's absolutely the goal.

And given there's a fixed reimbursement, do you think within the existing DRG codes and outpatient reimbursement for knee surgery that this type of technology at a price premium would be accepted? Or do you think you need differentiated reimbursement for something like this? And is that likely with the claim?

I don't believe that differentiated reimbursement, at least not in the U.S., is likely and probably globally. But I don't believe that it's likely in the U.S. We'll always pursue avenues if it's possible. But my sense is where you have a DRG already in existence, the idea at this point anyway is not to add incremental reimbursement to that DRG. That's the premise that we're going off of. If we can get it, great. But I don't think we need it. We did a pretty significant survey before we launched the product to understand given what this could do, would people would be willing to pay a premium. Very much like what we would have done with robotics before hand to be able to land on the price premium for a robotic procedure. And it was very clear from that survey, extensive survey, that people would be willing to pay more for the data collection capability. So we believe that we'll be able to get the price premium through that survey, number one; but also through fact, through actual performance right now. We're selling it already at a premium, and there's a pretty high demand to be able to get access to it.

Got it. Maybe shifting gears a little bit. Usually, we lead with ROSA, but I thought I'd save the best for last. You now have hundreds of robots around the world. I was wondering if you could give us just any high-level thoughts on how you closed out the year with placements versus expectations and how the environment remains on a global level for ROSA heading into 2022?

I've been really enthusiastic. It's hard to believe almost because I said before, almost, let's call it, 75% to 80% of the time that we've been out launching ROSA, it's been in the midst of the pandemic and the pressure associated with that. But even still, as I referenced before, we closed out '21 at almost 600 units. I mean it's a lot of units out in the marketplace in a pretty challenged environment. We're remembering again that we started for the most part with our first unit place at March 2019. So the demand is strong. The placements are good. The utilization inside those spaces is very strong. We're working our way. I look at this as a tailwind for years to come. I'm excited about what we're doing. I'm excited about the penetration of procedures that we're getting at robotics, but it's just starting. We have a lot of headroom still left for us in -- with ROSA. And I think what's going to help us beyond just ROSA is the whole idea of ZBEdge. We're the only robotic system that also has mymobility. We're the only robotic system that also has a smart implant in OrthoIntel to use that artificial intelligence to link all that information. That, to me, is the most exciting part. It's not ROSA by itself. Although I love ROSA, I love what it's doing. It's really just a variable in the ZBEdge equation. That's what gets me the most excited, that true all-encompassing robotics and data equation that we have and are using right now.

I got to see a little bit of ZBEdge at the AOS conference, and it really is integrating the entire platform. Are there any areas that you think Zimmer Biomet needs to add to the platform to be a little more competitive? I'm not saying you are, I'm just asking, is there -- are there any gaps in the portfolio that you think need to be filled, whether it's more on the capital side or a device side?

I mean the biggest gap now is just data. We want to collect as much as we possibly can, even through the vectors that we currently have in place. So the more we collect, the better insights we're going to get again through machine and artificial intelligence. But to me, separate from that, it's different applications of ROSA because now we can collect data in different procedures that can still go into the mymobility that can be applied to those procedures as well. So it becomes more of a proliferation of what we currently have and need and ensuring we have it in shoulder and other areas of the body. So to me, the biggest gap would be just data itself. So the lake gets bigger, and we can actually use it for those insights that we're seeking. But beyond that, it's just a proliferation of the ecosystem.

So as I think about the entire product portfolio, there's clearly preoperative planning along with ROSA. Where can I expect to see some of the biggest improvements in the ZBEdge ecosystem, whether it's pre or post or even well post and follow-up? Where can I think of some of the biggest improvements in the ZBEdge platform on a tangible basis?

Yes. I think the biggest short term, the here, the now, what you can get right away, in my view, on mymobility, you have the ability to use mymobility -- we have about 5,000 patients, by the way, now in the mymobility side, which I think is the biggest in orthopedic history. And what we are finding is it gives you an opportunity to stay more connected and have the patient do less in-person rehab but still get the same outcome for their procedure. So having that connected between the patient and the care team is unique with mymobility, and it's virtual in nature, so that it's easier to do, particularly in this type of an environment. That's the here and the now, and people are taking advantage of that now. If I think about iQ already, even though it's early days, we're picking up data collection right now that nobody could have ever had. Before, when a patient might call you and complain about something, you didn't know for sure what was happening. But you've got a dashboard now as a result of mymobility and iQ that you can actually look at to understand how much the patient has been moving, sitting, walking, stepping, doing stairs. I mean it's a significant difference than what the surgeon has today. The future, the true future, for me -- and by the way, ROSA also provides that accuracy inside the procedure. If you know what you want to do, and you want to make sure that you actually accomplish it in the procedure for tissue balancing and bone cut, you can get that with ROSA. You can increase the accuracy of actually doing what you try to do during surgery. The biggest difference, though, and that's going to take time, is to be able to inform the surgeon on what they should do. What should you do, what kind of tissue balancing is right for that patient based on all the patients that I've seen it look like that patient? And what kind of cut you should have on that bone. And so to me, that's the thing that is going to be most exciting. It's not being able to deliver what you want, it's being able to get insights on what you should want and then deliver it.

I would not want to see the mymobility data on me today. It's just lots of sitting. Bryan, I want to ask one more question, then there's a couple of questions that came in I want to make sure I get to. But how do I think about you have these -- all these ROSA robots around the world. Any sort of utilization data or what percentage of total knee surgeries across Zimmer Biomet at a center with ROSA that are being done on it that you can share with us?

Because you asked in that way and you got that world map behind you, I'm just going to go ahead and answer that question even though [indiscernible] I think we ask for. But I'll look at the U.S. I think it's cleanest to look, even though it's been challenged by COVID. It's where we started first, launching the robotic system. We've been balanced. We look at the globe, but the U.S. has done the best so far for a country standpoint. And in the U.S., we finally probably got to the double-digit mark in the total knee procedures that are being done robotically. So just hit 10% as we closed out 2021, we certainly have higher -- much higher aspirations than that. But what it tells you that it's working. And utilization is working in those robotic systems. We're getting it pretty quickly. Surgeons feel comfortable doing all their procedures robotically because it's not slowing them down and that's important to them. But that was a pretty big mark for us, moving from single digit to double digit as a percentage of our total needs being done robotically.

Got it. One question that came in, you touched on this a little bit, but is Omicron so far worse, better or the same as Delta was on orthopedic surgeries?

It's hard to say whether it's Omicron as the acuity level of the disease or just the fact that it's spreading so fast and it's impacting patients that would have come in otherwise because they have COVID or it's impacting staff members that would have been there to help that patient if they didn't have it as well. So it's hard for me to know. But what I can tell you is that when Omicron has been out for whatever the reasons are, we've definitely seen a much more challenged environment here closing out the year. I think the variables of why may be different than the Delta variant. But either way, it's still creating a challenging environment.

Got it. Probably last question before we're going to run out of time. Bryan, there's been an undeniable shift into the ASC setting that's been accelerated with COVID. How do you feel about Zimmer Biomet's competitiveness in the ASC environment?

Yes. I'll tell you, we're playing catch up, no question, in the ASC environment. If you look at where we were -- where we are as a percentage of our business in the ASC, I guess, is smaller than some of our competitors, unfortunately because that's a fast-growth submarket right now. We're actively catching up. We've built an entire organization focused on ASC during the pandemic period. It was a goal of ours anyway, but we've obviously put it on steroids, and we've acquired a couple of technologies that would allow us to have a fuller portfolio that we could sell into the ASC. A big part of it is just going to be to continue to fill the product gaps that we have, which we're doing, and to make sure that we have the right contracting entity in place so that we can increase our share position in ASC. Definitely a focus, but there's no question, we're behind.

All right. Well, unfortunately, we're out of time. I really appreciate the conversation, the insight and hope you have a great rest of the day.

Thanks, Robbie.

Thanks, Robert.