Zimmer Biomet Annual Report 2022

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FY2022 Annual Report · Zimmer Biomet

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ZIM

UAL REPO R T 2 0 2 2
MER BIOMET HOLDI N G S ,

I N C .

Financial Highlights* (Dollars in millions except per share amounts)

Sales b y Geography

2020

United States

$3,508

International

Consolidated

2,620

$6,128

42%

58%

2021

$3,854

2,973

$6,827

2022

$4,012

2,928

$6,940

Sales b y Product Category

25%

40%

Knees

Hips

S.E.T.

Other

2020

$2,378

1,751

1,526

473

2021

2022

$2,648

$2,778

1,856

1,728

595

1,895

1,697

570

27%

Consolidated

$6,128

$6,827

$6,940

% Change 2021-2022

Constant
Reported Currency(1)

(2%)

10%

% Change 2021-2022

Constant
Reported Currency(1)

(2%)

(4%)

10%

Net Sales

Operating Profit

Operating Cash Flow

Diluted Earnings (Loss) per Share

Zimmer Biomet recorded net
sales of $6.940 billion in 2022,
our net sales increased by 1.6%
compared to 2021 primarily
due to recovery in surgical
procedures as COVID-19 cases
subsided, partially offset by the
negative impacts of changes in
foreign currency exchanges
rates on International sales.

Our 2022 reported operating profit
declined primarily due to a goodwill
impairment charge of $289.8
million related to our EMEA
reporting unit. Our 2022 adjusted
operating profit improved from
2021 primarily due to the recovery
of elective surgical procedures as
COVID-19 cases subsided.

The decrease in cash flow from
operating activities in 2022 from
2021 was primarily the result of
higher tax and restructuring-
related payments.

Reported diluted earnings (loss) per
share declined in 2022 primarily due
to a goodwill impairment charge of
$289.8 million related to our EMEA
reporting unit. Adjusted diluted
earnings (loss) per share improved in
2022 primarily due to the recovery of
elective surgical procedures as
COVID-19 cases subsided.

7
2
8

8
2
1

0
4
9

7
2
8

8
2
1

0
4
9

7
2
8

0
4
9

4
0
4

6
5
3

4
9
8

7
3
8

4
9
8

6
7
0

7
3
8

1
3
5

0
6
8

4
9
8

0
6
8

1
3
5

1
0
6
8

1
3
5

6
5

6
5
3

5
3

4
0
4

6
5
3

9
8

6
5

9
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2
1

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3

9
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3

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5
0

0
(

2
1

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3

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5
0

0
(

6
9
6

3
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)
5
0

0
(

20
20

21
20
21

22
22

20
20

GRAPH KEY

Reported

Adjusted(2)

21
21

22
21
22

20
20

21
20
21

21
22
22

20
20

21
20
21

22
22

(1) “Constant Currency” refers to changes in sales resulting from translating current and prior-period sales at the same predetermined foreign currency exchange rate. The translated results are then used to determine year-
over-year percentage increases or decreases that exclude the effect of changes in foreign currency exchange rates. See the reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure
on page 87.

(2) “Adjusted” refers to performance measures that exclude the effects of inventory step-up; certain inventory and manufacturing-related charges, including charges to discontinue certain product lines; intangible asset
amortization; goodwill and intangible asset impairment, as applicable; quality remediation expenses; restructuring and other cost reduction initiatives; acquisition, integration, divestiture and related expenses; certain
litigation gains and charges; expenses to establish initial compliance with the European Union Medical Device Regulation; other charges; loss on early extinguishment of debt; any related effects on our income tax provision
associated with these items; the effect of Swiss tax reform; the effect of U.S. tax reform; other certain tax adjustments; and, with respect to earnings per share information, provide for the effect of dilutive shares assuming
net earnings in periods of a reported net loss. See the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures on pages 84-86.

*All historical information is presented on a continuing operations basis.

To Our Shareholders,

In 2022, the Zimmer Biomet team remained intensely focused on serving our customers and their patients

and creating value for our shareholders. This was against the backdrop of another year impacted by the

global pandemic, as well as broader economic headwinds such as inflation, unfavorable foreign currency

exchange rates and supply chain challenges.

I am extremely proud to report that we continued to execute our corporate strategy, made great progress

in the ongoing transformation of our business and further strengthened our position as a leading global

MedTech innovator.

I want to thank all of our Zimmer Biomet team members for demonstrating incredible resilience, innovative

thinking and dedication to getting the job done throughout 2022. Our exceptional team is the engine driving

us forward and we are very honored to be on this journey together.

Key Achievements in 2022

Zimmer Biomet continued to drive innovation across the patient journey in 2022. Our “innovation flywheel”

is spinning and as we develop – or acquire – and launch a steady cadence of new products and technologies

into the marketplace, we’re seeing our business momentum build and our Vitality Index continue to grow.

Highlights of Zimmer Biomet’s 2022 accomplishments include:

•

Innovative, Enabling Technologies and Solutions: Zimmer Biomet executed multiple product

launches, including the WalkAI™ artificial intelligence model for mymobility® digital care management

platform, the Omni™ Suite Intelligent Operating Room and the Identity™ Shoulder system, and we

received regulatory clearance of the Persona® OsseoTi® Keel Tibia, our new cementless knee offering.

• Active Portfolio Management: We successfully completed the spinoff of our Dental and Spine

businesses ahead of schedule on March 1, 2022, enabling the Company to focus more fully on our

prioritized strategic growth areas. We also acquired differentiated technologies and products through

several exciting business development transactions.

• Navigating the Macroeconomic Landscape and the Global Pandemic: Global companies like us
faced challenges around inflationary pressures, supply chain disruption and unfavorable foreign
currency exchange rates in 2022, but Zimmer Biomet was able to navigate these headwinds and
mitigate their impact on our business. For example, our continued commitment to supply chain
optimization and efficiency helped us adapt to and manage a variety of challenges to be able to deliver
products to our customers and their patients. Additionally, while we saw fewer COVID-19 cases in 2022
than in 2021, the global pandemic still caused surgical procedure cancellations and customer staffing
shortages that affected our business. Our team remained vigilant around safety and addressed those
challenges through continued strong execution–which we believe puts Zimmer Biomet in a favorable
position as we enter 2023.

• Team Member Engagement and Our Commitment to Good Corporate Citizenship: Zimmer Biomet
continued to focus on engaging our team members and building a Best and Preferred Place to Work.
In fact, in 2022, the Company was certified as a Great Place to Work®1 in the United States based on
achieving key criteria and the direct feedback of our team members. We also established a corporate
function responsible for building and executing against a comprehensive Environmental, Social and
Governance (ESG) strategy for Zimmer Biomet. We are dedicated to being a Trusted Partner to our key
stakeholders and a responsible corporate citizen, and we take these genuine commitments seriously.
You can learn more about how Zimmer Biomet is delivering on these commitments in our annual
Sustainability Report.

Our notable progress in 2022 was further evidenced by Zimmer Biomet delivering Total Shareholder Return
in the top 25% of our defined peer group.2 In addition, the Company received several external recognitions

during the year, including being named one of Fast Company’s Most Innovative Companies for 2022, one of

America’s Best Large Employers as well as Best Employer for Diversity by Forbes Magazine 2022, and a 2022

China Top Employer Award winner.

The Year Ahead: Moving Our Mission Forward in 2023

I continue to remain highly confident in the Zimmer Biomet team and our business momentum. While some

macroeconomic and market challenges remain, we believe in our ability to navigate them successfully and

that our strategy is working. The transformation of our business is well underway, and I am excited about the

value we can deliver to our customers and create for our shareholders.

On behalf of all of us at Zimmer Biomet, I thank you for your support. I look forward to continuing to share our

progress with you as we move forward.

Sincerely,

Bryan Hanson

Chairman, President and CEO, Zimmer Biomet

Leadership (As of March 3, 2023)

Board of Directors

Christopher B. Begley
Lead Independent Director of
Zimmer Biomet Holdings, Inc.
and Retired Executive Chairman
and Chief Executive Officer,
Hospira, Inc.

Betsy J. Bernard
Retired President,
AT&T Corp.

Michael J. Farrell
Chief Executive Officer,
ResMed Inc.

Robert A. Hagemann
Retired Senior Vice President
and Chief Financial Officer,
Quest Diagnostics Incorporated

Maria Teresa Hilado
Retired Executive Vice President
and Chief Financial Officer,
Allergan plc

Sreelakshmi Kolli
Executive Vice President
and Chief Digital Officer,
Align Technology, Inc.

Syed Jafry
Retired Senior Vice President
and President, Regions,
Thermo Fisher Scientific, Inc.

Michael W. Michelson
Retired Senior Advisory Partner,
KKR Management LLC, the
general partner of KKR & Co. L.P.

Bryan Hanson
Chairman of the Board,
President and Chief Executive
Officer, Zimmer Biomet
Holdings, Inc.

Arthur J. Higgins
Operating Advisor to Abu Dhabi
Investment Authority

Management Team

Bryan Hanson
Chairman of the Board, President
and Chief Executive Officer,
Zimmer Biomet Holdings, Inc.

Keri Mattox
Senior Vice President,
Chief Communications and
Administration Officer

Rachel Ellingson
Senior Vice President,
Chief Strategy Officer

Chad Phipps
Senior Vice President,
General Counsel and Secretary

David Kunz
Senior Vice President, Global Quality
and Regulatory Affairs

Paul Stellato
Vice President, Controller and Chief
Accounting Officer

Angela Main
Senior Vice President, Global Chief
Compliance Officer and Associate
General Counsel, Asia Pacific

Zeeshan Tariq
Senior Vice President,
Chief Information Officer

Ivan Tornos
Chief Operating Officer

Lori Winkler
Senior Vice President,
Chief Human Resources Officer

Kenneth Tripp
Senior Vice President,
Global Operations and Logistics

Sang Yi
President, Asia Pacific

Suketu Upadhyay
Executive Vice President,
Chief Financial Officer

Wilfred van Zuilen
President, Europe, Middle East
and Africa

Forward-Looking Statements

This 2022 Annual Report includes forward-looking statements that are subject to significant risks, uncertainties and changes in circumstances that could cause actual
results to differ materially from the forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” immediately following the cover page
of our Annual Report on Form 10-K included herein.

1 Certified by Great Place to Work®

2 Consisting of Agilent Technologies, Inc.; Align Technology, Inc.; Baxter International Inc.; Becton, Dickinson and Company; Boston Scientific Corporation; DexCom,
Inc.; Edwards Lifesciences Corporation; Hologic, Inc.; Intuitive Surgical, Inc.; Laboratory Corporation of America Holdings; Quest Diagnostics Incorporated; Stryker
Corporation; TELEFLEX Incorporated; and The Cooper Companies.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For year ended December 31, 2022
Commission file number 001-16407
ZIMMER BIOMET HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State of Incorporation)
345 East Main Street Warsaw, Indiana

13-4151777
(IRS Employer Identification No.)
46580

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (574) 373-3121

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $0.01 par value
2.425% Notes due 2026
1.164% Notes due 2027

Trading Symbol(s)
ZBH
ZBH 26
ZBH 27

Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes È

No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ‘

No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È

No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
No ‘
the registrant was required to submit such files). Yes È

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. È

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ‘

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ‘
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘

No È

The aggregate market value of shares held by non-affiliates was $22,002,934,091 (based on the closing price of these shares on the
New York Stock Exchange on June 30, 2022 and assuming solely for the purpose of this calculation that all directors and executive
officers of the registrant are “affiliates”). As of February 7, 2023, 208,980,256 shares of the registrant’s $.01 par value common stock
were outstanding.

Document

Portions of the Proxy Statement with respect to the 2023 Annual Meeting of Stockholders

Form 10-K

Part III

Documents Incorporated by Reference

ZIMMER BIOMET HOLDINGS, INC.
ANNUAL REPORT
Cautionary Note Regarding Forward-Looking Statements

This Annual Report 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, intentions, 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,” “design,” “strive,” “continue,” “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 effects of business disruptions such
as the COVID-19 pandemic, either alone or in combination with other risks on our business and operations; the risks and uncertainties
related to our ability to successfully execute our restructuring plans; control of costs and expenses; our ability to attract, retain and develop
the highly skilled employees, senior management, independent agents and distributors we need to support our business; 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, suppliers and
lenders and on our operating results and businesses generally; the ability to form and implement alliances; dependence on a limited number
of suppliers for key raw materials and other inputs and for outsourced activities; the risk of disruptions in the supply of materials and
components used in manufacturing or sterilizing our products; supply and prices of raw materials and products; breaches or failures of our
information technology systems or products, including by cyberattack, unauthorized access or theft; 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 outcome of government investigations; dependence on new product development, technological advances and innovation;
shifts in the product category or regional sales mix of our products and services; competition; pricing pressures; changes in customer
demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform and cost
containment measures, including efforts sponsored by government agencies, legislative bodies, the private sector and healthcare purchasing
organizations, through reductions in reimbursement levels and otherwise; the impact of substantial indebtedness on our ability to service
our debt obligations and/or refinance amounts outstanding under our debt obligations at maturity on terms favorable to us, or at all; changes
in tax obligations arising from examinations by tax authorities and from changes in tax laws in jurisdictions where we do business, including
those expected to occur as a result of the “base erosion and profit shifting” project undertaken by the Organisation for Economic
Co-operation and Development and otherwise; challenges to the tax-free nature of the ZimVie Inc. (“ZimVie”) spinoff transaction and the
subsequent liquidation of our retained interest in ZimVie; the risk of additional tax liability due to the recategorization of our independent
agents and distributors to employees; the risk that material impairment of the carrying value of our intangible assets, including goodwill,
could negatively affect our operating results; changes in general domestic and international economic conditions, including interest rate and
currency exchange rate fluctuations; changes in general industry and market conditions, including domestic and international growth,
inflation and currency exchange rates; the domestic and international business impact of political, social and economic instability, tariffs,
trade restrictions and embargoes, sanctions, wars, disputes and other conflicts, including on our ability to operate in, export from or collect
accounts receivable in affected countries; challenges relating to changes in and compliance with governmental laws and regulations affecting
our U.S. and international businesses, including regulations of the FDA and foreign government regulators relating to medical products,
healthcare fraud and abuse laws and data privacy and security laws; the success of our quality and operational excellence initiatives; the
ability to remediate matters identified in inspectional observations or warning letters issued by the FDA and other regulators, while
continuing to satisfy the demand for our products; product liability, intellectual property and commercial litigation losses; and the ability to
obtain and maintain adequate intellectual property protection.

See also the section titled “Risk Factors” (refer to Part I, Item 1A of this report) for further discussion of certain risks and

uncertainties that could cause actual results and events to differ materially from the forward-looking statements. Readers of this report 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. 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. You are
advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. This cautionary note is applicable to all forward-looking statements contained in this report.

TABLE OF CONTENTS

PART I

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

PART II

Item 5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Item 6.

[Reserved]

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14.

Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

Item 16.

Form 10-K Summary

Page

PART I

Item 1. Business

Overview

Zimmer Biomet is a global medical technology leader with
a comprehensive portfolio designed to maximize mobility and
improve health. We design, manufacture and market
orthopedic reconstructive products; sports medicine, biologics,
extremities and trauma products; craniomaxillofacial and
thoracic (“CMFT”) products; surgical products; and a suite of
integrated digital and robotic technologies that leverage data,
data analytics and artificial intelligence. 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. In
this report, “Zimmer Biomet,” “we,” “us,” “our,” “the Company”
and similar words refer collectively to Zimmer Biomet
Holdings, Inc. and its subsidiaries. “Zimmer Biomet Holdings”
refers to the parent company only.

Zimmer Biomet Holdings was incorporated in Delaware in
2001. Our history dates to 1927, when Zimmer Manufacturing
Company, a predecessor, was founded in Warsaw, Indiana. On
August 6, 2001, we were spun off from our former parent and
became an independent public company. In 2015, we acquired
LVB Acquisition, Inc. (“LVB”), the parent company of Biomet,
Inc. (“Biomet”), and LVB and Biomet became our wholly-
owned subsidiaries. In connection with the merger, we
changed our name from Zimmer Holdings, Inc. to Zimmer
Biomet Holdings, Inc.

On March 1, 2022, we completed the spinoff of our spine
and dental businesses into a new public company, ZimVie Inc.
(“ZimVie”). The transaction was intended to benefit our
stockholders by enhancing the focus of both Zimmer Biomet
and ZimVie to meet the needs of patients and customers and,
therefore, achieve faster growth and deliver greater value for
all stakeholders.

Customers, Sales and Marketing

Our primary customers include orthopedic surgeons,

neurosurgeons, and other specialists, hospitals, stocking
distributors, healthcare dealers and, in their capacity as
agents, healthcare purchasing organizations or buying groups.
These customers range from large multinational enterprises to
independent clinicians.

We market and sell products through two principal

channels: 1) direct to healthcare institutions, such as hospitals
and ambulatory surgery centers, referred to as direct channel
accounts; and 2) through stocking distributors and healthcare
dealers. With direct channel accounts and some healthcare
dealers, inventory is generally consigned to sales agents or
customers. With sales to stocking distributors, some healthcare
dealers and some hospitals, title to product passes upon
shipment. Consignment sales represented approximately
85 percent of our net sales in 2022. No individual customer
accounted for more than 1 percent of our net sales for 2022.

We stock inventory in our warehouse facilities and retain

title to consigned inventory in an effort to have sufficient
quantities available when products are needed for surgical
procedures. Safety stock levels are determined based on a
number of factors, including demand, manufacturing lead
times and quantities required to maintain service levels.

We also carry trade accounts receivable balances based on

credit terms that are generally consistent with local market
practices.

We utilize a network of sales associates, sales managers

and support personnel, some of whom are employed or
contracted by independent distributors and sales agencies. We
invest a significant amount of time and expense in training
sales associates in how to use specific products and how to
best inform surgeons of product features and uses. Sales force
representatives must have strong technical selling skills and
medical education to provide technical support for surgeons.

In response to the different healthcare systems

throughout the world, our sales and marketing strategies and
organizational structures differ by region. We utilize a global
approach to sales force training, marketing and medical
education to provide consistent, high quality service.
Additionally, we keep current with key surgical developments
and other issues related to orthopedic surgeons,
neurosurgeons, other specialists, and the medical procedures
they perform.

We allocate resources to achieve our operating profit goals

through three regional operating segments. Our operating
segments are comprised of the Americas; Europe, Middle East
and Africa (“EMEA”); and Asia Pacific. The following is a
summary of our operating segments. See Note 19 to our
consolidated financial statements for more information
regarding our segments.

Americas. The Americas operating segment is our

largest operating segment. This segment is comprised
principally of the U.S. and includes other North, Central and
South American markets. This segment also includes research,
development engineering, medical education and brand
management for our product category headquarter locations.
The U.S. accounts for approximately 95 percent of net sales in
this region. The U.S. sales force consists of a combination of
employees and independent sales agents, most of whom sell
products exclusively for Zimmer Biomet. The sales force in the
U.S. receives a commission on product sales and is responsible
for many operating decisions and costs.

In this region, we contract with group purchasing

organizations and managed care accounts and have promoted
unit growth by offering volume discounts to customer
healthcare institutions within a specified group. Generally, we
are designated as one of several preferred purchasing sources
for specified products, although members are not obligated to
purchase our products. Contracts with group purchasing
organizations generally have a term of three years, with
extensions as warranted.

EMEA. The EMEA operating segment is our second
largest operating segment. France, Germany, Italy, Spain and
the United Kingdom (the “UK”) collectively account for
approximately 55 percent of net sales in the region. This
segment also includes other key markets, including
Switzerland, Benelux, Nordic, Central and Eastern Europe, the
Middle East and Africa. Our sales force in this segment is
comprised of direct sales associates, commissioned agents,
independent distributors and sales support personnel. In most
European countries, healthcare is sponsored by the
government and therefore government budgets impact
healthcare spending, which can affect our sales in this
segment.

Asia Pacific. The Asia Pacific operating segment
includes key markets such as Japan, China, Australia, New
Zealand, Korea, Taiwan, India, Thailand, Singapore, Hong Kong
and Malaysia. Japan is the largest market within this segment,
accounting for approximately 50 percent of the region’s sales.
In Japan and most countries in the Asia Pacific region, we
maintain a network of dealers, who act as order agents on
behalf of hospitals in the region, and sales associates, who
build and maintain relationships with orthopedic surgeons and
neurosurgeons in their markets. The knowledge and skills of
these sales associates play a critical role in providing service,
product information and support to surgeons. In certain
countries of this region, healthcare is sponsored by
governments. Most notably, in 2021 the Chinese government
began to implement a nationwide volume-based procurement
(“VBP”) process across certain of our product categories that
negatively affected our net sales due to distributor inventory
reductions, ongoing pricing negotiations with distributor
partners, revaluation of channel inventory and volume
reductions as patients deferred procedures until after VBP
pricing became effective in 2022.

Seasonality

Our business is seasonal in nature to some extent, as
many of our products are used in elective procedures, which
typically decline during the summer months and can increase
at the end of the year once annual deductibles have been met
on health insurance plans. Additionally, with sales to
customers where title to product passes upon shipment, these
customers may purchase items in large quantities if incentives
are offered or if there are new product offerings in a market,
which could cause period-to-period differences in sales. Due to
the COVID-19 global pandemic, typical seasonal patterns were
disrupted in 2020 and 2021, but started to return to normal in
2022.

Distribution

We distribute our products both through large, centralized

warehouses and through smaller, market specific facilities,
depending on the needs of the market. We maintain large,
centralized warehouses in the U.S. and Europe to be able to
efficiently distribute our products to customers in those
regions. In addition to these centralized warehouses, we
maintain smaller distribution facilities in the U.S. and in each

of the countries where we have a direct sales presence. In
many locations, our inventory is consigned to the healthcare
institution.

We generally ship our orders via expedited courier. Since

most of our sales occur at the time of an elective procedure,
we generally do not have firm orders.

Products

Our products include orthopedic reconstructive products;

sports medicine, biologics, extremities and trauma products;
CMFT products; surgical products; and a suite of integrated
digital and robotic technologies.

KNEES

Total knee replacement surgeries typically include a
femoral component, a patella (knee cap), a tibial tray and an
articular surface (placed on the tibial tray). Knee replacement
surgeries include first-time, or primary, joint replacement
procedures and revision procedures for the replacement,
repair or enhancement of an implant or component from a
previous procedure. There are also procedures for partial
reconstruction of the knee, which treat limited knee
degeneration and involve the replacement of only one side, or
compartment, of the knee with a unicompartmental knee
prosthesis. Our significant knee brands include the Persona®
Knee, NexGen® Knee Implants, Vanguard® Knee, and Oxford®
Partial Knee. Additionally, our ROSA® Robot utilizes robotic
technologies to assist a surgeon with implant positioning in
total knee arthroplasty or partial knee arthroplasty.

HIPS

Total hip replacement surgeries replace both the head of
the femur and the socket portion of the pelvis (acetabulum) of
the natural hip. Hip procedures include first-time, or primary,
joint replacement as well as revision procedures. Hip implant
procedures involve the use of bone cement to attach or affix
the prosthetic components to the surrounding bone, or are
press-fit into bone, which means that they have a surface that
bone affixes to through either ongrowth or ingrowth
technologies. Our significant hip brands include the Taperloc®
Hip System, Avenir Complete® Hip System, Arcos® Modular
Hip System, and G7® Acetabular System. In 2021, we entered
the robotic assistance market for hips with our ROSA® Robot.

S.E.T.

Our S.E.T. product category includes sports medicine,

biologics, foot and ankle, extremities, trauma and CMFT
products. Our sports medicine products are primarily for the
repair of soft tissue injuries, most commonly used in the knee
and shoulder. Our biologics products are used as early
intervention for joint preservation or to support surgical
procedures. Our foot and ankle and extremities products are
designed to treat arthritic conditions and fractures in the foot,
ankle, shoulder, elbow and wrist. Our trauma products are
used to stabilize damaged or broken bones and their
surrounding tissues to support the body’s natural healing
process. Our CMFT product division includes face and skull
reconstruction products as well as products that fixate and

stabilize the bones of the chest in order to facilitate healing or
reconstruction after open heart surgery, trauma or for
deformities of the chest. Our significant S.E.T. brands include
the JuggerKnot® Soft Anchor System, Gel-One® Cross-linked
Hyaluronate, Comprehensive® Shoulder, Natural Nail® System,
and SternaLock® System. Gel-One® is a registered trademark
of Seikagaku Corporation.

OTHER

Our other product category primarily includes our robotic,

surgical and bone cement products.

Research and Development

We have extensive research and development activities to
develop new surgical techniques, including robotic techniques,
materials, biologics and product designs. The research and
development teams work closely with our strategic brand
marketing function. The rapid commercialization of innovative
new materials, biologics products, implant and instrument
designs and surgical techniques remains one of our core
strategies and continues to be an important driver of sales
growth.

We are broadening our offerings in certain of our product
categories and exploring new technologies, including artificial
intelligence and machine learning, with possible applications in
multiple areas. Our primary research and development facility
is located in Warsaw, Indiana. We have other research and
development personnel based in, among other places, Canada,
China, France, Switzerland and other U.S. locations. As of
December 31, 2022, we employed approximately 2,100
research and development employees worldwide.

We expect to continue to identify innovative technologies,

which may include acquiring complementary products or
businesses, establishing technology licensing arrangements or
strategic alliances.

Government Regulation and Compliance

Our operations, products and customers are subject to
extensive government regulation by numerous government
agencies, both within and outside the U.S. We are subject to
supranational, national, regional and local regulations affecting,
among other things, the development, design, manufacturing,
product standards, packaging, advertising, promotion, labeling,
marketing and postmarket surveillance of medical products
and medical devices in many of the countries in which our
products are sold. Our global regulatory environment is
increasingly stringent, unpredictable and complex. There is a
global trend toward increased regulatory activity related to
medical products and medical devices.

Medical Product and Medical Device Regulation

In the U.S., numerous laws and regulations govern the
processes by which our products are brought to market. These
include the Federal Food, Drug and Cosmetic Act, as amended
(“FDCA”), and associated regulations. U.S. Food and Drug
Administration (“FDA”) regulations control all aspects of the
development, manufacturing, advertising, promotion,
marketing, distribution and postmarket surveillance of medical

products and medical devices. All of our devices marketed in
the U.S. have been cleared or approved by the FDA, except for
those exempt from FDA premarket clearance and approval and
those in commercial distribution prior to May 28, 1976. The
process of obtaining FDA clearance or approval to market a
product is resource intensive, lengthy, and costly. FDA review
may involve substantial delays that adversely affect the
marketing and sale of our products. Most of our new products
fall into a classification that requires the submission of a
Premarket Notification (510(k)) to the FDA before we can
market the new device. This process requires us to
demonstrate that the device to be marketed is at least as safe
and effective as, that is, substantially equivalent to, a legally
marketed device. Other devices we develop and market require
stringent FDA clinical investigation and Premarket Approval
(“PMA”) requirements, including submission of clinical and
laboratory data that establishes that the new medical device is
safe and effective. Additionally, certain of our new products
incorporate innovations related to artificial intelligence,
machine learning and software as a medical device, which are
subject to emerging FDA oversight and regulation.

We are subject to FDA Quality System regulations
governing design and manufacturing practices, testing,
manufacturing quality assurance, labeling and record keeping
and reporting requirements for our products, which apply both
to our own and to our third-party manufacturers’ operations.
We are required to establish a quality system by which we
monitor our (and our third-party manufacturers’)
manufacturing processes and maintain records that show
compliance with FDA regulations and manufacturers’ written
specifications and procedures.

There are also requirements of state and local

governments with which we must comply in the manufacture
and marketing of our products.

The FDA conducts announced and unannounced periodic

and on-going inspections of medical device manufacturers to
determine compliance with its Quality System, and other
applicable, regulations. If in connection with these inspections
the FDA believes the manufacturer has failed to comply with
applicable regulations and/or procedures, it may issue
inspectional observations on Form FDA-483 (“Form 483”) that
would necessitate prompt corrective action. If FDA
inspectional observations are not addressed and/or corrective
action is not taken in a timely manner and to the FDA’s
satisfaction, the FDA may issue a warning letter (which would
similarly necessitate prompt corrective action) and/or proceed
directly to other forms of enforcement action, including the
imposition of operating restrictions, including ceasing
operations on one or more facilities, enjoining and restraining
legal violations pertaining to products, seizing products,
negotiating the entry of a consent decree and permanent
injunction against us, recommending prosecution to the U.S.
Department of Justice (the “DOJ”), and assessing civil or
criminal penalties against our officers, employees or us. Any
adverse regulatory action, depending on its magnitude, may
restrict us from effectively manufacturing, marketing and
selling our products and could have a material adverse effect
on our business, financial condition and results of operations.
For information regarding a warning letter and certain Form

483 inspectional observations that we are addressing at a
single Zimmer Biomet site, see Note 21 to our consolidated
financial statements.

The FDA, in cooperation with U.S. Customs and Border
Protection (“CBP”), administers controls over the import of
medical devices into the U.S. and can prevent the importation
of products the FDA deems to violate the FDCA or its
implementing regulations. The CBP imposes its own regulatory
requirements on the import of our products, including
inspection and possible sanctions for noncompliance. We are
also subject to foreign trade controls administered by certain
U.S. government agencies, including the Bureau of Industry
and Security within the Commerce Department and the Office
of Foreign Assets Control within the Treasury Department
(“OFAC”). In addition, exported medical products are subject
to the regulatory requirements of each country to which the
medical product is exported.

The European Union (the “EU”) adopted the European

Medical Device Directive (the “MDD”), which created a single
set of medical device regulations for products marketed in all
member countries. The EU Medical Device Regulation (the
“EU MDR”) took effect in May 2021, replacing the MDD. The
EU MDR imposes significant additional premarket and
postmarket requirements. Products currently certified per the
existing MDD regulations must be certified to the new EU
MDR regulation prior to the current MDD certificate expiry or
May 2024, whichever comes first. Industry members, EU
Notified Bodies and individual EU country heath
administrations have voiced concern over the lack of progress
in the issuance of MDR certifications and the subsequent
impact on product availability on the European market as the
May 2024 deadline nears. Subsequently the EU Commission
recommended action to ensure medical device access to
patients, which we expect to be detailed and forthcoming in
2023. The UK additionally is in the process of creating a new
medical device framework (the “UK MDR”) following its exit
from the European Union. The new regulation, initially
scheduled to be implemented in 2023, is anticipated to be
delayed until 2024. The UK, in the meantime, continues to
allow product meeting the current EU regulations to be
marketed.

Our quality management system is based upon the

requirements of ISO 13485, the FDA Quality System
regulations, the MDD, the EU MDR, the UK MDR and other
applicable regulations for the markets in which we sell. Our
principal manufacturing sites are certified to ISO 13485 and
audited at regular intervals. Additionally, our principal sites are
certified under the Medical Device Single Audit Program
(“MDSAP”), a voluntary audit program developed by
regulatory authorities in Australia, Brazil, Canada, Japan, and
the United States to assess compliance with the quality
management system regulatory requirements of those
countries. MDSAP audits are conducted by an MDSAP-
recognized auditing organization and can fulfill the needs of
the participating regulatory jurisdictions, replacing standard
surveillance audits by the regulatory authorities in those
countries.

We are subject to supranational, national, regional, state

and local laws and regulations concerning healthcare cost

containment, including price regulation, competitive pricing,
coverage and payment policies, comparative effectiveness
reviews and other methods, including through efforts to
reduce healthcare fraud and abuse, false claims and anti-
kickback laws as well as the U.S. Physician Payments Sunshine
Act and similar state and foreign healthcare professional
payment transparency laws. Many authorities have increased
their enforcement activities with respect to medical products
manufacturers in recent years. Violations of these laws are
punishable by criminal and/or civil sanctions, including, in
some instances, fines, imprisonment and exclusion from
participation in certain government healthcare programs.

Foreign Corrupt Practices Act and Related Laws

Our operations outside the U.S. are subject to the
extraterritorial application of the U.S. Foreign Corrupt
Practices Act (the “FCPA”). Our global operations are also
subject to non-U.S. anti-corruption laws, such as the United
Kingdom Bribery Act. As part of our global compliance
program, we seek to address anti-corruption risks proactively.
On January 12, 2017, we resolved previously-disclosed FCPA
matters involving Biomet and certain of its subsidiaries. As
part of that settlement, we entered into a Deferred Prosecution
Agreement with the DOJ, which concluded on February 9,
2021, six months following certification to the DOJ and the
U.S. Securities and Exchange Commission (the “SEC”) by an
independent compliance monitor that our compliance
program, including its policies and procedures, is reasonably
designed and implemented to prevent and detect violations of
the FCPA and is functioning effectively.

Environmental Laws

All of our facilities and operations are subject to complex

national, state and local environmental and occupational safety
laws and regulations, including those relating to discharges of
substances in the air, water and land, the handling, storage and
disposal of wastes and the clean-up of properties contaminated
by pollutants. We do not expect that the ongoing costs of
compliance with these environmental requirements will have a
material impact on our consolidated earnings, capital
expenditures or competitive position.

Data Privacy Laws

We are subject to evolving supranational, national, state

and international data privacy and security laws and
regulations that govern the collection, use, disclosure, transfer,
location, storage, disposal and protection of health-related and
other personal information, including laws and regulations that
regulate and restrict cross-border data transfers. Certain of
these laws and regulations impose time-sensitive notification
requirements to governmental authorities or consumers. We
are also subject to emerging guidance governing data security
and cyber risk management for medical devices. Failure to
comply with any such data protection laws and regulations
could result in government enforcement actions (which could
include civil and/or criminal penalties), private litigation and/or
adverse publicity and could negatively affect our operating
results and business. Information regarding the risks
associated with data privacy and protection laws may be found

in Item 1A. Risk Factors – If we fail to comply with data
privacy and security laws and regulations, we could face
substantial penalties and our business, operations and
financial condition could be adversely affected.

Competition

The orthopedics and broader musculoskeletal care
industry is highly competitive. In the global markets for our
knees, hips, and S.E.T. products, our major competitors
include the DePuy Synthes Companies of Johnson & Johnson,
Stryker Corporation and Smith & Nephew plc. There are
smaller competitors in these product categories as well who
have success by focusing on smaller subsegments of the
industry.

Competition within the industry is primarily based on
technology, innovation, quality, reputation, customer service
and pricing. A key factor in our continuing success in the
future will be our ability to develop new products and
technologies and improve existing products and technologies.

Manufacturing and Raw Materials

We manufacture our products at various sites. We also

strategically outsource some manufacturing to qualified
suppliers who are highly capable of producing components.
The manufacturing operations at our facilities are
designed to incorporate the cellular concept for production
and to implement tenets of a manufacturing philosophy
focused on continuous improvement efforts in product quality,
lead time reduction and capacity optimization. Our continuous
improvement efforts are driven by Lean and Six Sigma
methodologies. In addition, at certain of our manufacturing
facilities, many of the employees are cross-trained to perform a
broad array of operations.

We generally target operating our manufacturing facilities
at optimal levels of total capacity. We continually evaluate the
potential to in-source and outsource production as part of our
manufacturing strategy to provide value to our stakeholders.

Intellectual Property

Patents and other proprietary rights are important to the

continued success of our business. We also rely upon trade
secrets, know-how, continuing technological innovation and
licensing opportunities to develop and maintain our
competitive position. We protect our proprietary rights
through a variety of methods, including confidentiality
agreements and proprietary information agreements with
suppliers, employees, consultants and others who may have
access to proprietary information. We own or control through
licensing arrangements over 6,000 issued patents and patent
applications throughout the world that relate to aspects of the
technology incorporated in many of our products.

Human Capital

As of December 31, 2022, we employed approximately

18,000 employees worldwide, including approximately 2,100
employees dedicated to research and development.
Approximately 8,000 employees are located within the U.S.
and approximately 10,000 employees are located outside of the
U.S., primarily throughout Europe and in Japan and China. We
have approximately 7,600 employees dedicated to
manufacturing our products worldwide.

Our mission is to alleviate pain and improve the quality of
life for people around the world. Our commitment to patients
shapes all day-to-day decisions at Zimmer Biomet. To be able
to accomplish our mission, we have established guiding
principles. These guiding principles are central to our human
capital management policies and practices. The guiding
principles are:
(cid:129) Respect the contributions and perspectives of all employees
(cid:129) Commit to the highest standards of patient safety, quality

and integrity

(cid:129) Focus our resources in areas where we will make a

difference

(cid:129) Ensure the company’s return is equivalent to the value we

provide our customers and patients

In most of our manufacturing network, we have improved

(cid:129) Give back to our communities and people in need.

our manufacturing processes to harmonize and optimize our
quality systems and to protect our profitability and offset the
impact of inflationary costs. We have, for example, employed
computer-assisted robots and multi-axis grinders to precision
polish medical devices; automated certain manufacturing and
inspection processes, including on-machine inspection and
process controls; purchased state-of-the-art equipment;
in-sourced core products and processes; and negotiated cost
reductions from third-party suppliers.

We use a diverse and broad range of raw materials in the

manufacturing of our products. We purchase all of our raw
materials and select components used in manufacturing our
products from external suppliers. In addition, we purchase
some supplies from single sources for reasons of quality
assurance, sole source availability, cost effectiveness or
constraints resulting from regulatory requirements. We work
closely with our suppliers to assure continuity of supply while
maintaining high quality and reliability. To date, we have not
experienced any significant difficulty in locating and obtaining
the materials necessary to fulfill our production schedules.

Diversity, Equity and Inclusion

We believe that each of us as individuals can drive change

every day. We remain wholly committed to creating,
supporting and celebrating diverse and equal workplaces and
communities. Together, we will continue to foster and embrace
diversity and inclusion within our team and our communities,
and commit our voices and our resources to community
groups, business platforms and other organizations united to
driving meaningful change and sustained improvement.
We believe that representation matters. As of

December 31, 2022, women made up approximately 35 percent
of our total employee population, and approximately
25 percent of positions at Director level and above. People of
Color (“POC”) made up approximately 23 percent of our total
employee population in the U.S., and comprised approximately
15 percent of positions at Director level and above. We have
established 2026 representation goals for women and POC at
all levels of the organization, guided by internal data and
external benchmarking.

Core to our values is our commitment to stand together
against hatred, discrimination and injustice, and we advance
these values through our actions and investments. With this in
mind, we have committed to the following initiatives to drive
and accelerate change both within our own organization and
around the globe. We have shared these commitments publicly
and are tracking our progress against them:
(cid:129) Engage our 18,000 global employees in cultural awareness

and inclusion programming;

(cid:129) Invest $1 million and provide executive sponsorship to

support ongoing programs and elevate the impact of our
employee resource groups;

(cid:129) Commit at least $5 million over five years through the

Zimmer Biomet Foundation to non-profit organizations
dedicated to combating racism and supporting diversity,
equality and justice. The Zimmer Biomet Foundation is an
independent, non-profit organization established in 2018 to
address the needs of our global community;

(cid:129) Match, through the Zimmer Biomet Foundation, employee

financial contributions to non-profit organizations, including
those dedicated to combating racism and supporting
diversity, equality and justice;

(cid:129) Expand our student and early career internship programs to

attract and develop more Black leaders; and

(cid:129) Continue our financial support of Movement is Life, Inc., a
nonprofit multidisciplinary coalition seeking to eliminate
racial, ethnic and gender disparities in muscle and joint
health.

Employee Engagement

We value our employees’ input and to that end, from time

to time, we conduct comprehensive employee engagement
surveys that ultimately inform our actions towards improving
employee engagement. Surveys attempt to assess five drivers
of engagement including purpose, culture, leadership, personal
growth and belonging. The key results of surveys, and
commensurate action plans, are shared with our Board of
Directors and with our employee base. Employee engagement
is the degree to which employees invest their cognitive,
emotional, and behavioral energies toward positive
organizational outcomes. While we strive for engagement
scores to sequentially improve, the outcomes of the surveys
can be influenced by many factors that are internal and
external to the company.

We believe it is critical to keep our employees engaged

through frequent and transparent communication. This is
accomplished through town halls, video and written messages,
news and recognition on our intranet site, and various other
methods.

Health, Safety and Wellness

The physical and mental health, financial wellbeing, and
work/life balance of our employees is vital to accomplishing our
mission. We sponsor wellness programs designed to enhance
physical, financial and mental wellbeing for our employees. We
encourage participation in these programs through regular
communications, educational sessions and other incentives.

We are also intensely focused on the health and safety of

our team members in the workplace. Our environmental,

health and safety team constantly monitors various metrics to
ensure we are providing a safe environment in which to work.
In 2022, our Total Recordable Incident Rate was 0.29 and our
Lost Time Incident Rate was 0.11. These results are shared
with relevant regulatory agencies as required and presented to
our Board of Directors.

Cybersecurity

We have established a cybersecurity program intended to

protect the confidentiality, integrity and availability of our
systems, data and products in a manner consistent with
industry best practices and the NIST Cybersecurity framework.
We are currently ISO 27001 certified for our surgery planning
ecosystem and continue to maintain this industry certification
while expanding its scope. The Audit Committee of the Board
of Directors receives cybersecurity updates at least quarterly.
The Audit Committee considers cybersecurity risk individually
and within our overall risk management framework. We obtain
periodic assessments of our cybersecurity program from
independent third-party experts, the results of which
assessments are reported to our Audit Committee. Our Chief
Information Security Officer (“CISO”) leads our cybersecurity
program through our global information security operations
team. Our CISO reports to our Chief Information Officer, who
in turn reports to our Chairman, President and Chief Executive
Officer.

Under our program, cybersecurity issues are analyzed by

subject matter experts, including in IT, risk and compliance,
for potential financial, operational, legal, reputational and
other risks, based on, among other factors, the nature of the
matter and the potential breadth of impact. Matters involving
potential data breaches are considered against applicable data
breach notification requirements. Matters determined to
present potential material impacts to our financial results,
operations, and/or reputation are required to be immediately
reported to the Audit Committee, as appropriate, in
accordance with our escalation framework. In addition, we
have established procedures providing that members of
management responsible for overseeing the operation of our
disclosure controls and procedures are informed in a timely
manner of known cybersecurity risks and incidents that may
materially impact our operations and that timely public
disclosure is made, as appropriate.

Our cybersecurity program includes a variety of policies,

procedures and attributes including training requirements,
threat monitoring and detection, threat containment, risk
assessments, third-party penetration testing and security
requirements for third-party vendors. From time to time, the
program adds new types of artificial intelligence and machine
learning processes, techniques and procedures in an effort to
combat evolving and adaptive cybersecurity threats. Our global
cybersecurity program involves strict separation of duties from
other IT functional areas and has established roles that define
the responsibility of cybersecurity within our organization. Our
global cybersecurity team has a process to address
organizational risk through an IT risk committee to evaluate
and determine the best approach to mitigate the risk internally
and externally. We maintain business continuity, contingency
and recovery plans to be used if we experience a cybersecurity

incident. We refine our cybersecurity procedures, policies and
program based on a variety of factors including lessons
learned from previous successful and unsuccessful cyber
attacks. Like other large multi-national corporations, we have
experienced instances of successful phishing attacks on our
email systems and expect to be subject to similar attacks in
the future. We also are subject to other cyber-attacks,
including state-sponsored cyberattacks, industrial espionage,
insider threats, computer denial-of-service attacks, computer
viruses, ransomware and other malware, payment fraud or
other cyber incidents. However, as of December 31, 2022, we
had not yet detected any material information security

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

breaches. Based on our cybersecurity program, we do not
maintain dedicated cybersecurity insurance as of
December 31, 2022. We continue to evaluate our cybersecurity
posture for any changes that could affect the long-term
organizational strategy and adjust it based on threats globally.
Additional information regarding cybersecurity risks may be
found in Item 1A. Risk Factors—We are increasingly
dependent on sophisticated information technology and if
we fail to effectively maintain or protect our information
systems or data, including from data breaches, our
business could be adversely affected.

The following table sets forth certain information with respect to our executive officers as of February 15, 2023.

Name

Bryan Hanson

Rachel Ellingson

Chad Phipps

Paul Stellato

Ivan Tornos

Suketu Upadhyay

Wilfred van Zuilen

Lori Winkler

Sang Yi

Age

Position

Chairman, President and Chief Executive Officer

Senior Vice President and Chief Strategy Officer

Senior Vice President, General Counsel and Secretary

Vice President, Controller and Chief Accounting Officer

Chief Operating Officer

Executive Vice President and Chief Financial Officer

President, Europe, Middle East and Africa

Senior Vice President, Chief Human Resources Officer

President, Asia Pacific

Mr. Hanson was appointed President and Chief Executive
Officer and a member of the Board of Directors in December
2017. He was subsequently named Chairman of the Board of
Directors in May 2021. Previously, Mr. Hanson served as
Executive Vice President and President, Minimally Invasive
Therapies Group of Medtronic plc from January 2015 until
joining Zimmer Biomet. Prior to that, he was Senior Vice
President and Group President, Covidien of Covidien plc from
October 2014 to January 2015; Senior Vice President and
Group President, Medical Devices and United States of
Covidien from October 2013 to September 2014; Senior Vice
President and Group President of Covidien for the Surgical
Solutions business from July 2011 to October 2013; and
President of Covidien’s Energy-based Devices business from
July 2006 to June 2011. Mr. Hanson held several other
positions of increasing responsibility in sales, marketing and
general management with Covidien from October 1992 to July
2006. Mr. Hanson has also served as a member of the board of
directors of Walgreens Boots Alliance, Inc. since October 2022.

Ms. Ellingson was appointed Senior Vice President and
Chief Strategy Officer in April 2018 and was designated as an
executive officer in January 2021. Prior to joining Zimmer
Biomet, Ms. Ellingson served as a member of the executive
leadership team of St. Jude Medical in positions of increasing
responsibility from 2012 until 2017, most recently as Vice
President, Corporate Strategy from 2015 until 2017. Before
joining St. Jude Medical, Ms. Ellingson served as Vice
President, Business Development and Investor Relations at
AGA Medical Corporation. Prior to joining AGA Medical,
Ms. Ellingson had more than 15 years of experience in

investment banking, rising to the position of Managing
Director, Medical Technology Investment Banking with Bank
of America. She has served as a member of the board of
directors of Biolife Solutions, Inc. since April 2021.

Mr. Phipps was appointed Senior Vice President, General

Counsel and Secretary in May 2007. He has global
responsibility for the Company’s Legal Affairs and he serves as
Secretary to the Board of Directors. Mr. Phipps also oversees
the Company’s Government Affairs activities. Previously,
Mr. Phipps served as Associate General Counsel and Corporate
Secretary from December 2005 to May 2007. He joined the
Company in September 2003 as Associate Counsel and
Assistant Secretary. Prior to joining the Company, he served as
Vice President and General Counsel of L&N Sales and
Marketing, Inc. in Pennsylvania and he practiced law with the
firm of Morgan, Lewis & Bockius in Philadelphia, focusing on
corporate and securities law, mergers and acquisitions and
financial transactions. Since June 2022, Mr. Phipps has served
as a director of Movement is Life, Inc., a 501(c)(3) charity
focused on reducing healthcare disparities and for which we
are a principal financial donor.

Mr. Stellato was appointed Vice President, Controller and

Chief Accounting Officer in May 2022. Previously, he served as
Vice President Finance, Global Business Services from March
2019 through April 2022, with Xylem Inc. (“Xylem”), a global
provider of water technology products and services. He joined
Xylem upon its spinoff from ITT Corporation (“ITT”) in
October 2011 and served as Xylem’s Vice President Finance,
Financial Planning and Analysis through August 2017. He was

promoted to Vice President, Controller and Chief Accounting
Officer in August 2017 after serving as Interim Corporate
Controller starting in August 2016, and became Vice President
Finance, Global Business Services in March 2019. Prior to
Xylem’s spinoff from ITT in October 2011, Mr. Stellato served
with ITT beginning in May 2003, having served most recently as
ITT’s General Auditor and prior to that, as Manager - Investor
Relations. He began his career in public accounting with
Ernst & Young LLP and Arthur Andersen LLP and is a certified
public accountant.

Mr. Tornos was appointed Chief Operating Officer in March
2021. Previously, he served as the Company’s Group President,
Global Businesses and the Americas since December 2019 and
prior to that as Group President, Orthopedics since joining the
Company in November 2018. Prior to joining Zimmer Biomet,
Mr. Tornos served as Worldwide President of the Global
Urology, Medical and Critical Care Divisions of Becton,
Dickinson and Company (“BD”) (and previously, C. R. Bard,
Inc. (“Bard”)) from June 2017 until October 2018. From June
2017 until BD’s acquisition of Bard in December 2017,
Mr. Tornos also continued to serve as President, EMEA of Bard,
a position to which he was appointed in September 2013.
Mr. Tornos joined Bard in August 2011 and, prior to his
appointment as President, EMEA, served as Vice President and
General Manager with leadership responsibility for Bard’s
business in Southern Europe, Central Europe and the Emerging
Markets Region of the Middle East and Africa. Before joining
Bard, Mr. Tornos served as Vice President and General Manager
of the Americas Pharmaceutical and Medical/Imaging Segments
of Covidien International from April 2009 to August 2011.
Before that, he served as International Vice President, Business
Development and Strategy with Baxter International Inc. from
July 2008 to April 2009 and, prior to that, Mr. Tornos spent 11
years with Johnson & Johnson in positions of increasing
responsibility. He has also served as a member of the board of
directors at PHC Holdings Corporation since September 2021.

Mr. Upadhyay was appointed Executive Vice President and

Chief Financial Officer in July 2019. Prior to joining Zimmer
Biomet, Mr. Upadhyay served as Senior Vice President, Global
Financial Operations at Bristol-Myers Squibb Company from
November 2016 until June 2019. Before joining Bristol-Myers
Squibb, he served as Executive Vice President and Chief
Financial Officer of Endo International plc from September
2013 to November 2016. Prior to his tenure at Endo
International, Mr. Upadhyay served as Interim Chief Financial
Officer as well as Senior Vice President of Finance, Corporate
Controller and Principal Accounting Officer of BD. Prior to his
role as BD’s Interim Chief Financial Officer and Corporate
Controller, Mr. Upadhyay was the Senior Vice President of
Global Financial Planning and Analysis and also held the role of
Vice President and Chief Financial Officer of BD’s international
business. Before joining BD in 2010, Mr. Upadhyay held a
number of leadership roles across AstraZeneca PLC and
Johnson & Johnson. Mr. Upadhyay spent the early part of his
career in public accounting with KPMG. He has also served as
a member of the board of directors of Vertex Pharmaceuticals
Incorporated since May 2022.

Mr. van Zuilen was appointed President, Europe, Middle
East and Africa in June 2021. Prior to joining Zimmer Biomet,
Mr. van Zuilen served in various roles for Medtronic plc,
including as Vice President, North Western Europe from
October 2020 to May 2021, as Vice President, Restorative
Therapies Group EMEA from February 2017 through
September 2020, and as Vice President, Advanced Surgical
Technologies Europe, Surgical Solution Group, from October
2011 through January 2017. He served in other roles of
increasing responsibility with Medtronic plc through January
1998. Before joining Medtronic, he spent more than five years
in medical sales, most recently with Baxter BV (Edwards
Lifesciences).

Ms. Winkler joined Zimmer Biomet as Group Vice President

of Human Resources in February 2020 and was appointed
Senior Vice President, Chief Human Resources Officer in
February 2021. Prior to joining Zimmer Biomet, she served
Cardinal Health, Inc. as a Worldwide Vice President of Human
Resources in the Medical Segment from November 2016
through January 2020. Before joining Cardinal Health,
Ms. Winkler served more than 20 years with Johnson and
Johnson, including its subsidiary companies DePuy and Cordis,
most recently as Global Head, Human Resources Global
Finance from April 2011 through November 2016. She has
served as an independent voting member of the board of
directors of Family Promise, Inc., a 501(c)(3) charity focused
on housing and homelessness, since August 2022.

Mr. Yi was appointed President, Asia Pacific in June 2015. He is
responsible for the sales, marketing and distribution of
products, services and solutions in the Asia Pacific region.
Mr. Yi joined the Company in March 2013 as Senior Vice
President, Asia Pacific. Previously, he served as Vice President
and General Manager of St. Jude Medical for Asia Pacific and
Australia from 2005 to 2013. Prior to that, Mr. Yi held several
leadership positions over a ten-year period with Boston
Scientific Corporation, ultimately serving as Vice President for
North Asia.

AVAILABLE INFORMATION

Our Internet address is www.zimmerbiomet.com. We
routinely post important information for investors on our
website in the “Investor Relations” section, which may be
accessed from our homepage at www.zimmerbiomet.com or
directly at https://investor.zimmerbiomet.com. 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. Our goal is to maintain the
Investor Relations website as a portal through which investors
can easily find or navigate to pertinent information about us,
free of charge, including:
(cid:129) our Annual Reports on Form 10-K, Quarterly Reports on

Form 10-Q, Current Reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as

amended (“Exchange Act”), as soon as reasonably
practicable after we electronically file that material with or
furnish it to the SEC;

(cid:129) announcements of investor conferences and events at which

our executives talk about our products and competitive
strategies, as well as archives of these events;
(cid:129) press releases on quarterly earnings, product

announcements, legal developments and other material
news that we may post from time to time;

(cid:129) corporate governance information including our Corporate
Governance Guidelines, Code of Business Conduct and
Ethics, Code of Ethics for Chief Executive Officer and
Senior Financial Officers, information concerning our Board
of Directors and its committees, including the charters of the
Audit Committee, Compensation and Management
Development Committee, Corporate Governance Committee
and Quality, Regulatory and Technology Committee, and
other governance-related policies;

(cid:129) stockholder services information, including ways to contact
our transfer agent and information on how to sign up for
direct deposit of dividends or enroll in our dividend
reinvestment plan; and

(cid:129) opportunities to sign up for email alerts and RSS feeds to

have information provided in real time.

The information available on our website is not

incorporated by reference in, or a part of, this or any other
report we file with or furnish to the SEC.

Item 1A. Risk Factors

We operate in a rapidly changing economic and
technological environment that presents numerous risks,
many of which are driven by factors that we cannot control
or predict. Our business, financial condition and results of
operations may be impacted by a number of factors. In
addition to the factors discussed elsewhere in this report,
the following risks and uncertainties could materially
harm our business, financial condition or results of
operations, including causing our actual results to differ
materially from those projected in any forward-looking
statements. The following list of significant risk factors is
not all-inclusive or necessarily in order of importance.
Additional risks and uncertainties not presently known to
us, or that we currently deem immaterial, also may
materially adversely affect us in future periods. You
should carefully consider these risks and uncertainties
before investing in our securities.

Risks Related to our Business, Operations and Strategy

Business and economic conditions, including
disruptions related to the COVID-19 pandemic, have
adversely impacted, and may, either alone or in
combination with other risks, in the future adversely
impact, our business, results of operations and
financial condition, the nature and extent of which are
uncertain and unpredictable.

Our operations expose us to risks from business

interruptions that may arise from a variety of sources,

including public health crises and outbreaks of diseases, such
as the COVID-19 pandemic and its variants, supply chain
disruptions, trade and tariff disputes and global conflicts, that
can, singly or in combination with other factors, adversely
affect our business and financial results. We experienced a
sustained decline in elective surgical procedures globally due
to the COVID-19 pandemic and its associated effects, including
deferrals of elective surgical procedures and staffing shortages
at hospitals. Surgical volumes generally recovered over the
course of 2022, but may return to lower levels due to future
COVID-19 variants and resurgences.

We continue to experience risks and uncertainty in
several aspects of our business including relating to global,
regional and national supply chain disruption; dynamic
economic conditions; foreign exchange rate volatility; inflation;
workforce availability changes; healthcare staffing challenges
and changes in government spending. We expect several of
these factors to continue, and there can be no assurance that
we will successfully manage these risks without adverse
impacts to our business or financial results.

The COVID-19 pandemic has illustrated that the

occurrence of one risk can have unpredictable effects on other
risks, such as we experienced with supply chain disruptions
connected to the COVID-19 pandemic. The occurrence of any
one or more risks described in these Risk Factors or otherwise
may have unpredictable effects on other risks, our business,
operations or financial results which may be comparable to, or
more adverse than, those we experienced in connection with
the COVID-19 pandemic. Therefore, we are also at risk from
business and other risks and uncertainties, either alone or in
combination with other risk factors.

Our restructuring programs may not be successful

or we may not fully realize the expected cost savings
and/or operating efficiencies from our restructuring
initiatives.

In December 2019, our Board of Directors approved, and

we initiated, a global restructuring program (the “2019
Restructuring Plan”) with an objective of reducing costs to
allow us to further invest in higher priority growth
opportunities, which is ongoing. In December 2021, our
management also initiated a global restructuring program (the
“2021 Restructuring Plan”) to further reduce costs and to
reorganize our global operations in preparation for the spinoff
of ZimVie. Restructuring initiatives involve complex plans and
actions that may include, or result in, workforce reductions,
global plant closures and/or consolidations, product portfolio
rationalizations and asset impairments. Additionally, as a result
of restructuring initiatives, we may experience a loss of
continuity, loss of accumulated knowledge and/or inefficiencies
during transitional periods. Restructuring initiatives present
significant risks that may impair our ability to achieve
anticipated operating enhancements and/or cost reductions, or
otherwise harm our business, including higher than anticipated
costs in implementing our restructuring programs, as well as
management distraction. For more information on our
restructuring programs, see Note 5 to our consolidated
financial statements. If we fail to achieve some or all of the
expected benefits of restructuring, it could have a material

adverse effect on our competitive position, business, financial
condition, results of operations and cash flows.

Our success largely depends on our ability to

attract, retain, develop and motivate our human
capital, including our senior management, and on our
ability to have meaningful succession plans in place to
prepare for foreseen and unforeseen changes.

Our future performance depends, in large part, on the
continued skills, experiences, competencies and services of
our senior management and other key talent, including our
ability to attract, retain, develop and motivate our highly
skilled employees, senior management, independent agents
and distributors. Competition for talent in our business is
significant. Our ability to attract and retain key talent, in
particular senior management, is dependent on a number of
factors, including prevailing market conditions, our ability to
offer competitive compensation packages and our ability to be
perceived as a preferred place to work. Effective succession
planning is also important to our long-term success; failure to
ensure effective transfer of knowledge and orderly transitions
involving key employees could hinder our business.

We may not be able to effectively integrate
acquired businesses into our operations or achieve
expected cost savings or profitability from our
acquisitions.

Our acquisitions involve numerous risks, including:
(cid:129) unforeseen difficulties in integrating personnel and sales
forces, operations, manufacturing, logistics, research and
development, information technology, compliance, vendor
management, communications, purchasing, accounting,
marketing, administration and other systems and processes;
(cid:129) difficulties harmonizing and optimizing quality systems and

operations;

(cid:129) diversion of financial and management resources from

existing operations;

(cid:129) unforeseen difficulties related to entering geographic

regions or markets where we do not have prior experience;

(cid:129) potential loss of key employees;
(cid:129) unforeseen risks and liabilities associated with businesses

acquired, including any unknown vulnerabilities in acquired
technology or compromises of acquired data; and/or

(cid:129) inability to generate sufficient revenue or realize sufficient

cost savings to offset acquisition or investment costs.

As a result, if we fail to evaluate and execute acquisitions

properly, we might not achieve the anticipated benefits of such
acquisitions, and we may incur costs in excess of what we
anticipate. These risks would likely be greater in the case of
larger acquisitions.

Interruption of manufacturing operations could

adversely affect our business, financial condition and
results of operations.

We and our third-party manufacturers have

manufacturing sites all over the world. In some instances,
however, the manufacturing of certain of our product lines is
concentrated in one or more plants, some of which plants are
geographically concentrated. Damage to one or more facilities
from weather or natural disaster-related events, vulnerabilities
in technology, cyber-attacks against our information systems
or the information systems of our business partners (such as

ransomware attacks), or issues in manufacturing arising from
failure to follow specific internal protocols and procedures,
compliance concerns relating to the Quality System Regulation
(“QSR”) and Good Manufacturing Practice requirements,
equipment breakdown or malfunction, reductions in operations
and/or worker absences, trade impediments or other factors
could adversely affect the ability to manufacture our products.
In the event of an interruption in manufacturing, we may be
unable to move quickly to alternate means of producing
affected products or to meet customer demand. We have
experienced such interruptions due to the COVID-19
pandemic, and we may experience such interruptions in the
future due to the pandemic or otherwise. In the event of a
significant interruption, for example, as a result of a failure to
follow regulatory protocols and procedures, we may
experience lengthy delays in resuming production of affected
products due primarily to the need for regulatory approvals.
The global supply chain has been and continues to be
negatively impacted by COVID-19 and a variety of other macro
factors which has, in part, resulted in challenges to meet end
market demand in some instances. We expect similar
challenges in 2023. As a result, we may experience loss of
market share, which we may be unable to recapture, and harm
to our reputation, which could adversely affect our business,
financial condition and results of operations.

Disruptions in the supply of the materials and
components used in manufacturing our products or the
sterilization of our products by third-party suppliers
could adversely affect our business, financial condition
and results of operations.

We purchase many of the materials and components used
in manufacturing our products from third-party suppliers, and
we outsource some key manufacturing activities. Certain of
these materials and components and outsourced activities can
only be obtained from a single source or a limited number of
sources due to quality considerations, expertise, costs or
constraints resulting from regulatory requirements. In certain
cases, we may not be able to establish additional or
replacement suppliers for such materials or components or
outsourced activities in a timely or cost effective manner, due
to market constraints or as a result of FDA and other
worldwide regulations that require validation of materials and
components prior to their use in our products and the complex
nature of our and many of our suppliers’ manufacturing
processes and the need for clearance or approval of significant
changes by worldwide regulatory bodies prior to
implementation. A reduction or interruption in the supply of
materials or components used in manufacturing our products,
such as due to one or more suppliers experiencing reductions
in operations and/or worker absences due to a pandemic or
otherwise; an inability to timely develop and validate
alternative sources if required; or a significant increase in the
price of such materials or components could adversely affect
our business, financial condition and results of operations.
In addition, many of our products require sterilization
prior to sale, and we utilize a mix of internal resources and
contract sterilizers to perform this service. To the extent we or
our contract sterilizers are unable to sterilize our products,
whether due to capacity, availability of materials for

sterilization, regulatory or other constraints, including federal
and state regulations on the use of ethylene oxide, or
reductions in operations and/or worker absences due to the
COVID-19 pandemic or otherwise, we may be unable to
transition to other contract sterilizers, sterilizer locations or
sterilization methods in a timely or cost effective manner or at
all, which could have a material impact on our results of
operations and financial condition.

Moreover, we are subject to the SEC’s rule regarding

disclosure of the use of certain minerals, known as “conflict
minerals” (tantalum, tin and tungsten (or their ores) and
gold), which are mined from the Democratic Republic of the
Congo and adjoining countries. This rule could adversely affect
the sourcing, availability and pricing of materials used in the
manufacture of our products, which could adversely affect our
manufacturing operations and our profitability. In addition, we
are incurring additional costs to comply with this rule,
including costs related to determining the source of any
relevant minerals, metals and other materials used in our
products. We have a complex supply chain, and we may not be
able to sufficiently verify the origins of the minerals and metals
used in our products through our due diligence procedures. As
a result, we may face reputational challenges with our
customers and other stakeholders.

intentional actions by our employees, third-party vendors and/
or business partners, or from cyber-attacks by malicious third
parties attempting to gain unauthorized access to our
products, systems or Confidential Information.

Like other large multi-national corporations, we have

experienced instances of successful phishing attacks on our
email systems and expect to be subject to similar attacks in the
future. We also are subject to other cyber-attacks, including
state-sponsored cyber-attacks, industrial espionage, insider
threats, computer denial-of-service attacks, computer viruses,
ransomware and other malware, payment fraud or other cyber
incidents. In addition, as a result of our adoption of remote
work arrangements in many positions, a significant number of
our employees who are able to work remotely are doing so, and
malicious cyber actors may increase malware campaigns and
phishing emails targeting teleworkers, which exposes us to
additional cybersecurity risks. Our incident response efforts,
business continuity procedures and disaster recovery planning
may not be sufficient for all eventualities. If we fail to maintain
or protect our information systems and data integrity
effectively, we could:
(cid:129) lose existing customers, vendors and business partners;
(cid:129) have difficulty attracting new customers;
(cid:129) have problems in determining product cost estimates and

We are increasingly dependent on sophisticated

establishing appropriate pricing;

information technology and if we fail to effectively
maintain or protect our information systems or data,
including from data breaches, our business could be
adversely affected.

(cid:129) suffer outages or disruptions in our operations or supply

chain;

(cid:129) have difficulty preventing, detecting, and controlling fraud;
(cid:129) have disputes with customers, physicians, and other

We are increasingly dependent on sophisticated

healthcare professionals;

information technology for our products and infrastructure. As
a result of technology initiatives, expanding and evolving
privacy and cybersecurity laws, changes in our system
platforms and integration of new business acquisitions, we
have been consolidating and integrating the number of systems
we operate and have upgraded and expanded our information
systems capabilities. In addition, some of our products and
services incorporate software or information technology that
collects data regarding patients and patient therapy, and some
software and other products we provide to customers connect
to our systems for maintenance and other purposes. We also
have outsourced elements of our operations to third parties,
and, as a result, we manage a number of third-party suppliers
who may or could have access to our confidential information,
including, but not limited to, intellectual property, proprietary
business information and personal information of patients,
employees and customers (collectively “Confidential
Information”).

Our information systems, and those of third-party

suppliers with whom we contract, require an ongoing
commitment of significant resources to maintain, protect and
enhance existing systems and develop new systems to keep
pace with continuing changes in information technology,
evolving systems and regulatory standards, changing threats
and vulnerabilities, and the increasing need to protect patient
and customer information. In addition, given their size and
complexity, these systems could be vulnerable to service
interruptions or to security breaches from inadvertent or

(cid:129) have regulatory sanctions or penalties imposed;
(cid:129) incur increased operating expenses;
(cid:129) be subject to issues with product functionality that may

result in a loss of data, risk to patient safety, field actions
and/or product recalls;

(cid:129) incur expenses or lose revenues as a result of a data privacy

breach; or

(cid:129) suffer other adverse consequences.

While we have invested heavily in the protection of our
data and information technology, there can be no assurance
that our activities related to consolidating the number of
systems we operate, upgrading and expanding our information
systems capabilities, protecting and enhancing our systems
and implementing new systems will be successful. We will
continue to dedicate significant resources to protect against
unauthorized access to our systems and work with government
authorities to detect and reduce the risk of future cyber
incidents; however, cyber-attacks are becoming more
sophisticated, frequent and adaptive. Therefore, despite our
efforts, we cannot assure that cyber-attacks or data breaches
will not occur or that systems issues will not arise in the future.
Any significant breakdown, intrusion, breach, interruption,
corruption or destruction of these systems could have a
material adverse effect on our business and reputation and
could materially adversely affect our results of operations and
financial condition.

Our success depends on our ability to effectively

develop and market our products against those of our
competitors.

We operate in a highly competitive environment. Our
present or future products could be rendered obsolete or
uneconomical by technological advances by one or more of our
present or future competitors or by other therapies, including
biological therapies. To remain competitive, we must continue
to develop and acquire new products and technologies and
improve existing products and technologies. Competition is
primarily on the basis of technology, innovation, quality,
reputation, customer service and pricing. In markets outside of
the U.S., other factors influence competition as well, including
local distribution systems, complex regulatory environments
and differing medical philosophies and product preferences.
Our competition may have greater financial, marketing and
other resources than us; respond more quickly to new or
emerging technologies; undertake more extensive marketing
campaigns; operate more effective sales and distribution
channels; adopt more aggressive pricing policies; or be more
successful in attracting potential customers, employees and
strategic partners. Any of these factors, alone or in
combination, could cause us to have difficulty maintaining or
increasing sales of our products.

If we fail to retain the employees, independent
agents and distributors upon whom we rely heavily to
market our products, customers may not buy our
products and our revenue and profitability may
decline.

Our marketing success in the U.S. and abroad depends
significantly upon our employees’, agents’ and distributors’
sales and service expertise in the marketplace. Many of these
agents have developed professional relationships with existing
and potential customers because of the agents’ detailed
knowledge of products and instruments. A loss of a significant
number of our agents could have a material adverse effect on
our business and results of operations.

If we do not introduce new products in a timely
manner, our products may become obsolete over time,
customers may not buy our products and our revenue
and profitability may decline.

Demand for our products may change, in certain cases, in

ways we may not anticipate because of evolving customer
needs, changing demographics, slowing industry growth rates,
declines in the musculoskeletal implant market, the
introduction of new products and technologies and evolving
surgical philosophies and industry standards.

Without the timely introduction of new products and
enhancements, our products may become obsolete over time.
If that happens, our revenue and operating results would
suffer. The success of our new product offerings will depend
on several factors, including our ability to properly identify and
anticipate customer needs; commercialize new products in a
timely manner; manufacture and deliver instruments and
products in sufficient volumes on time; differentiate our
offerings from competitors’ offerings; achieve positive clinical
outcomes for new products; satisfy the increased demands by
healthcare payors, providers and patients for shorter hospital
stays, faster post-operative recovery and lower-cost
procedures; innovate and develop new materials, product

designs and surgical techniques; and provide adequate medical
education relating to new products.

In addition, new materials, product designs and surgical
techniques that we develop may not be accepted quickly, in
some or all markets, because of, among other factors,
entrenched patterns of clinical practice, the need for
regulatory clearance and uncertainty with respect to third-
party reimbursement.

Moreover, innovations generally require a substantial

investment in research and development before we can
determine their commercial viability, and we may not have the
financial resources necessary to fund the research,
development and production. In addition, even if we are able to
successfully develop enhancements or new generations of our
products, these enhancements or new generations of products
may not produce revenue in excess of the costs of
development and they may be quickly rendered obsolete by
changing customer preferences or the introduction by our
competitors of products embodying new technologies or
features.

If third-party payors decline to reimburse our
customers for our products or reduce reimbursement
levels, the demand for our products may decline and
our ability to sell our products profitably may be
harmed. In addition, we are subject to cost
containment measures in the United States and other
countries, resulting in pricing pressures, which could
have a material adverse effect on our business, results
of operations, and cash flows.

We sell our products and services to hospitals, doctors and

other healthcare providers, which receive reimbursement for
the healthcare services provided to their patients from third-
party payors, such as domestic and international government
programs, private insurance plans and managed care
programs. These third-party payors may deny reimbursement
if they determine that a product or service used in a procedure
was not in accordance with cost-effective treatment methods,
as determined by the third-party payor, or was used for an
unapproved indication. Third-party payors may also decline to
reimburse for experimental procedures and products. In
addition, third-party payors are increasingly attempting to
contain healthcare costs by limiting both coverage and the
level of reimbursement for medical products and services. If
third-party payors deny or decline reimbursement, reduce
reimbursement levels or change reimbursement models for our
products, demand for our products may decline, or we may
experience increased pressure to reduce the prices of our
products, which could have a material adverse effect on our
sales and results of operations.

Many customers for our products have formed group
purchasing organizations in an effort to contain costs. Group
purchasing organizations negotiate pricing arrangements with
medical supply manufacturers and distributors, and these
negotiated prices are made available to a group purchasing
organization’s affiliated hospitals and other members. If we are
not one of the providers selected by a group purchasing
organization, affiliated hospitals and other members may be
less likely to purchase our products, and, if the group
purchasing organization has negotiated a strict compliance

contract for another manufacturer’s products, we may be
precluded from making sales to members of the group
purchasing organization for the duration of the contractual
arrangement. Our failure to respond to the cost-containment
efforts of group purchasing organizations may cause us to lose
market share to our competitors and could have a material
adverse effect on our sales and results of operations.

Initiatives to limit the growth of general healthcare

expenses and hospital costs are ongoing in the markets in
which we do business, and we have experienced downward
pressure on product pricing and other effects of healthcare
reform in our international markets. These initiatives are
sponsored by government agencies, legislative bodies and the
private sector and include price regulation and competitive
pricing. For example, China has implemented a volume-based
procurement (“VBP”) process designed to reduce medical
spending, which has in the past resulted in, and could in the
future result in, reduced margins on covered devices and
products, required renegotiation of distributor arrangements,
and incurrence of inventory-related charges. In cases where
our product is not selected in VBP, sales of that product are
substantially impacted. Pricing pressure has also increased due
to continued consolidation among healthcare providers, trends
toward managed care, the shift toward governments becoming
the primary payors of healthcare expenses, reductions in
reimbursement levels and government laws and regulations
relating to reimbursement and pricing generally. If key
participants in government healthcare systems reduce the
reimbursement levels for our products, including through
political changes or transitions, our business, financial
condition, results of operations and cash flows may be
adversely affected.

Financial, Credit and Liquidity Risks

We incurred substantial additional indebtedness
in connection with previous mergers and acquisitions
and may not be able to meet all of our debt obligations,
and interest rate risk could adversely affect our
indebtedness.

We incurred substantial additional indebtedness in
connection with previous mergers and acquisitions. At
December 31, 2022, our total indebtedness was $5.7 billion. As
of December 31, 2022, our debt service principal obligations
(excluding interest, leases and equipment notes), during the
next 12 months are expected to be $0.5 billion. As a result of
the increase in our debt, demands on our cash resources have
increased. The increased level of debt could, among other
things:
(cid:129) require us to dedicate a large portion of our cash flow from
operations to the servicing and repayment of our debt,
thereby reducing funds available for working capital, capital
expenditures, research and development expenditures and
other general corporate requirements;

(cid:129) limit our ability to obtain additional financing to fund future

working capital, capital expenditures, research and
development expenditures and other general corporate
requirements;

(cid:129) limit our flexibility in planning for, or reacting to, changes in

our business and the industry in which we operate;
(cid:129) restrict our ability to make strategic acquisitions or
dispositions or to exploit business opportunities;

(cid:129) place us at a competitive disadvantage compared to our

competitors that have less debt;

(cid:129) adversely affect our credit rating, with the result that the
cost of servicing our indebtedness might increase and our
ability to obtain surety bonds could be impaired;

(cid:129) adversely affect the market price of our common stock; and
(cid:129) limit our ability to apply proceeds from a future offering or

asset sale to purposes other than the servicing and
repayment of debt.

In addition, the interest rates applicable to certain of our

debt obligations are based on a fluctuating rate of interest
determined by reference to the Secure Overnight Financing
Rate (“SOFR”) or the rate of interest last quoted by The Wall
Street Journal as the “Prime Rate” in the United States. Any
increase in interest rates applicable to our debt obligations
would increase our cost of borrowing and could adversely
affect our financial position, results of operations or cash flows.

We may have additional tax liabilities.
We are subject to income taxes in the U.S. and many

foreign jurisdictions. Significant judgment is required in
determining our worldwide provision for income taxes. In the
ordinary course of our business, there are many transactions
and calculations where the ultimate tax determination is
uncertain. We are regularly under audit by tax authorities.
Although we believe our tax estimates are reasonable, the final
determination of tax audits and any related litigation could be
materially different from our historical income tax provisions
and accruals. The results of an audit or litigation could have a
material effect on our financial statements in the period or
periods for which that determination is made.

Proposed changes in tax laws in countries in which
we do business, if enacted, could lead to changes in tax
laws that could negatively impact our effective tax
rate.

Changes in the tax laws and regulations of the

jurisdictions where we do business, including an increase in
tax rates or an adverse change in the treatment of an item of
income or expense, could result in a material increase in our
tax expense and/or tax payments, could increase tax
uncertainty and could have a material adverse impact on our
business, financial condition or results of operations.
For example, changes in the tax laws of foreign

jurisdictions are expected to occur as a result of pillar two of
the base erosion and profit shifting plan (“Pillar Two”)
undertaken by the Organisation for Economic Co-operation
and Development, which would require profits earned in
jurisdictions in which we operate to be subject to a minimum
15 percent income tax rate. In December 2022, the European
Union Council established effective dates of January 1, 2024
and January 1, 2025 for different aspects of Pillar Two. We are
continuing to evaluate the potential impact on future periods
of the Pillar Two, pending legislative adoption by additional
individual countries, including those within the European
Union.

The spinoff of ZimVie Inc. and the divestiture of

our retained interest in ZimVie Inc. could result in
substantial tax liability.

We obtained Internal Revenue Service (“IRS”) rulings and

an opinion as to the tax-free nature of the spinoff under the
U.S. Internal Revenue Code of 1986, as amended. We
subsequently obtained supplemental IRS rulings as to the
tax-free nature of our divestiture of retained shares of ZimVie
common stock following the spinoff, which divestiture
completed in February 2023. The IRS rulings and opinion are
based, among other things, on various factual assumptions and
representations we made. If any of these assumptions or
representations are, or become, inaccurate or incomplete,
reliance on the opinion and rulings may be jeopardized. If the
spinoff, or the subsequent divestiture of our retained interest
in ZimVie, does not qualify for tax-free treatment for U.S.
federal income tax purposes, the resulting tax liability to us, to
our stockholders and to ZimVie stockholders could be
substantial.

If our independent agents and distributors are
characterized as employees, we would be subject to
additional tax and other liabilities.

We structure our relationships with independent agents

and distributors in a manner that we believe results in an
independent contractor relationship, not an employee
relationship. Although we believe that our independent agents
and distributors are properly characterized as independent
contractors, tax or other regulatory authorities may in the
future challenge our characterization of these relationships.
Further, we have been subject to lawsuits challenging the
characterization of these relationships. Changes in
classification from independent contractor to employee can
result in a change to various requirements associated with the
payment of wages, tax withholding, and the provision of
unemployment, health, and other traditional employer-
employee related benefits. If regulatory authorities or state,
federal or foreign courts were to determine our independent
agents or distributors are employees, and not independent
contractors, we would be required to withhold income taxes, to
withhold and pay social security, Medicare and similar taxes
and to pay unemployment and other related payroll taxes. We
would also be liable for unpaid past taxes and subject to
penalties. As a result, any determination that our independent
agents and distributors are our employees could have a
material adverse effect on our business, financial condition or
results of operations.

Future material impairments in the carrying value

of our intangible assets, including goodwill, would
negatively affect our operating results.

Goodwill and intangible assets represent a significant

portion of our assets. At December 31, 2022, we had
$8.6 billion in goodwill and $5.1 billion of intangible assets. The
goodwill results from our acquisition activity and represents
the excess of the consideration transferred over the fair value
of the net assets acquired. We assess at least annually whether
events or changes in circumstances indicate that the carrying
value of our intangible assets may not be recoverable. As
discussed further in Note 11 to our consolidated financial
statements, in the fourth quarter of 2022, we recorded

goodwill impairment charges of $289.8 million as a result of,
among other factors, changes in foreign currency exchange
rates in our European-based currencies, inflation and a higher
interest rate environment; in the first quarter of 2020, we
recorded goodwill impairment charges of $470.0 million as a
result of the adverse impacts from the COVID-19 pandemic
and a change in our reportable segments; and in the second
quarter of 2022 and 2021, we recorded $3.0 million and
$16.3 million, respectively, of in-process research and
development (“IPR&D”) intangible asset impairments on
certain IPR&D projects. If the operating performance at one or
more of our reporting units falls significantly below current
levels, including if elective surgical procedures return to lower
levels due to a resurgence of the COVID-19 pandemic or
otherwise, if competing or alternative technologies emerge, if
market conditions or future cash flow estimates for one or
more of our businesses decline, or as a result of restructuring
initiatives pursuant to which we reorganize our reporting units,
we could be required to record additional impairment charges.
Any write-off of a material portion of our goodwill or
unamortized intangible assets would negatively affect our
results of operations.

Global Operational Risks

We conduct a significant amount of our sales

activity outside of the U.S., which subjects us to
additional business risks and may cause our
profitability to decline due to increased costs.

We sell our products in more than 100 countries and
derived approximately 42 percent of our net sales in 2022 from
outside the U.S. We intend to continue to pursue growth
opportunities in sales internationally, including in emerging
markets, which could expose us to additional risks associated
with international sales and operations. Our international
operations are, and will continue to be, subject to a number of
risks and potential costs, including:
(cid:129) changes in foreign medical reimbursement policies and

programs;

(cid:129) differences in and changes to foreign regulatory

requirements, such as more stringent requirements for
regulatory clearance of products;

(cid:129) differing local product preferences and product

requirements;

(cid:129) fluctuations in foreign currency exchange rates;
(cid:129) the effects of inflation, including the effects of different rates
of inflation in different countries, on our costs and the costs
of our products;

(cid:129) diminished protection of intellectual property in some

countries outside of the U.S.;

(cid:129) trade protection measures, import or export requirements,

new or increased tariffs, trade embargoes and sanctions and
other trade barriers, which may prevent us from shipping
products to or receiving products from a particular market,
restrict our access to certain sources of raw materials and
other inputs, increase our operating costs and disrupt our
ability to collect payment for our products and services in
particular markets;

(cid:129) foreign exchange controls that might prevent us from
repatriating cash earned in countries outside the U.S.;
(cid:129) complex data privacy and cybersecurity requirements and

labor relations laws;

(cid:129) extraterritorial effects of U.S. laws such as the FCPA;
(cid:129) effects of foreign anti-corruption laws, such as the UK

Bribery Act;

(cid:129) difficulty in staffing and managing foreign operations;
(cid:129) labor force instability;
(cid:129) potentially negative consequences from changes in tax laws;

and

(cid:129) political, social and economic instability and uncertainty,
including wars, other conflict and sovereign debt issues.
Violations of foreign laws or regulations could result in

fines, criminal sanctions against us, our officers or our
employees, prohibitions on the conduct of our business and
damage to our reputation.

Wars and other conflicts may increase certain of these

risks and may adversely affect our business and financial
performance, including by limiting our ability to operate in, or
export from, certain markets. Losing access to such markets or
exports may have a material adverse effect on our business in
the affected market and may limit our ability to operate some
of our businesses globally.

We anticipate that the effects of emerging, expanding and

new conflicts, such as a possible expansion of the Russian-
Ukrainian conflict or a conflict involving China and Taiwan,
would not be limited to the specific markets involved. For
example, the U.S. and other countries have imposed sanctions
on Russia, certain of its governmental bodies, certain
businesses and certain individuals due to the invasion of
Ukraine, and additional sanctions may continue to be imposed.
Similar sanctions could be expected to emerge from other
conflicts. Sanctions, and other civil, political and economic
effects of such conflicts may have adverse impacts globally,
including supply chain continuity disruption; inflationary
pressures and increased costs of raw materials and inputs;
manufacturing or shipping delays; increased shipping costs;
inability to ship products to or from certain countries
potentially resulting in an inability to sell certain products
globally; and increased disruptions and delays on our ability to
collect payment for our products and services in particular
markets. While Russia and Ukraine do not constitute material
portions of our business, a significant escalation or expansion
of economic disruption or of the conflict’s current scope, or the
emergence of new conflicts involving other countries, could
adversely affect our results of operations.

We are subject to risks arising from currency

exchange rate fluctuations, which can increase our
costs, cause our profitability to decline and expose us
to counterparty risks.

A substantial portion of our foreign revenues is generated

in Europe and Japan. The U.S. Dollar value of our foreign-
generated revenues varies with currency exchange rate
fluctuations. Significant increases in the value of the
U.S. Dollar relative to the Euro, the Japanese Yen, the Swiss
Franc or other currencies could have a material adverse effect
on our results of operations. Although we address currency
risk management through regular operating and financing

activities, and, on a limited basis, through the use of derivative
financial instruments, those actions may not prove to be fully
effective or may create additional financial obligations for us.
Further, if the counterparties to the derivative financial
instrument transactions fail to honor their obligations due to
financial distress or otherwise, we would be exposed to
potential losses or the inability to recover anticipated gains
from those transactions.

Legal, Regulatory and Compliance Risks

We are subject to costly and complex laws and
governmental regulations relating to the development,
design, product standards, packaging, advertising,
promotion, postmarket surveillance, manufacturing,
labeling and marketing of our products,
non-compliance with which could adversely affect our
business, financial condition and results of operations.

Our global regulatory environment is increasingly

stringent, unpredictable and complex. The products we design,
develop, manufacture and market are subject to rigorous
regulation by the FDA and numerous other supranational,
national, federal, regional, state and local governmental
authorities. The process of obtaining regulatory approvals and
clearances to market these products can be costly and time
consuming and approvals might not be granted for future
products on a timely basis, if at all. Delays in receipt of, or
failure to obtain, approvals for future products, or loss of
approval for current products, could result in delayed
realization of product revenues or in substantial additional
costs.

Both before and after a product is commercially released,

we have ongoing responsibilities under FDA regulations and
other supranational, national, federal, regional, state and local
requirements globally. These requirements relate to quality
systems, recordkeeping, labeling, promotional requirements,
adverse event reporting regulations and other matters, which
are subject to continual review and are monitored rigorously
through periodic inspections by regulators, which may result in
observations (such as on FDA Form 483), and in some cases
warning letters, that require corrective action, or other forms
of enforcement. Furthermore, regulators strictly regulate the
promotional claims that we may make about approved or
cleared products.

In the EU, for example, the EU MDR became effective in

May 2021 and includes significant additional premarket and
post-market requirements. Complying with the requirements
of this regulation requires us to incur significant expense.
Additionally, the availability of recognized European notified
body services certified to the new EU MDR requirements is
limited, which may delay the marketing approval for some of
our products under the EU MDR.

If a regulator were to conclude that we are not in

compliance with applicable laws or regulations, that any of our
products are ineffective or pose an unreasonable health risk, or
that we have marketed or promoted a product for use other
than as indicated in labelling approved by the regulator, the
regulator could ban such products; detain or seize adulterated
or misbranded products; order a recall, repair, replacement, or

refund of payment of such products; refuse to grant pending
premarket approval applications; refuse to provide certificates
for exports; require us to notify healthcare professionals and
others that the products present unreasonable risks of
substantial harm to the public health; and subject us to fines,
injunctions or other penalties. The regulator may also impose
operating restrictions, including a ceasing of operations at one
or more facilities, enjoining and restraining certain violations of
applicable law pertaining to our products, seizing our products,
and/or assessing civil or criminal penalties against our officers,
employees or us. Regulators could also issue a corporate
warning letter or a recidivist warning letter or negotiate the
entry of a consent decree of permanent injunction with us,
and/or recommend prosecution. Any adverse regulatory action,
depending on its magnitude, may restrict us from effectively
manufacturing, marketing and selling our products and could
have a material adverse effect on our business, financial
condition and results of operations.

In August 2018, we received a warning letter from the

FDA related to observed non-conformities with current good
manufacturing practice requirements of the QSR at our
Warsaw North Campus manufacturing facility. As of
February 24, 2023, this warning letter remained pending. Until
the violations are corrected, we may become subject to
additional regulatory action by the FDA as described above,
the FDA may refuse to grant premarket approval applications
and/or the FDA may refuse to grant export certificates, any of
which could have a material adverse effect on our business,
financial condition and results of operations. Additional
information regarding these and other FDA regulatory matters
can be found in Note 21 to our consolidated financial
statements.

Our products and operations are also often subject to the
rules of industrial standards bodies, such as the International
Standards Organization. If we fail to adequately address any of
these regulations, our business could be harmed.

If we fail to comply with healthcare fraud and
abuse laws and regulations, we could face substantial
penalties and our business, operations and financial
condition could be adversely affected.

The sales, marketing and pricing of products and
relationships that medical products companies have with
healthcare providers are under increased scrutiny around the
world. Our industry is subject to various laws and regulations
pertaining to healthcare fraud and abuse, including the False
Claims Act, the Anti-Kickback Statute, the Stark law, the
Physician Payments Sunshine Act, the Food, Drug, and
Cosmetic Act and similar laws and regulations in the U.S. and
around the world. In addition, we are subject to various laws
concerning anti-corruption and anti-bribery matters (including
the FCPA), sales to countries or persons subject to economic
sanctions and other matters affecting our international
operations. Violations of these laws are punishable by criminal
and/or civil sanctions, including, in some instances, fines,
imprisonment and, within the U.S., exclusion from
participation in government healthcare programs, including
Medicare, Medicaid and Veterans Administration health
programs. These laws are administered by, among others, the
DOJ, the Office of Inspector General of the Department of

Health and Human Services, the SEC, the OFAC, the Bureau of
Industry and Security of the U.S. Department of Commerce
and state attorneys general.

If we fail to comply with data privacy and security

laws and regulations, we could face substantial
penalties and our business, operations and financial
condition could be adversely affected.

We process personal and personal health data in our
business, particularly through our ZBEdgeTM ecosystem, our
suite of integrated digital and robotic technologies,
incorporating data-powered insights across the continuum of
care. In addition, some of our products and services
incorporate software or information technology that processes
health data regarding patients and patient therapy for
treatment, health care, maintenance and other purposes.
Further, we obtain and process personal data related to our
employees, individual business partners (such as physicians
and consultants), and website visitors located around the
world. These data and information-focused activities carry
additional risk.

We are subject to supranational, national, state and
international data privacy and security laws and regulations
that govern the collection, use, disclosure, transfer, storage,
location, disposal and protection of health-related and other
personal information. In addition to U.S. federal laws and
regulations, a number of U.S. states have also enacted data
privacy and security laws and regulations that govern the
collection, use, disclosure, transfer, storage, disposal, and
protection of personal information, such as social security
numbers, medical and financial information, biometric data
and other personal information. The FDA has issued guidance
to which we may be subject concerning data security for
medical devices. These laws and regulations may be more
restrictive and not preempted by U.S. federal laws. The
legislative and regulatory framework for privacy and data
protection issues worldwide is rapidly evolving as countries
continue to adopt privacy and data security laws that may
apply to us, both because our operations are located in those
countries and/or because we provide services to customers in
those countries. In addition, certain of our affiliates and
associates are subject to privacy, security and breach
notification regulations established under these and other
international, national, state and foreign laws. We, and certain
of our affiliates and associates, are also subject to reporting
requirements relating to certain data and other breaches.
The interpretation and enforcement of the laws and
regulations described above are uncertain and subject to
change, and may require substantial costs to monitor and
implement compliance with any additional requirements. In
addition, new and more stringent multinational, national and
state privacy legislation and regulations may be adopted in
2023 and beyond. We cannot predict all the jurisdictions in
which new legislation, regulation or enforcement might arise,
the scope of such legislation, regulation and enforcement, or
the potential impact to our business and operations of any
such changes. Failure to comply with U.S. and international
data protection laws and regulations, and the disclosure of any
data or related breach, could result in government

enforcement actions (which could include substantial civil and/
or criminal penalties and injunctive relief), private litigation
and/or adverse publicity and could have a material adverse
impact on our business, financial condition or results of
operations.

Pending and future product liability claims and

litigation could adversely impact our financial
condition and results of operations and impair our
reputation.

Our business exposes us to potential product liability risks
that are inherent in the design, manufacture and marketing of
medical devices. In the ordinary course of business, we are the
subject of product liability lawsuits alleging that component
failures, manufacturing flaws, design defects or inadequate
disclosure of product-related risks or product-related
information resulted in an unsafe condition or injury to
patients. As discussed further in Note 21 to our consolidated
financial statements, we are defending product liability
lawsuits relating to the Durom® Acetabular Component
(“Durom Cup”), certain products within the M/L Taper and M/
L Taper with Kinectiv® Technology hip stems and Versys®
Femoral Head implants, and the M2a-MagnumTM hip system.
We are also currently defending a number of other product
liability lawsuits and claims related to various other products.
Any product liability claim brought against us, with or without
merit, can be costly to defend. Product liability lawsuits and
claims, safety alerts or product recalls, regardless of their
ultimate outcome, could have a material adverse effect on our
business and reputation and on our ability to attract and retain
customers.

We are substantially dependent on patent and

other proprietary rights, and failing to protect such
rights or to be successful in litigation related to our
rights or the rights of others may result in our
payment of significant monetary damages and/or
royalty payments, negatively impact our ability to sell
current or future products, or prohibit us from
enforcing our patent and other proprietary rights
against others.

Claims of intellectual property infringement and litigation

regarding patent and other intellectual property rights are
commonplace in our industry and are frequently time
consuming and costly. At any given time, we may be involved
as either plaintiff or defendant in a number of patent
infringement actions, the outcomes of which may not be
known for prolonged periods of time. While it is not possible to
predict the outcome of patent and other intellectual property
litigation, such litigation has in the past resulted in, and could
in the future result in, our payment of significant monetary
damages and/or royalty payments, negatively impact our ability
to sell current or future products, or prohibit us from enforcing
our patent and proprietary rights against others, which could
have a material adverse effect on our business and results of
operations.

Our success depends in part on our proprietary

technology, processes, methodologies and information. We rely
on a combination of patent, copyright, trademark, trade secret
and other intellectual property laws and nondisclosure, license,
assignment and confidentiality arrangements to establish,

maintain and protect our proprietary rights, as well as the
intellectual property rights of third parties whose assets we
license. However, the steps we have taken to protect our
intellectual property rights, and the rights of those from whom
we license intellectual property, may not be adequate to
prevent unauthorized use, misappropriation or theft of our
intellectual property. Further, our currently pending or future
patent applications may not result in patents being issued to
us, patents issued to or licensed by us in the past or in the
future may be challenged or circumvented by competitors, and
such patents may be found invalid, unenforceable or
insufficiently broad to protect our technology or to provide us
with any competitive advantage. Third parties could obtain
patents that may require us to negotiate licenses to conduct
our business, and the required licenses may not be available on
reasonable terms or at all. We also cannot be certain that
others will not independently develop substantially equivalent
proprietary information.

In addition, intellectual property laws differ in various
jurisdictions in which we operate and are subject to change at
any time, which could further restrict our ability to protect our
intellectual property and proprietary rights. In particular, a
portion of our revenues is derived from jurisdictions where
adequately protecting intellectual property rights may prove
more challenging or impossible. We may also not be able to
detect unauthorized uses or take timely and effective steps to
remedy unauthorized conduct. To prevent or respond to
unauthorized uses of our intellectual property, we might be
required to engage in costly and time-consuming litigation or
other proceedings and we may not ultimately prevail. Any
failure to establish, maintain or protect our intellectual
property or proprietary rights could have a material adverse
effect on our business, financial condition, or results of
operations.

We are involved in legal proceedings that may

result in adverse outcomes.

In addition to intellectual property and product liability
claims and lawsuits, we are involved in various commercial and
securities litigation and claims and other legal proceedings that
arise from time to time in the ordinary course of our business.
Although we believe there are substantial defenses in these
matters, litigation and other claims are subject to inherent
uncertainties and management’s view of these matters may
change in the future. Given the uncertain nature of legal
proceedings generally, we are not able in all cases to estimate
the amount or range of loss that could result from an
unfavorable outcome. We could in the future incur judgments
or enter into settlements of claims that could have a material
adverse effect on our results of operations in any particular
period.

Risks Related to Our Organizational Documents and Jurisdiction of
Incorporation

Anti-takeover provisions in our organizational
documents could delay or prevent a change of control.

Certain provisions of our Restated Certificate of
Incorporation, our Restated By-Laws and the Delaware
General Corporation Law may have an anti-takeover effect and
may delay, defer or prevent a merger, acquisition, tender offer,

Item 1B. Unresolved Staff Comments

Not Applicable.

takeover attempt or other change of control transaction that a
stockholder might consider in its best interest, including those
attempts that might result in a premium over the market price
for the shares held by our stockholders.

These provisions provide for, among other things:
(cid:129) the ability of our board of directors to issue one or more

series of preferred stock without further stockholder action;
(cid:129) advance notice for nominations of directors by stockholders
and for stockholders to include matters to be considered at
our annual meetings;

(cid:129) certain limitations on convening special stockholder

meetings; and

(cid:129) the prohibition on engaging in a “business combination” with
an “interested stockholder” for three years after the time at
which a person became an interested stockholder unless
certain conditions are met, as set forth in Section 203 of the
Delaware General Corporation Law.

These anti-takeover provisions could make it more

difficult for a third party to acquire us, even if the third party’s
offer may be considered beneficial by many of our
stockholders. As a result, our stockholders may be limited in
their ability to obtain a premium for their shares.

Our Restated By-Laws designate certain Delaware
courts as the sole and exclusive forum for certain types
of actions and proceedings that may be initiated by
our stockholders, which could limit our stockholders’
ability to obtain a favorable judicial forum for
disputes with us or our directors, officers or other
employees.

Our Restated By-Laws provide that, unless we consent in

writing to the selection of an alternative forum, a state court
located within the State of Delaware (or, if no state court
located in the State of Delaware has jurisdiction, the federal
district court for the District of Delaware) will be the sole and
exclusive forum for any stockholder (including any beneficial
owner) to bring (i) any derivative action or proceeding brought
on our behalf, (ii) any action asserting a claim of breach of
fiduciary duty owed by any of our directors, officers or other
employees to us or our stockholders, (iii) any action asserting
a claim against us or any of our directors, officers or other
employees arising pursuant to any provision of the Delaware
General Corporation Law or our Restated Certificate of
Incorporation or our Restated By-Laws, as either may be
amended from time to time, or (iv) any action asserting a claim
against us or any of our directors, officers or other employees
governed by the internal affairs doctrine. Any person or entity
purchasing or otherwise acquiring any interest in shares of our
common stock is deemed to have received notice of and
consented to the foregoing provisions. This choice of forum
provision may limit a stockholder’s ability to bring a claim in a
judicial forum that it finds favorable for disputes with us or our
directors, officers or other employees, which may discourage
such lawsuits against us and our directors, officers and
employees. Alternatively, if a court were to find this choice of
forum provision inapplicable to, or unenforceable in respect of,
one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such
matters in other jurisdictions, which could adversely affect our
business, financial condition or results of operations.

Item 2. Properties

We own or lease approximately 280 different facilities around the world, of which approximately half are in the U.S. Our
corporate headquarters is in Warsaw, Indiana. Warsaw, Indiana is also home to our most significant manufacturing, research and
development (“R&D”), and other business activities for our Knees, Hips and S.E.T. product divisions. Internationally, our EMEA
regional headquarters is in Switzerland and our Asia Pacific regional headquarters is in Singapore.

We have approximately 25 manufacturing locations in the U.S. and internationally. Our most significant locations outside of the

U.S. are in Switzerland, Ireland, the U.K., China, and Puerto Rico. We primarily own our manufacturing facilities in the U.S.;
internationally, we occupy both owned and leased manufacturing facilities.

We maintain sales and administrative offices and warehouse and distribution facilities in more than 45 countries around the

world. These local market facilities are primarily leased due to common businesses practices and to allow us to be more adaptable
to changing needs in the market.

We distribute our products both through large, centralized warehouses and through smaller, market specific facilities,
depending on the needs of the market. We maintain large, centralized warehouses in the U.S. and the Netherlands to be able to
efficiently distribute our products to customers in the U.S. and EMEA.

We believe that all of the facilities and equipment are in good condition, well maintained and able to operate at present levels.
We believe the current facilities, including manufacturing, warehousing, R&D and office space, provide sufficient capacity to meet
ongoing demands.

Item 3. Legal Proceedings

Information pertaining to certain legal proceedings in which we are involved can be found in Note 21 to our consolidated

financial statements included in Part II, Item 8 of this report and is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Not Applicable.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

Market for the Registrant’s Common Equity and Related Stockholder Matters

Our common stock is traded on the New York Stock Exchange and the SIX Swiss Exchange under the symbol “ZBH.” As of

February 7, 2023, there were approximately 14,540 holders of record of our common stock. A substantially greater number of
holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other
financial institutions.

We expect to continue paying cash dividends on a quarterly basis; however, future dividends are subject to approval of the

Board of Directors and may be adjusted as business needs or market conditions change.

The information required by this Item concerning equity compensation plans is incorporated herein by reference to Item 12 of

this report.

The graph below shows the cumulative total stockholder return on our common stock compared to the S&P 500 Stock Index,

the S&P 500 Health Care Equipment Index and the common stock of a selected group of peer issuers (the “Peer Group”). The chart
assumes $100 was invested on December 31, 2017 in Zimmer Biomet common stock and each index and that dividends were
reinvested. Returns over the indicated period should not be considered indicative of future returns.

The Peer Group is a group of publicly traded companies, including other large healthcare equipment and services companies,
life sciences services companies and companies with whom we compete for business and for executive talent, which companies we
use as a market reference point for performance comparisons, executive compensation levels, equity usage and incentive plan
design and industry trend analysis. The Peer Group is selected by our Compensation and Management Development Committee
from time to time, most recently in May 2022, and currently consists of the following issuers: Agilent Technologies, Inc.; Align
Technology, Inc.; Baxter International Inc.; Becton Dickinson and Company; Boston Scientific Corporation; DexCom, Inc.; Edwards
Lifesciences Corporation; Hologic, Inc.; Intuitive Surgical, Inc.; Laboratory Corporation of America Holdings; Quest Diagnostics
Incorporated; Stryker Corporation; Teleflex Incorporated; and The Cooper Companies, Inc. We have selected the Peer Group to
replace the S&P 500 Health Care Equipment Index because we believe it better reflects our relative market performance and to
provide consistency in evaluating our relative executive compensation practices.

Company/Index

2017

2018

2019

2020

2021

2022

Zimmer Biomet Holdings, Inc.

S&P 500 Stock Index

S&P 500 Health Care Equipment Index

Peer Group

$100.00

$ 86.69

$126.03

$130.77

$108.51

$113.18

100.00

95.62

125.72

148.85

100.00

116.24

150.32

176.83

100.00

112.39

147.56

171.63

191.58

211.05

208.11

156.88

171.25

165.99

Issuer Purchases of Equity Securities

The following table summarizes repurchases of common stock settled during the three months ended December 31, 2022:

Period

October 2022

November 2022

December 2022

Total

Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares Purchased as
a Part of Publicly
Announced
Program(1)

Maximum Approximate
Dollar Value of Shares
that may yet be
Purchased Under the
Program(1)

–

$1,000,000,000

1,000,000,000

1,185,064

126.58

1,185,064

850,000,131

1,185,064

$126.58

1,185,064

$ 850,000,131

(1) In February 2016, our Board of Directors authorized a $1.0 billion share repurchase program effective March 1, 2016, with no expiration date.

Item 6.

[Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

On March 1, 2022, we completed the spinoff of our spine

2022 Financial Highlights

and dental businesses into ZimVie. The historical results of our
spine and dental businesses have been reflected as
discontinued operations in our consolidated financial
statements in our 2022 results through the date of the spinoff
and in the prior year periods. In addition, as of December 31,
2021, the assets and liabilities associated with these
businesses are classified as assets and liabilities of
discontinued operations in our consolidated balance sheet. See
Note 3 to our consolidated financial statements for additional
information. The following discussion and analysis is
presented on a continuing operations basis unless otherwise
noted. Certain percentages presented in this discussion and
analysis are calculated from the underlying whole-dollar
amounts and therefore may not recalculate from the rounded
numbers used for disclosure purposes.

The following discussion, analysis and comparisons
generally focus on the operating results for the years ended
December 31, 2022 and 2021. Discussion, analysis and
comparisons of the years ended December 31, 2021 and 2020
that are not included in this Form 10-K can be found in (i)
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the year ended December 31, 2021
(the “2021 Form 10-K”) prior to the spinoff of ZimVie; and (ii)
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Part II, Item 7 of Exhibit 99.1
filed with our Form 8-K on June 22, 2022, which Form 8-K was
filed to recast certain items of the 2021 Form 10-K, including
Part II, Item 7, to reflect the historical results of our spine and
dental businesses as discontinued operations following the
ZimVie spinoff.

EXECUTIVE LEVEL OVERVIEW

Impact of the COVID-19 Global Pandemic

Our results continue to be impacted by the COVID-19
global pandemic. The vast majority of our net sales are derived
from products used in elective surgical procedures that have
typically declined during surges of the virus as governments
and healthcare systems take actions in an effort to prevent the
spread and provide sufficient hospital beds and other
resources for COVID-19 patients. Additionally, we believe that
staffing shortages at hospitals have contributed to the deferral
of elective surgical procedures. In the year ended
December 31, 2022, the Omicron variant resulted in fewer
elective surgical procedures earlier in the year with recovery
in procedures as the surge began to subside later in the first
quarter and through the second quarter. In the second half of
2022, procedural volumes continued to improve across most
markets relative to the first half of the year. However, in the
fourth quarter we did experience more acute deferrals of
elective surgical procedures in some markets, such as China,
due to surges of the virus.

In 2022, our net sales increased by 1.6 percent compared

to 2021. Our net sales in 2022 were tempered by a negative
5.0 percent effect from changes in foreign currency exchange
rates. We continued to see the return of elective surgical
procedures across most markets when compared to the prior
year, which was negatively affected by a surge of the
COVID-19 virus in early 2021 before vaccines were widely
available and later in the year by the Delta variant.

Our net earnings, including discontinued operations, were

$231.4 million in 2022 compared to $401.6 million in 2021. In
2022, we recognized a goodwill impairment charge of
$289.8 million, which was the primary driver for lower net
earnings in 2022 when compared to 2021. Other significant
unfavorable items in 2022 when compared to 2021 include an
unrealized investment loss of $116.6 million due to a decline in
the value of our investment in ZimVie, higher restructuring-
related costs as we continued to execute on our 2019 and 2021
Restructuring Plans, and higher spending on travel and other
activities which started to return to pre-pandemic levels.
These unfavorable factors to net earnings were partially offset
by higher net sales, hedge gains recognized from our hedging
program, the favorable effects of our restructuring programs,
lower litigation-related expenses, and the fact the 2021 period
included a $165.1 million charge for the early extinguishment
of debt and $65.0 million of charges related to certain
agreements we entered into to gain access to or acquire third-
party in-process research and development (“IPR&D”)
projects.

2023 Outlook

We expect revenue growth in 2023 to be driven by a

combination of market growth, procedure volume recovery
from COVID-19 and new product introductions. We believe
there will continue to be some deferrals of elective surgical
procedures caused by COVID-19 surges and staffing shortages,
but to a lesser extent in 2023 than in 2022. In addition, based
on foreign currency exchange rates at the end of 2022 we
expect foreign currency to negatively affect net sales growth
in 2023, but at a lower level than experienced in 2022. We
expect that supply chain and inflation pressures will continue
into 2023, but with supply chain pressure easing in the second
half of the year and with inflation stable to the level
experienced at the end of 2022. We estimate our operating
expenses in 2023 will be impacted by the expected
non-reoccurrence of goodwill impairment charges, lower
quality remediation expenses due to the completion of our
remediation milestones, and lower restructuring-related
expenses related to our 2019 and 2021 Restructuring Plans.
We expect our interest expense, net, will increase primarily
due to higher interest rates. We also expect our non-operating
other (expense) income, net, will decline in 2023 since the
2022 expense was primarily driven by an investment loss in
the shares of ZimVie that we held following the spinoff, which
shares we disposed of in February 2023.

RESULTS OF OPERATIONS

We review sales by two geographies, the United States
and International, and by the following product categories:
Knees; Hips; S.E.T. (Sports Medicine, Extremities, Trauma,
Craniomaxillofacial and Thoracic); and Other. This sales
analysis differs from our reportable operating segments, which
are based upon our senior management organizational
structure and how we allocate resources toward achieving
operating profit goals. We review sales by these geographies
because the underlying market trends in any particular
geography tend to be similar across product categories,
because we primarily sell the same products in all geographies

and many of our competitors publicly report in this manner.
Our business is seasonal in nature to some extent, as many of
our products are used in elective surgical procedures, which
typically decline during the summer months and can increase
at the end of the year once annual deductibles have been met
on health insurance plans. Additionally, with sales to
customers where title to product passes upon shipment, these
customers may purchase items in large quantities if incentives
are offered or if there are new product offerings in a market,
which could cause period-to-period differences in sales. Due
to the COVID-19 global pandemic, the typical seasonal
patterns did not occur in 2020 or 2021, but started to return in
2022.

Net Sales by Geography

The following table presents net sales by geography and the percentage changes (dollars in millions):

United States

International

Total

Year Ended December 31,

2022

2021

2020

2022 vs. 2021
% Inc/(Dec)

2021 vs. 2020
% Inc

$4,012.4

$3,853.9

$3,507.7

2,927.5

2,973.4

2,619.8

4.1%

(1.5)

$6,939.9

$6,827.3

$6,127.5

1.6

9.9%

13.5

11.4

Net Sales by Product Category

The following table presents net sales by product category and the percentage changes (dollars in millions):

Knees

Hips

S.E.T.

Other

Total

Year Ended December 31,

2022

2021

2020

2022 vs. 2021
% Inc/(Dec)

2021 vs. 2020
% Inc

$2,778.3

$2,647.9

$2,378.3

1,894.9

1,856.1

1,750.5

1,696.7

1,727.8

1,525.6

570.0

595.5

473.1

4.9%

2.1

(1.8)

(4.3)

$6,939.9

$6,827.3

$6,127.5

1.6

11.3%

6.0

13.3

25.9

11.4

The following table presents net sales by product category by geography for our Knees and Hips product categories, which

represent our most significant product categories (dollars in millions):

Year Ended December 31,

2022

2021

2020

2022 vs. 2021
% Inc/(Dec)

2021 vs. 2020
% Inc

$1,615.0
1,163.3

$1,487.6
1,160.3

$1,382.5
995.8

$2,778.3

$2,647.9

$2,378.3

8.6%
0.3

4.9

$ 960.9
934.0

$ 921.5
934.6

$ 881.1
869.4

4.3%
(0.1)

$1,894.9

$1,856.1

$1,750.5

2.1

7.6%

16.5

11.3

4.6%
7.5

6.0

Knees

United States
International

Total

Hips

United States
International

Total

Demand (Volume/Mix) Trends

Product Categories

Changes in volume and mix of product sales had a positive

effect of 7.6 percent and 12.3 percent on year-over-year sales
during the years ended December 31, 2022 and 2021,
respectively. Volume trends were positive in 2022 as we saw
recovery of elective surgical procedures, most notably in
international markets, driving volume growth in tandem with new
product introductions. In 2022, sales were negatively impacted by
limitations due to global supply chain challenges.

Based upon country dynamics, volume changes varied by

region in 2022. The volume increases in 2022 were largely a
product of how much the COVID-19 pandemic negatively
affected the various regions in 2021. In EMEA and Asia Pacific,
deferral of elective surgical procedures were more prevalent than
in the Americas in 2021. Additionally, in Asia Pacific in 2021,
China sales were negatively impacted from a combination of
variables related to the implementation of a nationwide volume-
based procurement (“VBP”) process. The China VBP had a
negative effect on volume due to inventory reductions by
distributors and short-term deferral of procedures as patients
waited to have a surgical procedure performed until after VBP
pricing was effective in 2022.

Pricing Trends

Global selling prices had negative effects of 1.0 percent and

2.1 percent on year-over-year sales during 2022 and 2021,
respectively. In the majority of countries in which we operate, we
continue to experience pricing pressure from governmental
healthcare cost containment efforts and from local hospitals and
health systems. However, we have had some success in reducing
the negative effects of pricing in 2022 due to internal initiatives
and being able to pass some inflationary impacts on to customers.

Foreign Currency Exchange Rates

In 2022 and 2021, changes in foreign currency exchange
rates had a negative effect of 5.0 percent and a positive effect of
1.2 percent, respectively, on year-over-year sales.

Geography

The 4.1 percent and 9.9 percent net sales growth in the

U.S. in 2022 and 2021, respectively, when compared to the
prior year in each case was primarily driven by recovery in
surgical procedures as COVID-19 cases subsided, especially in
the Knees and Hips categories. Internationally, net sales
declined by 1.5 percent in 2022 when compared to 2021 and
increased 13.5 percent in 2021 when compared to 2020. The
decline in 2022 was driven by the negative impacts on
International sales of 11.2 percent due to changes in foreign
currency exchange rates. Absent the effect of changes in
foreign currency exchange rates, most of our markets
internationally experienced demand (volume and mix) growth
from recovery in surgical procedures. In 2021, our
International markets experienced net sales growth from
recovery in elective surgical procedures.

In 2022, our Knees and Hips net sales increased by
4.9 percent and 2.1 percent, respectively, when compared to
2021 due to the recovery in elective surgical procedures and
new product introductions. The increase was despite the
impact of changes in foreign currency exchange rates having a
negative effect of 5.0 percent and 5.9 percent on Knees and
Hips net sales, respectively. S.E.T. net sales decreased by
1.8 percent in 2022 when compared to 2021 due to the
negative effects of changes in foreign currency exchange rates,
lower trauma product net sales partially due to VBP
implementation and unfavorable changes in reimbursement for
certain restorative therapy products. Other product category
net sales decreased by 4.3 percent in 2022 when compared to
2021 due to the negative effects of changes in foreign currency
exchange rates and lower unit sales of our ROSA robots as
some customers shifted to operating lease arrangements for
our robots instead of purchasing them. In 2021, all our product
categories experienced net sales growth when compared to
2020 due to the recovery of elective surgical procedures.

Expenses as a Percent of Net Sales

Cost of products sold,
excluding intangible
asset amortization

Intangible asset
amortization

Research and

development

Selling, general and
administrative

Goodwill and intangible
asset impairment

Restructuring and other

cost reduction
initiatives

Quality remediation

Acquisition, integration,
divestiture and related

Year Ended December 31,

2022

2021

2020

2022 vs. 2021
Inc/(Dec)

2021 vs. 2020
Inc/(Dec)

29.1% 28.7% 29.8%

0.4%

(1.1)%

7.6

7.8

8.4

(0.2)

(0.6)

5.9

6.4

5.3

(0.5)

1.1

39.8

41.6

44.3

(1.8)

(2.7)

4.2

0.2

8.2

4.0

(8.0)

2.8

0.5

0.2

1.8

0.8

–

1.7

0.8

0.2

1.4

1.0

(0.3)

0.2

(2.6)

0.1

–

(0.2)

11.2

Operating Profit

10.0

12.6

Cost of Products Sold and Intangible Asset Amortization

We calculate gross profit as net sales minus cost of
products sold and intangible asset amortization. Our gross
margin percentage is gross profit divided by net sales. The
following table sets forth the factors that contributed to the

gross margin changes in each of 2022 and 2021 compared to
the prior year:

Prior year gross margin

Lower average selling prices

Manufacturing costs

Impact of volume, product mix and other

Inventory charges

Impact from changes in foreign currency exchange

rates

Intangible asset amortization

Year Ended December 31,

2022

2021

63.5% 61.9%

(0.3)

(0.9)

0.6

(0.1)

0.3

0.2

(0.6)

0.5

(0.5)

2.1

(0.5)

0.6

Current year gross margin

63.3% 63.5%

The decline in gross margin percentage in 2022 compared
to 2021 was primarily due to inflationary cost pressures, lower
average selling prices and inventory charges related to
products we plan to discontinue. These unfavorable items were
partially offset by hedge gains recognized in 2022 as part of our
hedging program compared to hedge losses in 2021, operating
leverage from volume increases, a mix shift to higher margin
product sales, as well as the fact that the 2021 period
experienced lower than normal production at certain facilities
which resulted in fixed overhead costs being expensed
immediately.

Intangible asset amortization expense was similar in both

amount and as a percentage of net sales in 2022 when
compared to 2021.

Operating Expenses

Research & development (“R&D”) expenses decreased in

both amount and as a percentage of net sales in 2022
compared to 2021, primarily due to the fact that in 2021 we
entered into certain agreements to gain access to or acquire
third-party IPR&D projects that resulted in charges of
$65.0 million. We did not enter into any significant, similar
agreements in 2022. That favorability was partially offset by
higher personnel-related costs and higher spending on our
initial compliance with the EU MDR in 2022.

Selling, general & administrative (“SG&A”) expenses
decreased in both amount and as a percentage of net sales in
2022 compared to 2021 primarily due to litigation-related
expenses declining by $135.1 million and savings from our
restructuring plans. These favorable items were partially offset
by higher bad debt charges partially related to the Russia/
Ukraine conflict and higher expenses for travel and other
activities as we started to return to pre-pandemic levels in
2022.

As a result of the invasion of Ukraine by Russia, economic

sanctions and export controls were imposed by much of the
world on Russian financial institutions and businesses. Our
operations in Russia consist primarily of local commercial
activities, including sales and customer support. We do not
have direct operations in Ukraine. Our net sales in Russia and
Ukraine in 2022 were less than 1 percent of our consolidated
net sales. Therefore, the ongoing conflict and economic
sanctions are not expected to have a significant effect on our
results of operations or financial position. The bad debt

charges for expected credit losses in Russia resulted in a
significant portion of our accounts receivable from customers
in this country being impaired. In addition to accounts
receivable, we also have inventory and instruments that could
require impairment if our business in Russia deteriorates more
than our current expectations; however, any such amounts are
not expected to be material. See Part I, Item 1A “Risk Factors”
for additional risks related to this conflict.

In 2022, we recognized a goodwill impairment charge of
$289.8 million related to our EMEA reporting unit. In 2022 and
2021, we recognized intangible asset impairment charges of
$3.0 million and $16.3 million, respectively, related to IPR&D
projects that we discontinued. For more information regarding
these charges, see Note 11 to our consolidated financial
statements.

In December of 2021 and 2019, we initiated restructuring
programs. The 2021 Restructuring Plan is intended to further
reduce costs and to reorganize our global operations in
preparation for the spinoff of ZimVie. The 2019 Restructuring
Plan has an objective of reducing costs to allow us to invest in
higher priority growth opportunities. We also have other cost
reduction and optimization initiatives that have the goal of
reducing costs across the organization. We recognized
expenses of $191.6 million and $125.7 million in 2022 and
2021, respectively, primarily related to employee termination
benefits, sales agent contract terminations, and consulting and
project management expenses associated with these programs.
The expenses were higher in 2022 primarily due to additional
expenses related to the 2021 Restructuring Plan that had just
been initiated at the end of 2021. For more information
regarding these expenses, see Note 5 to our consolidated
financial statements.

We incurred quality remediation expenses of $33.8 million

and $52.8 million in 2022 and 2021, respectively. We incurred
these quality remediation expenses to complete our
remediation milestones that address inspectional observations
on Form 483 and a warning letter issued by the FDA at our
Warsaw North Campus facility, among other matters. The
decline in expenses in 2022 when compared to 2021 was due
to the natural regression as various remediation milestones
were completed. We do not expect to incur any significant
quality remediation expenses related to these inspectional
observations in 2023.

Acquisition, integration, divestiture and related expenses
related to acquisitions made in 2022 and 2020 as well as costs
related to our separation with ZimVie.

Other (Expense) Income, net, Interest Expense, net, Loss on Early
Extinguishment of Debt and Income Taxes

In 2022, we incurred a loss of $128.0 million in our other
(expense) income, net compared to a gain of $12.2 million in
2021. The expense in 2022 was primarily due to a
$116.6 million loss on our investment in ZimVie.

Interest expense, net, decreased in 2022 when compared
to 2021 primarily from using debt that we issued in the fourth
quarter of 2021, along with cash on hand, to repurchase
portions of outstanding notes with higher interest rates.
Additionally, interest expense, net was lower due to additional
debt paydown.

In 2021, we recognized a $165.1 million loss on the early

extinguishment of debt. See Note 13 to our consolidated
financial statements for additional information on this loss.
Our effective tax rate (“ETR”) on earnings from

continuing operations before income taxes was 27.9 percent
and 10.7 percent for the years ended December 31, 2022 and
2021, respectively. In 2022, the ETR was primarily driven by
the $289.8 million goodwill impairment charge and the
$116.6 million loss on our investment in ZimVie, which have no
corresponding tax benefits, partially offset by favorable tax
audit settlements and finalization of Switzerland’s Federal Act
on Tax Reform and AHV Financing (“TRAF”) step-up. In 2021,
the ETR was primarily driven by the foreign rate differential as
our foreign locations have lower tax rates and favorable

return-to-provision changes in estimate offset by unfavorable
tax rate changes.

Absent discrete tax events, we expect our future ETR will

be lower than the U.S. corporate income tax rate of
21.0 percent due to our mix of earnings between U.S. and
foreign locations, which have lower corporate income tax
rates. Our ETR in future periods could also potentially be
impacted by: changes in our mix of pre-tax earnings; changes
in tax rates, tax laws or their interpretation, including the
European Union adoption of Pillar 2 proposals; the outcome of
various federal, state and foreign audits; and the expiration of
certain statutes of limitations. Currently, we cannot reasonably
estimate the impact of these items on our financial results.

See Note 17 to our consolidated financial statements for

additional information on our income taxes.

Segment Operating Profit

(dollars in millions)

Americas

EMEA

Asia Pacific

Americas

Net Sales

Operating Profit

Operating Profit as a
Percentage of Net Sales

Year Ended December 31,

2022

2021

2020

2022

2021

2020

2022

2021

2020

$4,295.5

$4,102.1

$3,699.5

$1,811.9

$1,709.3

$1,528.2

42.2% 41.7% 41.3%

1,456.6

1,477.2

1,237.3

1,187.8

1,248.0

1,190.7

380.8

407.0

380.3

401.3

303.0

395.4

26.1

34.3

25.7

32.2

24.5

33.2

In the Americas, operating profit and operating profit as a

percentage of net sales increased in 2022 when compared to
2021 due to higher net sales driven by continued recovery of
elective surgical procedures, lower excess and obsolete
inventory charges and savings from our restructuring
programs. These favorable items were partially offset by
higher R&D costs.

EMEA

In EMEA, operating profit and operating profit as a
percentage of net sales increased in 2022 when compared to
2021. Our net sales declined in EMEA due to the negative
effects of changes in foreign currency exchange rates.
However, our operating profit increased slightly due to our
hedging program as we recognized hedge gains, which
minimized the negative effects from net sales, and we realized
savings from our restructuring programs. These favorable
items were partially offset by higher bad debt, travel and
medical training and education expenses.

Asia Pacific

In Asia Pacific, operating profit and operating profit as a
percentage of net sales increased in 2022 when compared to
2021. Our net sales declined in Asia Pacific due to the negative
effects of changes in foreign currency exchange rates and by
the China government implementing a nationwide volume-
based procurement process that became effective in 2022.
However, our operating profit increased slightly due to our
hedging program as we recognized hedge gains, which

minimized these negative effects from net sales, and we
realized savings from our restructuring programs.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2022, we had $375.7 million in cash

and cash equivalents. In addition, we had $1.0 billion available
to borrow under a 364-day revolving credit agreement that
matures on August 18, 2023, and $1.1 billion available under a
five-year revolving facility that matures on August 19, 2027.
The terms of the 364-day revolving credit agreement and the
five-year revolving facility are described further in Note 13 to
our consolidated financial statements.

We believe that cash flows from operations, our cash and
cash equivalents on hand, and available borrowings under our
revolving credit facilities will be sufficient to meet our ongoing
liquidity requirements for at least the next twelve months.
However, due to the continued uncertainties related to the
COVID-19 pandemic, it is possible our needs may change.
Further, there can be no assurance that, if needed, we will be
able to secure additional financing on terms favorable to us, if
at all.

Sources of Liquidity

Cash flows provided by operating activities from

continuing operations were $1,356.2 million in 2022 compared
to $1,404.3 million in 2021. The decrease in cash flows from
operating activities in 2022 when compared to 2021 was
primarily the result of higher tax payments and increased
payments under our restructuring programs. These
unfavorable items were partially offset by lower interest

payments and lower investments in inventory, as well as the
fact that the 2021 period included payments related to certain
IPR&D agreements.

Cash flows used in investing activities from continuing

operations were $522.0 million in 2022 compared to
$443.3 million in 2021. Instrument and property, plant and
equipment additions reflected ongoing investments in our
product portfolio, optimization of our manufacturing and
logistics network and investments in enterprise resource
planning software. The 2022 period also reflects investments
for an acquisition as well as other investments for acquiring
intellectual property related to products that have been
commercialized. These cash outflows were partially offset by
favorable settlements of our net investment hedges as they
matured.

Cash flows used in financing activities from continuing

operations were $775.7 million in 2022 compared to
$1,306.0 million in 2021. At the ZimVie spinoff date, we
received $540.6 million as partial consideration for the
contribution of assets in connection with the separation. We
used these proceeds, together with borrowings on our five-year
revolving facility and cash on hand to redeem the full
$750.0 million senior notes that were due April 1, 2022. We
also repaid $242.9 million outstanding on our Japanese term
loans and $525.8 million outstanding on our 1.414% Euro
senior notes at their maturity date of December 13, 2022. In
order to help fund the payment on these Euro senior notes, we
borrowed $375.0 million under our five-year revolving facility
and $83.0 million under a short-term term loan in connection
with our plans to dispose of our ZimVie shares. In addition, in
2022 we expended $126.4 million to repurchase shares of our
common stock.

In 2021, we issued senior notes and received

$1,599.8 million in proceeds, which, along with cash on hand,
were used to extinguish $1,993.2 million aggregate outstanding
principal amount of our senior notes pursuant to cash tender
offers for certain outstanding series of our senior notes, at a
total reacquisition price of $2,154.8 million. Additionally, we
used cash on hand to redeem $500.0 million of other senior
notes that matured in 2021. We also had deferred business
combination payments of $145.0 million that were paid in 2021
under the terms of the purchase agreements.

We place our cash and cash equivalents in highly-rated
financial institutions and limit the amount of credit exposure to
any one entity. We invest only in high-quality financial
instruments in accordance with our internal investment policy.

As of December 31, 2022, $328.2 million of our cash and
cash equivalents were held in jurisdictions outside of the U.S.
Of this amount, $43.2 million is denominated in U.S. Dollars
and, therefore, bears no foreign currency translation risk. The
balance of these assets is denominated in currencies of the
various countries where we operate. We generally intend to
limit distributions from foreign subsidiaries to earnings
previously taxed in the U.S., primarily as a result of the
transition tax or tax on Global Intangible Low-Taxed Income
(“GILTI”), as we would not be subject to further U.S. federal
tax. In addition to the previously taxed earnings, we have
intercompany notes available to repatriate.

Material Cash Requirements from Known Contractual and
Other Obligations

At December 31, 2022, we had outstanding debt of

$5,696.5 million, of which $544.3 million was classified as
current debt. Of our current debt, we settled the full amount of
our $83.0 million of our short-term term loan in February 2023
using $33.9 million in cash and the transfer of all the ZimVie
shares that we owned, $86.3 million of senior notes mature on
March 19, 2023 and the remaining $375.0 million is outstanding
under our five-year revolving facility which we expect to repay
during 2023. We believe we can satisfy these debt obligations
with cash generated from our operations.

For additional information on our debt, including types of

debt, maturity dates, interest rates, debt covenants and
available revolving credit facilities, see Note 13 to our
consolidated financial statements.

In February, May, August and December 2022, our Board

of Directors declared cash dividends of $0.24 per share. We
expect to continue paying cash dividends on a quarterly basis;
however, future dividends are subject to approval of the Board
of Directors and may be adjusted as business needs or market
conditions change.

In February 2016, our Board of Directors authorized a
$1.0 billion share repurchase program effective March 1, 2016,
with no expiration date. We had not repurchased any shares
under this program until the fourth quarter of 2022, when we
entered into transactions to repurchase $150.0 million in
shares of our common stock. Our third-party broker executed
the full $150.0 million of repurchases as of December 31, 2022
for which paid them $126.4 million by December 31, 2022, with
the remaining balance we owed settled at the beginning of
January 2023. As of December 31, 2022, $850.0 million
remained authorized under this program.

As discussed in Note 5 to our consolidated financial

statements, we have a 2021 Restructuring Plan and a 2019
Restructuring Plan. The 2021 Restructuring Plan is expected
to result in total pre-tax restructuring charges of
approximately $220 million, of which approximately
$130 million was incurred through December 31, 2022. We
expect to reduce gross annual pre-tax operating expenses by
approximately $190 million relative to the 2021 baseline
expenses by the end of 2024 as program benefits under the
2021 Restructuring Plan are realized. The 2019 Restructuring
Plan is expected to result in total pre-tax restructuring charges
of approximately $350 million to $400 million, of which
approximately $280 million was incurred through
December 31, 2022. In our original estimates, we expected to
reduce gross annual pre-tax operating expenses by
approximately $180 million to $280 million relative to the 2019
baseline expenses by the end of 2023 as program benefits
under the 2019 Restructuring Plan are realized. Our latest
estimates indicate that we will be near the low end of that
range.

As discussed in Note 17 to our consolidated financial
statements, the IRS has issued proposed adjustments for years
2010 through 2012, and for years 2013 through 2015,
reallocating profits between certain of U.S. and foreign
subsidiaries. We have disputed these proposed adjustments

and intend to continue to vigorously defend our positions.
Although the ultimate timing for resolution of the disputed tax
issues is uncertain, future payments may be significant to our
operating cash flows.

Under the Tax Cuts and Jobs Act of 2017, we have a
$187.8 million liability remaining from a one-time tax on the
mandatory deemed repatriation of post-1986 untaxed foreign
earnings and profits (“toll charge”) for the deemed repatriation
of unremitted foreign earnings. This amount was recorded in
non-current income tax liabilities on our consolidated balance
sheet as of December 31, 2022.

As discussed in Note 21 to our consolidated financial
statements, we are involved in various litigation matters. We
estimate the total liabilities for all litigation matters was
$349.2 million as of December 31, 2022. We expect to pay
these liabilities over the next few years.

In the normal course of business, we enter into purchase
commitments, primarily related to raw materials. However, we
do not believe these purchase commitments are material to the
overall standing of our business or our liquidity.

We have entered into various agreements that may result
in future payments dependent upon various events such as the
achievement of certain product R&D milestones, sales
milestones, or, at our discretion, maintenance of exclusive
rights to distribute a product. These estimated payments
related to these agreements could range from $0 to
$415 million.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements is affected by

the selection and application of accounting policies and
methods, and also requires us to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Critical
accounting estimates are those that involve a significant level
of estimation uncertainty and have had or are reasonably likely
to have a material impact on our financial condition and results
of operations. We believe that the accounting estimates and
assumptions described below involve significant subjectivity
and judgment, and changes to such estimates or assumptions
could have a material impact on our financial condition or
operating results.

Excess Inventory and Instruments—We must determine

as of each balance sheet date how much, if any, of our
inventory may ultimately prove to be unsaleable or unsaleable
at our carrying cost. Similarly, we must also determine if
instruments on hand will be put to productive use or remain
undeployed as a result of excess supply. Accordingly,
inventory and instruments are written down to their net
realizable value. To determine the appropriate net realizable
value, we evaluate current stock levels in relation to historical
and expected patterns of demand for all of our products and
instrument systems and components. The basis for the
determination is generally the same for all inventory and
instrument items and categories except for work-in-process
inventory, which is recorded at cost. Obsolete or discontinued

items are generally destroyed and completely written off.
Management evaluates the need for changes to the net
realizable values of inventory and instruments based on market
conditions, competitive offerings and other factors on a regular
basis.

Income Taxes—Our income tax expense, deferred tax
assets and liabilities and reserves for unrecognized tax benefits
reflect management’s best assessment of estimated future
taxes to be paid. We are subject to income taxes in the U.S.
and numerous foreign jurisdictions. Significant judgments and
estimates are required in determining the consolidated income
tax expense.

We estimate income tax expense and income tax liabilities

and assets by taxable jurisdiction. Realization of deferred tax
assets in each taxable jurisdiction is dependent on our ability
to generate future taxable income sufficient to realize the
benefits. We evaluate deferred tax assets on an ongoing basis
and provide valuation allowances unless we determine it is
“more likely than not” that the deferred tax benefit will be
realized.

The calculation of our tax liabilities involves dealing with

uncertainties in the application of complex tax laws and
regulations in a multitude of jurisdictions across our global
operations. We are subject to regulatory review or audit in
virtually all of those jurisdictions and those reviews and audits
may require extended periods of time to resolve. We record
our income tax provisions based on our knowledge of all
relevant facts and circumstances, including existing tax laws,
our experience with previous settlement agreements, the
status of current examinations and our understanding of how
the tax authorities view certain relevant industry and
commercial matters.

We recognize tax liabilities in accordance with the
Financial Accounting Standards Board (“FASB”) guidance on
income taxes and we adjust these liabilities when our judgment
changes as a result of the evaluation of new information not
previously available. Due to the complexity of some of these
uncertainties, the ultimate resolution may result in a payment
that is materially different from our current estimate of the tax
liabilities. These differences will be reflected as increases or
decreases to income tax expense in the period in which they
are determined.

Commitments and Contingencies—We are involved in

various ongoing proceedings, legal actions and claims arising in
the normal course of doing business, including litigation
related to product, labor and intellectual property. We
establish liabilities for loss contingencies when it is probable
that a loss has been incurred and the amount of the loss can be
reasonably estimated. Accruals for product liability and other
claims are established with the assistance of internal and
external legal counsel based on current information and
historical settlement information for claims, related legal fees
and for claims incurred but not reported.

Goodwill and Intangible Assets—We evaluate the
carrying value of goodwill and indefinite life intangible assets
annually, or whenever events or circumstances indicate that
the fair value is below its carrying amount. We evaluate the
carrying value of finite life intangible assets whenever events
or circumstances indicate the carrying value may not be

recoverable. Significant assumptions are required to estimate
the fair value of goodwill and intangible assets, most notably
estimated future cash flows generated by these assets and risk-
adjusted discount rates. As such, these fair value
measurements use significant unobservable inputs. Changes to
these assumptions could require us to record impairment
charges on these assets.

In our annual impairment test in the fourth quarter of
2022, we determined our EMEA reporting unit’s carrying value
was in excess of its estimated fair value. Fair value was
determined using income and market approaches. Fair value
under the income approach was determined by discounting to
present value the estimated future cash flows of the reporting
unit. Fair value under the market approach utilized the
guideline public company methodology, which uses valuation
indicators determined from other businesses that are similar to
our EMEA reporting unit. As a result of its carrying value being
in excess of its estimated fair value, we recorded a goodwill
impairment charge of $289.8 million. No goodwill balance
remains for the EMEA reporting unit.

See Note 11 to our consolidated financial statements for

further discussion and the factors that contributed to this
impairment charge.

We have three other reporting units with goodwill

assigned to them. For two of these reporting units, their
estimated fair values exceeded their carrying values by more
than 35 percent. We estimated the fair value of these reporting
units using the income and market approaches. We performed
a qualitative test on the other reporting unit and concluded it
was more likely than not the fair value of this reporting unit
exceeded its carrying value.

Future impairment in our reporting units could occur if

the estimates used in the income and market approaches
change. If our estimates of profitability in the reporting unit
decline, the fair value estimate under the income approach will
decline. Additionally, changes in the broader economic
environment could cause changes to our estimated discount
rates and comparable company valuation indicators, which
may impact our estimated fair values. Further, changes in
foreign currency exchange rates could increase the cost of
procuring inventory and services from foreign suppliers, which
could reduce reporting unit profitability.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to our consolidated financial statements for

information on how recent accounting pronouncements have
affected or may affect our financial position, results of
operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures

About Market Risk

MARKET RISK

We are exposed to certain market risks as part of our
ongoing business operations, including risks from changes in
foreign currency exchange rates, interest rates and commodity
prices that could affect our financial condition, results of

operations and cash flows. We manage our exposure to these
and other market risks through regular operating and financing
activities and through the use of derivative financial
instruments. We use derivative financial instruments solely as
risk management tools and not for speculative investment
purposes.

FOREIGN CURRENCY EXCHANGE RISK

We operate on a global basis and are exposed to the risk

We maintain written policies and procedures governing
our risk management activities. Our policy requires that critical
terms of hedging instruments be the same as hedged
forecasted transactions. On this basis, with respect to cash
flow hedges, changes in cash flows attributable to hedged
transactions are generally expected to be offset by changes in
the fair value of hedge instruments. As part of our risk
management program, we also perform sensitivity analyses to
assess potential changes in revenue, operating results, cash
flows and financial position relating to hypothetical movements
in currency exchange rates. A sensitivity analysis of changes in
the fair value of foreign currency exchange forward contracts
outstanding at December 31, 2022 indicated that, if the
U.S. Dollar uniformly strengthened or weakened in value by
10 percent relative to all currencies, with no change in the
interest differentials, the fair value of those contracts would
affect earnings in a range of a decrease of approximately
$93 million to an increase of approximately $88 million before
income taxes in periods through June 2025.

Any change in the fair value of foreign currency exchange

forward contracts as a result of a fluctuation in a currency
exchange rate is expected to be largely offset by a change in
the value of the hedged transaction. Consequently, foreign
currency exchange contracts would not subject us to material
risk due to exchange rate movements because gains and losses
on these contracts offset gains and losses on the assets,
liabilities and transactions being hedged.

We had net assets, excluding goodwill and intangible

assets, in legal entities with non-U.S. Dollar functional
currencies of $1,771.5 million at December 31, 2022.

We enter into foreign currency forward exchange
contracts with terms of one to three months to manage
currency exposures for monetary assets and liabilities
denominated in a currency other than an entity’s functional
currency. As a result, foreign currency remeasurement gains/
losses recognized in earnings are generally offset with gains/
losses on the foreign currency forward exchange contracts in
the same reporting period.

For details about these and other financial instruments,

including fair value methodologies, see Note 15 to our
consolidated financial statements.

COMMODITY PRICE RISK

We purchase raw material commodities such as cobalt
chrome, titanium, tantalum, polymer and sterile packaging. We
enter into supply contracts generally with terms of 12 to 24
months, where available, on these commodities to alleviate the
effect of market fluctuation in prices. As part of our risk
management program, we perform sensitivity analyses related
to potential commodity price changes.

INTEREST RATE RISK

In the normal course of business, we are exposed to
market risk from changes in interest rates that could affect our
results of operations and financial condition. We manage our
exposure to interest rate risks through our regular operations
and financing activities.

We invest our cash and cash equivalents primarily in
highly-rated corporate commercial paper and bank deposits.
The primary investment objective is to ensure capital
preservation. Currently, we do not use derivative financial
instruments in our investment portfolio.

The majority of our debt is fixed-rate debt and therefore is

not exposed to changes in interest rates. Based upon our
overall interest rate exposure as of December 31, 2022, a
change of 10 percent in interest rates, assuming the principal
amount outstanding remains constant, would not have a
material effect on interest expense, net. This analysis does not
consider the effect of the change in the level of overall
economic activity that could exist in such an environment.

CREDIT RISK

Financial instruments, which potentially subject us to

concentrations of credit risk, are primarily cash and cash
equivalents, derivative instruments and accounts receivable.

We place our cash and cash equivalents and enter into
derivative transactions with highly-rated financial institutions
and limit the amount of credit exposure to any one entity. We
believe we do not have any significant credit risk on our cash
and cash equivalents or derivative instruments.

Our concentrations of credit risks with respect to trade

accounts receivable is limited due to the large number of
customers and their dispersion across a number of geographic
areas and by frequent monitoring of the creditworthiness of
the customers to whom credit is granted in the normal course
of business. Substantially all of our trade receivables are
concentrated in the public and private hospital and healthcare
industry in the U.S. and internationally or with distributors or
dealers who operate in international markets and, accordingly,
are exposed to their respective business, economic and
country specific variables. Our ability to collect accounts
receivable in some countries depends in part upon the
financial stability of these hospital and healthcare sectors and
the respective countries’ national economic and healthcare
systems. Most notably, in Europe healthcare is typically
sponsored by the government. Since we sell products to public

hospitals in those countries, we are indirectly exposed to
government budget constraints and price reduction initiatives.
To the extent the respective governments’ ability to fund their
public hospital programs deteriorates, we may have to record
significant bad debt expenses in the future.

While we are exposed to risks from the broader healthcare

industry in Europe and around the world, there is no
significant net exposure due to any individual customer.
Exposure to credit risk is controlled through credit approvals,
credit limits and monitoring procedures, and we believe that
reserves for losses are adequate.

Item 8. Financial Statements and Supplementary Data

Zimmer Biomet Holdings, Inc.
Index to Consolidated Financial Statements

Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)

Consolidated Statements of Earnings for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020

Notes to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Zimmer Biomet Holdings, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Zimmer Biomet Holdings, Inc. and its subsidiaries (the
“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of earnings, of comprehensive income
(loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the
related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2022
appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the
Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in
Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial

statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or

disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on
the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment – EMEA and Americas CMFT Reporting Units

As described in Notes 2 and 11 to the consolidated financial statements, the Company’s consolidated goodwill balance was

$8,580.2 million as of December 31, 2022, and the goodwill associated with the EMEA and Americas CMFT reporting units
represents a portion of the consolidated goodwill balance. Management performs an impairment test in the fourth quarter of each
year or whenever events or changes in circumstances indicate that the fair value of the reporting unit is more likely than not below
its carrying amount. Potential impairment of a reporting unit is identified by comparing the reporting unit’s estimated fair value to
its carrying amount. The annual goodwill impairment test resulted in an impairment charge of $289.8 million related to the EMEA
reporting unit, which represented all of the remaining goodwill. Management estimated the fair value of the EMEA and Americas
CMFT reporting units based on income and market approaches. Fair value under the income approach was determined by
discounting to present value the estimated future cash flows of the reporting unit. Fair value under the market approach utilized
the guideline public company methodology, which uses valuation indicators from publicly-traded companies that are similar to the
EMEA and Americas CMFT reporting units. Significant assumptions are incorporated into the discounted cash flow analysis such as
forecasted net sales, revenue growth rates, forecasted operating expenses and risk-adjusted discount rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment

of the EMEA and Americas CMFT reporting units is a critical audit matter are (i) the significant judgment by management when
estimating the fair value of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing
procedures and evaluating management’s significant assumptions related to forecasted net sales, forecasted operating expenses
and risk-adjusted discount rate for the EMEA reporting unit and revenue growth rates, forecasted operating expenses and risk-
adjusted discount rate for the Americas CMFT reporting unit; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall

opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting units. These
procedures also included, among others (i) testing management’s process for developing the estimated fair value of the EMEA and
Americas CMFT reporting units; (ii) evaluating the appropriateness of the discounted cash flow analysis; (iii) testing the
completeness and accuracy of the underlying data used in the discounted cash flow analysis; and (iv) evaluating the reasonableness
of the significant assumptions used by management in the discounted cash flow analysis related to forecasted net sales, forecasted
operating expenses and risk-adjusted discount rate for the EMEA reporting unit and revenue growth rates, forecasted operating
expenses and risk-adjusted discount rate for the Americas CMFT reporting unit. Evaluating management’s assumptions related to
forecasted net sales, revenue growth rates and forecasted operating expenses involved evaluating whether the assumptions used by
management were reasonable considering (i) the current and past performance of the EMEA and Americas CMFT reporting units,
where applicable; (ii) the consistency with external data from market and industry sources; and (iii) whether these assumptions
were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to
assist in evaluating the appropriateness of the Company’s discounted cash flow analysis and the reasonableness of the risk-adjusted
discount rate assumptions.

Tax Liabilities for Certain Unrecognized Tax Benefits

As described in Notes 2 and 17 to the consolidated financial statements, the Company has recorded tax liabilities for

unrecognized tax benefits with a consolidated balance of $521.0 million as of December 31, 2022. The calculation of certain of the
Company’s estimated tax liabilities, representing a majority of the consolidated balance, involves dealing with uncertainties in the
application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. The
Company’s income tax filings are regularly under audit in multiple federal, state and foreign jurisdictions. Income tax audits may
require an extended period of time to reach resolution and may result in significant income tax adjustments when interpretation of
tax laws or allocation of company profits is disputed.

The principal considerations for our determination that performing procedures relating to tax liabilities for certain
unrecognized tax benefits is a critical audit matter are (i) the significant judgment by management when determining the tax
liabilities for certain unrecognized tax benefits due to a high degree of estimation uncertainty related to management’s application
of complex tax laws and regulations, the result of income tax audits, and potential for significant adjustments as a result of such
audits; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the timely identification
and accurate measurement of tax liabilities for certain unrecognized tax benefits and evaluating audit evidence available to support
the estimates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
identification and accurate measurement of tax liabilities for unrecognized tax benefits, including controls addressing the

completeness of the tax liabilities. These procedures also included, among others (i) evaluating the accuracy of the measurement of
tax liabilities for certain unrecognized tax benefits by testing certain information used in the calculation of tax liabilities for certain
unrecognized tax benefits by jurisdiction, on a sample basis; (ii) assessing the completeness of the Company’s identification of tax
liabilities for unrecognized tax benefits and possible outcomes for certain unrecognized tax benefits; and (iii) evaluating the status
and results of income tax audits related to certain unrecognized tax benefits with the relevant tax authorities. Professionals with
specialized skill and knowledge were used to assist in evaluating management’s application of complex tax laws and regulations in
various jurisdictions and assessing the reasonableness of certain of the Company’s tax positions.

/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 24, 2023

We have served as the Company’s auditor since 2000.

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)

Net Sales

Cost of products sold, excluding intangible asset amortization

Intangible asset amortization

Research and development

Selling, general and administrative

Goodwill and intangible asset impairment

Restructuring and other cost reduction initiatives

Quality remediation

Acquisition, integration, divestiture and related

Operating expenses

Operating Profit

Other (expense) income, net

Interest expense, net

Loss on early extinguishment of debt

Earnings (loss) from continuing operations before income taxes

Provision (benefit) for income taxes from continuing operations

Net Earnings (Loss) from Continuing Operations

Less: Net earnings attributable to noncontrolling interest

Net Earnings (Loss) from Continuing Operations of Zimmer Biomet Holdings, Inc.

Loss from Discontinued Operations, Net of Tax

Net Earnings (Loss) of Zimmer Biomet Holdings, Inc.

Basic Earnings (Loss) Per Common Share

Earnings (Loss) from Continuing Operations

Loss from Discontinued Operations

Basic Earnings (Loss) Per Common Share

Diluted Earnings (Loss) Per Common Share

Earnings (Loss) from Continuing Operations

Loss from Discontinued Operations

Diluted Earnings (Loss) Per Common Share

Weighted Average Common Shares Outstanding

Basic

Diluted

The accompanying notes are an integral part of these consolidated financial statements.

For the Years Ended December 31,

2022

2021

2020

$6,939.9

$6,827.3

$6,127.5

2,019.5

1,960.4

1,824.3

526.8

406.0

529.5

435.8

512.1

322.8

2,761.7

2,843.4

2,712.7

292.8

191.6

33.8

11.4

16.3

125.7

52.8

3.1

503.0

107.2

50.9

11.4

6,243.6

5,967.0

6,044.4

696.3

(128.0)

860.3

12.2

83.1

23.8

(164.8)

(208.4)

(212.1)

–

(165.1)

–

403.5

112.3

291.2

1.0

499.0

(105.2)

53.5

445.5

0.5

(96.0)

(9.2)

1.5

290.2

445.0

(10.7)

(58.8)

(43.4)

(128.2)

$ 231.4

$ 401.6

$ (138.9)

1.38

2.14

$ (0.05)

(0.28)

(0.21)

(0.62)

1.10

1.93

$ (0.67)

1.38

2.12

$ (0.05)

(0.28)

(0.21)

(0.62)

1.10

1.91

$ (0.67)

209.6

210.3

208.6

210.4

207.0

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)

Net Earnings (Loss) of Zimmer Biomet Holdings, Inc.

Other Comprehensive Income (Loss):

Foreign currency cumulative translation adjustments, net of tax

Unrealized cash flow hedge gains/(losses), net of tax

Reclassification adjustments on hedges, net of tax

Adjustments to prior service cost and unrecognized actuarial

assumptions, net of tax

Total Other Comprehensive (Loss) Income

For the Years Ended December 31,

2022

2021

2020

$ 231.4

$401.6

$(138.9)

(123.3)

(99.9)

25.6

83.5

(46.0)

86.4

1.3

(33.5)

(38.5)

77.0

78.4

(9.5)

(8.8)

66.2

(55.9)

Comprehensive Income (Loss) Attributable to Zimmer Biomet Holdings, Inc.

$ 222.6

$467.8

$(194.8)

The accompanying notes are an integral part of these consolidated financial statements.

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)

ASSETS

Current Assets:

Cash and cash equivalents

Accounts receivable, less allowance for credit losses

Inventories

Prepaid taxes

Prepaid expenses and other current assets

Current assets of discontinued operations

Total Current Assets

Property, plant and equipment, net

Goodwill

Intangible assets, net

Other assets

Noncurrent assets of discontinued operations

Total Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

Income taxes payable

Other current liabilities

Current portion of long-term debt

Current liabilities of discontinued operations

Total Current Liabilities

Deferred income taxes, net

Long-term income tax payable

Other long-term liabilities

Long-term debt

Noncurrent liabilities of discontinued operations

Total Liabilities

Commitments and Contingencies (Note 21)
Stockholders’ Equity:

Common stock, $0.01 par value, one billion shares authorized,
313.8 million (312.8 million in 2021) issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss

Treasury stock, 104.8 million shares (103.8 million shares in 2021)

Total Zimmer Biomet Holdings, Inc. stockholders’ equity

Noncontrolling interest

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part of these consolidated financial statements.

As of December 31,

2022

2021

375.7

378.1

1,381.5

2,147.2

198.4

324.5

–

4,427.3

1,872.5

8,580.2

5,063.8

1,122.2

–

1,259.6

2,148.0

326.7

271.0

501.6

4,885.0

1,836.6

8,919.4

5,533.6

1,005.0

1,276.8

$ 21,066.0

$ 23,456.4

354.1

306.5

38.5

1,421.3

544.3

–

62.0

1,317.1

1,605.1

177.2

2,358.2

3,467.9

474.8

421.2

632.6

558.5

583.0

548.5

5,152.2

5,463.7

–

168.4

9,039.0

10,790.0

3.1
9,504.4
9,559.3
(179.3)

3.1
9,314.8
10,292.2
(231.6)

(6,867.2)

(6,717.8)

12,020.3
6.7

12,660.7
5.7

12,027.0

12,666.4

$ 21,066.0

$ 23,456.4

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)

Zimmer Biomet Holdings, Inc. Stockholders

Common Shares

Number

Amount

Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury Shares

Number

Amount

Noncontrolling
Interest

Total
Stockholders’
Equity

309.9
–
–

$3.1
–
–

$8,920.1
–
–

$10,427.3
(138.9)
–

$(241.9)
–
(55.9)

(103.9) $(6,720.5)
–
–

–
–

$ 4.7
1.5
–

$12,392.8
(137.4)
(55.9)

–

–
1.5

311.4
–
–

–
1.4

312.8
–
–

–

–
–
1.0
–

–

–
–

3.1
–
–

–
–

3.1
–
–

–

–
–
–
–

–

–
201.5

9,121.6
–
–

–
193.2

9,314.8
–
–

(198.9)

(3.1)

–
0.5

10,086.9
401.6
–

(200.4)
4.1

10,292.2
231.4
–

–

–
–

–

–
0.1

–

–
0.9

(297.8)
–
66.2

(103.8)
–
–

(6,719.6)
–
–

–
–

–
1.8

(231.6)
–
(8.8)

(103.8)
–
–

(6,717.8)
–
–

–

(201.3)

–
–
189.6
–

–
(763.4)
0.4
–

–

25.9
35.2
–
–

–

–
–
–
(1.0)

–
–
0.6
(150.0)

–

(1.0)
–

5.2
0.5
–

–
–

5.7
1.0
–

–

–
–
–
–

(198.9)

(3.1)

(1.0)
202.9

12,199.4
402.1
66.2

(200.4)
199.1

12,666.4
232.4
(8.8)

(201.3)

25.9
(728.2)
190.6
(150.0)

Balance January 1, 2020
Net loss
Other comprehensive loss
Cash dividends declared
($0.96 per share)

Adoption of

new accounting standard
Acquisition of noncontrolling

interest

Stock compensation plans

Balance December 31, 2020
Net earnings
Other comprehensive income
Cash dividends declared
($0.96 per share)

Stock compensation plans

Balance December 31, 2021
Net earnings
Other comprehensive loss
Cash dividends declared
($0.96 per share)
Reclassifications of net
investment hedges
Spinoff of ZimVie Inc.
Stock compensation plans
Share repurchases

Balance December 31, 2022

313.8

$3.1

$9,504.4

$ 9,559.3

$(179.3)

(104.8) $(6,867.2)

$ 6.7

$12,027.0

The accompanying notes are an integral part of these consolidated financial statements.

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

Cash flows provided by (used in) operating activities from continuing operations:

Net earnings (loss) from continuing operations
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization
Share-based compensation
Goodwill and intangible asset impairment
Loss on early extinguishment of debt
Loss on investment in ZimVie
Deferred income tax (benefit) provision
Changes in operating assets and liabilities, net of acquired assets and liabilities

Income taxes
Receivables
Inventories
Accounts payable and accrued liabilities
Other assets and liabilities

Net cash provided by operating activities from continuing operations

Cash flows provided by (used in) investing activities from continuing operations:

Additions to instruments
Additions to other property, plant and equipment
Net investment hedge settlements
Business combination investments, net of acquired cash
Investments in other assets

Net cash used in investing activities from continuing operations
Cash flows provided by (used in) financing activities from continuing operations:

Proceeds from multicurrency revolving facility
Payments on multicurrency revolving facility
Proceeds from senior notes
Redemption of senior notes
Proceeds from term loan
Payments on term loans
Dividends paid to stockholders
Proceeds from employee stock compensation plans
Distribution from ZimVie, Inc.
Net cash flows from unremitted collections from factoring programs
Business combination contingent consideration payments
Debt issuance costs
Deferred business combination payments
Repurchase of common stock
Other financing activities

Net cash used in financing activities from continuing operations

Cash flows provided by (used in) discontinued operations:

Net cash (used in) provided by operating activities
Net cash used in investing activities
Net cash used in financing activities

Net cash (used in) provided by discontinued operations

Effect of exchange rates on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of year (includes $100.4 million, $27.4 million and

$36.7 million at January 1, 2022, 2021 and 2020, respectively, of discontinued operations cash)
Cash and cash equivalents, end of year (includes $100.4 million and $27.4 million at December 31,

For the Years Ended December 31,

2022

2021

2020

291.2 $

445.5 $

(9.2)

926.4
105.0
292.8
–
116.6
(64.4)

937.7
76.0
16.3
165.1
–
(102.1)

898.4
73.8
503.0
–
–
39.4

(152.9)
(184.7)
(75.6)
103.0
(1.2)
1,356.2

(123.9)
(40.8)
(8.4)
86.5
(47.6)
1,404.3

(293.9)
(66.2)
(34.5)
(96.3)
61.1
1,075.6

(258.3)
(187.9)
89.4
(99.8)
(65.4)
(522.0)

(273.6)
(143.6)
1.9
–
(28.0)
(443.3)

(259.0)
(111.9)
53.5
(227.1)
(19.8)
(564.3)

595.0
(220.0)
–

–
–
–
–
1,497.1
1,599.8
(1,275.8) (2,654.8) (1,750.0)
–
–
(198.5)
129.8
–
(53.0)
(15.0)
(22.3)
–
–
(8.3)
(420.2)

–
–
(200.1)
122.5
–
–
(8.9)
(13.2)
(145.0)
–
(6.3)
(775.7) (1,306.0)

83.0
(242.9)
(201.2)
78.1
540.6
–
–
(1.6)
–
(126.4)
(4.5)

(71.5)
(7.2)
(68.1)
(146.8)
(14.5)
(102.8)

94.9
(60.3)
–
34.6
(13.2)
(323.6)

128.9
(49.5)
(1.6)
77.8
15.3
184.2

478.5

802.1

617.9

2021 and 2020, respectively, of discontinued operations cash)

375.7 $

478.5 $

802.1

The accompanying notes are an integral part of these consolidated financial statements.

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business

We design, manufacture and market orthopedic
reconstructive products; sports medicine, biologics,
extremities and trauma products; craniomaxillofacial and
thoracic products; surgical products; and a suite of integrated
digital and robotic technologies that leverage data, data
analytics and artificial intelligence. 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.
The words “Zimmer Biomet,” “we,” “us,” “our,” “the
Company” and similar words refer to Zimmer Biomet Holdings,
Inc. and its subsidiaries. “Zimmer Biomet Holdings” refers to
the parent company only.

Risks and Uncertainties - Our results have been and may

continue to be impacted by the COVID-19 global pandemic.
The vast majority of our net sales are derived from products
used in elective surgical procedures which continue to be
deferred to some extent due to precautions in certain markets
and staffing shortages. The consequences of COVID-19 and its
related effects continue to be extremely fluid and there are
many market dynamics that are difficult to predict. Although
the effects of the COVID-19 pandemic on our operating results
continue to subside, the pandemic could still have an
unfavorable effect on our financial position, results of
operations and cash flows in the near term.

Spinoff - On March 1, 2022, we completed the previously

announced separation of our spine and dental businesses into a
new public company through the distribution by Zimmer
Biomet Holdings of 80.3% of the outstanding shares of
common stock of ZimVie Inc. (“ZimVie”) to Zimmer Biomet
Holding’s stockholders. The historical results of our spine and
dental businesses that were contributed to ZimVie in the
spinoff have been reflected as discontinued operations in our
consolidated financial statements as the spinoff represents a
strategic shift in our business that has a major effect on
operations and financial results. As of December 31, 2021, the
assets and liabilities associated with these businesses are
classified as assets and liabilities of discontinued operations in
the consolidated balance sheet. The disclosures presented in
our notes to the consolidated financial statements are
presented on a continuing operations basis.

Significant Accounting Policies

Basis of Presentation – The consolidated financial
statements include the accounts of Zimmer Biomet Holdings
and its subsidiaries in which it holds a controlling financial
interest. All significant intercompany accounts and
transactions are eliminated.

Use of Estimates – The consolidated financial statements

are prepared in conformity with accounting principles

generally accepted in the United States of America (“GAAP”),
which requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. We have made our best
estimates, as appropriate under GAAP, in the recognition of
our assets and liabilities. These estimates have considered the
impact the COVID-19 pandemic may have on our financial
position, results of operations and cash flows. Such estimates
included, but were not limited to, variable consideration to our
customers, our allowance for doubtful accounts for expected
credit losses, the net realizable value of our inventory, the fair
value of our goodwill and the recoverability of other long-lived
assets. Actual results could differ materially from these
estimates.

Foreign Currency Translation – The financial

statements of our foreign subsidiaries are translated into U.S.
Dollars using period-end exchange rates for assets and
liabilities and average exchange rates for operating results.
Unrealized translation gains and losses are included in
accumulated other comprehensive loss in stockholders’ equity.
When a transaction is denominated in a currency other than
the subsidiary’s functional currency, we remeasure the
transaction into the functional currency and recognize any
transactional gains or losses in earnings.

Shipping and Handling – Amounts billed to customers

for shipping and handling of products are reflected in net sales
and are not significant. Expenses incurred related to shipping
and handling of products are reflected in selling, general and
administrative (“SG&A”) expenses and were $254.4 million,
$255.4 million and $235.5 million for the years ended
December 31, 2022, 2021 and 2020, respectively.

Research and Development – We expense all research

and development (“R&D”) costs as incurred except when
there is an alternative future use for the R&D. R&D costs
include salaries, prototypes, depreciation of equipment used in
R&D, consultant fees, service fees paid to collaborative
partners, and arrangements to gain access to or acquire third-
party in-process R&D projects with no alternative future use.
Where contingent milestone payments are due to third parties
under R&D arrangements, we expense the milestone payment
obligations when it is probable that the milestone results will
be achieved.

Litigation – We record an undiscounted liability for
contingent losses, including future legal costs, settlements and
judgments, when we consider it is probable that a liability has
been incurred and the amount of the loss can be reasonably
estimated.

Quality remediation – We use the financial statement

line item “Quality remediation” to recognize expenses related
to addressing inspectional observations on Form 483 and a
warning letter issued by the FDA following its inspections of
our Warsaw North Campus facility, among other matters. See
Note 21 for additional information about the Form 483 and

warning letter. The majority of these expenses were related to
consultants who helped us to update previous documents and
redesign certain processes.

Restructuring and other cost reduction initiatives – A

restructuring is defined as a program that is planned and
controlled by management, and materially changes either the
scope of a business undertaken by an entity, or the manner in
which that business is conducted. Restructuring charges
include (i) employee termination benefits, (ii) contract
termination costs and (iii) other related costs associated with
exit or disposal activities.

In December 2021, our management approved a new
global restructuring program intended to further reduce costs
and to reorganize our global operations in preparation for the
spinoff of ZimVie. In December 2019, our Board of Directors
approved, and we initiated, a new global restructuring program
with an objective of reducing costs to allow us to further invest
in higher priority growth opportunities. Restructuring charges
for the years ended December 31, 2022, 2021 and 2020 were
primarily attributable to these programs.

Acquisition, integration, divestiture and related – We
use the financial statement line item, “Acquisition, integration,
divestiture and related” to recognize expenses resulting from
the consummation of business mergers and acquisitions and
the related integration of those businesses, and expenses
related to the divestiture of our businesses. Acquisition,
integration, divestiture and related gains and expenses are
primarily composed of:
(cid:129) Consulting and professional fees related to third-party

integration performed in a variety of areas, such as finance,
tax, compliance, logistics and human resources, and legal
fees related to the consummation of mergers and
acquisitions.

Accounts Receivable – Accounts receivable consists of

trade and other miscellaneous receivables. We grant credit to
customers in the normal course of business and maintain an
allowance for expected credit losses. We determine the
allowance for credit losses by geographic market and take into
consideration historical credit experience, creditworthiness of
the customer and other pertinent information. We make
concerted efforts to collect all accounts receivable, but
sometimes we have to write-off the account against the
allowance when we determine the account is uncollectible. The
allowance for credit losses was $78.4 million and $60.1 million
as of December 31, 2022 and 2021, respectively.

We also have receivables purchase arrangements with

unrelated third parties to transfer portions of our trade
accounts receivable balance. We terminated our purchase
arrangements in the U.S. and Japan during the year ended
December 31, 2020. We continue to have arrangements in
Europe where we sell to a third party and have no continuing
involvement or significant risk with the factored accounts
receivable. Funds received from the transfers are recorded as
an increase to cash and a reduction to accounts receivable
outstanding in our consolidated balance sheets. We report the
cash flows attributable to the sale of receivables to third
parties in cash flows from operating activities in our
consolidated statements of cash flows. Net expenses resulting
from the sales of receivables are recognized in SG&A expense
and are immaterial. Net expenses include any resulting gains
or losses from the sales of receivables, credit insurance and
factoring fees. Under the previous arrangement in the U.S. and
Japan, any initial collections of cash and remittances to the
third parties were recognized in our consolidated statements of
cash flows in financing activities which resulted in an outflow
of $53.0 million for the year ended December 31, 2020.

(cid:129) Employee termination benefits related to terminating

Inventories – Inventories are stated at the lower of cost

employees with overlapping responsibilities in various areas
of our business.

and net realizable value, with cost determined on a first-in
first-out basis.

(cid:129) 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.

(cid:129) Contract termination expenses related to terminated
contracts, primarily with sales agents and distribution
agreements.

(cid:129) Changes to our contingent consideration liabilities related to

our mergers and acquisitions.

(cid:129) Other various expenses to relocate facilities, integrate

information technology, losses incurred on assets resulting
from the applicable acquisition, and other various expenses.

Property, Plant and Equipment – Property, plant and
equipment is carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based
on estimated useful lives of ten to forty years for buildings and
improvements and three to eight years for machinery and
equipment. Maintenance and repairs are expensed as incurred.
We review property, plant and equipment for impairment
whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. An
impairment loss would be recognized when estimated future
undiscounted cash flows relating to the asset are less than its
carrying amount. An impairment loss is measured as the
amount by which the carrying amount of an asset exceeds its
fair value.

(cid:129) Income and expenses related to providing ZimVie certain

Software Costs – We capitalize certain computer software

services after the separation date.

Cash and Cash Equivalents – We consider all highly
liquid investments with an original maturity of three months or
less to be cash equivalents. The carrying amounts reported in
the balance sheet for cash and cash equivalents are valued at
cost, which approximates their fair value.

and software development costs incurred in connection with
developing or obtaining computer software for internal use
when both the preliminary project stage is completed and it is
probable that the software will be used as intended.
Capitalized software costs generally include external direct
costs of materials and services utilized in developing or
obtaining computer software and compensation and related

benefits for employees who are directly associated with the
software project. Capitalized software costs are included in
property, plant and equipment on our balance sheet and
amortized on a straight-line or weighted average estimated
user basis when the software is ready for its intended use over
the estimated useful lives of the software, which approximate
three to fifteen years.

For cloud computing arrangements that are considered a
service contract, our capitalization of implementation costs is
aligned with the internal use software requirements. However,
on our consolidated balance sheet these implementation costs
are recognized in other noncurrent assets. On our consolidated
statement of cash flows, these implementations costs are
recognized in operating cash flows. The implementation costs
are recognized on a straight-line basis over the expected term
of the related service contract.

Instruments – Instruments are hand-held devices used by

surgeons during total joint replacement and other surgical
procedures. Instruments are recognized as long-lived assets
and are included in property, plant and equipment.
Undeployed instruments are carried at cost or net realizable
value. Instruments that have been deployed to be used in
surgeries are carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based
on average estimated useful lives, determined principally in
reference to associated product life cycles, primarily five years.
We review instruments for impairment whenever events or
changes in circumstances indicate that the carrying value of an
instrument may not be recoverable. Depreciation of
instruments is recognized as SG&A expense.

Goodwill – Goodwill is not amortized but is subject to

annual impairment tests. Goodwill has been assigned to
reporting units. Potential impairment of a reporting unit is
identified by either comparing a reporting unit’s estimated fair
value to its carrying amount or doing a qualitative assessment
of a reporting unit’s fair value from the last quantitative
assessment to determine if there is potential impairment. We
may do a qualitative assessment when the results of the
previous quantitative test indicated the reporting unit’s
estimated fair value was significantly in excess of the carrying
value of its net assets and we do not believe there have been
significant changes in the reporting unit’s operations that
would significantly decrease its estimated fair value. If a
quantitative assessment is performed, the fair value of the
reporting unit and the fair value of goodwill are determined
based upon a discounted cash flow analysis and/or use of a
market approach by looking at market values of comparable
companies. Significant assumptions are incorporated into our
discounted cash flow analyses such as forecasted net sales,
revenue growth rates, forecasted operating expenses and risk-
adjusted discount rates. We perform this test in the fourth
quarter of the year or whenever events or changes in
circumstances indicate that the fair value of the reporting unit
is more likely than not below its carrying amount. If the fair
value of the reporting unit is less than its carrying value, an
impairment loss is recorded in the amount that the carrying
value of the reporting unit exceeds the fair value. See Note 11
for more information regarding goodwill.

Intangible Assets – Intangible assets are initially

measured at their fair value. We have determined the fair value
of our intangible assets either by the fair value of the
consideration exchanged for the intangible asset or the
estimated after-tax discounted cash flows expected to be
generated from the intangible asset. Intangible assets with a
finite life, including technology, certain trademarks and trade
names, customer-related intangibles, intellectual property
rights and patents and licenses are amortized on a straight-line
basis over their estimated useful life or contractual life, which
may range from less than one year to twenty years. Intangible
assets with a finite life are tested for impairment whenever
events or circumstances indicate that the carrying amount may
not be recoverable.

Intangible assets with an indefinite life, including certain

trademarks and trade names and in-process research and
development (“IPR&D”) projects, are not amortized. Indefinite
life intangible assets are assessed annually to determine
whether events and circumstances continue to support an
indefinite life. Intangible assets with an indefinite life are
tested for impairment annually or whenever events or
circumstances indicate that the fair value of the reporting unit
is more likely than not below its carrying amount. An
impairment loss is recognized if the carrying amount exceeds
the estimated fair value of the asset. The amount of the
impairment loss to be recorded would be determined based
upon the excess of the asset’s carrying value over its fair value.
The fair values of indefinite lived intangible assets are
determined based upon a discounted cash flow analysis using
the relief from royalty method or a qualitative assessment may
be performed for any changes to the asset’s fair value from the
last quantitative assessment. The relief from royalty method
estimates the cost savings associated with owning, rather than
licensing, assets. Significant assumptions are incorporated into
these discounted cash flow analyses such as estimated growth
rates, royalty rates and risk-adjusted discount rates. We may
do a qualitative assessment when the results of the previous
quantitative test indicated that the asset’s fair value was
significantly in excess of its carrying value.

In determining the useful lives of intangible assets, we

consider the expected use of the assets and the effects of
obsolescence, demand, competition, anticipated technological
advances, changes in surgical techniques, market influences
and other economic factors. For technology-based intangible
assets, we consider the expected life cycles of products, absent
unforeseen technological advances, which incorporate the
corresponding technology. Trademarks and trade names that
do not have a wasting characteristic (i.e., there are no legal,
regulatory, contractual, competitive, economic or other factors
which limit the useful life) are assigned an indefinite life.
Trademarks and trade names that are related to products
expected to be phased out are assigned lives consistent with
the period in which the products bearing each brand are
expected to be sold. For customer relationship intangible
assets, we assign useful lives based upon historical levels of
customer attrition. Intellectual property rights are assigned
useful lives that approximate the contractual life of any related
patent or the period for which we maintain exclusivity over the
intellectual property.

Income Taxes – We account for income taxes under the
asset and liability method, which requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the
financial statements. Under this method, deferred tax assets
and liabilities are determined based on the differences
between the financial statements and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized
in income in the period the new tax rate is enacted.

We reduce our deferred tax assets by a valuation
allowance if it is more likely than not that we will not realize
some portion or all of the deferred tax assets. In making such
determination, we consider all available positive and negative
evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax
planning strategies and recent financial operations. In the
event we were to determine that we would be able to realize
our deferred income tax assets in the future in excess of their
net recorded amount, we would make an adjustment to the
valuation allowance which would reduce the provision for
income taxes.

We operate on a global basis and are subject to numerous

and complex tax laws and regulations. The calculation of our
tax liabilities involves dealing with uncertainties in the
application of complex tax laws and regulations in a multitude
of jurisdictions across our global operations. Our income tax
filings are regularly under audit in multiple federal, state, and
foreign jurisdictions. Income tax audits may require an
extended period of time to reach resolution and may result in
significant income tax adjustments when interpretation of tax
laws or allocation of company profits is disputed. Because
income tax adjustments in certain jurisdictions can be
significant, we record tax positions based upon our estimates.
For those tax positions where it is more likely than not that a
tax benefit will be sustained, we have recorded the largest
amount of tax benefit with a greater than 50 percent likelihood
of being realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information.
For those income tax positions where it is not more likely than
not that a tax benefit will be sustained, no tax benefit has been
recognized in the financial statements.

Derivative Financial Instruments – We measure all
derivative instruments at fair value and report them on our
consolidated balance sheet as assets or liabilities. We maintain
written policies and procedures that permit, under appropriate
circumstances and subject to proper authorization, the use of
derivative financial instruments solely for risk management
purposes. The use of derivative financial instruments for
trading or speculative purposes is prohibited by our policy. See
Note 15 for more information regarding our derivative and
hedging activities.

Accumulated Other Comprehensive Income (Loss) –
Accumulated other comprehensive income (loss) (“AOCI”)
refers to gains and losses that under GAAP are included in
comprehensive income but are excluded from net earnings as
these amounts are recorded directly as an adjustment to
stockholders’ equity. Our AOCI is comprised of foreign

currency translation adjustments, including unrealized gains
and losses on net investments hedges, unrealized gains and
losses on cash flow hedges and amortization of prior service
costs and unrecognized gains and losses in actuarial
assumptions.

Other Expense (Income), Net – Other expense (income),

net includes gains/(losses) on changes in fair value of our
investments, gains/(losses) on remeasurement of monetary
assets and liabilities denominated in a currency other than an
entity’s functional currency and the related gains/(losses) on
derivative instruments that are not designated as hedging
instruments that we use to manage the currency exposures of
these assets and liabilities, certain components of pension
expense, and other non-operating gains/(losses). In the year
ended December 31, 2022, we recognized losses of
$116.6 million related to our investment in ZimVie. The initial
value of our investment was based upon our 19.7 percent share
of the carrying value of net assets transferred to ZimVie on the
separation date. At December 31, 2022, we valued our
investment at fair value based upon ZimVie’s share price on
that date, less a discount to reflect that the shares are not
registered.

Treasury Stock – We account for repurchases of common

stock under the cost method and present treasury stock as a
reduction of stockholders’ equity. We reissue common stock
held in treasury only for limited purposes.

Noncontrolling Interest – We have investments in other

companies in which we have a controlling financial interest,
but not 100 percent of the equity. Further information related
to the noncontrolling interests of those investments has not
been provided as it is not significant to our consolidated
financial statements.

Accounting Pronouncements Recently Adopted

In July 2021, the Financial Accounting Standards Board

issued Accounting Standards Update (“ASU”) 2021-05 Lessors
– Certain Leases with Variable Lease Payments which is an
amendment to Accounting Standards Codification Topic 842 -
Leases (“ASC 842”). Under the prior ASC 842 guidance,
variable payments were excluded from the measurement of the
initial net investment in the lease if the payments do not
depend on an index or rate. For sales-type or direct financing
leases, this could result in the recognition of a day-one loss for
leases with entire or partial variable payments. ASU 2021-05
requires lessors to classify leases with entire or partial variable
payments as operating leases if otherwise a day-one loss would
be recognized. The ASU is effective for fiscal years beginning
after December 15, 2021, and interim periods within those
years. Early adoption of this ASU was permitted. The ASU
could either be applied retrospectively to leases that were
commenced or modified on or after the adoption of ASC 842 or
applied prospectively to leases that commence or are modified
after the adoption of ASU 2021-05. We adopted this standard
as of January 1, 2022. The adoption of this standard did not
have a material impact on our financial position, results of
operations or cash flows.

Accounting Pronouncements Not Yet Adopted

There are no recently issued accounting pronouncements

that we have not yet adopted that are expected to have a
material effect on our financial position, results of operations
or cash flows.

Discontinued Operations and Related ZimVie Matters

On March 1, 2022, we completed the previously announced

separation of our spine and dental businesses through the
distribution of 80.3% of the outstanding shares of common stock
of ZimVie to our stockholders at the close of business on
February 15, 2022 (the “Record Date”). The distribution was
made in the amount of one share of ZimVie common stock for
every ten shares of our common stock owned by our stockholders
at the close of business on the Record Date. Fractional shares of
ZimVie common stock were not issued but instead were
aggregated and sold in the open market with the proceeds being
distributed pro rata in lieu of such fractional shares.

In the fourth quarter of 2021, ZimVie entered into a credit

agreement with a financial institution providing for revolving
loans of up to $175.0 million and term loan borrowings of up to
$595.0 million. On February 28, 2022, prior to separation, ZimVie
borrowed the entire $595.0 million available under the term loan.
Approximately $540.6 million of this amount was paid by ZimVie
to Zimmer Biomet in the form of a dividend at separation which is
included in our cash flows from financing activities in the
consolidated statements of cash flows. We used proceeds from
the dividend, along with cash on hand and proceeds from a draw
on our revolving credit facility, to repay our 3.150% Senior Notes
due 2022 which had an outstanding principal balance of
$750.0 million.

Also, in connection with the spinoff, we entered into
definitive agreements with ZimVie that, among other things, set
forth the terms and conditions of the separation and distribution.
The agreements set forth the principles and actions taken or to
be taken in connection with the separation and the distribution
and provide a framework for our relationship with ZimVie from
and after the separation and the distribution. The agreements
include a Separation and Distribution Agreement, a Tax Matters
Agreement, an Employee Matters Agreement, a Transition
Services Agreement (the “TSA”), an Intellectual Property
Matters Agreement, a Stockholder and Registration Rights
Agreement, a Transition Manufacturing and Supply Agreement
(the “TMA”), a Reverse Transition Manufacturing and Supply
Agreement (the “Reverse TMA”) and a Transitional Trademark
License Agreement, each dated as of March 1, 2022.

Pursuant to the TSA, both we and ZimVie agree to provide

certain services to each other, on an interim, transitional basis
from and after the separation and the distribution. The services
include certain regulatory services, commercial services,
operational services, tax services, clinical affairs services,
information technology services, finance and accounting services
and human resource and employee benefits services. The
remuneration to be paid for such services is generally intended to
allow the company providing the services to recover all of its
costs and expenses of providing such services. The TSA will
terminate on the expiration of the term of the last service
provided thereunder, which will generally be no later than

March 31, 2025. However, we expect most TSA services will be
completed by the end of 2023.

Pursuant to the TMA and the Reverse TMA, Zimmer Biomet

or ZimVie, as the case may be, will manufacture or cause to be
manufactured certain products for the other party, on an interim,
transitional basis. Pursuant to such agreements, Zimmer Biomet
or ZimVie, as the case may be, will be required to purchase
certain minimum amounts of products from the other party. Each
of the TMA and the Reverse TMA has a two-year term, with a
one-year extension possible upon mutual agreement of the
parties.

We recognize any gains or losses from the TSA and TMA
agreements in Acquisition, integration, divestiture and related
expense in our consolidated statements of earnings. Amounts
included in the consolidated statements of earnings related to
these agreements for the years ended December 31, 2022, 2021
and 2020 were immaterial. Amounts due from ZimVie were also
immaterial as of December 31, 2022.

We retained approximately 5.1 million common shares of
ZimVie, representing approximately 19.7 percent of ZimVie’s
outstanding common shares on the separation date. Given our
inability to exert significant influence over ZimVie, we recognize
this investment at fair value in prepaid expenses and other
current assets on our consolidated balance sheet. We disposed of
these shares in February 2023. Changes to the fair value of the
investment are recognized in non-operating other (expense)
income, net. In the year ended December 31, 2022, we
recognized losses of $116.6 million related to our investment in
ZimVie.

On August 31, 2022, we borrowed an aggregate principal
amount of $83.0 million under a short-term credit agreement
(the “Short-Term Term Loan”) with a third-party financial
institution, the proceeds of which were used to repay certain
of our existing indebtedness. On September 1, 2022, we
entered into a forward exchange agreement and pledge
agreement (collectively the “Forward Exchange Agreement”)
with the same financial institution to deliver to them our
5.1 million shares of ZimVie common stock in the first quarter
of 2023. It is likely that the financial institution entered into
hedging transactions, which may have included selling the
ZimVie shares in the market, in anticipation of receiving the
shares in the first quarter of 2023. We pledged our 5.1 million
shares of ZimVie common stock to the financial institution as
collateral for our obligations under the Short-Term Term Loan
and the Forward Exchange Agreement.

In February 2023, we repaid in full the Short-Term Term

Loan by transferring our ZimVie common shares to the
financial institution counterparty to settle the Forward
Exchange Agreement and by paying $33.9 million in cash,
representing an amount determined by the difference between
the average daily volume-weighted average price of the ZimVie
shares over the outstanding term of the Forward Exchange
Agreement and the principal amount of $83.0 million.

The Forward Exchange Agreement was accounted for at

fair value, with changes in fair value recognized in
non-operating other (expense) income, net. The most
significant input into the valuation of the Forward Exchange
Agreement is the price of ZimVie shares. The fair value of the
Forward Exchange Agreement as of December 31, 2022 was

–

142.0

We sell products through two principal channels: 1) direct to

$1.1 million and is included within prepaid expenses and other
current assets on our consolidated balance sheet. For the year
ended December 31, 2022, an unrealized gain of $1.1 million
related to the change in fair value of the Forward Exchange
Agreement was recorded in non-operating other (expense)
income, net in our consolidated statements of earnings.

As discussed in Note 1, Business, the results of our spine

and dental businesses have been reflected as discontinued
operations in the consolidated statements of earnings for the
years presented. Details of earnings (loss) from discontinued
operations included in our consolidated statements of earnings
are as follows (in millions):

Net Sales

$147.8

$1,008.8

$ 896.9

For the Years Ended December 31,

2022

2021

2020

Cost of products sold, excluding
intangible asset amortization

Intangible asset amortization

Research and development

Selling, general and administrative

Goodwill and intangible asset

impairment

Restructuring and other cost reduction

initiatives

Quality remediation

Acquisition, integration, divestiture and

Other expense (income), net

Loss from discontinued operations

53.5

14.0

10.5

89.4

–

0.4

–

40.9

0.3

380.6

304.0

86.2

61.3

85.5

49.0

480.5

465.0

3.3

0.2

76.8

0.5

9.7

0.2

12.4

(1.6)

before income taxes

(61.2)

(80.6)

(169.3)

Benefit for income taxes from
discontinued operations

(2.4)

(37.2)

(41.1)

Loss from discontinued operations,

net of tax

$(58.8) $ (43.4) $(128.2)

Details of assets and liabilities of discontinued operations

are as follows (in millions):

Cash and cash equivalents

Accounts receivable, less allowance for credit losses

Inventories

Prepaid expenses and other current assets

Total Current Assets of Discontinued Operations

Property, plant and equipment, net

Goodwill

Intangible assets, net

Other assets

December 31, 2021

$ 100.4

145.3

246.5

9.4

$ 501.6

$ 179.9

272.8

766.2

57.9

Total Noncurrent Assets of Discontinued Operations

$1,276.8

Accounts payable

Income taxes payable

Other current liabilities

Total Current Liabilities of Discontinued Operations

Deferred income taxes, net

Other long-term liabilities

Total Noncurrent Liabilities of Discontinued

Operations

December 31, 2021

$ 44.7

3.1

129.4

$177.2

$107.1

61.3

$168.4

Revenue Recognition

We recognize revenue when our performance obligations
under the terms of a contract with our customer are satisfied.
This happens when we transfer control of our products to the
customer, which generally occurs upon implantation or when title
passes upon shipment. Revenue is measured as the amount of
consideration we expect to receive in exchange for transferring
our product. Taxes collected from customers and remitted to
governmental authorities are excluded from revenues.

healthcare institutions, referred to as direct channel accounts;
and 2) through stocking distributors and healthcare dealers. In
direct channel accounts and with some healthcare dealers,
inventory is generally consigned to sales agents or customers so
that products are available when needed for surgical procedures.
No revenue is recognized upon the placement of inventory into
consignment, as we retain the ability to control the inventory.
Upon implantation, we issue an invoice and revenue is
recognized. Consignment sales represented approximately
85 percent of our net sales in 2022. Pricing for products is
generally predetermined by contracts with customers, agents
acting on behalf of customer groups or by government regulatory
bodies, depending on the market. Price discounts under group
purchasing contracts are generally linked to volume of implant
purchases by customer healthcare institutions within a specified
group. At negotiated thresholds within a contract buying period,
price discounts may increase. Payment terms vary by customer,
but are typically less than 90 days.

With sales to stocking distributors and some healthcare
dealers and hospitals, revenue is generally recognized when
control of our product passes to the customer, which can be upon
shipment of the product or receipt by the customer. We estimate
sales recognized in this manner represented approximately
15 percent of our net sales in 2022. These customers may
purchase items in large quantities if incentives are offered or if
there are new product offerings in a market, which could cause
period-to-period differences in sales. It is our accounting policy to
account for shipping and handling activities as a fulfillment cost
rather than as an additional promised service. We have contracts
with these customers or orders may be placed from available
price lists. Payment terms vary by customer, but are typically less
than 90 days.

We offer standard warranties to our customers that our

Net sales by product category are as follows (in millions):

products are not defective. These standard warranties are not
considered separate performance obligations. In limited
circumstances, we offer extended warranties that are separate
performance obligations. We have very few contracts that have
multiple performance obligations. Since we do not have
significant multiple element arrangements and essentially all of
our sales are recognized upon implantation of a product or when
title passes, very little judgment is required to allocate the
transaction price of a contract or determine when control has
passed to a customer. Our costs to obtain contracts consist
primarily of sales commissions to employees or third-party agents
that are earned when control of our product passes to the
customer. Therefore, sales commissions are expensed as part of
SG&A expenses at the same time revenue is recognized.
Accordingly, we do not have significant contract assets, liabilities
or future performance obligations.

We offer volume-based discounts, rebates, prompt pay
discounts, right of return and other various incentives which we
account for under the variable consideration model. If sales
incentives may be earned by a customer for purchasing a
specified amount of our product, we estimate whether such
incentives will be achieved and recognize these incentives as a
reduction in revenue in the same period the underlying revenue
transaction is recognized. We primarily use the expected value
method to estimate incentives. Under the expected value
method, we consider the historical experience of similar
programs as well as review sales trends on a
customer-by-customer basis to estimate what levels of incentives
will be earned. Occasionally, products are returned and,
accordingly, we maintain an estimated refund liability based upon
the expected value method that is recorded as a reduction in
revenue.

We analyze sales by two geographies, the United States and

International; and by the following product categories: Knees;
Hips; Sports Medicine, Extremities and Trauma (“S.E.T.”), which
includes Craniomaxillofacial and Thoracic (“CMFT”); and Other.
Other includes sales from our Technology, Surgical and Bone
Cement products.

This net sales presentation differs from our reportable

operating segments, which are based upon our senior
management organizational structure and how we allocate
resources toward achieving operating profit goals. Each of our
reportable operating segments sells all the product categories
noted above. Accordingly, the only difference from the
presentation below and our reportable operating segments are
the geographic groupings.

Net sales by geography are as follows (in millions):

United States

International

Total

For the Years Ended December 31,

2022

2021

2020

$4,012.4

$3,853.9

$3,507.7

2,927.5

2,973.4

2,619.8

$6,939.9

$6,827.3

$6,127.5

For the Years Ended December 31,

2022

2021

2020

$2,778.3

$2,647.9

$2,378.3

1,894.9

1,856.1

1,750.5

1,696.7

1,727.8

1,525.6

570.0

595.5

473.1

$6,939.9

$6,827.3

$6,127.5

Knees

Hips

S.E.T

Other

Total

Restructuring

In December 2021, our management approved a new
global restructuring program (the “2021 Restructuring Plan”)
intended to further reduce costs and to reorganize our global
operations in preparation for the spinoff of ZimVie. The 2021
Restructuring Plan is expected to result in total pre-tax
restructuring charges of approximately $220 million. The
pre-tax restructuring charges consist of employee termination
benefits; contract terminations for sales agents; and other
charges, such as consulting fees and project management. The
following table summarizes the liabilities recognized related to
the 2021 Restructuring Plan (in millions):

Employee
Termination
Benefits

Contract
Terminations

Balance, December 31, 2020

–

Additions

Cash payments

Foreign currency exchange

rate changes

Balance, December 31, 2021

Additions

Cash payments

Foreign currency exchange

19.5

–

19.5

33.6

Other

Total

– $

–

10.3

32.1

–

10.3

32.1

16.6

99.7

–

2.3

–

2.3

49.5

(43.4)

(27.8)

(23.9)

(95.1)

rate changes

0.8

1.0

0.1

1.9

Balance, December 31, 2022

$ 10.5

$ 25.0

$ 3.1 $ 38.6

Expense incurred since the

start of the 2021
Restructuring Plan

Expense estimated to be

recognized for the 2021
Restructuring Plan

$ 53.1

$ 51.8

$ 26.9 $131.8

$ 70.0

$100.0

$ 50.0 $220.0

In December 2019, our Board of Directors approved, and

we initiated, a new global restructuring program (the “2019
Restructuring Plan”) with an objective of reducing costs to
allow us to further invest in higher priority growth
opportunities. The 2019 Restructuring Plan is expected to
result in total pre-tax restructuring charges of approximately
$350 million to $400 million. The pre-tax restructuring charges
consist of employee termination benefits; contract
terminations for facilities and sales agents; and other charges,
such as consulting fees, project management and relocation
costs. The restructuring charges incurred in the year ended
December 31, 2022, primarily related to employee termination

benefits, consulting fees and project management expenses.
The following table summarizes the liabilities recognized
related to the 2019 Restructuring Plan (in millions):

Employee
Termination
Benefits

Contract
Terminations

22.3

49.6

—

15.8

Other

4.1

33.1

Total

26.4

98.5

(35.5)

(4.9)

(22.1)

(62.5)

Balance, December 31, 2019

Additions

Cash payments

Foreign currency exchange

rate changes

1.4

Balance, December 31, 2020

37.8

Additions

Cash payments

Foreign currency exchange

7.3

—

10.9

18.5

—

15.1

49.2

1.4

63.8

75.0

(28.7)

(12.9)

(64.2)

(105.8)

rate changes

(1.6)

—

(0.1)

(1.7)

Balance, December 31, 2021

$ 14.8

$ 16.5

$ — $ 31.3

Additions

Cash payments

29.1

(13.4)

0.7

40.1

69.9

(7.3)

(33.3)

(54.0)

Foreign currency exchange

rate changes

(1.6)

(0.9)

(0.4)

(2.9)

Balance, December 31, 2022

$ 28.9

$ 9.0

$ 6.4 $ 44.3

Expense incurred since the

start of the 2019
Restructuring Plan

Expense estimated to be

recognized for the 2019
Restructuring Plan

$108.3

$ 35.0

$134.6 $ 277.9

$160.0

$ 35.0

$180.0 $ 375.0

For the expense estimated to be recognized for the 2019

Restructuring Plan, we have disclosed the midpoint in our
estimated range of expenses.

We do not include restructuring charges in the operating

profit of our reportable segments.

In our consolidated statement of earnings, we report

restructuring charges in our “Restructuring and other cost
reduction initiatives” financial statement line item. We report
the expenses for other cost reduction and optimization
initiatives with restructuring expenses because these activities
also have the goal of reducing costs across the organization.
However, since the cost reduction and optimization initiative
expenses are not considered restructuring, they have been
excluded from the amounts presented in this note.

Share-Based Compensation

Our share-based payments primarily consist of stock
options and restricted stock units (“RSUs”). Share-based
compensation expense was as follows (in millions):

Total expense, pre-tax
Tax benefit related to awards

Total expense, net of tax

For the Years Ended December 31,

2022

2021

2020

$105.0
16.9

$ 88.1

$76.0
17.2

$58.8

$73.8
15.6

$58.2

We had two equity compensation plans in effect at
December 31, 2022: the 2009 Stock Incentive Plan (“2009
Plan”) and the Stock Plan for Non-Employee Directors. We
have reserved the maximum number of shares of common
stock available for awards under the terms of each of these
plans. We have registered 49.9 million shares of common stock
under these plans. The 2009 Plan provides for the grant of
nonqualified stock options and incentive stock options, long-
term performance awards in the form of performance shares or
units, restricted stock, RSUs and stock appreciation rights. The
Compensation and Management Development Committee of
the Board of Directors determines the grant date for annual
grants under our equity compensation plans. The date for
annual grants under the 2009 Plan to our executive officers is
expected to occur in the first quarter of each year following
the earnings announcements for the previous quarter and full
year. The Stock Plan for Non-Employee Directors provides for
awards of stock options, restricted stock and RSUs to
non-employee directors. It has been our practice to issue
shares of common stock upon exercise of stock options from
previously unissued shares, except in limited circumstances
where they are issued from treasury stock. The total number of
awards which may be granted in a given year and/or over the
life of the plan under each of our equity compensation plans is
limited. At December 31, 2022, an aggregate of 8.5 million
shares were available for future grants and awards under these
plans.

Stock Options

Stock options granted to date under our plans generally

vest over three or four years and have a maximum contractual
life of 10 years. As established under our equity compensation
plans, vesting may accelerate upon retirement after the first
anniversary date of the award if certain criteria are met. We
recognize expense related to stock options on a straight-line
basis over the requisite service period, less awards expected to
be forfeited using estimated forfeiture rates. Due to the
accelerated retirement provisions, the requisite service period
of our stock options range from one to four years. Stock
options are granted with an exercise price equal to the market
price of our common stock on the date of grant, except in
limited circumstances where local law may dictate otherwise.

A summary of stock option activity for the year ended December 31, 2022 is as follows (options in thousands):

Outstanding at January 1, 2022 (1)

Options granted (1)

Options exercised (1)

Options forfeited (1)

Options expired (1)

Awards transferred to ZimVie in the spinoff

Adjustment to Zimmer Biomet awards related to the spinoff of ZimVie (2)

Outstanding at December 31, 2022

Vested or expected to vest as of December 31, 2022

Exercisable at December 31, 2022

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Intrinsic
Value
(in millions)

Stock
Options

7,547

$125.32

1,479

117.04

(527)

82.35

(208)

132.38

(186)

138.54

(431)

134.66

270

7,944

$121.94

7,779

$121.70

5,196

$116.05

5.9

5.8

4.6

$99.7

$98.7

$83.2

(1) Activity prior to the ZimVie spinoff has not been adjusted for the spinoff
(2)

In connection with the spinoff of ZimVie, all outstanding Zimmer Biomet stock options (whether vested or unvested) were
modified into adjusted Zimmer Biomet awards for continuing Zimmer Biomet employees or converted into ZimVie awards for
those becoming ZimVie employees. The modified awards attempted to preserve the same intrinsic value and general terms and
conditions (including vesting) as were in place immediately prior to the modification. The modification of these awards did not
result in significant incremental expense.

We use a Black-Scholes option-pricing model to
determine the fair value of our stock options. Expected
volatility was derived from a combination of historical volatility
and implied volatility because the options that were actively
traded around the grant date of our stock options did not have
maturities of over one year. The expected term of the stock
options has been derived from historical employee exercise
behavior. The risk-free interest rate was determined using the
implied yield currently available for zero-coupon U.S.
government issues with a remaining term approximating the
expected life of the options. The dividend yield was
determined by using an estimated annual dividend and
dividing it by the market price of our stock on the grant date.

The following table presents information regarding the

weighted average fair value of stock options granted, the
assumptions used to determine fair value, the intrinsic value of
options exercised and the tax benefit of options exercised in
the indicated year:

As of December 31, 2022, there was $49.9 million of

unrecognized share-based payment expense related to
nonvested stock options granted under our plans. That
expense is expected to be recognized over a weighted average
period of 1.9 years.

RSUs

We have awarded RSUs to certain of our employees. The
terms of the awards are generally three or four years. Some of
the awards have only service conditions while some have
performance and market conditions in addition to service
conditions. Future service conditions may be waived if an
employee retires after the first anniversary date of the award,
but performance and market conditions continue to apply.
Accordingly, the requisite service period used for share-based
payment expense on our RSUs range from one year to four
years.

A summary of nonvested RSU activity for the year ended

For the Years Ended December 31,

December 31, 2022 is as follows (RSUs in thousands):

Dividend yield

Volatility

Risk-free interest rate

Expected life (years)

2022

2021

2020

0.8%

0.6%

30.2% 30.3% 22.3%

1.9%

0.7%

1.3%

5.0

5.4

5.0

Weighted average fair value of options

granted

$32.07

$43.91

$31.65

Intrinsic value of options exercised (in

millions)

$ 20.5

$ 54.6

$ 50.1

Tax benefit of options exercised (in

millions)

$ 4.0

$ 10.8

$ 9.6

Outstanding at January 1, 2022 (1)

Granted (1)

Vested (1)

Forfeited (1)

Awards transferred to ZimVie in the spinoff

Adjustment to Zimmer Biomet awards related

to the spinoff of ZimVie (2)

Weighted Average
Grant Date Fair
Value

$146.58

114.61

117.47

157.22

132.61

RSUs

1,039

699

(168)

(336)

(71)

Outstanding at December 31, 2022

1,198

$147.85

(1) Activity prior to the ZimVie spinoff has not been adjusted

Property, Plant and Equipment

Property, plant and equipment consisted of the following

(in millions):

Land

Building and equipment

Capitalized software costs

Instruments

Construction in progress

Accumulated depreciation

As of December 31,

2022

2021

19.2

20.1

2,093.4

2,086.0

518.2

454.9

3,683.5

3,460.4

144.1

116.3

6,458.4

6,137.7

(4,585.9)

(4,301.1)

Property, plant and equipment, net

$ 1,872.5

$ 1,836.6

Depreciation expense was $399.6 million, $408.1 million

and $386.3 million for the years ended December 31, 2022,
2021 and 2020, respectively.

We had $17.0 million and $10.3 million of property, plant

and equipment included in accounts payable as of
December 31, 2022 and 2021, respectively.

Fair Value Measurements of Assets and Liabilities

The following financial assets and liabilities related to
continuing operations are recorded at fair value on a recurring
basis (in millions):

As of December 31, 2022

Fair Value Measurements
at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Recorded
Balance

Description

Assets

Derivatives designated as hedges,

current and long-term

Foreign currency forward

contracts

$ 72.8

Cross-currency interest rate

6.8

1.8

1.1

–

$72.8

$ –

6.8

1.8

1.1

–

contracts

Forward Exchange Agreement

Investment in ZimVie

45.5

Total Assets

$128.0

$45.5

$82.5

$ –

(2)

for the spinoff.
In connection with the spinoff of ZimVie, all unvested
Zimmer Biomet RSUs were modified into adjusted Zimmer
Biomet awards for continuing Zimmer Biomet employees
or converted into ZimVie awards for those becoming
ZimVie employees. For awards with service conditions
only, the modified awards attempted to preserve the same
intrinsic value and general terms and conditions
(including vesting) as were in place immediately prior to
the modification. For awards that had performance and
market conditions, these conditions were removed and
converted into service condition only awards to be earned
at a fixed amount as determined by our Board of
Directors’ Compensation and Management Development
Committee. The other general terms and conditions
(including vesting) were preserved. The modification of
these awards did not result in significant incremental
expense.

For the RSUs with service conditions only, the fair value of

the awards was determined based upon the fair market value
of our common stock on the date of grant. For the RSUs with
market conditions, a Monte Carlo valuation technique was used
to simulate the market conditions of the awards. The outcome
of the simulation was used to determine the fair value of the
awards.

We are required to estimate the number of RSUs that will

vest and recognize share-based payment expense on a straight-
line basis over the requisite service period. As of December 31,
2022, we estimate that approximately 893,091 outstanding
RSUs will vest. If our estimate were to change in the future,
the cumulative effect of the change in estimate will be
recorded in that period. Based upon the number of RSUs that
we expect to vest, the unrecognized share-based payment
expense as of December 31, 2022 was $59.5 million and is
expected to be recognized over a weighted-average period of
1.8 years. The fair value of RSUs that vested during the years
ended December 31, 2022, 2021 and 2020 based upon our
stock price on the date of vesting was $20.3 million,
$40.0 million, and $33.2 million, respectively.

Inventories

Finished goods

Work in progress

Raw materials

Inventories

$1,655.0

$1,729.2

230.9

261.3

175.5

243.3

$2,147.2

$2,148.0

Amounts charged to the consolidated statements of
earnings for excess and obsolete inventory, including certain
product lines we intend to discontinue, in the years ended
December 31, 2022, 2021 and 2020 were $137.3 million,
$117.3 million and $230.0 million, respectively.

Inventories consisted of the following (in millions):

swaps

As of December 31,

hedges, current and long-term

Derivatives not designated as

2022

2021

Foreign currency forward

As of December 31, 2022

Fair Value Measurements
at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Recorded
Balance

Description

Liabilities

Derivatives designated as hedges,

current and long-term

Foreign currency forward

contracts

$ 5.5

$ –

$ 5.5

Cross-currency interest rate

swaps

Interest rate swaps

Derivatives not designated as

hedges, current and long-term

Foreign currency forward

contracts

Contingent payments related to

acquisitions

49.6

172.0

3.3

17.4

–

49.6

172.0

3.3

–

As of December 31, 2021

Fair Value Measurements
at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Recorded
Balance

$ 0.3

$ –

$ 0.3

3.4

10.5

1.5

35.6

–

3.4

10.5

1.5

–

35.6

–

Description

Liabilities

Derivatives designated as

hedges, current and long-term

Foreign currency forward

contracts

Cross-currency interest rate

swaps

Interest rate swaps

Derivatives not designated as

hedges, current and long-term

Foreign currency forward

contracts

Contingent payments related to

acquisitions

–

17.4

Total Liabilities

$51.3

$ –

$15.7

$35.6

Total Liabilities

$247.8

$ –

$230.4

$17.4

As of December 31, 2021

Fair Value Measurements
at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Recorded
Balance

$52.4

$ –

$52.4

$ –

23.0

1.1

–

23.0

1.1

–

$76.5

$ –

$76.5

$ –

Description

Assets

Derivatives designated as

hedges, current and long-term

Foreign currency forward

contracts

Cross-currency interest rate

swaps

Derivatives not designated as

hedges, current and long-term

Foreign currency forward

contracts

Total Assets

We value our foreign currency forward contracts using a

market approach based on foreign currency exchange rates
obtained from active markets, and we perform ongoing
assessments of counterparty credit risk.

We value our interest rate swaps using a market approach
based on publicly available market yield curves and the terms
of our swaps, and we perform ongoing assessments of
counterparty credit risk. The valuation of our cross-currency
interest rate swaps also includes consideration of foreign
currency exchange rates.

In connection with the spinoff, we retained approximately

5.1 million unregistered uncommon shares of ZimVie,
representing 19.7 percent of ZimVie’s common stock on the
separation date. At each reporting date, we value these shares
based upon the market share price of ZimVie less a discount to
reflect that the shares are not registered.

The value of the Forward Exchange Agreement is based
upon the historical volume-weighted average price of ZimVie
stock since the inception of the agreement with simulations of
how the ZimVie stock might perform until the settlement date.
Contingent payments related to acquisitions consist of

sales-based payments, and are valued using discounted cash
flow techniques. The fair value of sales-based payments is
based upon probability-weighted future revenue estimates, and
changes as revenue estimates increase or decrease.

The following table provides a reconciliation of the
beginning and ending balances of items related to continuing
operations measured at fair value on a recurring basis in the
tables above that used significant unobservable inputs (Level
3) (in millions):

Contingent payments related to acquisitions

Beginning balance December 31, 2021

Change in estimates

Settlements

Ending balance December 31, 2022

Level 3 -
Liabilities

$ 35.6

(11.2)

(7.0)

$ 17.4

Changes in estimates for contingent payments related to
acquisitions included in continuing operations are recognized
in the Acquisition, integration, divestiture and related line item
on our consolidated statements of earnings.

10. Acquisitions

On April 18, 2022, we completed the acquisition of all the
outstanding shares of a privately held sternal closure company.
The acquisition was completed primarily to expand our
product offerings in the CMFT market. The total aggregate
cash consideration paid at closing was $100.0 million, with an
additional $11.0 million of deferred payments to be made over
the next two years.

The goodwill related to this acquisition represents the

excess of the consideration transferred over the fair value of
the net assets acquired. The goodwill is related to the
operational synergies we expect to achieve from combining the
companies and the cash flows from future, undefined,
development projects. The goodwill is included in the
Americas operating segment and the Americas CMFT
reporting unit. A portion of the goodwill is expected to be
deductible for U.S. income tax purposes.

The following table summarizes the aggregate final
estimates of fair value of the assets acquired and liabilities
assumed related to the acquisition (in millions):

Current assets

Intangible assets subject to amortization:

Technology

Customer relationships

Goodwill

Other assets

Total assets acquired

Current liabilities

Total liabilities assumed

Net assets acquired

$ 3.8

42.8

12.3

48.3

4.9

112.1

1.1

$111.0

The amortization periods selected for technology and
customer relationships related to this acquisition were 10 years
and 4 years, respectively.

In the fourth quarter of 2020, we completed the
acquisitions of A&E Medical Corporation, a sternal closure
company, and Relign Corp., an arthroscopy equipment
company (collectively referred to as the “2020
acquisitions”). The 2020 acquisitions were completed
primarily to expand our product offerings in CMFT and sports
medicine markets. The total aggregate cash consideration paid
in 2020 related to the 2020 acquisitions was $235.7 million. An
additional $145.0 million of guaranteed deferred payments
were made in 2021. We assigned a fair value of $23.0 million
for potential additional payments as of the acquisition dates
related to these acquisitions that are contingent on the
respective companies’ future product sales. The estimated fair
value of the aggregate contingent payment liabilities was
calculated based on the probability of achieving the specified
sales growth and discounting to present value the estimated
payments.

The goodwill related to the 2020 acquisitions represents
the excess of the consideration transferred over the fair value
of the net assets acquired. The goodwill related to the 2020
acquisitions is generated from the operational synergies and
cross-selling opportunities we expect to receive from the
technologies acquired. None of the goodwill related to these
acquisitions is expected to be deductible for tax purposes.
The following table summarizes the aggregate final
estimates of fair value of the assets acquired and liabilities
assumed related to the 2020 acquisitions (in millions):

Current assets

Intangible assets subject to amortization:

Technology

Trademarks and trade names

Customer relationships

Goodwill

Other assets

Total assets acquired

Current liabilities

Deferred income taxes

Total liabilities assumed

Net assets acquired

$ 30.5

147.9

1.5

92.7

172.6

5.1

450.3

4.6

42.0

46.6

$403.7

In the year ended December 31, 2021, we adjusted the

preliminary fair values of the 2020 acquisitions. The
adjustments primarily related to the customer relationships
intangible assets and the related deferred income tax liability
as we refined our estimates by analyzing historical purchasing
patterns of existing customers. The adjustment did not result
in a significant change to intangible asset amortization expense
recognized in the year ended December 31, 2021 that would
have been recognized in the previous period if the adjustment
were recognized as of the acquisition date. In addition, we
revised our estimates related to net operating loss
carryforwards based on updated tax calculations which
reduced our deferred income tax liability and goodwill
correspondingly. There were no other significant adjustments
during the year ended December 31, 2021.

The weighted average amortization period selected for

technology, trademarks and trade names, and customer
relationships related to the 2020 acquisitions were 13 years, 12
years, and 15 years, respectively.

We have not included pro forma information and certain
other information under GAAP for these acquisitions because
they did not have a material impact on our financial position or
results of operations.

11. Goodwill and Other Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill related to continuing operations (in millions):

Balance at January 1, 2021

Goodwill

Accumulated impairment losses

Purchase accounting adjustments

Other acquisitions

Currency translation

Balance at December 31, 2021

Goodwill

Accumulated impairment losses

Purchase accounting adjustments

Other acquisitions

Currency translation

Impairment

Balance at December 31, 2022

Goodwill

Accumulated impairment losses

Americas

EMEA

Asia
Pacific

Total

$8,089.1

$ 1,362.9

$575.8

$10,027.8

(7.7)

(1,037.0)

–

(1,044.7)

8,081.4

325.9

575.8

8,983.1

15.4

2.4

5.2

–

2.3

–

22.9

2.4

(61.1)

(13.8)

(14.1)

(89.0)

8,045.8

1,354.3

564.0

9,964.1

(7.7)

(1,037.0)

–

(1,044.7)

8,038.1

317.3

564.0

8,919.4

0.9

48.3

–

(51.7)

(27.5)

(19.4)

–

(289.8)

–

0.9

48.3

(98.6)

(289.8)

8,043.3

1,326.8

544.6

9,914.7

(7.7)

(1,326.8)

–

(1,334.5)

$8,035.6

–

$544.6

$ 8,580.2

As discussed further in Note 10, we purchased a privately

held sternal closure company during the year ended
December 31, 2022, resulting in additional goodwill in 2022.
We perform our annual test of goodwill impairment in the

fourth quarter of every year. In connection with the annual
goodwill impairment test in the fourth quarter of 2022, we
estimated the fair value of our Americas Orthopedics, Americas
CMFT, and EMEA reporting units using the income and market
approaches. In the annual 2022 test, each of the Americas
Orthopedics and Americas CMFT reporting units exceeded their
carrying values by more than 35 percent. We determined the
goodwill related to our EMEA reporting unit was fully impaired
and recognized an impairment charge of $289.8 million for the
year ended December 31, 2022. We performed a qualitative test
on our Asia Pacific reporting unit and concluded it was more
likely than not the fair value of this reporting unit exceeded its
carrying value.

The impairment charge of $289.8 million in our EMEA

reporting unit was primarily due to the impacts from
macroeconomic factors. The weakening of major foreign
currencies in our EMEA reporting unit against the U.S. Dollar
significantly impacted forecasted cash flows used in our analysis.
For the EMEA reporting unit, operating expenses do not decline
proportionally to revenue as many inventory-related and certain
expenses are based on the U.S. Dollar. In addition, inflationary

pressures have also caused our forecasted expenses to increase.
Furthermore, our discounted cash flows utilized a higher risk-
adjusted discount rate for the 2022 impairment test when
compared to the 2021 test, primarily due to central banks raising
interest rates in 2022 and increased country-specific risk due to
macroeconomic factors and risks the region faces. We had
previously taken goodwill impairment charges related to this
reporting unit in prior years so when these negative
macroeconomic factors occurred in 2022, the remaining goodwill
was determined to be fully impaired.

We estimated the fair value of the Americas Orthopedics,
Americas CMFT, and EMEA reporting units based on income
and market approaches. Fair value under the income approach
was determined by discounting to present value the estimated
future cash flows of the reporting unit. Fair value under the
market approach utilized the guideline public company
methodology, which uses valuation indicators from publicly-
traded companies that are similar to our reporting units and
considers differences between our reporting unit and the
comparable companies.

In estimating the future cash flows of the reporting units, we

utilized a combination of market and company-specific inputs
that a market participant would use in assessing the fair value of
the reporting units. The primary market input was revenue
growth rates.

These rates were based upon historical trends and
estimated future growth drivers such as an aging global
population, obesity and more active lifestyles. Significant
company-specific inputs included assumptions regarding how
the reporting units could leverage operating expenses as
revenue grows and the impact any of our differentiated
products or new products will have on revenues.

Under the guideline public company methodology, we took

into consideration specific risk differences between our reporting
unit and the comparable companies, such as recent financial
performance, size risks and product portfolios, among other
considerations.

We will continue to monitor the fair value of our reporting

units in our interim and annual reporting periods. If our
estimated cash flows decrease, we may have to record further
impairment charges in the future. Factors that could result in our
cash flows being lower than our current estimates include: 1)
additional recurrence of the COVID-19 virus, including variants,
causing hospitals to defer elective surgical procedures, 2)
decreased revenues caused by unforeseen changes in the
healthcare market, or our inability to generate new product
revenue from our research and development activities, 3) our
inability to achieve the estimated operating margins in our
forecasts from our restructuring programs, cost saving initiatives,

and other unforeseen factors, and 4) the weakening of foreign
currencies against the U.S. Dollar. Additionally, changes in the
broader economic environment could cause changes to our
estimated discount rates and comparable company valuation
indicators, which may impact our estimated fair values.

During the year ended December 31, 2020, we recorded a

goodwill charge related to our EMEA reporting unit of
$470.0 million. The impairment charge was primarily due to the
COVID-19 pandemic and a reportable segment change. The
COVID-19 pandemic had a significant adverse effect on both the
operational and non-operational assumptions used to estimate
the fair value of our EMEA reporting unit. The significant decline
in our share price and that of most other publicly-traded
companies resulted in us utilizing a higher risk-adjusted discount
rate compared to the rate used in the previous annual goodwill
impairment test to discount our future estimated cash flows to
present value. On an operational basis, due to the deferral of
elective surgical procedures, we estimated that our cash flows
would be significantly lower than previously estimated in the
prior annual goodwill impairment test. The change in reportable
segments resulted in additional impairment due to additional
assets being allocated to the EMEA reporting unit.

The fair value for the 2020 impairment charge was
estimated using income and market approaches similar to the
2022 test.

The components of identifiable intangible assets related to continuing operations were as follows (in millions):

As of December 31, 2022:

Intangible assets subject to amortization:

Gross carrying amount

Accumulated amortization

Intangible assets not subject to amortization:

Gross carrying amount

Intellectual
Property
Rights

Trademarks
and Trade
Names

Customer
Relationships

Technology

IPR&D

Other

Total

$ 2,954.3

$ 388.5

$ 518.0

$ 5,073.1

(1,700.2)

(250.8)

(258.7)

(2,198.8)

–

$174.0

$ 9,107.9

(94.7)

(4,503.2)

–

452.1

–

7.0

–

459.1

Total identifiable intangible assets

$ 1,254.1

$ 137.7

$ 711.4

$ 2,874.3

$ 7.0

$ 79.3

$ 5,063.8

As of December 31, 2021:

Intangible assets subject to amortization:

Gross carrying amount

Accumulated amortization

Intangible assets not subject to amortization:

Gross carrying amount

$ 2,930.7

$ 381.9

$ 522.1

$ 5,109.1

(1,537.1)

(230.2)

(230.7)

(1,939.5)

–

$136.6

$ 9,080.4

(79.3)

(4,016.8)

–

457.0

–

13.0

–

470.0

Total identifiable intangible assets

$ 1,393.6

$ 151.7

$ 748.4

$ 3,169.6

$13.0

$ 57.3

$ 5,533.6

We recognized IPR&D intangible asset impairment
charges of $3.0 million, $16.3 million and $33.0 million in the
years ended December 31, 2022, 2021 and 2020, respectively,
in “Goodwill and intangible asset impairment” on our
consolidated statements of earnings. These impairments were
the result of terminated projects or delays and additional costs
related to a project. Since these projects had a low probability
of success or were not a priority, their terminations are not
expected to have a significant impact on our future cash flows.
Estimated annual amortization expense based upon

intangible assets recognized as of December 31, 2022 for the
years ending December 31, 2023 through 2027 is (in millions):

For the Years Ending December 31,

2023

2024

2025

2026

2027

$525.0

516.3

511.3

496.1

482.2

12. Other Current Liabilities

Other current liabilities consisted of the following (in

millions):

As of December 31,

2022

2021

Other current liabilities:

License and service agreements

$ 147.5

$ 133.9

Salaries, wages and benefits

Litigation and product liability

Customer rebates

Accrued liabilities

336.2

205.6

149.7

582.3

317.6

199.9

129.5

536.2

Total other current liabilities

$1,421.3

$1,317.1

We have reclassified certain previously reported

components of other current liabilities to conform to the current
year presentation.

13. Debt

Our debt consisted of the following (in millions):

Current portion of long-term debt
3.150% Senior Notes due 2022
1.414% Euro Notes due 2022
Japan Term Loan A
Japan Term Loan B
Short-Term Term Loan
2022 Five-Year Credit Agreement
3.700% Senior Notes due 2023

As of December 31,

2022

2021

–
–
–
–
83.0
375.0
86.3

750.0
568.6
101.6
184.9
–
–
–

Total short-term debt

$ 544.3

$1,605.1

Long-term debt

3.700% Senior Notes due 2023

1.450% Senior Notes due 2024
3.550% Senior Notes due 2025
3.050% Senior Notes due 2026
3.550% Senior Notes due 2030
2.600% Senior Notes due 2031
4.250% Senior Notes due 2035
5.750% Senior Notes due 2039
4.450% Senior Notes due 2045
2.425% Euro Notes due 2026
1.164% Euro Notes due 2027
Debt discount and issuance costs
Adjustment related to interest rate swaps

–

850.0
863.0
600.0
257.5
750.0
253.4
317.8
395.4
533.6
533.6
(30.1)
(172.0)

86.3

850.0
863.0
600.0
257.5
750.0
253.4
317.8
395.4
568.6
568.6
(36.4)
(10.5)

Total long-term debt

$5,152.2

$5,463.7

At December 31, 2022, our total current and non-current
debt of $5.7 billion consisted of $5.4 billion aggregate principal
amount of senior notes, which included €1.0 billion of Euro-
denominated senior notes (“Euro notes”), an $83.0 million
borrowing under the Short-Term Term Loan, and $375.0 million
of outstanding borrowings under the 2022 Five-Year Revolving
Facility (defined below), partially offset by fair value adjustments
relating to interest rate swaps totaling $172.0 million and debt
discount and issuance costs of $30.1 million.

On December 13, 2022, we used cash on hand, including the
Short-Term Term Loan proceeds of $83.0 million and borrowings
under our 2022 Five-Year Revolving Facility, to redeem the full
€500.0 million outstanding principal amount of our 1.414% Euro
Notes due 2022.

On September 22, 2022, we used cash on hand to repay the
full ¥11.7 billion and ¥21.3 billion outstanding principal amounts
of our Japanese Term Loan A and Japanese Term Loan B,
respectively.

On August 31, 2022, we borrowed an aggregate principal
amount of $83.0 million under the Short-Term Term Loan with a
third-party financial institution, the proceeds of which were used
to redeem a portion of the 1.414% Euro Notes that matured on
December 13, 2022. As more fully described in Note 3, the Short-
Term Term Loan was settled in February 2023.

On March 18, 2022, we redeemed the full $750.0 million
outstanding principal amount of our 3.150% Senior Notes due
April 1, 2022. A $100.0 million draw under the 2021 Five-Year
Revolving Facility (as defined below), together with cash on
hand, were used to redeem these notes. $540.6 million of this
cash on hand came from the dividend paid by ZimVie to Zimmer
Biomet at separation.

In 2021, we redeemed the $200.0 million outstanding
principal amount of our Floating Rate Notes due 2021 and the
$300.0 million outstanding principal amount of our 3.375% Senior
Notes due 2021, in each case at a redemption price equal to
100% of the aggregate principal amount of the senior notes being
redeemed, plus accrued and unpaid interest.

On November 24, 2021, we completed the offering of
$850.0 million aggregate principal amount of our 1.450% Senior
Notes due November 22, 2024 and $750.0 million aggregate
principal amount of our 2.600% Senior Notes due November 24,
2031. Interest is payable on the 1.450% Senior Notes due 2024 on
May 22 and November 22 of each year until maturity. Interest is
payable on the 2.600% Senior Notes due 2031 on May 24 and
November 24 of each year until maturity. We received net
proceeds of $1,599.8 million.

On November 15, 2021, we commenced cash tender offers

to purchase certain outstanding senior notes. The proceeds from
the senior notes offering described above, together with cash on
hand, were used to pay for the senior notes purchased in the
cash tender offers. The cash tender offers resulted in the
following principal amount of the notes tendered: $213.7 million
of the 3.700% Senior Notes due 2023, $1,137.0 million of the
3.550% Senior Notes due 2025, and $642.5 million of the 3.550%
Senior Notes due 2030. As a result, we recorded a loss on the
extinguishment of debt in the amount of $165.1 million in our
consolidated statement of earnings for the year ended
December 31, 2021. The components of this loss were the
reacquisition price of $2,154.8 million minus the carrying value of
the debt of $1,982.7 million (including debt discount and
issuance costs) plus debt tender fees of $5.0 million minus a gain
of $12.0 million on a reverse treasury lock that we entered into to
offset any increases or decreases to the premium associated with
the tender offer from the date we entered into the lock.

On August 19, 2022, we entered into a new five-year

The 2022 364-Day Revolving Facility will mature on

revolving credit agreement (the “2022 Five-Year Credit
Agreement”) and a new 364-day revolving credit agreement (the
“2022 364-Day Revolving Credit Agreement”), as described
below. Borrowings under these credit agreements will be used for
general corporate purposes.

The 2022 Five-Year Credit Agreement contains a five-year
unsecured revolving facility of $1.5 billion (the “2022 Five-Year
Revolving Facility”). The 2022 Five-Year Credit Agreement
replaces the previous revolving credit agreement (the “2021 Five-
Year Credit Agreement”), which contained a five-year unsecured
multicurrency revolving facility of $1.5 billion (the “2021 Five-
Year Revolving Facility”). There were no borrowings outstanding
under the 2021 Five-Year Credit Agreement at the time it was
terminated.

The 2022 Five-Year Credit Agreement will mature on

August 19, 2027, with two one-year extensions exercisable at our
discretion and subject to required lender consent. The 2022 Five-
Year Credit Agreement also includes an uncommitted
incremental feature allowing us to request an increase of the
facility by an aggregate amount of up to $500.0 million.

Borrowings under the 2022 Five-Year Credit Agreement
bear interest at floating rates, based upon either an adjusted term
secured overnight financing rate (“Term SOFR”) for the
applicable interest period or an alternate base rate, in each case,
plus an applicable margin determined by reference to our senior
unsecured long-term debt credit rating. We pay a facility fee on
the aggregate amount of the 2022 Five-Year Revolving Facility at
a rate determined by reference to our senior unsecured long-
term debt credit rating. The 2022 Five-Year Credit Agreement
contains customary affirmative and negative covenants and
events of default for unsecured financing arrangements,
including, among other things, limitations on consolidations,
mergers, and sales of assets. The 2022 Five-Year Credit
Agreement also requires us to maintain a consolidated
indebtedness to consolidated EBITDA ratio of no greater than 4.5
to 1.0 as of the last day of any period of four consecutive fiscal
quarters (with such ratio subject to increase to 5.0 to 1.0 for a
period of time in connection with a qualified material acquisition
and certain other restrictions). We were in compliance with all
covenants under the 2022 Five-Year Credit Agreement as of
December 31, 2022. As of December 31, 2022, there were
outstanding borrowings of $375.0 million under the 2022 Five-
Year Revolving Facility. We elected short-term interest periods
on these outstanding borrowings.

The 2022 364-Day Revolving Credit Agreement is an
unsecured revolving credit facility in the principal amount of
$1.0 billion (the “2022 364-Day Revolving Facility”). The 2022
364-Day Revolving Credit Agreement replaced a credit
agreement entered into on August 20, 2021, which was also a
364- day unsecured revolving credit facility of $1.0 billion (the
“2021 364-Day Revolving Facility”). There were no borrowings
outstanding under the 2021 364-Day Revolving Facility when it
was terminated.

August 18, 2023. Borrowings under the 2022 364-Day Revolving
Credit Agreement bear interest at floating rates based upon
either an adjusted Term SOFR for the applicable interest period
or an alternate base rate, in each case, plus an applicable margin
determined by reference to our senior unsecured long-term debt
credit rating. We pay a facility fee on the aggregate amount of the
2022 364-Day Revolving Facility at a rate determined by
reference to our senior unsecured long-term debt credit rating.
The 2022 364-Day Revolving Credit Agreement contains
customary affirmative and negative covenants and events of
default for an unsecured financing arrangement including, among
other things, limitations on consolidations, mergers, and sales of
assets. The 2022 364-Day Revolving Credit Agreement also
requires us to maintain a consolidated indebtedness to
consolidated EBITDA ratio of no greater than 4.5 to 1.0 as of the
last day of any period of four consecutive fiscal quarters (with
such ratio subject to increase to 5.0 to 1.0 in connection with a
qualified material acquisition and certain other restrictions). We
were in compliance with all covenants under the 2022 364-Day
Revolving Credit Agreement as of December 31, 2022. As of
December 31, 2022, there were no outstanding borrowings under
the 2022 364-Day Revolving Credit Agreement.

The estimated fair value of our senior notes, which includes
our Euro notes, as of December 31, 2022, based on quoted prices
for the specific securities from transactions in over-the-counter
markets (Level 2), was $4,909.0 million. The carrying value of the
outstanding $375.0 million principal balance of the 2022 Five-
Year Revolving Facility and $83.0 million Short-Term Term Loan
approximates their fair value as they bear interest at short-term
market rates.

At December 31, 2022 and 2021, the weighted average
interest rate for our borrowings was 3.2 percent and 2.8 percent,
respectively. We paid $161.7 million, $219.0 million, and
$193.1 million in interest during 2022, 2021, and 2020,
respectively.

14. Accumulated Other Comprehensive Income

AOCI refers to certain gains and losses that under GAAP
are included in comprehensive income but are excluded from
net earnings as these amounts are initially recorded as an
adjustment to stockholders’ equity. Amounts in AOCI may be
reclassified to net earnings upon the occurrence of certain
events.

Our AOCI is comprised of foreign currency translation
adjustments, unrealized gains and losses on cash flow hedges,
and amortization of prior service costs and unrecognized gains
and losses in actuarial assumptions on our defined benefit
plans. Foreign currency translation adjustments are
reclassified to net earnings upon sale or upon a complete or
substantially complete liquidation of an investment in a foreign
entity. Unrealized gains and losses on cash flow hedges are
reclassified to net earnings when the hedged item affects net
earnings. Amounts related to defined benefit plans that are in
AOCI are reclassified over the service periods of employees in
the plan. See Note 16 for more information on our defined
benefit plans.

The following table shows the changes in the components of AOCI, net of tax (in millions):

Balance December 31, 2021
AOCI before reclassifications
Reclassifications to statements of earnings
Spinoff of ZimVie Inc.
Reclassifications of net investment hedges to retained earnings

Balance December 31, 2022

The following table shows the reclassification adjustments from AOCI (in millions):

Component of AOCI

Cash flow hedges

Foreign exchange forward contracts
Forward starting interest rate swaps

Defined benefit plans

Settlements, Prior service cost and unrealized actuarial gain

(loss)

Total reclassifications

Amount of Gain / (Loss)
Reclassified from AOCI

For the Years Ended December 31,

2022

2021

2020

$54.8
(0.8)

$ (0.8)
(0.6)

$45.4
(0.6)

54.0
8.0

(1.4)
(0.1)

44.8
6.3

$46.0

$ (1.3)

$38.5

$ 0.2
(1.2)

$(14.0)
(3.8)

$(4.6)
(1.7)

$ 1.4

$(10.2)

$(2.9)

$47.4

$(11.5)

$35.6

Foreign
Currency
Translation

Cash
Flow
Hedges

Defined
Benefit
Plan
Items

Total
AOCI

$(107.1) $ 32.1
83.5
(46.0)
–
–

(123.3)
–
35.2
25.9

$(156.6) $(231.6)
38.6
(47.4)
35.2
25.9

78.4
(1.4)
–
–

$(169.3) $ 69.6

$ (79.6) $(179.3)

Location on
Statements of Earnings

Cost of products sold
Interest expense, net

Total before tax
Provision (benefit) for income taxes

Net of tax

Other (expense) income, net
Provision (benefit) for income taxes

Net of tax

The following table shows the tax effects on each component of AOCI recognized in our consolidated statements of

comprehensive income (loss) (in millions):

For the Years Ended December 31,

Foreign currency cumulative translation adjustments
Unrealized cash flow hedge gains (losses)
Reclassification adjustments on cash flow hedges
Adjustments to prior service cost and unrecognized actuarial

assumptions

Total Other Comprehensive

Income (Loss)

15. Derivative Instruments and Hedging Activities

Before Tax

2022

2021

2020

2022

$(87.3) $(54.8) $ (43.4) $36.0
17.0
(8.0)

100.5
(54.0)

(42.7)
(44.8)

102.5
1.4

Tax

2021

$45.1
16.1
0.1

Net of Tax

2020

2022

2021

2020

$(69.0) $(123.3) $(99.9) $ 25.6
(33.5)
(38.5)

83.5
(46.0)

(9.2)
(6.3)

86.4
1.3

95.9

96.9

(20.9)

18.9

18.5

(11.4)

77.0

78.4

(9.5)

$ 55.1

$146.0

$(151.8) $63.9

$79.8

$(95.9) $ (8.8) $ 66.2

$(55.9)

We are exposed to certain market risks relating to our ongoing business operations, including foreign currency exchange rate

risk, commodity price risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through
regular operating and financing activities. Currently, the only risks that we manage through the use of derivative instruments are
interest rate risk and foreign currency exchange rate risk.

Interest Rate Risk

Derivatives Designated as Fair Value Hedges

We currently use fixed-to-variable interest rate swaps to partially manage our exposure to interest rate risk from our cash
investments and debt portfolio. These derivative instruments are designated as fair value hedges under GAAP. Changes in the fair
value of the derivative instrument are recorded in current earnings and are offset by gains or losses on the underlying debt
instrument.

In June 2021, we entered into $1 billion of fixed-to-variable interest rate swaps that we have designated as fair value hedges of

$1 billion of our fixed rate debt obligations.

As of December 31, 2022 and December 31, 2021, the following amounts were recorded on our consolidated balance sheets

related to cumulative basis adjustments for fair value hedges (in millions):

Balance Sheet Line Item

Long-term debt

Derivatives Designated as Cash Flow Hedges

In 2014, we entered into forward starting interest rate
swaps that were designated as cash flow hedges of our thirty-
year tranche of senior notes (the 4.450% Senior Notes due
2045) we expected to issue in 2015. The forward starting
interest rate swaps mitigated the risk of changes in interest
rates prior to the completion of the notes offering. The
interest rate swaps were settled, and the remaining loss to be
recognized at December 31, 2022 was $24.6 million, which will
be recognized using the effective interest rate method over the
remaining maturity period of the hedged notes.

Foreign Currency Exchange Rate Risk

We operate on a global basis and are exposed to the risk

that our financial condition, results of operations and cash
flows could be adversely affected by changes in foreign
currency exchange rates. To reduce the potential effects of
foreign currency exchange rate movements on net earnings,
we enter into derivative financial instruments in the form of
foreign currency exchange forward contracts with major
financial institutions. We also designated our Euro notes and
other foreign currency exchange forward contracts as net
investment hedges of investments in foreign subsidiaries. We
are primarily exposed to foreign currency exchange rate risk
with respect to transactions and net assets denominated in
Euros, Swiss Francs, Japanese Yen, British Pounds, Canadian
Dollars, Australian Dollars, Korean Won, Swedish Krona,
Czech Koruna, Thai Baht, Taiwan Dollars, South African Rand,
Russian Rubles, Indian Rupees, Turkish Lira, Polish Zloty,
Danish Krone, and Norwegian Krone. We do not use derivative
financial instruments for trading or speculative purposes.

Derivatives Designated as Net Investment Hedges

We are exposed to the impact of foreign exchange rate
fluctuations in the investments in our wholly-owned foreign
subsidiaries that are denominated in currencies other than the
U.S. Dollar. In order to mitigate the volatility in foreign
exchange rates, we issued Euro notes in December 2016 and
November 2019 and designated 100 percent of the Euro notes
to hedge our net investment in certain wholly-owned foreign
subsidiaries that have a functional currency of Euro. All
changes in the fair value of the hedging instrument designated
as a net investment hedge are recorded as a component of
AOCI in our consolidated balance sheets.

At December 31, 2022, we had receive-fixed-rate,

pay-fixed-rate cross-currency interest rate swaps with notional
amounts outstanding of Euro 800 million, Japanese Yen
54.1 billion and Swiss Franc 125 million. These transactions

Carrying Amount of the Hedged Liabilities

Cumulative Amount of Fair Value Hedging
Adjustment Included in the Carrying Amount
of the Hedged Liabilities

December 31, 2022

December 31, 2021

December 31, 2022

December 31, 2021

823.9

985.2

(172.0)

(10.5)

further hedge our net investment in certain wholly-owned
foreign subsidiaries that have a functional currency of Euro,
Japanese Yen and Swiss Franc. All changes in the fair value of
a derivative instrument designated as a net investment hedge
are recorded as a component of AOCI in the consolidated
balance sheets. The portion of this change related to the
excluded component will be amortized into earnings over the
life of the derivative while the remainder will be recorded in
AOCI until the hedged net investment is sold or substantially
eliminated. We recognize the excluded component in interest
expense, net on our consolidated statements of earnings. The
net cash received related to the receive-fixed-rate, pay-fixed-
rate component of the cross-currency interest rate swaps is
reflected in investing cash flows in our consolidated
statements of cash flows. In the year ended December 31,
2022, Euro 575 million of these cross-currency interest rate
swaps matured at a gain of $56.2 million. In the year ended
December 31, 2022, ¥7 billion of these cross-currency swaps
were terminated at a gain of $12.8 million. The settlement of
these gains with the counterparties is reflected in investing
cash flows in our consolidated statements of cash flows and
will remain in AOCI on our consolidated balance sheet until
the hedged net investment is sold or substantially liquidated.

Derivatives Designated as Cash Flow Hedges

Our revenues are generated in various currencies
throughout the world. However, a significant amount of our
inventory is produced in U.S. Dollars. Therefore, movements
in foreign currency exchange rates may have different
proportional effects on our revenues compared to our cost of
products sold. To minimize the effects of foreign currency
exchange rate movements on cash flows, we hedge
intercompany sales of inventory expected to occur within the
next 30 months with foreign currency exchange forward
contracts. We designate these derivative instruments as cash
flow hedges.

We perform quarterly assessments of hedge effectiveness

by verifying and documenting the critical terms of the hedge
instrument and confirming that forecasted transactions have
not changed significantly. We also assess on a quarterly basis
whether there have been adverse developments regarding the
risk of a counterparty default. For derivatives which qualify as
hedges of future cash flows, the gains and losses are
temporarily recorded in AOCI and then recognized in cost of
products sold when the hedged item affects net earnings. On
our consolidated statements of cash flows, the settlements of
these cash flow hedges are recognized in operating cash flows.

For foreign currency exchange forward contracts
outstanding at December 31, 2022, we had obligations to

purchase U.S. Dollars and sell Euros, Japanese Yen, British
Pounds, Canadian Dollars, Australian Dollars, Korean Won,
Swedish Krona, Czech Koruna, Thai Baht, Taiwan Dollars,
South African Rand, Russian Rubles, Indian Rupees, Polish
Zloty, Danish Krone, and Norwegian Krone and obligations to
purchase Swiss Francs and sell U.S. Dollars. These derivatives
mature at dates ranging from January 2023 through June 2025.
As of December 31, 2022, the notional amounts of outstanding
forward contracts entered into with third parties to purchase
U.S. Dollars were $1,317.5 million. As of December 31, 2022,
the notional amounts of outstanding forward contracts entered
into with third parties to purchase Swiss Francs were
$419.2 million.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward exchange
contracts with terms of one to three months to manage
currency exposures for monetary assets and liabilities

Income Statement Presentation

Derivatives Designated as Cash Flow Hedges

denominated in a currency other than an entity’s functional
currency. Any foreign currency re-measurement gains/losses
recognized in earnings are generally offset with gains/losses on
the foreign currency forward exchange contracts in the same
reporting period. The amount of these gains/losses is recorded
in other (expense) income, net. Outstanding contracts are
recorded on the balance sheet at fair value as of the end of the
reporting period. The notional amounts of these contracts are
typically in a range of $1.5 billion to $2.0 billion per quarter.

As discussed in Note 13, in 2021 we entered into a reverse

treasury lock related to our bond tender offer to offset any
increases or decreases to the premium associated with the
tender offer from the date we entered into the lock. We
recognized a gain of $12.0 million that was included in the loss
on early extinguishment of debt.

As discussed in Note 3, we entered into the Forward
Exchange Agreement as part of our pledge to transfer our
ZimVie shares to a third-party financial institution, which
occurred in February 2023.

Derivative instruments designated as cash flow hedges had the following effects, before taxes, on AOCI and net earnings on our

consolidated statements of earnings, consolidated statements of comprehensive income (loss) and consolidated balance sheets (in
millions):

Amount of Gain / (Loss)
Recognized in AOCI

Years Ended December 31,

Amount of Gain / (Loss)
Reclassified from AOCI

Years Ended December 31,

Derivative Instrument

2022

2021

2020

Location on Statement of Earnings

2022

2021

2020

Foreign exchange forward contracts

$100.5

$102.5

$(42.7)

Cost of products sold

$54.8

$(0.8) $45.4

Forward starting interest rate swaps

–

Interest expense, net

(0.7)

(0.6)

$100.5

$102.5

$(42.7)

$54.1

$(1.4) $44.8

The fair value of outstanding derivative instruments designated as cash flow hedges and recorded on the consolidated balance

sheet at December 31, 2022, together with settled derivatives where the hedged item has not yet affected earnings, was a net
unrealized gain of $80.3 million, or $69.6 million after taxes, which is deferred in AOCI. A gain of $82.9 million, or $68.6 million after
taxes, is expected to be reclassified to earnings in cost of products sold and a loss of $0.7 million, or $0.5 million after taxes, is
expected to be reclassified to earnings in interest expense, net over the next twelve months.

The following table presents the effects of fair value, cash flow and net investment hedge accounting on our consolidated

statements of earnings (in millions):

Total amounts of income and expense line items presented in the

statements of earnings in which the effects of fair value, cash flow and
net investment hedges are recorded
The effects of fair value, cash flow and net investment hedging:

Gain (loss) on fair value hedging relationships

Discontinued interest rate swaps
Interest rate swaps

Gain (loss) on cash flow hedging relationships

Foreign exchange forward contracts
Forward starting interest rate swaps

Gain on net investment hedging relationships

Cross-currency interest rate swaps

Location and Amount of Gain/(Loss) Recognized in Income on Fair Value, Cash Flow
and Net Investment Hedging Relationships
Years Ended December 31,

2022

2021

2020

Cost of
Products
Sold

Interest
Expense,
Net

Cost of
Products
Sold

Interest
Expense,
Net

Cost of
Products
Sold

Interest
Expense,
Net

$2,019.5

$(164.8) $1,960.4

$(208.4) $1,824.3

$(212.1)

–
–

54.8
–

–
(4.0)

–
(0.7)

–
–

3.1
6.4

–
–

(0.8)
–

–
(0.6)

45.4
–

3.3
–

–
(0.6)

–

21.6

–

37.5

–

53.5

Derivatives Not Designated as Hedging Instruments

The following gains/(losses) from these derivative instruments were recognized on our consolidated statements of earnings (in

millions):

Derivative Instrument

Foreign exchange forward contracts

Forward Exchange Agreement

Reverse treasury lock

Location on

Years Ended December 31,

Statements of Earnings

2022

2021

2020

Other (expense) income, net

$(26.1) $(1.8) $10.6

Other (expense) income, net

Loss on early extinguishment of debt

1.1

–

12.0

–

These gains/(losses) do not reflect gains of $5.3 million and losses of $3.7 million and $22.8 million in 2022, 2021 and 2020,
respectively, recognized in other (expense) income, net as a result of foreign currency re-measurement of monetary assets and
liabilities denominated in a currency other than an entity’s functional currency.

Balance Sheet Presentation

As of December 31, 2022 and 2021, all derivative instruments designated as fair value hedges, cash flow hedges and net

investment hedges are recorded at fair value on our consolidated balance sheets. On our consolidated balance sheets, we recognize
individual forward contracts with the same counterparty on a net asset/liability basis if we have a master netting agreement with the
counterparty. Under these master netting agreements, we are able to settle derivative instrument assets and liabilities with the
same counterparty in a single transaction, instead of settling each derivative instrument separately. We have master netting
agreements with all of our counterparties. The fair value of derivative instruments on a gross basis is as follows (in millions):

Asset Derivatives Designated as

Hedges

Foreign exchange forward contracts

Cross-currency interest rate swaps

Foreign exchange forward contracts

Cross-currency interest rate swaps

Total asset derivatives

Asset Derivatives Not Designated as

Hedges

Foreign exchange forward contracts

Forward Exchange Agreement

Total asset derivatives not
designated as hedges

Liability Derivatives Designated as

Hedges

Foreign exchange forward contracts

Cross-currency interest rate swaps

Foreign exchange forward contracts

Cross-currency interest rate swaps

Interest rate swaps

Total liability derivatives

Liability Derivatives Not Designated

as Hedges

As of December 31, 2022

As of December 31, 2021

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Other current assets $ 73.2

Other current assets

$42.3

Other current assets

Other assets

6.8

16.6
–

$ 96.6

Other current assets $ 3.1

Other current assets

1.1

$ 4.2

Other current assets

Other assets

Other current assets

16.3

20.9

6.7

$86.2

$ 1.4
–

$ 1.4

Other current liabilities $ 8.0

Other current liabilities

$ 9.6

Other current liabilities

Other long-term liabilities

3.3

14.5

46.3

Other current liabilities

Other long-term liabilities

0.1

1.5

3.3

Other long-term liabilities

172.0

Other long-term liabilities

10.5

$244.1

$25.0

Foreign exchange forward contracts

Other current liabilities $ 4.6

Other current liabilities

$ 1.8

The table below presents the effects of our master netting agreements on our consolidated balance sheets (in millions):

Description

Asset Derivatives

Cash flow hedges

Derivatives not designated as hedges

Liability Derivatives

Cash flow hedges

Derivatives not designated as hedges

As of December 31, 2022

As of December 31, 2021

Location

Gross
Amount

Offset

Net Amount
in Balance
Sheet

Gross
Amount

Offset

Net Amount
in Balance
Sheet

Other current assets

$73.2

$7.1

$66.1

$42.3

$9.5

Other assets

Other current assets

Other current liabilities

Other long-term liabilities

Other current liabilities

16.6

3.1

8.0

14.5

4.6

9.9

1.3

7.1

9.9

1.3

6.7

1.8

0.9

4.6

3.3

20.9

1.4

9.6

1.5

1.8

1.3

0.3

9.5

1.3

0.3

$32.8

19.6

1.1

0.1

0.2

1.5

The following net investment hedge gains (losses) were recognized on our consolidated statements of comprehensive income

(loss) (in millions):

Derivative Instrument

Euro Notes

Cross-currency interest rate swaps

16. Retirement Benefit Plans

Amount of Gain / (Loss)
Recognized in AOCI

Years Ended December 31,

2022

2021

2020

$ 113.1

$ 129.6

$(151.5)

6.4

103.0

(143.8)

$ 119.5

$ 232.6

$(295.3)

We have defined benefit pension plans covering certain U.S. and Puerto Rico employees. Plan benefits are primarily based on
years of credited service and the participant’s average eligible compensation. The U.S. and Puerto Rico plans are frozen; meaning
there are no new participants that can join the plan and participants in the plan do not accrue additional years of service or
compensation. In addition to the U.S. and Puerto Rico defined benefit pension plans, we sponsor various foreign pension
arrangements, including retirement and termination benefit plans required by local law or coordinated with government sponsored
plans.

We use a December 31 measurement date for our benefit plans.

Defined Benefit Plans

The components of net pension expense for our defined benefit retirement plans were as follows (in millions):

Service cost

Interest cost

Expected return on plan assets

Settlements

Amortization of prior service cost

Amortization of unrecognized actuarial loss

Net periodic (income) benefit expense

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2020

2022

2021

2020

$ 0.7

$ 0.9

$ 0.7

$ 22.7

$ 24.7

11.7

10.5

13.9

5.4

4.9

5.4

(30.8)
–

0.3

7.8

(29.8)

(32.9)

(14.3)

(15.6)

(13.3)

6.4

0.3

8.6

0.5

0.3

7.2

(5.0)

(4.1)

0.8

0.5

(4.3)

2.5

(0.5)

(4.2)

1.3

$(10.3) $ (3.1) $(10.3) $ 5.5

$ 12.7

$ 13.4

In our consolidated statements of earnings, service cost is reported in the same location as other compensation costs arising

from services rendered by the pertinent employees while the other components of net pension expense are reported in other
(expense) income, net.

The weighted average actuarial assumptions used to determine net pension expense for our defined benefit retirement plans

were as follows:

Discount rate

Rate of compensation increase

Expected long-term rate of return on

plan assets

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2020

2022

2021

2020

2.86% 2.04% 3.40% 0.67% 0.63% 0.73%

–

2.27% 2.39% 2.28%

6.75% 6.75% 7.75% 1.83% 2.09% 2.17%

The expected long-term rate of return on plan assets is based on the historical and estimated future rates of return on the
different asset classes held in the plans. The expected long-term rate of return is the weighted average of the target asset allocation
of each individual asset class. We believe that historical asset results approximate expected market returns applicable to the
funding of a long-term benefit obligation.

Discount rates were determined for each of our defined benefit retirement plans at their measurement date to reflect the yield

of a portfolio of high quality bonds matched against the timing and amounts of projected future benefit payments.

Changes in projected benefit obligations and plan assets were (in millions):

Projected benefit obligation - beginning of year
Service cost
Interest cost
Employee contributions
Benefits paid
Actuarial loss
Expenses paid
Settlement
Translation (gain) loss

Projected benefit obligation - end of year

Plan assets at fair market value - beginning of year
Actual return on plan assets
Employer contributions
Employee contributions
Settlements
Benefits paid
Expenses paid
Translation (loss) gain

Plan assets at fair market value - end of year

Funded status

Amounts recognized in consolidated balance sheet:

Prepaid pension
Short-term accrued benefit liability
Long-term accrued benefit liability

Net amount recognized

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2022

2021

$ 503.1
0.7
11.7
–
(23.5)
(125.2)
–
–
–

$516.9
0.9
10.5
–
(13.3)
3.0
–
(14.9)
–

$ 807.9
22.7
5.4
24.5
(64.1)
(186.2)
(0.2)
(2.3)
(39.8)

$819.3
24.7
4.9
23.4
(41.7)
6.1
(0.2)
(3.0)
(25.6)

$ 366.8

$503.1

$ 567.9

$807.9

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2022

2021

$499.5
(81.5)
1.7
–
–
(23.5)
–
–

$474.1
50.5
3.1
–
(14.9)
(13.3)
–
–

$821.2
(93.8)
19.8
24.5
(2.3)
(64.1)
(0.2)
(37.9)

$756.7
86.6
22.4
23.4
(3.0)
(41.7)
(0.2)
(23.0)

$396.2

$499.5

$667.2

$821.2

$ 29.4

$ (3.6) $ 99.3

$ 13.3

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2022

2021

$30.9
(0.1)
(1.4)

$ 2.7
(0.1)
(6.2)

$119.9
(1.4)
(19.2)

$ 54.9
(1.3)
(40.3)

$29.4

$(3.6) $ 99.3

$ 13.3

The weighted average actuarial assumptions used to determine the projected benefit obligation for our defined benefit

retirement plans were as follows:

Discount rate

Rate of compensation increase

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2020

2022

2021

2020

5.37% 2.70% 2.70% 2.65% 0.73% 0.61%

–

2.25% 2.48% 2.36%

Plans with projected benefit obligations in excess of plan assets were as follows (in millions):

Projected benefit obligation

Plan assets at fair market value

As of December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2022

2021

$1.5

$468.5

$26.8

$38.8

–

462.2

7.9

8.1

Total accumulated benefit obligations and plans with accumulated benefit obligations in excess of plan assets were as follows

(in millions):

Total accumulated benefit obligations

Plans with accumulated benefit obligations in excess of plan assets:

Accumulated benefit obligation

Plan assets at fair market value

As of December 31,

U.S. and Puerto Rico

Foreign

2022

2021

2022

2021

$366.8

$503.1

$548.6

$783.0

1.5

–

468.5

462.2

24.5

7.9

36.4

8.1

The benefits expected to be paid out in each of the next five years and for the five years combined thereafter are as follows (in

millions):

For the Years Ending December 31,

2023
2024
2025
2026
2027
2028-2032

U.S. and
Puerto Rico

$ 23.7
24.2
25.2
25.6
25.8
132.3

Foreign

$ 32.4
32.0
31.5
30.8
31.3
145.8

The U.S. and Puerto Rico defined benefit retirement plans’

overall investment strategy is to balance total returns by
emphasizing long-term growth of capital while mitigating risk.
We have established target ranges of assets held by the plans of
30 to 65 percent for equity securities, 30 to 50 percent for debt
securities and 0 to 15 percent in non-traditional investments.
The plans strive to have sufficiently diversified assets so that
adverse or unexpected results from one asset class will not have
an unduly detrimental impact on the entire portfolio. We
regularly review the investments in the plans and we may
rebalance them from time-to-time based upon the target asset
allocation of the plans.

For the U.S. and Puerto Rico plans, we maintain an
investment policy statement that guides the investment
allocation in the plans. The investment policy statement
describes the target asset allocation positions described above.
Our benefits committee, along with our investment advisor,

monitor compliance with and administer the investment policy
statement and the plans’ assets and oversee the general
investment strategy and objectives of the plans. Our benefits
committee generally meets quarterly to review performance.

The investment strategies of foreign based plans vary
according to the plan provisions and local laws. The majority
of the assets in foreign based plans are located in Switzerland-
based plans. These assets are held in trusts and are
commingled with the assets of other Swiss companies with
representatives of all the companies making the investment
decisions. The overall strategy is to maximize total returns
while avoiding risk. The trustees of the assets have established
target ranges of assets held by the plans of 30 to 50 percent in
debt securities, 20 to 37 percent in equity securities, 15 to
24 percent in real estate, 3 to 15 percent in cash funds and 0
to 12 percent in other funds.

The fair value of our U.S. and Puerto Rico pension plan

assets by asset category was as follows (in millions):

As of December 31, 2022

Fair Value Measurements at Reporting Date
Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Asset Category

Total

As of December 31, 2021

Fair Value Measurements at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Asset Category

Total

Cash and cash
equivalents

$ 56.6

–

Equity securities

185.5

149.6

35.9

Cash and cash
equivalents

Equity securities

Intermediate fixed

income securities

$ 5.0

263.2

128.0

$5.0

–

263.2

128.0

$ –

–

Fixed income
securities

Other types of
investments

Real estate

195.5

223.0

160.6

–

195.5

223.0

–

160.6

Total

$396.2

$5.0

$391.2

$ –

Total

$821.2

$206.2

$454.4

$160.6

As of December 31, 2021

Fair Value Measurements at
Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Asset Category

Total

Cash and cash
equivalents

Equity securities

Intermediate fixed

income securities

$ 3.8

342.1

153.6

$3.8

–

342.1

153.6

$ –

–

Total

$499.5

$3.8

$495.7

$ –

The fair value of our foreign pension plan assets was as

follows (in millions):

As of December 31, 2022

Fair Value Measurements at Reporting Date Using:

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Asset Category

Total

Cash and cash
equivalents

$ 21.9

–

Equity securities

136.0

122.6

13.4

Fixed income
securities

Other types of
investments

Real estate

168.8

175.0

165.5

–

168.8

175.0

–

165.5

Total

$667.2

$144.5

$357.2

$165.5

As of December 31, 2022 and 2021, our defined benefit

pension plans’ assets did not hold any direct investment in
Zimmer Biomet Holdings common stock.

Equity securities are valued using a market approach,

based on quoted prices for the specific security from
transactions in active exchange markets (Level 1), or in some
cases where we are invested in mutual or collective funds,
based upon the net asset value per unit of the fund which is
determined from quoted market prices of the underlying
securities in the fund’s portfolio (Level 2). Fixed income
securities are valued using a market approach, based upon
quoted prices for the specific security or from institutional bid
evaluations. Real estate is valued by discounting to present
value the cash flows expected to be generated by the specific
properties.

The following table provides a reconciliation of the
beginning and ending balances of our foreign pension plan
assets measured at fair value that used significant
unobservable inputs (Level 3) (in millions):

Beginning Balance

Change in fair value of assets
Net purchases and sales
Translation gain

Ending Balance

December 31, 2022

$160.6
8.0
(0.9)
(2.2)

$165.5

We expect that we will have minimal legally required
funding requirements in 2023 for the qualified U.S. and Puerto
Rico defined benefit retirement plans, and we do not expect to
voluntarily contribute to these plans during 2023.
Contributions to foreign defined benefit plans are estimated to
be $18.8 million in 2023. We do not expect the assets in any of
our plans to be returned to us in the next year.

Defined Contribution Plans

We also sponsor defined contribution plans for

substantially all of the U.S. and Puerto Rico employees and
certain employees in other countries.

The benefits offered under these plans are reflective of
local customs and practices in the countries concerned. We
expensed $48.5 million, $46.3 million and $43.5 million related
to these plans for the years ended December 31, 2022, 2021
and 2020, respectively.

17.

Income Taxes

For the Years Ended December 31,

2022

2021

2020

Tax benefit relating to foreign derived

intangible income and U.S. manufacturer’s
deduction

R&D tax credit

Share-based compensation

(2.9)

0.4

14.2

(2.0)

(2.2)

4.8

1.8

(0.2)

(1.0)

Net uncertain tax positions, including interest

and penalties

(14.6)

2.9

56.9

The components of earnings (loss) from continuing
operations before income taxes consisted of the following (in
millions):

Switzerland tax reform and certain

restructuring transactions

Other

–

40.9

(0.2)

(0.1)

(2.5)

United States operations

$(242.4) $(118.8) $(387.6)

grant which expires in fiscal year 2026.

For the Years Ended December 31,

2022

2021

2020

Effective income tax rate

27.9% 10.7% 91.3%

Our operations in Puerto Rico benefit from a tax incentive

Foreign operations

645.9

617.8

282.4

Total

$ 403.5

$ 499.0

$(105.2)

The provision/(benefit) for income taxes and the income

taxes paid consisted of the following (in millions):

Current:

Federal

State

Foreign

Deferred:

Federal

State

Foreign

For the Years Ended December 31,

2022

2021

2020

$175.3

$ 44.3

$ (58.4)

16.1

7.2

2.7

(14.7)

104.1

(79.7)

176.7

155.6

(135.4)

(74.8)

1.6

8.8

(83.5)

(19.4)

0.8

(64.4)

(102.1)

(12.7)

(10.0)

62.1

39.4

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes. Valuation allowances are
recorded to reduce deferred income tax assets when it is more
likely than not that an income tax benefit will not be realized.
We reclassified certain prior period amounts to conform to the
current period presentation.

The components of deferred taxes consisted of the

following (in millions):

Deferred tax assets:

Inventory

Net operating loss carryover

Tax credit carryover

Capital loss carryover

Product liability and litigation

Provision (benefit) for income taxes

$112.3

$ 53.5

$ (96.0)

Accrued liabilities

Net income taxes paid

$326.6

$ 258.4

$ 142.0

A reconciliation of the U.S. statutory income tax rate to

our effective tax rate is as follows:

For the Years Ended December 31,

Share-based compensation

Accounts receivable

Research and development

Other

Total deferred tax assets

Less: Valuation allowances

2022

2021

2020

Total deferred tax assets after valuation

U.S. statutory income tax rate

21.0% 21.0% 21.0%

State taxes, net of federal deduction

3.2

(2.8)

6.6

allowances

Deferred tax liabilities:

Fixed assets

Intangible assets

(1.8)

(10.3)

37.4

Foreign currency items

(0.5)

3.8

Other

1.3

(4.3)

Total deferred tax liabilities

Tax impact of foreign operations, including U.S.
taxes on international income and foreign tax
credits

Change in valuation allowance

Non-deductible expenses

Goodwill impairment

Tax rate change

Tax impact of certain significant transactions

1.1

5.8

15.3

0.3

0.9

Total net deferred income taxes

$ (67.4) $(129.9)

–

(92.0)

0.1

1.1

5.5

–

As of December 31,

2022

2021

$ 187.9

$ 204.2

476.2

454.0

72.9

7.8

36.7

99.1

36.6

25.8

47.9

55.5

79.7

8.6

44.4

101.7

30.2

14.8

–

56.9

1,046.4

994.5

(463.2)

(460.1)

$ 583.2

$ 534.4

$ 111.6

$ 117.1

466.8

509.7

23.0

49.2

9.5

28.0

650.6

664.3

At December 31, 2022, net operating loss, tax credit
carryovers, and capital loss carryovers are available to reduce
future federal, state and foreign taxable earnings (in millions):

December 31, 2022, had a recognized liability for interest and
penalties of $134.5 million, which does not include any
increase related to business combinations.

Expiration Period:

1-5 years

6-10 years

11+ years

Indefinite

Net
operating
loss
carryover

Tax
credit
carryover

Capital
loss
carryover

$ 27.9

$17.1

$1.3

40.8

282.1

125.4

53.1

1.6

1.1

476.2

72.9

–

6.5

7.8

Valuation allowances

$407.0

$40.0

$7.8

The remaining valuation allowances booked against
deferred tax assets of $8.4 million relate primarily to accrued
liabilities and intangible assets that management believes,
more likely than not, will not be realized.

We generally intend to limit distributions from foreign
subsidiaries to earnings previously taxed in the U.S., primarily
as a result of the transition tax or tax on Global Intangible
Low-Taxed Income (“GILTI”), as we would not be subject to
further U.S. federal tax. In addition to the previously taxed
earnings, we have intercompany notes available to repatriate.
We have not provided deferred taxes on any other outside
basis differences in our investments in other foreign
subsidiaries as these other outside basis differences are
indefinitely reinvested in the operations of our foreign entities.
If we decide at a later date to repatriate these earnings to the
U.S., we would be required to provide for the net tax effects on
these amounts. We estimate that the total tax effect of a
potential repatriation would not be significant under current
enacted tax laws and regulations and at current currency
exchange rates.

The following is a tabular reconciliation of the total

amounts of unrecognized tax benefits (in millions):

During 2021, we accrued interest and penalties of
$8.9 million, and as of December 31, 2021 had a recognized
liability for interest and penalties of $116.2 million, which does
not include any increase related to business combinations.
During 2020, we released interest and penalties of $1.7 million,
and as of December 31, 2020, had a recognized liability for
interest and penalties of $107.4 million, which does not include
any increase related to business combinations.

We operate on a global basis and are subject to numerous

and complex tax laws and regulations. Additionally, tax laws
have and continue to undergo rapid changes in both
application and interpretation by various countries, including
initiatives led by the Organisation for Economic Cooperation
and Development. Our income tax filings are subject to
examinations by taxing authorities throughout the world.
Income tax audits may require an extended period of time to
reach resolution and may result in significant income tax
adjustments when interpretation of tax laws or allocation of
company profits is disputed. Although ultimate timing is
uncertain, the net amount of tax liability for unrecognized tax
benefits may change within the next twelve months due to
changes in audit status, expiration of statutes of limitations,
settlements of tax assessments and other events.
Management’s best estimate of such change is within the range
of a $400 million decrease to a $20 million increase.

We are under continuous audit by the Internal Revenue
Service (“IRS”) and other taxing authorities. During the course
of these audits, we receive proposed adjustments from taxing
authorities that may be material. Therefore, there is a
possibility that an adverse outcome in these audits could have
a material effect on our results of operations and financial
condition. Our U.S. federal income tax returns have been
audited through 2015 and are currently under audit for years
2016-2019.

For the Years Ended December 31,

2022

2021

2020

In October 2020, we reached agreement with the IRS for

tax years 2006-2012 primarily related to the reallocation of
profits between the U.S. and Puerto Rico.

Balance at January 1

$558.6

$619.4

$ 741.8

Increases related to prior periods

25.0

11.5

75.3

Decreases related to prior periods

(78.2)

(12.7)

(158.3)

Increases related to current period

19.0

7.3

3.4

Decreases related to settlements with

taxing authorities

(2.0)

(65.1)

(14.6)

Decreases related to lapse of statute of

limitations

(1.4)

(1.8)

(28.2)

Balance at December 31

$521.0

$558.6

$ 619.4

Amounts impacting effective tax rate, if
recognized balance at December 31

$360.1

$426.4

$ 473.9

We recognize accrued interest and penalties related to
unrecognized tax benefits as income tax expense. During 2022,
we accrued interest and penalties of $18.1 million, and as of

The IRS has proposed adjustments for tax years 2010-

2012, primarily related to the reallocation of profits between
certain U.S. and foreign subsidiaries, which remain unsettled.
We have disputed these adjustments and intend to continue to
vigorously defend our positions as we pursue resolution
through the administrative process with the IRS Independent
Office of Appeals.

The IRS has proposed adjustments for tax years 2013-

2015 related to transfer pricing involving our cost sharing
agreement between the U.S. and Switzerland affiliated
companies and the reallocation of profits between certain U.S.
and foreign subsidiaries. This includes a proposed increase to
our U.S. federal taxable income related to our cost sharing
agreement, which would result in additional tax expense
related to 2013 of approximately $370 million, subject to
interest and penalties. We strongly believe that the position of

the IRS, with regard to this matter, is inconsistent with the
applicable U.S. Treasury regulations governing our cost sharing
agreement. We intend to vigorously contest the adjustment,
and we will pursue all available administrative and, if
necessary, judicial remedies. If we pursue judicial remedies in
the U.S. Tax Court for years 2013-2015, a number of years will
likely elapse before such matters are finally resolved. No
payment of any amount related to this matter is required to be
made, if at all, until all applicable proceedings have been
completed.

a reconciliation of weighted average shares for the basic and
diluted share computations (in millions):

For the Years Ended
December 31,

2022

2021

2020

Weighted average shares outstanding for basic

net earnings per share

209.6

208.6

207.0

Effect of dilutive stock options and other

equity awards

0.7

1.8

–

A public referendum held in Switzerland passed the

Weighted average shares outstanding for

diluted net earnings per share

210.3

210.4

207.0

For the years ended December 31, 2022 and 2021, an

average of 4.4 million options and 1.3 million options,
respectively, to purchase shares of common stock were not
included in the computation of diluted earnings per share as
the exercise prices of these options were greater than the
average market price of the common stock. Since we incurred
a net loss in the year ended December 31, 2020, no dilutive
stock options or other equity awards were included as diluted
shares.

19. Segment Data

We design, manufacture and market orthopedic
reconstructive products; sports medicine, biologics,
extremities and trauma products; CMFT products; surgical
products; and a suite of integrated digital and robotic
technologies that leverage data, data analytics and artificial
intelligence. Our chief operating decision maker (“CODM”)
allocates resources to achieve our operating profit goals
through three operating segments. These operating segments,
which also constitute our reportable segments, are Americas;
EMEA; and Asia Pacific.

Federal Act on Tax Reform and AHV Financing (“TRAF”),
effective January 1, 2020. The TRAF provides transitional
relief measures for companies that are losing the tax benefit of
a ruling, including a “step-up” for amortizable goodwill, equal
to the amount of future tax benefit they would have received
under their existing ruling, subject to certain limitations. This
resulted in recording a deferred tax asset for future deductions
of tax goodwill. In 2022, we reached final agreement with Swiss
authorities for certain tax years, resulting in an increase of the
TRAF deferred tax asset and a corresponding net $59 million
tax benefit. We also recognized a net $22 million tax benefit
associated with closing certain tax years.

State income tax returns are generally subject to
examination for a period of 3 to 5 years after filing of the
respective return. The state impact of any federal changes
generally remains subject to examination by various states for
a period of up to one year after formal notification to the
states. We have various state income tax return positions in
the process of examination, administrative appeals, or
litigation.

In other major jurisdictions, open years are generally 2016

or later.

18. Capital Stock and Earnings per Share

We are authorized to issue 250.0 million shares of
preferred stock, none of which were issued or outstanding as
of December 31, 2022.

The numerator for both basic and diluted earnings per

share is net earnings available to common stockholders. The
denominator for basic earnings per share is the weighted
average number of common shares outstanding during the
period. The denominator for diluted earnings per share is
weighted average shares outstanding adjusted for the effect of
dilutive stock options and other equity awards. The following is

Our CODM evaluates performance based upon segment operating profit exclusive of operating expenses and income pertaining

to certain inventory and manufacturing-related charges, intangible asset amortization, goodwill and intangible asset impairment,
restructuring and other cost reduction initiatives, quality remediation, acquisition, integration, divestiture and related, litigation,
certain European Union Medical Device Regulation expenses, certain research and development expenses, other charges and
corporate functions (collectively referred to as “Corporate items”). Corporate functions include corporate legal, finance,
information technology, human resources and other corporate departments as well as stock-based compensation and certain
operations, distribution, quality assurance and regulatory expenses. Intercompany transactions have been eliminated from segment
operating profit.

Our Americas operating segment is comprised principally of the U.S. and includes other North, Central and South American

markets. This segment also includes research, development engineering, medical education, and brand management for our
product category headquarter locations. Our EMEA operating segment is comprised principally of Europe and includes the Middle
East and African markets. Our Asia Pacific operating segment is comprised principally of Japan, China and Australia and includes
other Asian and Pacific markets. The EMEA and Asia Pacific operating segments include the commercial operations as well as
regional headquarter expenses to operate in those markets. Since the Americas segment includes additional costs related to
centralized product category headquarter expenses, profitability metrics in this operating segment are not comparable to the EMEA
and Asia Pacific operating segments.

Our CODM does not review asset information by operating segment. Instead, our CODM reviews cash flow and other financial

ratios by operating segment.

Net sales and other information by segment are as follows (in millions):

Net Sales

Operating Profit (Loss)

Depreciation and
Amortization

Year Ended December 31,

2022

2021

2020

2022

2021

2020

2022

2021

2020

$4,295.5

$4,102.1

$3,699.5

$ 1,811.9

$ 1,709.3

$ 1,528.2

$142.1

$143.1

$135.6

1,456.6

1,477.2

1,237.3

1,187.8

1,248.0

1,190.7

380.8

407.0

380.3

401.3

303.0

395.4

64.4

63.5

71.4

66.7

73.9

63.0

$6,939.9

$6,827.3

$6,127.5

Americas

EMEA

Asia Pacific

Total

Corporate items

Intangible asset amortization

Goodwill and intangible asset impairment

Total

We conduct business in the following countries that hold

10 percent or more of our total consolidated Property, plant
and equipment, net (in millions):

United States

Other countries

As of December 31,

2022

2021

$1,101.8

$1,084.2

770.7

752.4

Property, plant and equipment, net

$1,872.5

$1,836.6

U.S. sales were $4,012.4 million, $3,853.9 million, and
$3,507.7 million for the years ended December 31, 2022, 2021
and 2020, respectively. Sales within any other individual
country were less than 10 percent of our consolidated sales in
each of those years. Sales are attributable to a country based
upon the customer’s country of domicile.

20. Leases

We own most of our manufacturing facilities, but lease

various office space, vehicles and other less significant assets
throughout the world. Our contracts contain a lease if they

(1,083.8)

(1,084.8)

(1,128.4)

129.6

(526.8)

(292.8)

(529.5)

(512.1)

526.8

(16.3)

(503.0)

–

127.0

529.5

–

113.8

512.1

–

696.3

860.3

83.1

$926.4

$937.7

$898.4

convey a right to control the use of an identified asset, either
explicitly or implicitly, in exchange for consideration. We have
elected not to recognize a right-of-use asset nor a lease
liability for leases with an initial term of twelve months or less.
Additionally, we have elected not to separate non-lease
components from the leased components in the valuation of
our right-of-use asset and lease liability for all asset classes.
Our lease contracts are a necessary part of our business, but
we do not believe they are significant to our overall operations.
We do not have any significant finance leases. Additionally, we
do not have significant leases: where we are considered a
lessor; where we sublease our assets; with an initial term of
twelve months or less; with related parties; with residual value
guarantees; that impose restrictions or covenants on us; or
that have not yet commenced, but create significant rights and
obligations against us.

Our real estate leases generally have terms of between 5
to 10 years and contain lease extension options that can vary
from month-to-month extensions to up to 5 year extensions.
We include extension options in our lease term if we are
reasonably certain to exercise that option. In determining
whether an extension is reasonably certain, we consider the
uniqueness of the property for our needs, the availability of

similar properties, whether the extension period payments
remain the same or may change due to market rates or fixed
price increases in the contract, and other economic factors.
Our vehicle leases generally have terms of between 3 to 5 years
and contain lease extension options on a month-to-month
basis. Our vehicle leases are generally not reasonably certain to
be extended.

We are required to discount our lease liabilities to present

value using the rate implicit in the lease, or our incremental
borrowing rate for a similar term as the lease term if the
implicit rate is not readily available. We generally do not have
adequate information to know the implicit rate in a lease and
therefore use our incremental borrowing rate. The incremental
borrowing rate must be on a collateralized basis, but our debt
arrangements are unsecured. We have determined our
incremental borrowing rate by using our credit rating to
estimate our unsecured borrowing rate and applying
reasonable assumptions to reduce the unsecured rate for a risk
adjustment effect from collateral.

Information on our leases is as follows ($ in millions):

Lease cost

For the Years Ended December 31,

2022

2021

2020

$62.4

$71.1

$68.8

Cash paid for leases recognized in operating

cash flows

$65.2

$70.5

$66.6

Right-of-use assets obtained in exchange for

new lease liabilities

$72.0

$88.8

$74.2

As of December 31,

2022

2021

Right-of-use assets recognized in Other

assets

Lease liabilities recognized in Other current

liabilities

Lease liabilities recognized in Other long-

term liabilities

196.4

53.0

167.3

219.4

56.7

174.9

Weighted-average remaining lease term

5.9 years

6.1 years

Weighted-average discount rate

2.1%

1.8%

Our variable lease costs are not significant.

Our future minimum lease payments as of December 31,

2022 were (in millions):

For the Years Ending December 31,

2023

2024

2025

2026

2027

Thereafter

Total

Less imputed interest

Total

$ 56.8

46.1

35.5

28.0

22.5

46.0

234.9

14.6

$220.3

21. Commitments and Contingencies

We are involved in various legal proceedings, including
product liability, intellectual property, stockholder matters, tax
disputes, commercial, employment, governmental proceedings
and investigations, and other legal matters that arise in the
normal course of our business, including those described
below. On a quarterly and annual basis, we review relevant
information with respect to loss contingencies and update our
accruals, disclosures and estimates of reasonably possible
losses or ranges of loss based on such reviews. We establish
liabilities for loss contingencies on an undiscounted basis when
it is probable that a loss has been incurred and the amount of
the loss can be reasonably estimated. If the reasonable
estimate of a known or probable loss is a range, and no amount
within the range is a better estimate than any other, the
minimum amount of the range is accrued. For matters where a
loss is believed to be reasonably possible, but not probable, or
if no reasonable estimate of known or probable loss is available,
no accrual has been made.

When determining the estimated loss or range of loss,
significant judgment is required. Estimates of probable losses
resulting from litigation and other contingences are inherently
difficult to predict, particularly when the matters are in early
procedural stages with incomplete facts or legal discovery,
involve unsubstantiated or indeterminate claims for damages,
and/or potentially involve penalties, fines or punitive damages.
In addition to the matters described herein, we remain subject
to the risk of future governmental, regulatory and legal actions.
Governmental and regulatory actions may lead to product
recalls, injunctions and other restrictions on our operations
and monetary sanctions, which may include substantial civil or
criminal penalties. Actions involving intellectual property could
result in a loss of patent protection or the ability to market
products, which could lead to significant sales reductions or
cost increases, or otherwise materially affect the results of our
operations.

We recognize litigation-related charges and gains in

Selling, general and administrative expense on our
consolidated statement of earnings. During the years ended
December 31, 2022, 2021, and 2020, we recognized
$65.9 million, $201.0 million and $166.0 million, respectively, of
net litigation-related charges. At December 31, 2022 and 2021,
accrued litigation liabilities were $349.2 million and
$409.3 million, respectively. These litigation-related charges
and accrued liabilities reflect all of our litigation-related
contingencies and not just the matters discussed below. The
ultimate cost of litigation could be materially different than the
amount of the current estimates and accruals and could have a
material adverse impact on our financial condition and results
of operations.

Litigation

Durom Cup-related claims: On July 22, 2008, we

temporarily suspended marketing and distribution of the
Durom Cup in the U.S. Subsequently, a number of product
liability lawsuits were filed against us in various U.S. and
foreign jurisdictions. The plaintiffs seek damages for personal
injury, and they generally allege that the Durom Cup contains
defects that result in complications and revision of the device.
We have settled the majority of these claims in the U.S., but
other lawsuits are pending in various foreign jurisdictions and
additional claims may be asserted in the future. The majority
of claims outside the U.S. are pending in Germany,
Netherlands and Italy.

We rely on significant estimates in determining the
provisions for Durom Cup-related claims, including our
estimate of the number of claims that we will receive and the
average amount we will pay per claim. The actual number of
claims and the actual amount we pay per claim may differ from
our estimates. For various reasons, we cannot reasonably
estimate the possible loss or range of loss that may result from
Durom Cup-related claims in excess of the losses we have
accrued. Although we are vigorously defending these lawsuits,
their ultimate resolution is uncertain. We accrued a litigation-
related charge in this matter based on an estimate of the
reasonably possible loss, as discussed above.

Zimmer M/L Taper, M/L Taper with Kinectiv
Technology, and Versys Femoral Head-related claims
(“Metal Reaction” claims): We are a defendant in a number of
product liability lawsuits relating to our M/L Taper and M/L
Taper with Kinectiv Technology hip stems, and Versys Femoral
Head implants. The plaintiffs seek damages for personal injury,
alleging that defects in the products lead to corrosion at the
head/stem junction resulting in, among other things, pain,
inflammation and revision surgery.

The majority of the cases are consolidated in an MDL that

was created on October 3, 2018 in the U.S. District Court for
the Southern District of New York (In Re: Zimmer M/L Taper
Hip Prosthesis or M/L Taper Hip Prosthesis with Kinectiv
Technology and Versys Femoral Head Products Liability
Litigation). Other related cases are pending in various state
and federal courts, and additional lawsuits are likely to be filed.
Although we are vigorously defending these lawsuits, their
ultimate resolution is uncertain. We accrued a litigation-related
charge in this matter based on an estimate of the reasonably
possible loss, as discussed above.

Biomet metal-on-metal hip implant claims: Biomet is a
defendant in a number of product liability lawsuits relating to
metal-on-metal hip implants, most of which involve the
M2a-Magnum hip system. Cases were originally consolidated in
an MDL in the U.S. District Court for the Northern District of
Indiana (In Re: Biomet M2a Magnum Hip Implant Product
Liability Litigation), but the majority of the claims in the U.S.
have been settled. Trials may still occur in the future, and
although each case will be tried on its particular facts, a verdict
and subsequent final judgment for the plaintiff in one or more
of these cases could have a substantial impact on our potential
liability. Lawsuits are pending in various foreign jurisdictions
and additional claims are expected to be asserted. We continue
to refine our estimates of the potential liability to resolve the
remaining claims and lawsuits. Although we are vigorously
defending these lawsuits, their ultimate resolution is uncertain.
We accrued a litigation-related charge in this matter based on
an estimate of the reasonably possible loss, as discussed above.

Regulatory Matters, Government Investigations and Other Matters

FDA warning letter: In August 2018, we received a

warning letter from the FDA related to observed
non-conformities with current good manufacturing practice
requirements of the Quality System Regulation (21 CFR Part
820) (“QSR”) at our legacy Biomet manufacturing facility in
Warsaw, Indiana (this facility is sometimes referred to in this
report as the “Warsaw North Campus”). We have provided
detailed responses to the FDA as to our corrective actions and
will continue to work expeditiously to address the issues
identified by the FDA during inspections in Warsaw. As of
December 31, 2022, the Warsaw warning letter remained
pending. Until the violations cited in the pending warning
letter are corrected, we may be subject to additional regulatory
action by the FDA, as described more fully below. Additionally,
requests for Certificates to Foreign Governments may not be
granted and premarket approval applications for Class III
devices to which the QSR deviations are reasonably related will
not be approved until the violations have been corrected. In
addition to responding to the warning letter described above,
we are in the process of addressing various FDA Form 483
inspectional observations at certain of our manufacturing
facilities, including observations issued by the FDA following
an inspection of the Warsaw North Campus in January 2020,
which inspection the FDA has classified as Voluntary Action
Indicated (“VAI”). The ultimate outcome of these matters is
presently uncertain. Among other available regulatory actions,
the FDA may impose operating restrictions, including a ceasing
of operations, at one or more facilities, enjoining and
restraining certain violations of applicable law pertaining to
products, seizure of products and assessing civil or criminal
penalties against our officers, employees or us. The FDA could
also issue a corporate warning letter or a recidivist warning
letter or negotiate the entry of a consent decree of permanent
injunction with us. The FDA may also recommend prosecution
by the U.S. Department of Justice. Any adverse regulatory
action, depending on its magnitude, may restrict us from
effectively manufacturing, marketing and selling our products
and could have a material adverse effect on our business,
financial condition and results of operations.

Other Contingencies

22. Subsequent Events

Indemnifications: As part of the ZimVie spinoff, we
agreed to indemnify ZimVie for certain legal and tax matters.
Our responsibilities for legal indemnification are for specifically
identified matters and are subject to a maximum amount,
which is not significant for us. We have made an accrual based
on an estimate of the probable loss for any legal
indemnification. For tax matters, our indemnification is related
to tax periods prior to the spinoff and any tax liabilities that
may be incurred as part of the spinoff. We have maintained
accruals based upon an estimate of any possible tax
indemnifications.

On February 14, 2023, we completed our acquisition of
100 percent of Embody, Inc. (“Embody”) by issuing 1.1 million
shares of our common stock and $19.6 million of cash for initial
consideration valued at $154.6 million. The acquisition also
includes up to $120.0 million in fair value of our common
shares and cash that is subject to achieving future regulatory
and commercial milestones over a three-year period. The
acquisition expands our product portfolio for the sports
medicine market. This acquisition is not expected to have a
significant effect on our results of operations or financial
position.

Contractual obligations: We have entered into

To minimize the dilutive effect of issuing our common

development, distribution and other contractual arrangements
that may result in future payments dependent upon various
events such as the achievement of certain product R&D
milestones, sales milestones, or, at our discretion, maintenance
of exclusive rights to distribute a product. Since there is
uncertainty on the timing or whether such payments will have
to be made, they have not been recognized on our consolidated
balance sheets. These estimated payments could range from $0
to approximately $415 million.

stock for this acquisition, we entered into a prepaid forward
purchase agreement with a financial institution to repurchase
1.1 million shares of our common stock. In order to fund this
prepaid forward purchase agreement and working capital
needs, we borrowed approximately $145 million under our
2022 Five-Year Revolving Facility.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) that are designed to provide reasonable assurance that
information required to be disclosed in the reports that we file
or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in
the Securities and Exchange Commission’s rules and forms,
and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosures. Because of inherent
limitations, disclosure controls and procedures, no matter how
well designed and operated, can provide only reasonable, and
not absolute, assurance that the objectives of disclosure
controls and procedures are met.

Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures as of
the end of the period covered by this report. Based on that
evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that as of December 31, 2022, the end of the
period covered by this report, our disclosure controls and
procedures were effective at a reasonable assurance level.

Management’s Annual Report on Internal Control over Financial
Reporting

The management of Zimmer Biomet Holdings, Inc. is
responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial
reporting is defined in Rules 13a-15(f) and 15d-15(f)
promulgated under the Exchange Act, as a process designed
by, or under the supervision of, the Company’s principal
executive and principal financial officers, or persons
performing similar functions, and effected by the Company’s
board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted
accounting principles and includes those policies and
procedures that:

Item 9B. Other Information

(cid:129) Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;

(cid:129) Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are
being made only in accordance with authorizations of
management and directors of the Company; and

(cid:129) Provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.

The Company’s management assessed the effectiveness of

the Company’s internal control over financial reporting as of
December 31, 2022. In making this assessment, the Company’s
management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework (2013).
Based on their assessment, management has concluded

that, as of December 31, 2022, the Company’s internal control
over financial reporting is effective based on those criteria.

PricewaterhouseCoopers LLP, an independent registered

public accounting firm, audited the effectiveness of our
internal control over financial reporting as of December 31,
2022 and issued an unqualified opinion thereon as stated in
their report, which appears under Item 8 of this Annual Report
on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over
financial reporting that occurred during the quarter ended
December 31, 2022 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.

During the fourth quarter of 2022, the Audit Committee of our Board of Directors approved the engagement of

PricewaterhouseCoopers LLP, our independent registered public accounting firm, to perform certain non-audit services. This
disclosure is made pursuant to Section 10A(i)(2) of the Exchange Act.

Disclosure Pursuant to Section 13(r) of the Exchange Act

Section 13(r) of the Exchange Act requires an issuer to disclose in its annual or quarterly reports if it or any of its affiliates

knowingly engaged in certain activities, transactions or dealings relating to parties subject to sanctions administered by OFAC
within the United States Department of the Treasury, whether or not such activities are prohibited or sanctionable under United
States law. On March 2, 2021, the United States government designated the Russian Federal Security Service (the “FSB”) as a
blocked party under Executive Order 13382. On the same day, OFAC updated General License No. 1B (the “OFAC General
License”), which generally authorizes certain licensing, permitting, certification, notification and related transactions with the FSB
as may be required pursuant to Russian encryption product import controls for the importation, distribution or use of certain
information technology products and radio frequency technology products in the Russian Federation.

As required under Russian law and as permitted under the OFAC General License, one of our subsidiaries in Russia

periodically files notifications with or applies for import licenses and permits from the FSB on our behalf in connection with the
importation of our products into Russia. These notification and licensing activities are free of charge, and none of our gross revenue
or net profits are attributable to such activities. We expect to continue to file notifications with and apply for import licenses and
permits from the FSB to qualify our products for importation and distribution in the Russian Federation to the extent required
under Russian law, but only so long as such notification and licensing activities are authorized by the OFAC General License, any
successor general license or other authorization issued by OFAC.

During the fourth quarter of 2022, we filed one notification with the FSB as described above.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this item is incorporated by reference from our definitive Proxy Statement for the annual meeting of

stockholders to be held on May 12, 2023 (the “2023 Proxy Statement”).

Information regarding our executive officers is included in Part I, Item 1 of this Annual Report on Form 10-K under the caption

“Information About our Executive Officers.”

We have adopted the Zimmer Biomet Code of Ethics for Chief Executive Officer and Senior Financial Officers (the “finance

code of ethics”), a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and
Corporate Controller, and other finance organization senior employees. The finance code of ethics is publicly available in the
Investor Relations section of our website, which may be accessed from our homepage at www.zimmerbiomet.com or directly at
https://investor.zimmerbiomet.com. If we make any substantive amendments to the finance code of ethics or grant any waiver,
including any implicit waiver, from a provision of the code to our Chief Executive Officer, Chief Financial Officer, or Chief
Accounting Officer and Corporate Controller, we will disclose the nature of that amendment in the Investor Relations section of our
website.

Item 11. Executive Compensation

Information required by this item is incorporated by reference from our 2023 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Information required by this item is incorporated by reference from our 2023 Proxy Statement.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information required by this item is incorporated by reference from our 2023 Proxy Statement.

Item 14. Principal Accountant Fees and Services

Information required by this item is incorporated by reference from our 2023 Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) (1) Financial Statements: See the Consolidated Financial Statements under Item 8 of this Report.

(2) Financial Statement Schedule

Schedule II. Valuation and Qualifying Accounts (in millions):

Description

Allowance for Doubtful Accounts:

Year Ended December 31, 2020

Year Ended December 31, 2021

Year Ended December 31, 2022

Deferred Tax Asset Valuation Allowances:

Year Ended December 31, 2020

Year Ended December 31, 2021

Year Ended December 31, 2022

Balance at
Beginning
of Period

Additions
Charged
(Credited)
to Expense

Deductions /
Other Additions
to Reserve

Effects of
Foreign
Currency

Balance at
End of
Period

$ 46.3

$19.1

$ (8.3)(1) $ 1.5

$ 58.6

58.6

60.1

12.4

22.5

(9.0)

(7.6)

(1.9)

3.4

60.1

78.4

$529.6

$(2.0)

$ (3.1)(2) $ 2.8

$527.3

527.3

460.1

(2.6)

(61.5)(2)

(3.1)

460.1

3.0

2.0(2)

(1.9)

463.2

(1)

Includes the $2.1 cumulative-effect adjustment related to the adoption of ASU 2016-13, Financial Instruments –
Credit Losses (Topic 326).

(2) Primarily relate to amounts generated by tax rate changes or current year activity which have offsetting changes to
the associated attribute and therefore there is no resulting impact on tax expense in the consolidated financial
statements.

Other financial statement schedules are omitted because they are not applicable or the required information is shown in
the financial statements or the notes thereto.

(3) Exhibits: See Index to Exhibits below

INDEX TO EXHIBITS

Exhibit No

Description

2.1

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

Separation and Distribution Agreement, dated as of March 1, 2022, by and between Zimmer Biomet
Holdings, Inc. and ZimVie Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report
on Form 8-K filed March 1, 2022)

Restated Certificate of Incorporation of Zimmer Biomet Holdings, Inc., dated May 17, 2021 (incorporated by
reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed May 20, 2021)

Restated Bylaws of Zimmer Biomet Holdings, Inc., effective December 14, 2022

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934

Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly
Report on Form 10-Q filed August 5, 2019)

Indenture dated as of November 17, 2009 between Zimmer Holdings, Inc. (now known as Zimmer Biomet
Holdings, Inc.) and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed December 13, 2016)

First Supplemental Indenture to the Indenture dated as of November 17, 2009 between Zimmer Holdings,
Inc. and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed November 17, 2009)

Form of 5.750% Note due 2039 (incorporated by reference to Exhibit 4.4 above)

Second Supplemental Indenture dated as of November 10, 2011, to the Indenture dated as of November 17,
2009 between Zimmer Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee (incorporated
by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed November 10, 2011)

Third Supplemental Indenture, dated as of March 19, 2015, to the Indenture dated as of November 17, 2009
between Zimmer Holdings, Inc. and Wells Fargo Bank, National Association, as Trustee (incorporated by
reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed March 19, 2015)

Form of 3.550% Notes due 2025 (incorporated by reference to Exhibit 4.7 above)

Form of 4.250% Notes due 2035 (incorporated by reference to Exhibit 4.7 above)

Form of 4.450% Notes due 2045 (incorporated by reference to Exhibit 4.7 above)

Fourth Supplemental Indenture, dated as of December 13, 2016, between Zimmer Biomet Holdings, Inc. and
Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed December 13, 2016)

Form of 2.425% Notes due 2026 (incorporated by reference to Exhibit 4.11 above)

Agency Agreement, dated as of December 13, 2016, by and among Zimmer Biomet Holdings, Inc., as issuer,
Elavon Financial Services DAC, UK Branch, as paying agent, Elavon Financial Services DAC, as registrar and
transfer agent, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed December 13, 2016)

Amendment No. 1, dated as of January 4, 2017, to the Agency Agreement dated as of December 13, 2016, by
and among Zimmer Biomet Holdings, Inc., as issuer, Elavon Financial Services DAC, UK Branch, as paying
agent, Elavon Financial Services DAC, as original registrar and original transfer agent, U.S. Bank National
Association, as successor registrar and successor transfer agent, and Wells Fargo Bank, National
Association, as Trustee (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement
on Form 8-A filed January 4, 2017)

Fifth Supplemental Indenture, dated as of March 19, 2018, between Zimmer Biomet Holdings, Inc. and Wells
Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s
Current Report on Form 8-K filed March 19, 2018)

Form of 3.700% Notes due 2023 (incorporated by reference to Exhibit 4.15 above)

Sixth Supplemental Indenture, dated as of November 15, 2019, between Zimmer Biomet Holdings, Inc. and
Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed November 15, 2019)

4.18

Form of 1.164% Notes due 2027 (incorporated by reference to Exhibit 4.17 above)

Exhibit No

Description

4.19

4.20

4.21

4.22

4.23

4.24

4.25

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

10.9*

10.10*

10.11*

10.12*

Agency Agreement, dated as of November 15, 2019, by and between Zimmer Biomet Holdings, Inc., as
issuer, Elavon Financial Services DAC, UK Branch, as paying agent, U.S. Bank National Association, as
transfer agent and registrar, and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on November 15, 2019)

Seventh Supplemental Indenture, dated as of March 20, 2020, between Zimmer Biomet Holdings, Inc. and
Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed March 20, 2020)

Form of 3.050% Notes due 2026 (incorporated by reference to Exhibit 4.20 above)

Form of 3.550% Notes due 2030 (incorporated by reference to Exhibit 4.20 above)

Eighth Supplemental Indenture, dated as of November 24, 2021, between Zimmer Biomet Holdings, Inc. and
Computershare Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the
Registrant’s Current Report on Form 8-K filed November 24, 2021)

Form of 1.450% Notes due 2024 (incorporated by reference to Exhibit 4.23 above)

Form of 2.600% Notes due 2031 (incorporated by reference to Exhibit 4.23 above)

Zimmer Biomet Holdings, Inc. Executive Performance Incentive Plan, as amended May 7, 2013 and further
amended as of June 24, 2015 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report
on Form 10-Q filed November 9, 2015)

Amendment to Zimmer Biomet Holdings, Inc. Executive Performance Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 7, 2016)

Amendment to Zimmer Biomet Holdings, Inc. Executive Performance Incentive Plan, Effective May 7, 2020
(incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed May 11,
2020)

Amended and Restated Zimmer Biomet Deferred Compensation Plan, effective as of January 1, 2022
(incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed May 5,
2022)

Restated Zimmer Biomet Holdings, Inc. Long Term Disability Income Plan for Highly Compensated
Employees (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed
January 7, 2016)

Restated Benefit Equalization Plan of Zimmer Holdings, Inc. and Its Subsidiary or Affiliated Corporations
Participating in the Zimmer Holdings, Inc. Savings and Investment Program (incorporated by reference to
Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K filed February 27, 2009)

First Amendment to the Restated Benefit Equalization Plan of Zimmer Holdings, Inc. and its Subsidiary or
Affiliated Corporations Participating in the Zimmer Holdings, Inc. Savings and Investment Program
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed January 7,
2016)

Offer Letter, dated as of December 18, 2017, by and between Zimmer Biomet Holdings, Inc. and Bryan C.
Hanson (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
December 21, 2017)

Change in Control Severance Agreement with Bryan C. Hanson (incorporated by reference to Exhibit 10.2
to the Registrant’s Current Report on Form 8-K filed December 21, 2017)

Chief Executive Officer Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation
Agreement with Bryan C. Hanson (incorporated by reference to Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed December 21, 2017)

Offer Letter by and between Zimmer Biomet Holdings, Inc. and Ivan Tornos dated as of October 11, 2018
(incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed
February 26, 2019)

Form of Change in Control Severance Agreement with Rachel Ellingson, Paul Stellato, Ivan Tornos, Suketu
Upadhyay and Lori Winkler (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report
on Form 10-K filed February 26, 2019)

Exhibit No

Description

10.13*

10.14*

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

Form of Confidentiality, Non-Competition and Non-Solicitation Agreement with Ivan Tornos, Suketu
Upadhyay, Rachel Ellingson and Lori Winkler (incorporated by reference to Exhibit 10.12 to the Registrant’s
Annual Report on Form 10-K filed February 26, 2019)

Swiss Employment Agreement by and between Zimmer GmbH and Wilfred van Zuilen dated as of May 5,
2021 (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed August 3, 2021)

Offer Letter by and between Zimmer Biomet Holdings, Inc. and Wilfred van Zuilen dated as of May 5, 2021
(incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed August 3, 2021)

Change in Control Severance Agreement by and between Zimmer GmbH and Wilfred van Zuilen
(incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed August 3, 2021)

Confidentiality, Non-Competition and Non-Solicitation Agreement by and between Zimmer GmbH and
Wilfred van Zuilen (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q filed
August 3, 2021)

Offer Letter between Zimmer Biomet Holdings, Inc. and Suketu Upadhyay dated June 13, 2019
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 19,
2019)

Letter of Appointment by and between Zimmer Asia (HK) Limited and Sang Yi dated June 15, 2020
(incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed
August 5, 2020)

Change in Control Severance Agreement with Sang Yi dated June 15, 2020 (incorporated by reference to
Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed August 5, 2020)

Confidentiality, Non-Competition and Non-Solicitation Agreement with Sang Yi dated June 15, 2020
(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed
August 5, 2020)

Form of Change in Control Severance Agreement with Chad F. Phipps (incorporated by reference to Exhibit
10.13 to the Registrant’s Annual Report on Form 10-K filed February 27, 2009)

Form of Confidentiality, Non-Competition and Non-Solicitation Agreement with Chad F. Phipps
(incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed June 26,
2015)

Offer Letter by and between Zimmer Biomet Holdings, Inc. and Paul Stellato dated as of April 5, 2022
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 16,
2022)

Form of Confidentiality, Non-Competition and Non-Solicitation Agreement with Paul Stellato (incorporated
by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed May 16, 2022)

Restated Zimmer Biomet Holdings, Inc. Executive Severance Plan (incorporated by reference to Exhibit
10.1 to the Registrant’s Quarterly Report on Form 10-Q filed August 6, 2018)

Amendment to Restated Zimmer Biomet Holdings, Inc. Executive Severance Plan (incorporated by
reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed May 5, 2022)

Zimmer Biomet Holdings, Inc. Amended Stock Plan for Non-Employee Directors, as amended May 14, 2021
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed May 20,
2021)

Form of Restricted Stock Unit Award Letter under the Zimmer Biomet Holdings, Inc. Stock Plan for
Non-Employee Directors (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on
Form 10-K filed February 29, 2016)

Zimmer Biomet Holdings, Inc. Deferred Compensation Plan for Non-Employee Directors, as amended
May 14, 2021 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K
filed May 20, 2021)

10.31*

Form of Indemnification Agreement with Non-Employee Directors and Officers (incorporated by reference
to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed July 31, 2008)

Exhibit No

Description

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

10.38*

10.39*

10.40*

10.41*

10.42*

10.43*

10.44

10.45

10.46

10.47

10.48

10.49

Zimmer Biomet Holdings, Inc. Executive Physical Sub Plan (incorporated by reference to Exhibit 10.47 to
the Registrant’s Annual Report on Form 10-K filed February 26, 2019)

Zimmer Biomet Holdings, Inc. 2009 Stock Incentive Plan (As Amended on May 14, 2021) (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 20, 2021)

Form of Nonqualified Stock Option Award Agreement (four-year vesting) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.32 to the Registrant’s
Annual Report on Form 10-K filed February 21, 2020)

Form of Nonqualified Stock Option Award Agreement (two-year vesting) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 to the Registrant’s
Annual Report on Form 10-K filed February 27, 2018)

Form of Nonqualified Stock Option Award Agreement (three-year vesting) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to the Registrant’s
Annual Report on Form 10-K filed February 25, 2022)

Form of Performance-Based Restricted Stock Unit Award Agreement (2020) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.37 to the Registrant’s
Annual Report on Form 10-K filed February 21, 2020)

Form of Performance-Based Restricted Stock Unit Award Agreement (2022) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.38 to the Registrant’s
Annual Report on Form 10-K filed February 25, 2022)

Form of Restricted Stock Unit Award Agreement (four-year vesting) under the Zimmer Biomet Holdings,
Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.38 to the Registrant’s Annual
Report on Form 10-K filed February 21, 2020)

Form of Restricted Stock Unit Award Agreement (three-year vesting) under the Zimmer Biomet Holdings,
Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual
Report on Form 10-K filed February 25, 2022)

Form of Restricted Stock Unit Award Agreement (two-year cliff vesting) under the Zimmer Biomet
Holdings, Inc. 2009 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s
Quarterly Report on Form 10-Q filed August 6, 2018)

Aircraft Time Sharing Agreement by and between Zimmer, Inc. and Bryan C. Hanson (incorporated by
reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K filed February 27, 2018)

First Amendment to Aircraft Time Sharing Agreement by and between Zimmer, Inc. and Bryan C. Hanson
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed
August 5, 2019)

Tax Matters Agreement, dated as of March 1, 2022, by and between Zimmer Biomet Holdings, Inc. and
ZimVie Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
March 1, 2022)

Employee Matters Agreement, dated as of March 1, 2022, by and between Zimmer Biomet Holdings, Inc. and
ZimVie Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed
March 1, 2022)

Transition Services Agreement, dated as of March 1, 2022, by and between Zimmer Biomet Holdings, Inc.
and ZimVie Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K
filed March 1, 2022)

Intellectual Property Matters Agreement, dated as of March 1, 2022, by and between Zimmer Biomet
Holdings, Inc. and ZimVie Inc. (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report
on Form 8-K filed March 1, 2022)

Stockholder and Registration Rights Agreement, dated as of March 1, 2022, by and between Zimmer Biomet
Holdings, Inc. and ZimVie Inc. (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report
on Form 8-K filed March 1, 2022)

Transition Manufacturing and Supply Agreement, dated as of March 1, 2022, by and between Zimmer, Inc.
and ZimVie Inc. (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K
filed March 1, 2022)

Exhibit No

10.50

10.51

10.52

10.53

31.1

31.2

Description

Reverse Transition Manufacturing and Supply Agreement, dated as of March 1, 2022, by and between
Zimmer, Inc. and ZimVie Inc. (incorporated by reference to Exhibit 10.7 to the Registrant’s Current
Report on Form 8-K filed March 1, 2022)

Transitional Trademark License Agreement, dated as of March 1, 2022, by and between Zimmer Biomet
Holdings, Inc. and ZimVie Inc. (incorporated by reference to Exhibit 10.8 to the Registrant’s Current
Report on Form 8-K filed March 1, 2022)

Five-Year Revolving Credit Agreement, dated as of August 19, 2022, among Zimmer Biomet Holdings,
Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed August 22, 2022)

364-Day Revolving Credit Agreement, dated as of August 19, 2022, among Zimmer Biomet Holdings, Inc.,
the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by
reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed August 22, 2022)

List of Subsidiaries of Zimmer Biomet Holdings, Inc.

Consent of PricewaterhouseCoopers LLP

Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 of the Chief
Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 of the Chief
Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File
because XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary

None

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: February 24, 2023

ZIMMER BIOMET HOLDINGS, INC.

By: /s/ Bryan Hanson
Bryan Hanson
Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE

TITLE

DATE

/s/ Bryan Hanson

Bryan Hanson

/s/ Suketu Upadhyay

Suketu Upadhyay

/s/ Paul Stellato

Paul Stellato

/s/ Christopher Begley

Christopher Begley

/s/ Betsy Bernard

Betsy Bernard

/s/ Michael Farrell

Michael Farrell

/s/ Robert Hagemann

Robert Hagemann

/s/ Arthur Higgins

Arthur Higgins

/s/ Maria Teresa Hilado

Maria Teresa Hilado

/s/ Syed Jafry

Syed Jafry

/s/ Sreelakshmi Kolli

Sreelakshmi Kolli

/s/ Michael Michelson

Michael Michelson

Chairman, President and Chief Executive Officer (Principal
Executive Officer)

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)

Director

February 24, 2023

ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF OPERATING PROFIT AND OPERATING PROFIT MARGIN TO
ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING PROFIT MARGIN
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021, and 2020
(in millions, unaudited*)

For the Years Ended December 31,

Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 696.3

$ 860.3

2022

2021

Inventory and manufacturing-related charges(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible asset amortization(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill and intangible asset impairment(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring and other cost reduction initiatives(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Quality remediation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition, integration, divestiture and related(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Litigation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

European Union Medical Device Regulation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other charges(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18.1

526.8

292.8

191.6

33.8

11.4

61.8

53.1

8.1

2020

83.1

55.0

512.1

503.0

107.2

51.1

11.4

5.1

529.5

16.3

125.7

52.8

3.1

192.9

159.8

40.8

10.8

22.5

25.8

Adjusted Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,893.8

$ 1,837.3

$ 1,531.0

For the Years Ended December 31,

2022

2021

2020

Operating Profit Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.0% 12.6% 1.4%

Inventory and manufacturing-related charges(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible asset amortization(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill and intangible asset impairment(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring and other cost reduction initiatives(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Quality remediation(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition, integration, divestiture and related(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Litigation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

European Union Medical Device Regulation(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other charges(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.3

7.6

4.2

2.8

0.5

0.1

0.9

0.8

0.1

7.8

0.2

1.8

0.8

–

2.8

0.6

0.2

0.9

8.4

8.2

1.7

0.8

0.2

2.6

0.4

Adjusted Operating Profit Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27.3% 26.9% 25.0%

Percentages presented on a continuing operations basis

*
(1) Please refer to page number 85-86 of this annual report for detailed explanations of each adjustment.

ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021, and 2020
(unaudited*)

For the Years Ended
December 31,

2022

2021

2020

Diluted Earnings (Loss) Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1.38

$ 2.12

$(0.05)

Inventory and manufacturing-related charges, net of tax(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible asset amortization, net of tax(2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill and intangible asset impairment, net of tax(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring and other cost reduction initiatives, net of tax(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Quality remediation, net of tax(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition, integration, divestiture and related, net of tax(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Litigation, net of tax(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

European Union Medical Device Regulation, net of tax(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss on early extinguishment of debt, net of tax(9)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other charges, net of tax(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other certain tax adjustments(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of dilutive shares assuming net earnings(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.04

2.00

1.39

0.69

0.12

0.03

0.22

0.20

–

0.65

0.17

–

(0.07)

2.04

0.07

0.49

0.19

0.01

0.80

0.15

0.64

0.03

0.09

–

0.09

2.02

2.41

0.39

0.19

0.03

0.59

0.09

–

0.03

(0.41)

(0.03)

Adjusted Diluted Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6.89

$ 6.56

$ 5.35

(1)

Amounts presented on a continuing operations basis, net of the tax effects on the specified items, including the deferred tax
rate changes on intangible assets. The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering
federal and state taxes, as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon
the statutory rates where the items were incurred.
Inventory and manufacturing-related charges include excess and obsolete inventory charges on certain product lines we intend
to discontinue, incremental cost of products sold from stepping up inventory to its fair value from its manufactured cost in
business combination accounting and other inventory and manufacturing-related charges or gains.

(2) We exclude intangible asset amortization as well as deferred tax rate changes on our intangible assets from our non-GAAP

(3)

(4)

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.
In the fourth quarter of 2022 and the first quarter of 2020, we recognized goodwill impairment charges of $289.8 million and
$470.0 million, respectively, related to our EMEA reporting unit. In the second quarters of 2022, 2021 and 2020, we recognized
$3.0 million, $16.3 million and $33.0 million, respectively, of in-process research and development (“IPR&D”) intangible asset
impairments on certain IPR&D projects.
In December 2019 and 2021, we initiated global restructuring programs that included a reorganization of key businesses and an
overall effort to reduce costs in order to accelerate decision-making, focus the organization on priorities to drive growth and to
prepare for the spinoff of ZimVie. Restructuring and other cost reduction initiatives also include other cost reduction and
optimization initiatives that have the goal of reducing costs across the organization. The costs include employee termination
benefits; contract terminations for facilities and sales agents; and other charges, such as retention period salaries and benefits
and relocation costs.

(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 previous inspections of our Warsaw North Campus facility, among other matters. This
quality remediation has required us to devote significant financial resources. The majority of the expenses are related to
consultants who are helping us to update previous documents and redesign certain processes.

(6) The acquisition, integration, divestiture and related gains and expenses we have excluded from our non-GAAP financial

measures resulted from various acquisitions, post-separation costs we’ve incurred related to ZimVie and gains related to a
transition services agreement for services we provide to ZimVie and a transition manufacturing and supply agreement for
products we supply to ZimVie for a limited period.

(7) We are involved in 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, patent
litigation 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.

(8) The European Union Medical Device Regulation imposes significant additional premarket and postmarket requirements. The

new regulations provided a transition period until May 2021 for previously-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
previously-approved medical devices. The incremental costs primarily relate to temporary personnel and third-party
professionals necessary to supplement our internal resources.

(9) We recognized a loss on early extinguishment of debt during the year ended December 31, 2021, as a result of cash tender

offers for certain outstanding series of senior notes of the Company.

(10) 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 optimization, including contract terminations, and gains and losses from changes in
fair value on our equity investments including our investment in ZimVie.

(11) Other certain tax adjustments are related to certain significant and discrete tax adjustments including intercompany

transactions between jurisdictions, ongoing impacts of tax only amortization resulting from certain restructuring transactions,
impacts of significant tax reform including Swiss reform and certain favorable tax audit settlements.

(12) Due to the reported net loss for this period, the effect of dilutive shares assuming net earnings is shown as an adjustment.

Diluted share count used in Adjusted Diluted EPS is:

Diluted shares

Dilutive shares assuming net earnings

Adjusted diluted shares

Year Ended
December 31, 2020

207.0

1.4

208.4

ZIMMER BIOMET HOLDINGS, INC.
RECONCILIATION OF SALES GROWTH RATE TO CONSTANT CURRENCY SALES GROWTH RATE
FOR THE YEAR ENDED DECEMBER 31, 2022
(unaudited)

Geographic Segment

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Product Category

Knees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

S.E.T. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the Year Ended December 31, 2022

Reported
% Growth

Foreign
Exchange
Impact

Constant
Currency
% Growth

(2)

(4)

–%

(12)

(5)

(6)

(4)

(5)

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Corporate Information (As of March 3, 2023)

Shareholder Information

Headquarters
Zimmer Biomet Holdings, Inc.
345 East Main Street
Warsaw, IN 46580, U.S.A.
+1-574-267-6131
www.zimmerbiomet.com

Stock Listing
Zimmer Biomet is listed on the
New York Stock Exchange and the
SIX Swiss Exchange under the symbol ZBH.

Independent Auditors
PricewaterhouseCoopers LLP
Chicago, IL, U.S.A.

Transfer Agent
Communications concerning stock transfer
requirements, loss of certificates and change of
address should be directed to Zimmer Biomet’s
Transfer Agent:

Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
+1-888-552-8493 (domestic)
+1-718-575-3336 (international)
Website: www.computershare.com

Investor Relations
Zimmer Biomet invites shareholders, security
analysts, portfolio managers and other
interested parties to contact:

Keri Mattox
+1-215-275-2431
keri.mattox@zimmerbiomet.com

Zach Weiner
+1-908-591-6955
zach.weiner@zimmerbiomet.com

Dividend Reinvestment and Stock Purchase Plan

Computershare Trust Company, N.A. administers the Computershare CIP, a direct stock purchase and dividend reinvestment plan, which allows registered shareholders
to purchase additional shares of Zimmer Biomet common stock through the automatic reinvestment of dividends. The plan also allows registered shareholders to
purchase shares with optional cash investments of at least $25. The minimum initial investment for new investors is $10,000. Existing registered shareholders as well as
new investors may enroll in the plan online at www.computershare.com/investor, or by completing and submitting an enrollment form that may be obtained by
contacting Computershare at the address or telephone numbers shown above.

Stock Performance Graph

Comparison of Cumulative Total Return for years ended December 31

Assumes $100 was invested on
December 31, 2017 in Zimmer Biomet
common stock and each index and that
dividends were reinvested. Returns over the
indicated period should not be considered
indicative of future returns.

$250

$200

$150

$100

2017

2018

2019

2020

2021

2022

Zimmer Biomet Holdings, Inc.

$100.00

$86.69

$126.03

$130.77

$108.51

$113.18

S&P 500 Stock Index

$100.00

$95.62

$125.72

$148.85

$191.58

$156.88

S&P 500 Health Care Equipment Index $100.00

$116.24

$150.32

$176.83

$211.05

$171.25

Peer Group1

$100.00

$112.39

$147.56

$171.63

$208.11

$165.99

To access Zimmer Biomet’s annual report on form 10-K, quarterly reports on form 10-Q, news releases, earnings releases, proxy statements, or to obtain Zimmer Biomet’s
financial calendar, access SEC filings, listen to earnings calls, or to look up Zimmer Biomet stock quotes, please visit http://investor.zimmerbiomet.com.

1 The Peer Group is selected by our Compensation and Management Development Committee from time to time, most recently in May 2022, and currently consists of the following issuers: Agilent Technologies, Inc.; Align
Technology, Inc.; Baxter International Inc.; Becton Dickinson and Company; Boston Scientific Corporation; DexCom, Inc.; Edwards Lifesciences Corporation; Hologic, Inc.; Intuitive Surgical, Inc.; Laboratory Corporation
of America Holdings; Quest Diagnostics Incorporated; Stryker Corporation; Teleflex Incorporated; and The Cooper Companies, Inc.

This annual report is printed on paper that contains 10% post-consumer waste.

ZIMMERBIOMET.COM

ZIM

UAL REPO R T 2 0 2 2

MER BIOMET HOLDI N G S ,

I N C .