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

Good morning. Welcome back to the 2024 Wells Fargo Healthcare Conference. I'm Larry Biegelsen, the Medical Device Analyst. And it's my pleasure to host this session with the management team from Zimmer Biomet. With us, we have Ivan Tornos, President and CEO. Dialing in, we have Suky Upadhyay, the CFO and Executive Vice President of Finance, Operations and Supply Chain. And also in the audience, we have Zach Weiner, the Director of Investor Relations. The format's fireside chat. If anybody has a question they want to ask, just raise your hand and we'll call on you. Ivan and Suky, thanks so much for being here.

Great to be here.

Good morning, everybody.

Suky ,can you hear us okay?

Yes I can, Larry. I'm sorry I couldn't be there in person. I had a commitment prior to this being scheduled. But hey, Larry, before we get started and I turn it over to you and Ivan, just a few hygiene comments. Just a reminder that we'll be making forward-looking statements. Actual results might differ materially and please refer to our SEC filings and our Investor Relations web page for risk factors.

So Ivan, you've been CEO now for just a little over a year, I believe. So I'd love to hear about your experience at Zimmer over the past year. What's gone well? What could have gone better? What are you excited about?

Sure. Well, once again, good morning, and thank you for hosting us, Larry. The good, the bad and the ugly, as we tend to call it, at Zimmer Biomet. The good. Over the last year, frankly, over the last 5, 6 years, we've made a lot of progress as a company. And I'll start with the results. If you go back 2017, 2018, this company was either declining or barely growing. Along came the pandemic, post pandemic 2021, we grew 10% top line with double-digit growth and adjusted EPS. In '22, we grew 6.5%. In '23 last year, we delivered 7.5% constant currency revenue with adjusted EPS of 9.5%. Started that 2024 midpoint into the year, growing mid-single digit. If you go back 4 quarters, Q3 of 2023, Q4 of 2023, Q1 of 2024 and reported Q2 of 2024, the growth remains mid-single digit -- strong mid-single digit with most quarters being strong EPS, 3 out of 4 double digit. So I think the results speak for themselves. Not pleased with those results, we want to do more. But again, let's not forget that this is a company that was either declining or flat 4, 5 years ago. So I'll put that strongly in the category of good. In the category of good, I'll also say that we've done a remarkable job in going from being a laggard in innovation to making innovation a competitive advantage. And that means first to market on smart technology, smart implants, first to market on shoulder robotics, first to market in diagnostics for infection management, first to market -- only company with 510(k) FDA approval for Mixed Reality, I could go on, but I think you get the picture. We have a sizable opportunity when it comes to innovation. We'll be launching 50 new products in the next 30 to 36 months. So that's in the bucket of good. In the bucket of ugly, hey, I don't like the fact that our U.S. performance remains inconsistent. When you annualize it, we are more or less what we need to be. But we do have choppiness, 1 quarter up, 1 quarter seems to be down. We're addressing that, making changes from a go-to-market standpoint, making leadership changes, making sure that we have the things that we need to have in place to make sure that it is a consistent performance when it comes to the largest market. What I do like, now to go back to the good, what I do like is that we're not a U.S.-centric dependent type of company, which leads me to another factor within the ugly. I've seen we've done a poor job, all of us over the last 5, 6 years at Zimmer Biomet in telling the story of who we are. We're not a U.S. Knee company. We can deliver mid-single-digit growth in revenue with EPS growing faster than revenue because we are diversified. Point in case, what we've done with S.E.T.; point in case what we're doing with robotics; point in case, what we're doing internationally, as you saw in Q2 of 2024. This is no permission to fail. This is not to tell you that the U.S. is not going to be a consistent performer. But this is to illustrate that this company is already diversified, and we can deliver through different sources. When it comes to the bad, closer with the bad, the company undoubtedly is managed in a much better way than it used to be back in '17, '18, we had FDA challenges, quality challenges, et cetera, et cetera. That said, we still have room to improve when it comes to operating the company. And that leads me to report something today in the spirit of transparency, a temporary challenge that we're dealing with. In July of 2024, early in the quarter, we actually moved from a legacy ERP platform, enterprise resource planning, which is very common in medtech. We moved from a legacy platform, DCS, to SAP. Things worked well at first, the usual glitches. As we get into the August time frame, we identified that it didn't work as expected. That is certainly going to create some challenges when it comes to revenue in the second half of 2024. The situation is well managed. We understand root cause. This is not impacting how we manufacture. This does not impact our quality. And I'm saying that because those were the 2 triggers of the massive challenges that we had back in '17 and '18. But nonetheless, it's a challenge that we need to overcome. Again, we have root cause analysis. It will impact second half revenue for 2024. And we believe we'll be out of the woods as we exit Q4 of 2024. Happy to have some more answers. I'm sure you have a lot of questions based on what I just reported.

Okay. I guess, starting with the news. The revenue impact, any way to quantify that today? And it wasn't clear to me, you said you identified the root cause. Is this resolved or not? Where are you?

Yes. So again, transparency here. We believe that with the data we have today, at this point, the impact in revenue could be around 1% of sales for the year, and that's the information we have today. In terms of the root cause, we know exactly what is the root cause. We are shipping product. This is impacting some areas more than others. In the background of this challenge, we're still seeing recon, reconstructive, our knee and hip business performing at robust levels. It is impacting some of the shipping in other categories as well as S.E.T., but yes, root cause analysis has been identified. The right people are working on it. And again, should the risk materialize, it could be around 1% of sales.

So if we think about it, started in August. So it's a little bit more than -- it's obviously more than 2% of sales, call it, for the second half of the year because, obviously, it didn't impact the first half.

It did not. We went live in the July time frame. And again, any time you go through an ERP implementation, there are challenges. And some of the challenges in July were as expected. Again, as we get into August is when we started to realize that this will be more meaningful than we initially thought it.

And you think it's going to impact sales through fourth quarter?

By the time we exit Q4, it should be largely resolved, it's going to go gradually better, but that's the information we have today.

And do you think you will lose cases? Or will you regain those cases?

A significant amount of it is going to be timing, the way we recognize revenue and we process orders. Likely, we will lose some cases when you have products that are not being shipped to a customer in some areas, then the customer is not going to sit back and just wait for you to get the product out there. But again, that's the information that we have today.

And it's less so -- it's not impacting Hips and Knees, it's impacting other businesses more.

It's impacting all categories, but predominantly it's impacting what we call S.E.T. or the non-reconstructive business as well as other. So as I was saying, even with these challenges, we've seen our Hips and Knees business performing at better levels than, let's call it, the first half of 2024.

And Suky, earnings impact, any preliminary color? Should we just expect -- what kind of flow through? .

Yes. So the first thing I would say is on that estimate that Ivan provided, we see more than half of that in the third quarter, we would expect at this time, third quarter versus fourth quarter from a revenue impact. So a little bit of phasing there. This will have an impact on earnings, as you would expect, the normal flow through, but we are working to mitigate some portion of that. And we'll update you and provide more information on our third quarter call, Larry.

Okay. But you've identified the root cause so you know how to fix the problem.

We -- the individuals that were responsible for the implementation are no longer with the organization. We're working with a top consulting firm and the top people are working on the remediation. Again, root cause has been identified. The issue is isolated to some parts and pieces of our business. So I'm feeling pretty confident that we're working at the right speed across the right steps.

Okay. Let me -- before I move on, questions in the audience? I'm sure I didn't think of everything on the fly here. So is there anything, people here, any questions people have on this topic before we move on that I didn't ask? Okay. All right. Anything else you expected me to ask that I didn't ask? Or Suky, anything else you expected me to ask from a financial standpoint that you want to communicate?

No. I think, Larry, you hit the key point. So Ivan talked about 1% of annualized sales is -- could be the impact based on what we know today. We do feel like we have our arms around the issues and the root causes. We have robust management teams as well as outside support in tackling those. We continue to make progress every day, every week. The phasing of that, as I said, will be more in the third quarter than fourth quarter. and the earnings, you should expect the normal flow through. However, we will mitigate some portion of that through cost containment and other measures. But it's too early to tell exactly what that looks like at this point. Again, we're missing an abundancy of transparency, and we'll provide more information on our third quarter call.

And geography, more U.S. or -- more U.S. impact than...

Yes, this was the change of the ERP in the U.S. and Canada predominantly. And just for background, we've done 35, 40 of these ERP implementations over the last 4 or 5 years. And this one obviously didn't work out initially as expected. But we do have the experience going through these implementations. And again, the right people are working on the problem.

And the LRP, everything is still intact? Just there's no -- this doesn't impact any of the LRP that you gave in May.

It does not. As you see here today, it does not.

Larry, sorry, just one last thing to clarify -- not clarify, but amplify what Ivan said, which is this does not affect production. We're manufacturing in any way. And we are shipping, just not at our usual velocity.

Okay. That's helpful. Okay. Let's move on. U.S. Knees, just there were some temporary issues in the second quarter in the U.S. Ivan, I want to just confirm that those issues that you talked about on the Q2 call are resolved.

Yes. So like where we started the quarter in July, as we noted in the earnings call, again, even in the background of these challenges that we're resolving in the world of ERPs, we like the progress that we're making in the U.S. If you recall in the earnings call in Q2, we spoke about some supply challenges, non-ERP related. I just want to make sure this is very clear, related to one platform that we call limb salvage, that is being largely resolved. We spoke about some medical education events that we did earlier in the quarter -- in the second quarter. That took a lot of surgeons and equally important, a lot of sales reps out of the field. Obviously, we're not doing the same Q3 and Q4. And then we spoke about comps. We spoke about the fact that in Q2 of 2023, we delivered Knee growth of 9.8. So in hindsight, we could have done a better job when it comes to our pacing. I'm not a fan of bringing excuses when it comes to comps, all companies go through comps. But given the timing of new product introductions, we could have done a better job. Net of the challenges with [Neuron], I like where we are with our new franchise. We continue to deploy -- sorry, [project Neuron] is internal code name for the ERP implementation. Net of those challenges, I like where we are in terms of the excitement around Persona OsseoTi, what are we doing with robotics, what are we doing in improving commercial execution in the U.S. So I'm very optimistic when it comes to U.S. Knees.

That's helpful. And while we're on Knees, Ivan, when is Persona IQ going to be a material driver of growth for your U.S. Knee business and how impactful is the study, the shorter stem launch is going to be at the end of this year?

Sure. As I shared last night over dinner, we are seeing continuous improvement, as we say acceleration more than improvement. Our current performance with Persona IQ, every day hit a new record when it comes to performance. We've seen large adoption in teaching institutions. We're developing great partnerships in ASCs. We continue to gain data. We got 3 billion data points with Persona IQ. The data is important because it help us in contracting. The data is important because it enables us to explore different monetization programs with payers and providers. We received 510(k) approval for what we call the shorter stem or the study version, the shorter stem of Persona IQ. We're doing the full launch of that as we speak as we entered late Q3, early Q4. To your question on when is it going to be material, I do think that 2025 is the year where we're going to start probably be more concrete in terms of the impact of Persona IQ, but everything is going the right direction.

That's helpful. And on Hips, Ivan, I think in the past, you've said you've lost share, but you have 3 new products coming that you think are going to help rectify that. Talk about those recent product launches and when we could expect those to be more of a growth driver for you, please?

Sure. Start with acknowledging the fact. So maybe in the category of ugly, if not bad, we did lose market share in Hips over the last 3 to 5 years, primarily in the U.S. So I'll say that again because I think we've been somewhat ambiguous. We have a lot of market share, Zimmer Biomet, over the last 3 to 5 years, predominantly in the U.S. The good news is that even with that share loss, we remain #1 in reconstructive and in key markets around the world. The better news is that we know why we lost market share. We have 3 product gaps: surgical impactors, direct anterior stems, implants for direct anterior surgeries, which is 40% of all the surgeries here in the U.S. and navigation robotics that made sense to customers. We launched HAMMR or surgical impactor late Q2. It continues to gain great momentum, frankly, above our current expectations. So you should see an uptick in that regard. We continue to accelerate the penetration of ROSA hip, recently announced the acquisition of OrthoGrid, which is going to give us surgical guidance -- AI, artificial intelligence surgical guidance for those customers that don't like robotics. We continue to see rapid acceleration of Hip Insights. It's the only 510(k) approved technology for mixed reality in an operating room. So the box of navigation is checked. And then we got 510(k) approval for direct anterior stems. So we are entering the launch process as we speak of Z1. Z as in zebra, which is the product that is going to compete with other direct anterior stems in the U.S. In the background of all that, we made changes around incentives and compensation. And I will tell you that every single rep today in the U.S. is thinking knees and hips, whereas in the past were thinking predominantly knees because we had the product gaps. So a long winded way to say, we got what we need, and we're going to regain the share that we lost.

That's helpful. And then S.E.T., Ivan, how are you thinking about -- you had a good quarter in S.E.T. in Q2. Actually, this year S.E.T. has been, I think, mid-single digits at least, better performance compared to recent years. How are you thinking about each segment going forward? And can this -- once you have the ERP situation resolved, can this grow above mid-single digits?

So it's more than a quarter. I think it's 3 quarters now in a row that we delivered a strong mid-single-digit performance with the growth drivers within S.E.T. those being shoulder, CMFT, craniomaxillofacial thoracic, and sports medicine growing upper single digit, if not double digit in some instances. So that's 3 quarters in a row. In the second quarter of 2024, every single S.E.T. business actually delivered meaningful growth. We got 6 businesses in there. As we think the next 4, 6, 12 quarters, the commitments that we made at the Investor Day remain. We should be in the strong mid-single-digit growth territory for S.E.T. And again, the expectation is that some of those businesses, and we've got 6 of them, will grow at an even faster pace.

That's helpful. Ivan, the other exciting new area for Zimmer is the robotic shoulder application. You were first to market. I think you're the only one -- well, you're the only one in the market right now, but you have anatomical reverse, right? What's the early feedback been? And when is the full market launch?

So yes, we are first to market, very proud of that. It's not just the speed, it's the quality of the product. We continue to go through the limited market launch with on cases at Cleveland, Mayo, Colombia recently, UCLA and some other areas. And the feedback remains compelling. We knew that the LMR was going to be at least 6 months. So we think that this may be a product that is going to be impactful in a positive way in 2025.

That's helpful. What are the clinical benefits of robotics for shoulder?

Sure. So first of all, as you mentioned, it's the optionality of doing anatomic and reverse. In the case of robotics, we believe that it's going to drive higher accuracy. As you think about a shoulder procedure, the real estate in the shoulder area is very limited. The visibility is compromised. So we think -- we believe that robotics will drive better cuts, better accuracy, better visibility over the glenoid, the [Indiscernible] tissue. The thesis remains that better accuracy in the cuts equals better outcomes, less pain, less recovery time, et cetera, et cetera.

That's helpful. The other -- sticking with ROSA, the other news you made on the Q2 call was about, I think you said 3 new ROSA modalities in the next 4 to 8 quarters. Hopefully, I got that right.

You did.

It sounds like there's 2 new versions of ROSA coming. Could you provide a little bit more color on those and any time lines, please?

Yes. Happy to do that, Larry. On the time lines, you just highlighted that 4 to 8 quarters, 3 different ROSAs, one for primary needs, what we call ROSA V15. We'll come up with a better name once we launch it, but that's the internal project name. This is going to be an easier interface with the customer. It's going to reduce the time in surgery. It's going to be a simpler version of the current ROSA for primary needs. And I want to be careful what I get into given competitive reasons. Then we're going to be launching a ROSA posterior application. In the U.S., 40% of all hip surgeries are done by a direct anterior. As you get into Asia Pacific and Europe, where ROSA is already the #1 robot, posterior hip approaches is the way to go. So we'll be launching a ROSA posterior for the hip cases. And then in the time frame, we are going to be launching a ROSA version that is CT-scan based. We know that some surgeons like CT scan, some do not like going through CT scan for radiation reasons, for complexity reasons, for cost reasons. So we want to make sure that ROSA becomes an option in a CT scan and non-CT scan approach for our customers.

That's helpful. So the next version of ROSA, the 1.5, I think you called it, that's a software upgrade.

Going to be a software upgrade, yes.

And the one, the CT scan-based ROSA, is that new hardware?

There'll be some minimal changes to the hardware. .

Okay. So people who have existing ROSA...

An upgrade to that.

I got it. And the next gen, the 1.5, comes up first?

The 1.5 is the first one to come, then it will be the CT scan ROSA and then the hip posterior application.

The other interesting thing about Q2 was you had positive pricing for the first time in a long time.

Yes, we did. We like the trend. We are now, I believe, it's 4 quarters which we've been neutral or positive. We have put governance in place. I actually speak about this, that is second to none. When I think about my 29, 30 years in medtech, the way we incentivize and candidly penalize people for price gains or losses is like nothing I've seen before. We have amplified the way that we do contracting across ASCs and whatnot. We are leveraging data in a way that we didn't used to do before. So I see this as us now going back to the older days, where we're losing 2 to 300 basis points. Can we come into the current gains? I'm not sure that's the commitment that we're ready to make today. But Suky, I'll you elaborate on pricing.

Yes. We started the year, Larry, saying that we thought pricing erosion would be about 100 basis points for the full year. Now given our first half performance, we've moderated that back to 5 -- sorry, 50 bps of erosion to flat. So that's where we currently sit. And then for the longer-term LRP, we still believe that 100 basis points of price erosion is the right planning assumption.

That's helpful. Suky, 2025, I mean, you have an LRP out there that's basically, I think, mid-single-digit growth on an annual basis. EPS, I think 1.5x sales is what you've said. Help us understand a couple of things, just some of the puts and takes for next year and the ERP issue this year, conceptually how to think about that next year. Does that create easy comps? Any help -- color on how to think about '25 would be helpful.

Yes. I think the dynamics into '25 are representative of what we really excited about our LRP in a 3-year horizon. In that 1.5x of earnings growing faster than revenue, it assumes about 30 to 50 basis points of operating margin expansion on average per year. And the building blocks to get there are really around, one, sales leverage on your fixed cost base; number two is gross margin sort of stability. And we've talked at length in our LRP about the dynamics and how that will phase in. So I won't go through that here. And the third is we still see some clear operating improvements throughout SG&A. And so those are really the 3 key building blocks to that margin expansion. As it relates to '25 and the impact of the ERP, I think it's too early to tell. We still need to go through the deep analysis of understanding how much of that backlog will come back, when does it come back this year versus next year and then what does that mean relative to growth into next year. But the way I would think about it as we said in Ivan's opening commentary is that we do not believe that this has any impact on our overall 3-year LRP ambition.

Okay. So just to be clear, there's -- some of the lost sales in '24 may come back. Those aren't -- you're not assuming that they're all loss cases?

That's correct.

And what -- how would that be? I mean why wouldn't someone -- why wouldn't someone just -- if they can't get a product today, you do the procedure with a different product today. Why would they wait? And why would you have catch-up sales?

Yes. I think there's two elements to that. There are some elements that are not case-dependent such as surgical other products that are direct to customer that are not sort of procedure-dependent. And so depending on what the backlog that is as we exit 2024, that could be a pickup into '25. And then also as you move through the back end of 2024, to the extent that there is a good delay in meeting cases because of product velocity, those could potentially come back to you in early 2025. But I think it's too early to call. We're just giving you some conceptual points of consideration.

Okay. That's helpful. Suky, while we have you -- any update -- or Ivan, of course, any updated thoughts on M&A? You guys have been pretty clear about deal size, about return on invested capital.

We continue to evaluate inorganic means to diversify the company. We spoke about our WAMGR, weighted average market growth rate, being around 4. We have an aspiration to get to 5. That is an organic way to get there, but that needs to get augmented by inorganic pathways. I think we already shared a lot in terms of what we're looking for at this point. Once we do something, we'll announce it.

How's the pipeline?

The pipeline is strong, and we...

Pipeline of deals, I mean.

The pipeline deals is strong. We're going to be bold, but we're not going to be reckless.

That's helpful. And diversification, you mentioned that a minute ago. How do you think -- well, how do you define diversification? .

So it has to be WAMGR accretive, right? We want to be entering markets that are north of 4%. Diversification for us, today, the way we think about it is in 3 key areas. We want to be in higher growth categories in the segments where we already are the leaders. There is a lot of high-growth areas we've seen reconstructive, point in case, what we're doing with OrthoGrid, technology navigation, those are spaces that are growing strong double digit. . Bucket #2 is areas in S.E.T. that are high growth. I'm not going to call them out because then all kinds of speculation takes place. But there's a lot in that regard. And then bucket #3 is ASC, ambulatory surgical centers, as a site of care that is a very relevant opportunity. So it provides vertical and horizontal opportunities for us to diversify Zimmer-Biomet. We already have diversified Zimmer Biomet, which is something that, again, going back to the ugly, we've not done a good job in telling. Our WAMGR today is 100 basis points higher than it was 5, 6 years ago. We're not a U.S.-centric type of company. We can grow mid-single digits, delivering performance in other markets. We have diversified from inpatient, outpatient to ASCs. But we are going to continue to diversify the company.

Before you became CEO and many years ago, the strategy was to focus on musculoskeletal health. You have a little bit outside of musculoskeletal health with thoracic, right? Or I guess that could be still -- but how important is it? Are you still focused exclusively on musculoskeletal health?

We have the optionality of moving in areas that are not core musculoskeletal, but you're not going to see us doing a deal in audiology or getting into areas where we don't have a right to win. I don't see that as a pathway for us to diversify. But again, the optionality, we think, reconstructive, musculoskeletal. And you mentioned CMFT, that opens all kinds of platforms, right? We have a neuro business. We are the leading company in epilepsy diagnostics through robotics. Once you have the platform, there is so much you can do in that space. To your point, we are in cardiac surgery through sternal closure, our CMFT business. There are opportunities in that space. So there's a lot of things that we can be doing without going into wild spaces and doing something reckless for the company.

That makes sense. And you got a question at the Investor Day on foot and ankle because I think it was a good question. There's times when I've heard you talk about being interested in foot and ankle, and I've heard other times, it sounds like it's less of a priority.

We're interested in anything that delivers a solution to our patients, I'll leave it at that, and its high-growth segments. So that's...

Foot and ankle, do you still consider that a high-growth segment?

It's high-growth segment. Either it's an organic or inorganic pathway to deliver a solution to our patients, we'll explore it.

That makes sense. And ASCs, do you have everything you need today?

Yes. So we were late to the party on that one, right? We were and continue to be the #1 company in inpatient, outpatient settings within the hospital. I will tell you, over the last 3 years, we made tremendous progress. We don't have portfolio gaps. We do not have contracting gaps. Even when we don't have beds, wheelchairs, booms and lights, we can license those up. We have an army of sales reps fully dedicated to an ASC. We got best-in-class people in key account management that are doing all the pricing negotiations. We incentivize people to be in an ASC. We continue to grow strong double digit in the ASC. So with those 4 data points, I'll tell you, we don't need anything to win in the ASC.

We talked about it a little bit yesterday, the sterilization. How significant is that? Is there really an opportunity there to help ASCs with that?

Huge opportunity. When you run ASC, you want somebody to help you deal with the volume. You want somebody to take cost out of ASC, you want someone to solve meaningful problems like sterilization. We partner with external companies in bringing sterilization solutions to ASCs, recently signed an agreement in the Atlanta, Georgia area. We're one of the largest volume surgeons, and that's definitely a competitive advantage that we bring.

I don't know if you're willing to comment on this, but on the Q2 call, you talked about some choppiness in the procedure volumes in the second quarter, and July was much better. If you're willing to comment, great. If not, I understand. Just in terms of like the global procedure environment for orthopedics, if there's any color or commentary.

Well, here's the color. The markets remain very strong. This is now -- the growth rates you've seen, and I believe you'll continue to see, are not backlog related. Demographics continue to play a factor, strong factor. We continue to see large volumes outside the U.S. as technology catches up outside of the U.S. The fact that all of us are getting older and more mobile continues to be a factor. The shift to the ASC, I think -- we think is a market accelerator. So I will tell you, these markets are strong. Some of us peg the market at 4% to 4.5%, reconstructive-wise. Some of us think it's 5%. But it's definitely another 2% to 3% that we have pre-COVID. So that's the color that I'll offer.

Ivan, any additional insight into why the second quarter you might have seen it -- I know it was only a couple of months, but why the softness might have occurred in Q2 in the U.S.

It's 3 things that I highlighted, I'm not going to repeat them. I wish that I will give you more color there. But we got to do a better job and make sure...

The procedures, I think you said procedure softness. Do you think you would just search in lot of territory...

It was very specific to us. If you look at where our peers came in, the market remains strong. But we should have done a better job in some of the things that are already highlighted.

Got it.

But as we enter Q3 and July, we like what we see.

Ivan, we've had about 2.5 minutes left. What's underappreciated, what haven't we covered that you want to share with people.

It's a different company. It's a different company. And I'm not going to repeat my [Indiscernible] with the speech on the good, the bad and the ugly, but I will tell you that it's far more good, if not great, than bad and ugly. We have a very compelling story when it comes to innovation. I'm excited about the pipeline. I'm excited about what progress we saw with our pipeline. We've made dramatic improvements when it comes to commercial execution. And I think that's one of the key reasons why for now 10 quarters in a row, we continue to deliver mid-single-digit growth. I love the culture that we're building at Zimmer Biomet. And yes, we do have operational challenges that need to be mitigated, and I'm confident that those challenges are going to be mitigated. So net-net, as you see here today, a year on the job, 5.5 years with the company, I've never seen Zimmer Biomet where I see it today, ready to continue to win and deliver the commitments that we made in the Investor Day back in New York.

One follow-up. Is it too early to think about applying Persona IQ into other joints?

It's never too early, but we want to win in the largest category, which is obviously knees. And then we'll think about getting to shoulder, hips and whatnot. But we're definitely having those conversations, and we'll have on those conversations once we're ready.

All right. Ivan and Suky, thanks for being here. Thanks for participating in our conference. Appreciate it.

It's a great conference. Thank you, Larry.