Zimmer Biomet Annual Report 2023

FY2023 Annual Report · Zimmer Biomet

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ANNUAL
REPORT
2023

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

2023 Net Sales b y Geography

2020

2021

2022

2023

United States

International

Consolidated

$3,508

2,620

$6,128

$3,854

2,973

$6,827

$4,012

2,928

$6,940

$4,289

3,105

$7,394

Constant
Reported Currency(1)

% Change 2022-2023

42%

58%

% Change 2022-2023

2023 Net Sales b y Product Category

2020

2021

2022

2023

24%

41%

27%

Knees

Hips

S.E.T.

Other

Consolidated

$2,378

$2,648

$2,778

$3,038

1,751

1,526

473

1,856

1,728

595

1,895

1,697

570

1,967

1,753

636

$6,128

$6,827

$6,940

$7,394

Constant
Reported Currency(1)

12%

10%

13%

Net Sales

Operating Proﬁt

Operating Cash Flow

Diluted Earnings per Share

Zimmer Biomet recorded
net sales of $7.394 billion in
2023, an increase of 6.5%
compared to 2022 primarily
due to the continuing
recovery of elective surgical
procedures following the
global pandemic. In addition,
new product introductions
and commercial execution
contributed to the increase.

Our 2023 reported operating proﬁt
increased primarily due to higher
net sales and the non-recurrence
of goodwill and intangible asset
impairment charges recognized in
2022. Our 2023 adjusted operating
proﬁt improved from 2022
primarily due to the continuing
recovery of elective surgical
procedures following the global
pandemic.

The increase in cash ﬂow from
operating activities in 2023 from
2022 was primarily the result of
higher earnings, lower
restructuring-related payments
and lower tax payments, partially
offset by higher investments in
inventory and higher bonus
payments.

Reported diluted earnings per
share increased in 2023 primarily
due to higher net sales and the
non-recurrence of goodwill and
intangible asset impairment
charges recognized in 2022.
Adjusted diluted earnings per share
improved in 2023 primarily due to
the continuing recovery of elective
surgical procedures following the
global pandemic.

4
9
3

7
2
8

0
4
9

8
2
1

4
0
4

6
5
3

2
8
5

6
7
0

7
3
8

4
9
8

7
8
0

8
7
2

6
9
6

1
3
5

0
6
8

3
8

6
5

9
8

5
5

8
8

2
1

8
3

5
3

)
5
0

0
(

GRAPH KEY

Reported

Adjusted(2)

(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 84.

(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 81-83.

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

To Our Shareholders,

In 2023, Zimmer Biomet evolved from remediation and transformation to innovation and acceleration. It was a critical
year for our team, as we underwent a CEO transition and continued our intense focus on serving our customers and their
patients and creating value for our shareholders. We emerged from 2023 stronger and in a better position to deliver on
the potential of our portfolio and our pipeline. In short, we believe we are set up for continued success in 2024.

I want to thank every one of our Zimmer Biomet team members for their hard work, innovative thinking and
commitment to achieving our Mission. I am honored by the trust they have put in me as their CEO, and I truly believe that
our People & Culture are key to our continued success.

Our Three Priorities

Zimmer Biomet continued to execute, innovate and diversify in 2023.

During the year, we identiﬁed Three Key Priorities to drive our business forward, achieve our goals and deliver value:

•

People & Culture – ﬁrst and foremost, we must have the right people in the right roles and offer a best-in-class
culture at Zimmer Biomet

• Operational Excellence – our team is committed to an owner / operator mindset, focusing on simpliﬁcation,

efficiency and effectiveness

•

Innovation & Diversiﬁcation – we will continue to innovate and diversify boldly through both our own internal
research and development programs as well as external partnerships and acquisitions

2023 Highlights

We’ve already mobilized behind these Three Key Priorities and are moving forward to achieve our goals as a leader in
medtech. Key recent highlights in each of these areas include:

People and Culture

•

Achieved highest employee engagement levels since our 2015 merger, as measured by our annual Engagement
Survey in September 2023. Team members are especially conﬁdent in and excited about ZB’s Mission, the
company’s focus, social responsibility, our compliance programs and their freedom to be their authentic selves.

Earned certiﬁcation in India, Poland, Puerto Rico, Switzerland and the U.S. (2nd consecutive year) by Great Place to
Work®, which recognizes employers who create an outstanding employee experience.

Continued recognition for our Diversity, Equity and Inclusion (DEI) efforts—Zimmer Biomet was named in
Newsweek’s America's Greatest Workplaces for Diversity 2024 list as well as earning a 100% score on the Human Rights
Campaign Foundation's 2023-2024 Corporate Equality Index.

Continued to advance our Environmental, Social and Governance (ESG) programs with publication of our 2022
Sustainability Report and another year of improvement in ESG rankings, including an “AA” from MSCI and an “A” from
the Carbon Disclosure Project (CDP).

Operational Excellence

•

Impacted the lives of almost 4 million patients.

• Officially resolved our last Warning Letter with the U.S. Food and Drug Administration (FDA) for our Warsaw North
Campus, which enables reallocation of time and resources to support future innovation and long-term growth.

•

Initiated a new global restructuring program to optimize our cost base and drive greater efficiencies throughout
the Company. These actions underscore our commitment to improving our growth proﬁle and proﬁtability with
expected meaningful run rate cost savings as we exit 2025.

•

Completed $500 million of share buybacks from November 2023 through January 2024.

Innovation and Diversiﬁcation

•

Launched the Persona® OsseoTi® Keel Tibia for cementless knee replacement, featuring a new porous version of the
Persona anatomic tibia and offering a comprehensive single system solution for a cementless or cemented application.

Acquired Embody, Inc., a privately-held medical device company focused on soft tissue healing, including a
comprehensive portfolio of collagen-based biointegrative solutions to support healing in the most challenging
orthopedic soft tissue injuries – including the TAPESTRY® biointegrative implant for tendon healing and TAPESTRY®
RC, one of the ﬁrst arthroscopic implant systems for rotator cuff repair.

Expanded ZBEdge™ portfolio and showcased key mymobility® with Apple Watch® data.

Launched HAMMR™, an automated Hip Impaction System for bone preparation and implant placement during hip
replacement surgery, designed to help surgeons achieve customized control, precision, and energy levels.

Achieved FDA clearance in February 2024 for our ROSA® Shoulder System, the ﬁrst-to-world platform for robotically-
assisted shoulder surgeries.

The Year Ahead: Boldly Moving Our Mission Forward in 2024

I am extremely excited about our business, our execution and our potential for growth in 2024. This team, focused on
these priorities, can deliver real value to our customers and 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,

Ivan Tornos

President and CEO, Zimmer Biomet

Leadership (As of March 11, 2024)

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

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

Louis A. Shapiro
Retired President and Chief
Executive Officer, Hospital for
Special Surgery

Arthur J. Higgins
Operating Advisor to Abu Dhabi
Investment Authority

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

Ivan Tornos
Director, President and Chief
Executive Officer, Zimmer
Biomet Holdings, Inc.

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

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

Board of Directors

Christopher B. Begley
Chairman of the Board of
Zimmer Biomet Holdings, Inc.
Retired Executive Chairman
and Chief Executive Officer,
Hospira, Inc.

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

Michael J. Farrell
Chairman and Chief Executive
Officer, ResMed Inc.

Management Team

Ivan Tornos
Director, President and Chief Executive
Officer, Zimmer Biomet Holdings, Inc.

David J. Kunz
Senior Vice President, Global Quality
and Regulatory Affair

Chad Phipps
Senior Vice President,
General Counsel and Secretary

Suketu Upadhyay
Chief Financial Officer and Executive
Vice President – Finance, Operations
and Supply Chain

Mark Bezjak
President, Americas

Jim Lancaster
President, Recon and Global
Headquarters Executive Director

Paul Stellato
Vice President, Controller and Chief
Accounting Officer

Lori Winkler
Senior Vice President and
Chief Human Resources Officer

Rachel Ellingson
Senior Vice President and
Chief Strategy Officer

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

Zeeshan Tariq
Senior Vice President and
Chief Information Officer

Sang Yi
Group President, Asia Paciﬁc

Nitin Goyal, M.D.
Chief Science, Technology and
Innovation Officer

Keri P. Mattox
Senior Vice President,
Chief Communications and
Administration Officer

Brian Hatcher
President, CMFT, Trauma and
Foot & Ankle

Nnamdi Njoku
President, Surgical, Sports, Upper
Extremities and Restorative Therapies

Kenneth R. Tripp
Senior Vice President,
Global Operations and Logistics

Wilfred van Zuilen
Group President, Europe, Middle East
and Africa

Forward-Looking Statements

This 2023 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.

This page is intentionally left blank.

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, 2023
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) 373-3333

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 check mark 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 $30,366,867,100 (based on the closing price of these shares on the
New York Stock Exchange on June 30, 2023 and assuming solely for the purpose of this calculation that all directors and executive
officers of the registrant are “affiliates”). As of February 14, 2024, 205,084,022 shares of the registrant’s $.01 par value common
stock were outstanding.

Document

Portions of the Proxy Statement with respect to the 2024 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: competition; pricing
pressures; dependence on new product development, technological advances and innovation; changes in customer demand for our
products and services caused by demographic changes, obsolescence, development of different therapies or other factors; shifts in the
product category or regional sales mix of our products and services; the effects of business disruptions, 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; 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 other government regulators, such
as more stringent requirements for regulatory clearance of products; the outcome of government investigations; 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, repayment demands 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 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 to or 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
other 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 1C. Cybersecurity

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, healthcare institutions,
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 2023. No individual customer
accounted for more than 2 percent of our net sales for 2023.

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 uses and features. Sales force
representatives must have strong technical selling and medical
education skills 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. accounted for approximately 95 percent of net sales
in this region in 2023. 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 accounted for
approximately 55 percent of net sales in the region in 2023.
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 2023. 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.

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.

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. Our ROSA® Robot is
also utilized in hip procedures.

S.E.T.

Our S.E.T. product category includes sports medicine,
biologics, foot and ankle, upper 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. Sports medicine products represented
11 percent of our S.E.T. product category net sales in 2023.
Our biologics products are used as early intervention for joint
preservation or to support surgical procedures. Biologics
products represented 8 percent of our S.E.T. product category
net sales in 2023. Our foot and ankle and upper extremities
products are designed to treat arthritic conditions and
fractures in the foot, ankle, shoulder, elbow and wrist. Our foot
and ankle products represented 4 percent of our S.E.T.
product category net sales in 2023. Our upper extremities
products represented 33 percent of our S.E.T. product
category net sales in 2023. Our trauma products are used to
stabilize damaged or broken bones and their surrounding
tissues to support the body’s natural healing process. Trauma
products represented 24 percent of our S.E.T. product
category net sales in 2023. 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. CMFT products
represented 20 percent of our S.E.T. product category net
sales in 2023. 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

technology, surgical and bone cement products. We market a
collective suite of our products and technologies as the
ZBEdgeTM Platform. The ZBEdge Platform connects robotic
and digital technologies together to collect data before, during
and after surgery, that can deliver insights to surgeons to assist
in making informed decisions on patient care.

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 new data
solutions, surgical techniques, innovative new materials,
biologics products, and implant and instrument designs
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, 2023, we employed approximately 2,200
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 post-market 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 post-market 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. The 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.

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”) has adopted the

European Medical Device Regulation (the “EU MDR”), which
created a single set of medical device regulations for products
marketed in all member countries. The EU MDR took effect in
May 2021, replacing the European Medical Device Directive
(the “MDD”). The EU MDR imposes significant additional
premarket and post-market requirements. Products currently
certified per the MDD regulations must be certified to the new
EU MDR regulation prior to December 2027 or December
2028, depending upon the device’s risk class. 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 2025.
The UK, in the meantime, continues to allow products 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 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.

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 as well as
emerging guidance relating to artificial intelligence. Failure to
comply with any such data protection laws, regulations and
guidance 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 that
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.

In most of our manufacturing network, we have improved

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.

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, 2023, we employed approximately

18,000 employees worldwide, including approximately
2,200 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 7,900 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:
• Respect and show gratitude for the contributions and

diverse perspectives of all team members

• Commit to the highest standards of patient safety, quality

and integrity

• Focus our resources in areas where we will make a

difference

• Ensure the company’s return is equivalent to the value we

provide our customers and patients

• Give back to our communities and people in need.

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, 2023, women made up approximately 35 percent
of our total employee population, and approximately
26 percent of positions at Director level and above. People of
Color (“POC”) made up approximately 25 percent of our total
employee population in the U.S., and comprised approximately
16 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:
• Engage our 18,000 global employees in cultural awareness

and inclusion programming;

• Invest $1 million and provide executive sponsorship to

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

• 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;

• 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;

• Expand our student and early career internship programs to

attract and develop more Black leaders; and

• 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.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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 2023, our Total Recordable Incident Rate was 0.23 and our
Lost Time Incident Rate was 0.13. These results are shared
with relevant regulatory agencies as required and presented to
our Board of Directors.

The following table sets forth certain information with respect to our executive officers as of February 15, 2024.

Name

Ivan Tornos

Mark Bezjak

Rachel Ellingson

Chad Phipps

Paul Stellato

Suketu Upadhyay

Wilfred van Zuilen

Lori Winkler

Sang Yi

Age

Position

President and Chief Executive Officer

President, Americas

Senior Vice President and Chief Strategy Officer

Senior Vice President, General Counsel and Secretary

Vice President, Controller and Chief Accounting Officer

Chief Financial Officer and Executive Vice President—Finance, Operations and
Supply Chain

Group President, Europe, Middle East and Africa

Senior Vice President, Chief Human Resources Officer

Group President, Asia Pacific

Mr. Tornos was appointed President and Chief Executive

Officer and a member of the Board of Directors in August
2023. Previously, he served as the Company’s Chief Operating
Officer since March 2021, as Group President, Global
Businesses and the Americas from December 2019 until March
2021, and as Group President, Orthopedics from joining the
Company in November 2018 until December 2019. 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. Bezjak was appointed President, Americas in
September 2023. As President, Americas, he oversees all
commercial, downstream marketing and distribution activities
in North America and Latin America. Mr. Bezjak joined

Zimmer Biomet in April of 2008 as Director of Corporate Sales
and has held roles of increasing importance within the
Company, most recently serving as President, North America,
since 2021. Prior to his work at Zimmer Biomet, Mr. Bezjak
held multiple roles with Teleflex Incorporated ranging from a
regional sales representative to Director of Strategic Accounts
from 2000 to 2008. He also held various sales representative
roles with Michelin Tire Company from 1997 to 2000.

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 and serves
on their audit and compensation committees.

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.

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. Upadhyay was appointed Chief Financial Officer and
Executive Vice President - Finance, Operations and Supply
Chain in August 2023. Previously, he served as our Executive
Vice President and Chief Financial Officer since joining the
Company 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 Group President, Europe,
Middle East and Africa in September 2023, after having served
as President, Europe, Middle East and Africa since joining the
Company in June 2021. He is responsible for the sales,
marketing and distribution of products, services and solutions
in the Europe, Middle East and Africa region. 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
March 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 Group President, Asia Pacific, in
March 2021. 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 and was promoted to
President, Asia Pacific, in June 2015. Prior to joining the
Company, 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:
• 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;

• announcements of investor conferences and events at which

our executives talk about our products and competitive
strategies, as well as archives of these events;
• press releases on quarterly earnings, product

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

• 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;

• 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

• 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 material 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

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. To remain competitive, we must
continue to identify, prioritize, develop and acquire new
products and technologies, as well as identify, prioritize and
improve existing products and technologies. We must also
obtain and maintain regulatory approvals for such products,
accurately forecast demand, manufacture the correct mix of
products, distribute products to multiple global markets and
market those products profitably. For example, we have
experienced elevated charges for excess and obsolete
inventory while also facing increased backorders due to
unpredictable demand fluctuations across our various markets,
and there can be no assurance that production mix planning or
inventory allocation will match end market demand.

Competition within our markets 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, technical
and other resources than us; respond more quickly to new or
emerging technologies; undertake more extensive marketing
campaigns; operate more effective planning, manufacturing,
sales and distribution channels; adopt more aggressive pricing
policies; or be more successful in attracting potential
customers, employees and strategic partners. We also face
competition from pharmaceutical and other therapies that may
be more attractive than, or have other benefits over, our
products, or that could affect the frequency, progressions or
symptoms of diseases and conditions that our products treat.

Any of these factors, alone or in combination, could cause us to
have difficulty maintaining or increasing sales of our products
or otherwise have an adverse effect on our business and
financial results.

Our products may become obsolete, customers may

not buy our products, and our revenue and
profitability may decline without the timely
introduction of new products and enhancements, due to
changes in markets, or due to changes in applicable
standards of care.

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.

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

Our restructuring programs may not be successful

ways we may not anticipate because of evolving customer
needs, changing demographics, changing industry growth
rates, declines in the musculoskeletal implant market, the
introduction of competing products and technologies, the
emergence of alternative treatment methods, and evolving
surgical philosophies and industry standards. Our products
may become obsolete without the timely introduction of new
products and enhancements, or due to changes in applicable
standards of care. If that happens, our revenue and operating
results would suffer. The success of our new and enhanced
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, product
enhancements and surgical techniques that we develop may
not be accepted quickly, in some or all markets, because of,
among other factors, the need for regulatory clearance,
entrenched patterns of clinical practice 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.

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

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

We have initiated a series of restructuring programs to

reduce costs, improve efficiency, spin off certain businesses,
and prioritize investments in higher-priority growth operations.
Restructuring initiatives involve complex plans and actions
that may include, or result in, workforce reductions, 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
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 our restructuring programs, it could have
a material adverse effect on our competitive position, business,
financial condition, results of operations and cash flows.
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:
• 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;
• difficulties harmonizing and optimizing quality systems and

operations;

• diversion of financial and management resources from

existing operations;

• unforeseen difficulties related to entering markets for which

or geographic regions where we do not have prior
experience;

• potential loss of key employees;
• unforeseen risks and liabilities associated with businesses

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

• 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 a few plants which are concentrated in
a single country or region. 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), 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, international
sanctions, wars or other factors could adversely affect the
ability to manufacture and distribute our products. In the
event of an interruption in manufacturing or involving a critical
supplier, we may be unable to move quickly to alternate means
of producing or acquiring affected products or to meet
customer demand, and alternative sources of supply may not
be adequate to accommodate sudden increases in demand. We
have experienced such interruptions previously, and we may
experience such interruptions in the future. In the event of a
significant interruption, for example, as a result of our or a
supplier’s failure to follow regulatory protocols and
procedures, we (or our suppliers) may experience lengthy
delays in resuming production of affected products due
primarily to the need for additional regulatory approvals. The
global supply chain has been and continues to be negatively
impacted by a variety of macro factors which have, in part,
resulted in challenges to meet end market demand in some
instances. As a result, we may experience lost sales, which we
may be unable to recover, loss of market share, which we may
be unable to recapture, and/or 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 us or 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 or 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 FDA and other 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 loss of access to one or more suppliers; 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. We also provide
sterilization services to certain of our customers. To the extent
we or our contract sterilizers are unable to sterilize our
products or provide sterilization services to our customers,
whether caused by capacity, availability of materials for
sterilization, and regulatory or other restrictions on the use of
ethylene oxide 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.

We are dependent on sophisticated information
technology and if we fail to effectively maintain or
protect our information systems and data, including
from cybersecurity events, our business could be
adversely affected.

We are dependent on sophisticated 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 the
ongoing integration of business acquisitions, we have been
consolidating and integrating the number of systems we
operate and have upgraded and expanded our information
systems and cybersecurity 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 and third-party systems for
maintenance and other purposes. We also have outsourced
elements of our operations to third parties (including

suppliers, customers and other business partners), and, as a
result, we manage a number of third parties who may now or
could in the future have access to our confidential information,
including, but not limited to, intellectual property, proprietary
business information and personal information of patients,
team members and customers (collectively “Confidential
Information”).

• have disputes with customers, physicians, other healthcare

professionals and payors for our products;

• have regulatory sanctions or penalties imposed;
• incur increased operating expenses;
• 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;

Our information systems, and those of third parties with

• incur expenses or lose revenues as a result of a data privacy

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 data
including patient, customer and Confidential Information. In
addition, given their size and complexity, these systems are
vulnerable to service interruptions and to security breaches
from inadvertent or intentional actions by our employees,
third-party suppliers and/or business partners, and from cyber-
attacks by malicious third parties attempting to gain
unauthorized access to our products, systems or Confidential
Information. Our use of artificial intelligence and machine
learning in our infrastructure and products exposes us to new
threats, risks and uncertainties, including with respect to
changing laws and regulations regarding the use of such
technologies.

Like other large multi-national corporations, we regularly

experience cyber attacks, and we expect to continue to be
subject to such attacks. These attacks may include phishing,
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. Evolving artificial intelligence and machine learning
continue to improve the capabilities of cyber attackers. 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 efforts targeting remote
workers, which exposes us to additional cybersecurity risks.
Our cybersecurity program, 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:
• suffer a loss of access to or alteration of all or a portion of

our Confidential Information;

• have difficulty meeting our compliance requirements,

including with respect to data retention and reporting, QMS,
quality reporting or other requirements;

• have difficulty developing new or enhanced products;
• lose existing customers, suppliers and business partners;
• have difficulty attracting new customers;
• have problems in determining product cost estimates and

establishing appropriate pricing;

• suffer outages or disruptions in our operations, supply chain,

products and/or services, including our ZBEdgeTM
ecosystem;

• have difficulty preventing, detecting, and controlling fraud;

breach; or

• suffer other adverse consequences.

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 cybersecurity incidents or
data breaches will not occur or that technology or information
system 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.

Business and economic conditions 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 impacts 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; supply chain disruptions; loss of
or limitations on access to certain markets due to trade and
tariff disputes and disruptions or national, regional and global
conflicts; adverse economic developments; healthcare staffing
challenges; government shutdowns; natural disasters; and
other events that can, singly or in combination with other
factors, adversely affect our business and financial results.
There can be no assurance that we will successfully manage
risks, such as experienced during the COVID-19 pandemic,
without adverse impacts to our business or financial results.
Moreover, the occurrence of any one or more risks described
in these Risk Factors or otherwise may have unpredictable
effects on other risks, our business, financial or operational
results which may be comparable to, or more adverse than,
those we experienced in connection with the COVID-19
pandemic.

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
employees, agents and distributors 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

marketing employees, agents or distributors could have a
material adverse effect on our business and results of
operations.

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 of 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. Similarly, the Italian Public
Administration has implemented a Pay Back Law to obtain
reimbursement from the medical device industry to contribute
to government overspending on medical devices beginning in
2015, which assessments we are challenging. Additional cost
reduction and recovery strategies are likely to be proposed in
various jurisdictions, the effects of which are difficult to
predict, but may have a material adverse effect on our sales
and results of operations.

Pricing pressure continues due to 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 regulatory changes, elections and
other political changes, 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, 2023, our total indebtedness was $5.8 billion. As
of December 31, 2023, our debt service principal obligations
(excluding interest, leases and equipment notes), during the
next 12 months are expected to be $0.9 billion. As a result of
the increase in our debt, demands on our cash resources have
increased; such demand would further amplify if we fund future
mergers and acquisitions using debt financing. Our current and
future increased level of debt could, among other things:
• 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;

• limit our ability to obtain additional financing to fund future

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

• limit our flexibility in planning for, or reacting to, changes in

our business and the industry in which we operate;

• restrict our ability to make strategic investments,

collaborations, acquisitions or dispositions or to exploit
business opportunities;

• place us at a competitive disadvantage compared to our

competitors that have less debt;

• 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;

• adversely affect the market price of our common stock; and
• 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 other externally-determined rates. SOFR
and such other rates have increased from recent lows, which
has increased our cost of borrowing. Any further 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.

Changes in tax laws in countries in which we do

business are expected to negatively impact our
effective tax rate; further changes in tax laws may
have a further negative impact.

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.

Tax law changes in certain foreign jurisdictions in which
we operate conforming to Pillar Two of the base erosion and
profit shifting plan (“Pillar Two”) undertaken by the
Organisation for Economic Co-operation and Development will
take effect in 2024. We expect the implementation and
interpretation of Pillar Two across all jurisdictions where we do
business will have an adverse effect on our effective tax rate,
results of operations and cash flows. These tax law changes
require profits earned in such jurisdictions to be subject to a
minimum 15 percent income tax rate. Currently, uncertainty
exists regarding how the Pillar Two rules interact with existing
national tax laws and whether such rules pertaining to the
Undertaxed Profits Rule that will take effect in 2025 are
consistent with existing tax treaty obligations.

We may have additional tax liabilities as a result

of examinations and audits.

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.

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

and distributors are properly characterized as independent
contractors, tax, labor 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, as well as provide other employer-employee
related benefits. 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, 2023, we had
$8.8 billion in goodwill and $4.9 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; 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. There were no impairment charges during the year
ended December 31, 2023, but if the operating performance at
one or more of our reporting units significantly declines,
including if competing or alternative technologies or
pharmacological treatments, 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.

The spinoff of ZimVie Inc. and the divestiture of

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

We structure our relationships with independent agents

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

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

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.

Global Operational Risks

We conduct a significant amount of our sales and

manufacturing activities 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 2023 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:
• changes to trade restrictions and protection measures, new
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 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;

• changes in foreign medical reimbursement policies and

programs;

• differences in and changes to foreign regulatory

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

• differing local product preferences and product

requirements;

• fluctuations in foreign currency exchange rates;
• the effects of inflation, including the effects of different rates
of inflation in different countries, on our costs and expenses,
and the costs of our products;

• diminished protection of intellectual property in some

countries outside of the U.S.;

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

labor relations laws;

• extraterritorial effects of U.S. laws such as the FCPA;
• effects of foreign anti-corruption laws, such as the UK

Bribery Act;

• difficulty in staffing and managing foreign operations;
• labor force instability;
• increased tax liabilities under foreign tax laws or changes

thereto; and

• 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 directors, officers,
employees, agents or distributors; prohibitions or restrictions
relating to 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
to exports from such markets may have a material adverse
effect on our business, and may limit our ability to operate,
both in the affected market and globally.

The effects of emerging, expanding and new conflicts,
such as a possible expansion of the Russian-Ukrainian conflict,
a possible expansion of conflicts in the Middle East, or a
possible conflict involving China and Taiwan, may not be
limited to the specific markets involved. Sanctions and other
civil, political and economic effects of such conflicts are likely
to have adverse impacts upon us. For example, we produced
implants and instruments in China that supported a significant
portion of our global total profit in 2023; if trade restrictions or
other barriers arose that limited our ability to export from
China and we are unable to fully mitigate the risk or find
alternative sources of supply, such trade restrictions could
have a material and adverse effect on our sales and results of
operations. Additionally, other trade disruptions include
supply chain continuity disruption; inflationary pressures and
increased costs of raw materials and inputs; manufacturing or
shipping delays; increased shipping costs and transit delays
(such as experienced due to attacks on shipping transiting the
Red Sea); and increased disruptions and delays affecting our
ability to operate in and to collect payment for our products
and services in particular markets.

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 complex and expensive laws and
governmental regulations relating to the development,
design, product standards, packaging, advertising,
promotion, post-market 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 and
services 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
product enhancements, or loss of approval for current
products, could result in delayed realization of product
revenues or in substantial additional costs. Emerging
opportunities, including those presented by the use of machine
learning and artificial intelligence in our current and future
products, devices and services are expected to present new,
complex and potentially inconsistent legal and regulatory
requirements across the various jurisdictions in which we
operate.

Both before and after a product is commercially released,

we have ongoing responsibilities under FDA regulations, the
EU MDR and other supranational, national, federal, regional,
state and local requirements. These requirements relate to
quality systems, recordkeeping, labeling, promotional and
marketing 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. Additionally,
the availability of designated European notified body services
to certify compliance with the new EU MDR requirements is
limited, which may delay the marketing approval for some of
our products under the EU MDR (and, potentially, the UK
MDR). Furthermore, regulators strictly regulate the
promotional claims that we may make about approved or
cleared products.

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 the product labelling approved by the
regulator, the regulator may 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.

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. In
addition, some of our products and services incorporate
software or information technology that processes patient
health data for treatment, 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 laws and regulations that govern the
collection, use, disclosure, transfer, storage, location, disposal,

processing and protection of health-related, personal and other
information. The FDA has issued guidance to which we are
subject concerning data security for medical devices. 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. These laws and
regulations may be more restrictive than, and not be
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 products and services to customers in those countries.
In addition, certain of our suppliers, partners, affiliates and
associates are subject to privacy, security and breach
notification regulations established under these and other
international, national, state and local laws. We, and certain of
our suppliers, partners, affiliates and associates, are also
subject to reporting requirements relating to certain data
breaches and cybersecurity events.

The interpretation and enforcement of the laws and
regulations described above are uncertain and subject to
change, and we expect to incur substantial costs to monitor for
and comply with changing and additional requirements. In
addition, new and more stringent multinational, national and
state privacy legislation and regulations are likely to be
adopted. 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 the 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, finances 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 other litigation,
claims and other proceedings that arise from time to time.
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 financial results 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, complicate, defer or prevent a merger, acquisition,
tender offer, takeover attempt or other change of control
transaction, including those that a stockholder might consider
in its best interest, that might result in a premium over the
market price for the shares held by our stockholders, or that
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 certain actions against us or on behalf of the
Company. 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 this
provision. 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 1B. Unresolved Staff Comments

Not Applicable.

Item 1C. Cybersecurity

Risk Management and Strategy

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 National Institute of Standards
and Technology (“NIST”) Cybersecurity Framework. We are
currently ISO 27001 certified for our surgery planning
ecosystem and plan to continue to maintain this industry
certification. We evaluate and monitor cybersecurity risk as
part of our overall enterprise risk management framework. Our
cybersecurity program includes a variety of processes to
assess, identify and manage risks from cybersecurity threats
arising from our own and third-party provided systems,
including customized annual training requirements, simulation
exercises, threat monitoring and detection tools (including
those using artificial intelligence and machine learning), threat
containment methods, risk assessments, third-party
penetration testing and security requirements for our suppliers
and other third parties. We assess third party cybersecurity
controls through a cybersecurity questionnaire and include
security and privacy addenda to our contracts where
applicable. We maintain separation of duties between our
cybersecurity organization and other IT functional areas as
well as established roles that define the responsibility of the
cybersecurity team within our organization.

Under our program, cybersecurity issues are analyzed by

subject matter experts, including those in information security,
information technology, risk, and other areas to evaluate
potential security, financial, operational, reputational and
other risks, as well as to identify any potential data breaches or
other cybersecurity incidents. Matters involving potential data
breaches and other cybersecurity incidents are considered
against applicable escalation and notification requirements. We
monitor and periodically enhance our cybersecurity program,
processes, techniques and procedures to combat evolving and
adaptive cybersecurity threats.

We engage third parties to enhance and strengthen our
cybersecurity program, to provide additional capabilities and
support and to provide annual independent assessments and
evaluations of our cybersecurity program. Third parties also
provide managed services for security operations, incident
response, vulnerability remediation consulting, security
remediation services, patching, and external audit services.

Like other large multi-national corporations, we regularly
experience cybersecurity incidents, and we expect to continue
to be subject to such incidents. To date, there have not been
any previous cybersecurity incidents that materially affected
us. However, we are subject to ongoing risks from
cybersecurity threats that could materially affect us, including
our business strategy, results of operations, or financial
condition, as further described in Item 1A. Risk Factors—We
are dependent on sophisticated information technology
and if we fail to effectively maintain or protect our
information systems or data, including from data
breaches and cybersecurity events, our business could be
adversely affected.

Governance

The Audit Committee of the Board of Directors oversees

our cybersecurity program. It 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 the Audit
Committee. Additionally, cybersecurity threats and incidents
determined through our cybersecurity program to present
potential material impacts to our financial results, operations,
and/or reputation are required to be immediately reported to
the Audit Committee in accordance with our escalation
framework.

Our Chief Information Security Officer (“CISO”) leads our
cybersecurity program through our global information security

Item 2. Properties

operations team. Our CISO has over 20 years of experience in
information technology security obtained in civilian and
military roles, and regularly reports on cybersecurity matters
to our Audit Committee. As of December 31, 2023, our
Cybersecurity, Risk and Compliance team consisted of team
members and contractors, many of whom have advanced
degrees and cybersecurity-related industry certifications.
Under the direction of our CISO, we monitor developments
that could affect our long-term organizational cybersecurity
strategy based on threats globally and to continually enhance
our cybersecurity program in response to such developments.
We have established processes providing for timely review
of cybersecurity incidents by a cross-functional subcommittee
of our Disclosure Committee to evaluate such incidents for
potential disclosure, and to ensure that the members of
management responsible for overseeing the operation of our
disclosure controls and procedures are informed of such
cybersecurity risks and incidents. This subcommittee consists
of leading representatives from our information security,
accounting, legal and internal audit functions and may be
supplemented by other subject matter experts depending on
the nature of cybersecurity incidents under review. The
subcommittee meets on a periodic and ad hoc basis to receive
reports about cybersecurity incidents and our cybersecurity
program. The subcommittee escalates certain cybersecurity
incidents to the Disclosure Committee within our escalation
framework. Additionally, our escalation framework requires
that any cybersecurity incidents determined to be material be
immediately reported to the Audit Committee.

We own or lease approximately 300 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, 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 6, 2024, there were approximately 13,587 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

and the S&P 500 Health Care Equipment Index. The chart assumes $100 was invested on December 31, 2018 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.

Company/Index

2018

2019

2020

2021

2022

2023

Zimmer Biomet Holdings, Inc.

S&P 500 Stock Index

S&P 500 Health Care Equipment Index

$100.00

$145.38

$150.84

$125.16

$130.55

$125.57

100.00

131.49

155.68

200.37

164.08

207.21

100.00

129.32

152.12

181.56

147.32

160.64

Issuer Purchases of Equity Securities

The following table summarizes repurchases of common stock settled during the three months ended December 31, 2023:

Period

October 2023

November 2023

December 2023

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)

–

$591,700,271

1,610,580

2,160,287

111.44

118.69

1,610,580

2,160,287

412,214,066

155,805,204

3,770,867

$115.60

3,770,867

$155,805,204

(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 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. 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.

The following discussion and analysis should be

read in conjunction with the consolidated financial
statements and the corresponding notes included
elsewhere in this Annual Report on Form 10-K.
Amounts reported in millions within this Annual Report
on Form 10-K are computed based on the actual
amounts. As a result, the sum of the components may
not equal the total amount reported in millions due to
rounding. In addition, certain columns and rows within
tables may not sum to the totals due to the use of
rounded numbers. Percentages presented are
calculated from the underlying unrounded amounts.

The following discussion, analysis and

comparisons generally focus on the operating results
for the years ended December 31, 2023 and 2022.
Discussion, analysis and comparisons of the years
ended December 31, 2022 and 2021 that are not
included in this Form 10-K can be found in
“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, 2022.

EXECUTIVE LEVEL OVERVIEW

2023 Financial Highlights

In 2023, we experienced fewer disruptions to
elective surgical procedures from the COVID-19 global
pandemic as compared to 2022 when the Omicron
variant and staffing shortages caused widespread
deferrals of procedures. In addition, improvements in
our supply chain, procedure volume recovery from
patients who deferred surgical procedures related to
the pandemic, new product introductions and
commercial execution have contributed to our net
sales growth. As a result, in 2023 our net sales
increased by 6.5 percent compared to 2022. Our net
sales in 2023 were tempered by a negative 1.0 percent
effect from changes in foreign currency exchange
rates.

Our net earnings from continuing operations were
$1,024.0 million in 2023 compared to $290.2 million in
2022. Our net earnings increased in 2023 driven by the

higher net sales, favorable tax settlements and lower
operating expenses. Operating expenses declined
primarily due to lower litigation-related, restructuring-
related and quality remediation-related charges. In
addition, 2022 included $292.8 million of goodwill and
intangible asset impairments, and a $116.6 million loss
on our investment in ZimVie.

2024 Outlook

We expect year-over-year revenue growth of
mid-single digits in 2024 to be driven by a combination
of market growth, new product introductions,
commercial execution and continued improvements in
product supply. Based on foreign currency exchange
rates at the end of 2023, we expect foreign currency to
negatively affect year-over-year net sales by
approximately 0.5 percent. We estimate operating
profit will increase in 2024 when compared to 2023 due
to higher net sales, leverage from fixed operating
expenses and savings from our restructuring plans.
However, we estimate these favorable items may be
partially offset by higher intangible asset amortization
and increased restructuring-related costs to implement
our plans. We estimate our net interest expense will
increase slightly due to higher interest rates. We
expect our provision for income taxes will increase in
2024 when compared to 2023 due to the European
Union adoption of Pillar Two and the non-reoccurrence
of favorable tax settlements.

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.

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,

2023

2022

2021

2023 vs. 2022
% Inc

2022 vs. 2021
% Inc/(Dec)

$4,288.8

$4,012.4

$3,853.9

6.9%

3,105.4

2,927.5

2,973.4

$7,394.2

$6,939.9

$6,827.3

6.1

6.5

4.1%

(1.5)

1.6

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,

2023

2022

2021

2023 vs. 2022
% Inc

2022 vs. 2021
% Inc/(Dec)

$3,038.4

$2,778.3

$2,647.9

9.4%

1,967.2

1,894.9

1,856.1

1,752.6

1,696.7

1,727.8

3.8

3.3

636.0

570.0

595.5

11.6

4.9%

2.1

(1.8)

(4.3)

$7,394.2

$6,939.9

$6,827.3

6.5

1.6

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

(dollars in millions):

Knees

United States
International

Total

Hips

United States
International

Total

Year Ended December 31,

2023

2022

2021

2023 vs. 2022
% Inc

2022 vs. 2021
% Inc/(Dec)

$1,770.6
1,267.8

$1,615.0
1,163.3

$1,487.6
1,160.3

$3,038.4

$2,778.3

$2,647.9

$1,012.3
954.9

$ 960.9
934.0

$ 921.5
934.6

$1,967.2

$1,894.9

$1,856.1

9.6%
9.0

9.4

5.4%
2.2

3.8

8.6%
0.3

4.9

4.3%
(0.1)

2.1

Demand (Volume/Mix) Trends

Foreign Currency Exchange Rates

Changes in volume and mix of product sales had positive
effects of 8.1 percent and 7.6 percent on year-over-year sales
during the years ended December 31, 2023 and 2022,
respectively. We saw recovery of elective surgical procedures
across most of our major markets driving volume growth. In
addition, new product introductions and commercial
execution contributed positively to volume and mix trends.

Pricing Trends

Global selling prices had negative effects of 0.6 percent
and 1.0 percent on year-over-year sales during 2023 and 2022,
respectively. The majority of countries in which we operate
continue to experience pricing pressure from local hospitals,
health systems, and governmental healthcare cost
containment efforts. However, we have had some success in
reducing the negative effects of pricing due to internal
initiatives and being able to pass some inflationary impacts on
to customers.

In 2023 and 2022, changes in foreign currency exchange

rates had negative effects of 1.0 percent and 5.0 percent,
respectively, on year-over-year sales.

Geography

The 6.9 percent net sales growth in the U.S. in 2023 when
compared to 2022 was primarily driven by recovery in surgical
procedures as COVID-19 caused fewer disruptions, especially
in the Knees and Hips categories. Internationally, net sales
increased by 6.1 percent in 2023 when compared to 2022. The
2023 International net sales increase was similarly driven by
recovery in surgical procedures as COVID-19 caused fewer
disruptions across most of our major markets, but volume
increases were partially offset by the negative impacts of
changes in foreign currency exchange rates of 2.1 percent.

Product Categories

In 2023, our Knees and Hips net sales increased by
9.4 percent and 3.8 percent, respectively, when compared to
2022 due to the recovery in elective surgical procedures,
improvements in our supply chain and new product
introductions. Changes in foreign currency exchange rates had
negative effects of 0.8 percent and 1.3 percent on 2023 Knees
and Hips net sales, respectively. S.E.T. net sales increased by
3.3 percent in 2023 when compared to 2022. Changes in
foreign currency exchange rates had a negative effect of
0.5 percent on 2023 S.E.T. net sales. S.E.T. net sales growth
was primarily driven by growth in CMFT, sports medicine and
upper extremities products of 12.9 percent, 10.6 percent and
9.4 percent, respectively, partially offset by a 5.5 percent
decline in trauma. S.E.T.’s performance was also negatively
impacted by unfavorable changes in reimbursement for certain
restorative therapy products. Other product category net sales
increased by 11.6 percent in 2023 when compared to 2022
primarily due to higher net sales for our ROSA robot.

Expenses as a Percent of Net Sales

Year Ended December 31,

2023

2022

2021

2023 vs. 2022
Inc/(Dec)

2022 vs. 2021
Inc/(Dec)

28.2% 29.1% 28.7% (0.9)%

0.4%

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

38.4

39.8

41.6

(1.4)

(1.8)

–

4.2

0.2

(4.2)

4.0

2.1

–

2.8

0.5

1.8

0.8

0.3

0.2

–

(0.7)

(0.5)

0.1

7.3

1.0

(0.3)

0.2

(2.6)

Operating Profit

17.3

10.0

12.6

Cost of Products Sold and Intangible Asset Amortization

Cost of products sold, excluding intangible asset
amortization, increased in 2023 compared to 2022 primarily
due to higher sales. However, as a percentage of net sales costs
of products sold, excluding intangible asset amortization,
declined in 2023 compared to 2022. This decline was primarily
due to volume and mix shift to higher margin products and
markets, higher hedge gains recognized in the current year
period as part of our hedging program and lower royalty
expense. The reduction in royalty expense was partially the
result of agreements we entered into to acquire intellectual
property through the buyout of certain licensing arrangements,
which are recognized as intangible assets and result in
additional intangible asset amortization expense instead of
royalty expense. These favorable items were partially offset by

higher excess and obsolete inventory charges, inflationary cost
pressures and lower average selling prices.

Intangible asset amortization expense increased in 2023
when compared to 2022 due to acquisitions we made in 2023,
including intangible assets acquired from the buyout of certain
royalty-related licensing agreements as described above.
However, as a percentage of net sales intangible asset
amortization in 2023 was similar to 2022 as amortization
expense and net sales increased by a similar percentage.

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 2023 and 2022 compared to
the prior year:

Prior year gross margin

Lower average selling prices

Manufacturing costs

Volume, product and market mix and other

Inventory charges

Changes in foreign currency exchange rates

Intangible asset amortization

Current year gross margin

Year Ended December 31,

2023

2022

63.3% 63.5%

(0.2)

(0.1)

1.4

(0.3)

(0.9)

0.6

(0.5)

(0.1)

0.3

–

0.3

0.2

64.2% 63.3%

both amount and as a percentage of net sales in 2023
compared to 2022. The increases were driven by higher
personnel-related costs, higher spending on our initial
compliance with the European Union Medical Device
Regulation, additional R&D expenses from acquisitions we
made in 2023, and other R&D investments.

Selling, general & administrative (“SG&A”) expenses
increased in amount, but decreased as a percentage of net
sales in 2023 compared to 2022. The increase in expenses was
due to selling and distribution costs that are variable expenses
which increase as net sales increase. Additionally, personnel-
related costs were higher due to additional headcount
investments and annual merit increases, and travel and
entertainment costs were higher as we have increased these
activities from lower pandemic levels. These higher costs were
partially offset by lower litigation-related charges in 2023,
lower bad debt charges in 2023 as we recognized higher bad
debt charges in 2022 that were partially related to the
beginning of the Russia/Ukraine conflict, lower share-based
compensation expense in 2023 due to the forfeiture of awards
related to employee departures, and a gain recognized in 2023
from the sale of an asset.

In 2023, we did not recognize any goodwill or intangible
asset impairment charges. 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.

7.6

7.8

–

(0.2)

Operating Expenses

6.2

5.9

6.4

0.3

(0.5)

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

For more information regarding these charges, see Note 11 to
our consolidated financial statements.

In December of 2023, 2021 and 2019, we initiated global

restructuring programs (the “2023 Restructuring Plan”, the
“2021 Restructuring Plan” and the “2019 Restructuring Plan”,
respectively). The 2023 Restructuring Plan is intended to
further streamline the organization, to better align it with our
go-to-market strategies and to reduce costs across the
organization. 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 $151.9 million and $191.6 million in 2023 and
2022, 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 when compared
to 2023 primarily due to additional expenses related to the
2021 Restructuring Plan that had just been initiated at the end
of 2021. We expect restructuring and other cost reduction
initiatives expense to increase in 2024 as we further
implement our 2023 Restructuring Plan. For more information
regarding these expenses, see Note 5 to our consolidated
financial statements.

In 2023, we did not recognize any significant quality
remediation expenses as we completed our remediation
milestones in late 2022 that addressed inspectional
observations on Form 483 and a warning letter issued by the
FDA at our Warsaw North Campus facility, among other
matters. This warning letter was resolved in late 2023.

Acquisition, integration, divestiture and related expenses
relate to acquisitions made in 2023 and 2022, as well as costs
related to our separation with ZimVie. The increase in these
expenses in 2023 was primarily due to higher contingent
consideration charges from our various acquisitions.

Segment Operating Profit

Other (Expense) Income, net, Interest Expense, net, and Income Taxes

In 2023, we incurred a loss of $9.3 million in our other
(expense) income, net compared to a loss of $128.0 million in
2022. The year-over-year change was primarily due to a loss of
$116.6 million recognized in 2022 related to our investment in
ZimVie, while in 2023 we recognized a gain of $2.5 million
prior to disposing of our ZimVie shares in February 2023.

Interest expense, net, increased in 2023 when compared
to 2022, primarily from higher interest rates on borrowings in
2023. In addition, in 2023 we incurred losses of $38.9 million
on our fixed-to-variable interest rate swaps compared to losses
of $4.0 million in 2022.

Our effective tax rate (“ETR”) on earnings from
continuing operations before income taxes was 4.0 percent
and 27.9 percent for the years ended December 31, 2023 and
2022, respectively. In 2023, the ETR was primarily driven by
unrecognized tax benefits determined to be effectively settled
during 2023. 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
settlements and finalization of Switzerland’s Federal Act on
Tax Reform and AHV Financing (“TRAF”) step-up.

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 Two proposals which will
begin to take effect in 2024; the outcome of various federal,
state and foreign audits, appeals, and litigation; and the
expiration of certain statutes of limitations. Currently, we
cannot reasonably estimate the impact of all these items on
our financial results.

See Note 17 to our consolidated financial statements for

additional information on our income taxes.

(dollars in millions)

Americas

EMEA

Asia Pacific

Americas

In the Americas, operating profit increased, but operating

profit as a percentage of net sales decreased, in 2023
compared to 2022. The increase in operating profit in 2023
was primarily due to higher net sales driven by continued
recovery of elective surgical procedures and new product
introductions. However, operating profit as a percentage of net
sales decreased in 2023 due to higher carrying expenses from

Net Sales

Operating Profit

Operating Profit as a
Percentage of Net Sales

Year Ended December 31,

2023

2022

2021

2023

2022

2021

2023

2022

2021

$4,624.1

$4,295.5

$4,102.1

$1,948.9

$1,819.7

$1,726.9

42.1% 42.4% 42.1%

1,592.4

1,456.6

1,477.2

1,177.7

1,187.8

1,248.0

524.6

422.6

404.1

419.6

405.9

418.3

32.9

35.9

27.7

35.3

27.5

33.5

inventory at consigned locations, and continued investments
in R&D, including personnel-related costs, which were
partially offset by lower royalty expenses as a result of
agreements we entered into to acquire intellectual property
through the buyout of certain licensing arrangements.

EMEA

In EMEA, operating profit and operating profit as a
percentage of net sales increased in 2023 when compared to
2022. The increases were due to higher net sales driven by
continued recovery of elective surgical procedures and
improved pricing, lower bad debt charges and operating profit
leverage from certain costs that do not increase as net sales
increase.

Asia Pacific

In Asia Pacific, operating profit and operating profit as a
percentage of net sales increased in 2023 when compared to
2022. In Asia Pacific, changes in foreign currency exchange
rates have had a larger impact on our results than in our other
operating segments. While net sales declined in 2023 when
compared to 2022 due to changes in foreign currency
exchange rates, the negative net sales impact was partially
offset by higher hedge gains recognized in 2023 from our
hedging program. As a result, net sales volume growth and
operating leverage from certain costs that do not increase as
net sales increase resulted in operating profit and operating
profit as a percentage of sales increasing in 2023.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2023, we had $415.8 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 July 5, 2024, and $1.5 billion available under a five-
year revolving facility that matures on July 7, 2028. 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, 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 $1,581.6 million in 2023 compared
to $1,356.2 million in 2022. The increase in 2023 was primarily
driven by higher earnings, lower restructuring-related
payments and lower tax payments. These favorable items were
partially offset by higher investments in inventory in 2023
when compared to 2022, as well as higher bonus payments in
2023.

Cash flows used in investing activities from continuing

operations were $778.9 million in 2023 compared to
$522.0 million in 2022. Instrument and property, plant and
equipment additions reflected ongoing investments in our
product portfolio, including new product introductions,
optimization of our manufacturing and logistics networks,
investments in enterprise resource planning software and a
new corporate jet. In addition, in 2023 we paid $134.9 million

related to acquisitions and $86.4 million to acquire intellectual
property through the buyout of certain licensing arrangements.
Cash flows used in financing activities from continuing

operations were $763.5 million in 2023 compared to
$775.7 million in 2022. In 2023, we used the proceeds from
draws on our existing credit facilities, along with cash on hand,
to repurchase $692.2 million of our common stock. We issued
senior notes for $499.8 million and used those proceeds to
repay amounts outstanding under our existing credit facilities
and for general corporate purposes, such that we repaid a net
$325.0 million on our various revolving credit facilities and
$120.2 million of other debt obligations that were due in the
first quarter of 2023.

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, 2023, $343.4 million of our cash and
cash equivalents were held in jurisdictions outside of the U.S.
Of this amount, $55.0 million is denominated in U.S. Dollars
and, therefore, bears no foreign currency translation risk. The
remaining amount is denominated in currencies of the various
countries where we operate. As discussed in Note 17 to our
consolidated financial statements, we generally intend to limit
distributions such that they would not result in significant U.S.
tax costs.

Material Cash Requirements from Known Contractual and
Other Obligations

At December 31, 2023, we had outstanding debt of

$5,767.9 million, of which $900.0 million was classified as
current debt. Of our current debt, $850.0 million of senior
notes mature on November 22, 2024 and the remaining
$50.0 million is outstanding under an uncommitted credit
facility which we expect to repay during 2024. We believe we
can satisfy these debt obligations with cash generated from our
operations, by issuing new debt and/or by borrowing on our
committed revolving credit facilities.

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 March, May, August and December 2023, 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. In 2023, we executed share
repurchases to return cash to investors as well as to limit
ownership dilution from the issuance of common stock under
our share-based compensation programs and in connection
with our acquisition of Embody, Inc. As of December 31, 2023,
$155.8 million remained authorized under this program. An
additional 0.5 million shares were repurchased in early January
2024 for $64.1 million.

As discussed in Note 5 to our consolidated financial
statements, we are executing on a 2023 Restructuring Plan, a
2021 Restructuring Plan and a 2019 Restructuring Plan. The
2023 Restructuring Plan along with other related initiatives is
expected to result in total pre-tax charges of $120 million to
$135 million by the end of 2025, of which approximately
$13 million was incurred through December 31, 2023. We
expect to reduce gross annual pre-tax operating expenses by
$175 million to $200 million relative to the 2023 baseline
expenses by the end of 2025 as program benefits under the
2023 Restructuring Plan are realized. The 2021 Restructuring
Plan is expected to result in total pre-tax restructuring charges
of approximately $180 million by the end of 2024, of which
approximately $170 million was incurred through
December 31, 2023. 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 $370 million by the end
of 2025, of which approximately $320 million was incurred
through December 31, 2023. 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 benefits under
the 2019 Restructuring Plan were realized. Our latest
estimates indicate that we will be near the low end of that
range, and the full benefits will not be realized until we
complete the closure of a manufacturing facility, which is
expected of occur in 2025.

As discussed in Note 17 to our consolidated financial
statements, the IRS has issued proposed adjustments for years
2010 through 2012, for years 2013 through 2015, and for years
2016 through 2019. 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
$206.2 million liability remaining from a one-time tax on the
mandatory deemed repatriation of post-1986 untaxed foreign
earnings and profits (“transition tax”) for the deemed
repatriation of unremitted foreign earnings. As of December,
31, 2023, $51.6 and $154.6 million of this amount is recorded in
current income tax liabilities and non-current income tax
liabilities, respectively, on our consolidated balance sheet.
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
$244.1 million as of December 31, 2023. 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 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 exclusive

rights to distribute a product. These estimated payments
related to these agreements could range from $0 to
$440 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 numerous 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,
including product liability, intellectual property, stockholder
matters, tax disputes, commercial disputes, employment
matters, whistleblower and qui tam claims and investigations,
governmental proceedings and investigations, and other legal
matters that arise in the normal course of our business. 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.

We have three reporting units with goodwill assigned to
them. During our annual goodwill impairment testing in the
fourth quarter of 2023, for two of these reporting units their
estimated fair values exceeded their carrying values by more
than 50 percent. We estimated the fair value of these reporting
units using the 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 reporting unit. 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, 2023 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
$114 million to an increase of approximately $105 million
before income taxes in periods through June 2026.

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 $1,854.5 million at December 31, 2023.

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, 2023, 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, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021

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, 2023 and 2022, 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, 2023, including the
related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2023
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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2023 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, 2023, 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 matter communicated below is a matter arising from the current period audit of the consolidated financial

statements that was communicated or required to be communicated to the audit committee and that (i) relates 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 matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

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 $391.9 million as of December 31, 2023. 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 23, 2024

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 from continuing operations before income taxes

Provision for income taxes from continuing operations

Net Earnings from Continuing Operations

Less: Net earnings attributable to noncontrolling interest

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

Loss from Discontinued Operations, Net of Tax

Net Earnings of Zimmer Biomet Holdings, Inc.

Basic Earnings Per Common Share

Earnings from Continuing Operations

Loss from Discontinued Operations

Basic Earnings Per Common Share

Diluted Earnings Per Common Share

Earnings from Continuing Operations

Loss from Discontinued Operations

Diluted Earnings 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,

2023

2022

2021

$ 7,394.2

$6,939.9

$6,827.3

2,083.8

2,019.5

1,960.4

561.5

458.7

526.8

406.0

529.5

435.8

2,838.9

2,761.7

2,843.4

–

151.9

–

21.7

292.8

191.6

33.8

11.4

16.3

125.7

52.8

3.1

6,116.5

6,243.6

5,967.0

1,277.7

696.3

(9.3)

(128.0)

860.3

12.2

(201.2)

(164.8)

(208.4)

–

(165.1)

1,067.3

42.2

403.5

112.3

499.0

53.5

1,025.1

291.2

445.5

1.1

1.0

0.5

1,024.0

290.2

445.0

–

(58.8)

(43.4)

$1,024.0 $ 231.4 $ 401.6

4.91

1.38

2.14

–

(0.28)

(0.21)

4.91 $ 1.10 $ 1.93

4.88

1.38

2.12

–

(0.28)

(0.21)

4.88 $ 1.10 $ 1.91

208.7

209.7

209.6

210.3

208.6

210.4

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

Net Earnings of Zimmer Biomet Holdings, Inc.

Other Comprehensive Income (Loss):

Foreign currency cumulative translation adjustments, net of tax

Unrealized cash flow hedge gains, 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,

2023

2022

2021

$1,024.0

$ 231.4

$401.6

9.9

(123.3)

(99.9)

71.1

83.5

(77.4)

(46.0)

86.4

1.3

(15.3)

77.0

78.4

(11.7)

(8.8)

66.2

Comprehensive Income Attributable to Zimmer Biomet Holdings, Inc.

$1,012.3

$ 222.6

$467.8

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 expenses and other current assets

Total Current Assets

Property, plant and equipment, net

Goodwill

Intangible assets, net

Other assets

Total Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

Income taxes payable

Other current liabilities

Current portion of long-term debt

Total Current Liabilities

Deferred income taxes, net

Long-term income tax payable

Other long-term liabilities

Long-term debt

Total Liabilities

Commitments and Contingencies (Note 21)
Stockholders’ Equity:

Common stock, $0.01 par value, one billion shares authorized,
316.2 million (313.8 million in 2022) issued

Paid-in capital

Retained earnings

Accumulated other comprehensive loss

Treasury stock, 110.6 million shares (104.8 million shares in 2022)

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,

2023

2022

415.8

375.7

1,442.4

2,385.2

366.1

4,609.5

2,060.4

8,818.5

4,856.4

1,152.1

1,381.5

2,147.2

522.9

4,427.3

1,872.5

8,580.2

5,063.8

1,122.2

$ 21,496.9

$ 21,066.0

410.6

354.1

61.2

38.5

1,485.7

1,421.3

900.0

544.3

2,857.4

2,358.2

357.6

273.7

652.1

474.8

421.2

632.6

4,867.9

5,152.2

9,008.7

9,039.0

3.2

9,846.1

10,384.5

3.1

9,504.4

9,559.3

(191.0)

(179.3)

(7,562.3)

(6,867.2)

12,480.5

12,020.3

7.7

6.7

12,488.1

12,027.0

$ 21,496.9

$ 21,066.0

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

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

$3.1
–
–

$9,121.6
–
–

$10,086.9
401.6
–

$(297.8)
–
66.2

(103.8) $(6,719.6)
–
–

–
–

$5.2
0.5
–

$12,199.4
402.1
66.2

Balance January 1, 2021
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
Net earnings
Other comprehensive loss
Cash dividends declared ($0.96

per share)

Stock compensation plans
Embody, Inc acquisition

consideration
Share repurchases

311.4
–
–

–
1.4

312.8
–
–

–

–
–
1.0

313.8
–
–

–
1.2

1.2
–

–
–

3.1
–
–

–

–
–
–
–

3.1
–
–

–
–

0.1
–

–
–

5.7
1.0
–

–

–
–
–
–

(200.4)
199.1

12,666.4
232.4
(8.8)

(201.3)

25.9
(728.2)
190.6
(150.0)

–
193.2

9,314.8
–
–

(200.4)
4.1

10,292.2
231.4
–

–
–

–
1.8

(231.6)
–
(8.8)

(103.8)
–
–

(6,717.8)
–
–

–

(201.3)

–
–
189.6
–

9,504.4
–
–

–
193.6

150.4
(2.3)

–
(763.4)
0.4
–

9,559.3
1,024.0
–

(200.1)
1.3

–
–

–

25.9
35.2
–
–

–

–
–
–
(1.0)

–
–
0.6
(150.0)

(179.3)
–
(11.7)

(104.8)
–
–

(6,867.2)
–
–

6.7
1.1
–

12,027.0
1,025.1
(11.7)

–
–

–
1.0

–
(5.8)

–
(696.1)

–
–

(200.1)
195.8

150.5
(698.4)

Balance December 31, 2023

316.2

$3.2

$9,846.1

$10,384.5

$(191.0)

(110.6) $(7,562.3)

$7.7

$12,488.1

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 from continuing operations
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization
Share-based compensation
Goodwill and intangible asset impairment
Loss on early extinguishment of debt
(Gain) loss on investment in ZimVie Inc.
Deferred income tax benefit
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

For the Years Ended December 31,

2023

2022

2021

$1,025.1

291.2

445.5

951.7
99.8
–
–
(2.5)
(96.3)

(73.8)
(51.9)
(240.4)
(55.3)
25.2

926.4
105.0
292.8
–
116.6
(64.4)

(152.9)
(184.7)
(75.6)
103.0
(1.2)

937.7
76.0
16.3
165.1
–
(102.1)

(123.9)
(40.8)
(8.4)
86.5
(47.6)

Net cash provided by operating activities from continuing operations

1,581.6

1,356.2

1,404.3

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
Acquisition of intellectual property rights
Business combination investments, net of acquired cash
Other investing activities

Net cash used in investing activities from continuing operations

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

Net (payments) proceeds on revolving facilities
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.
Business combination contingent consideration payments
Debt issuance costs
Deferred business combination payments
Repurchase of common stock
Other financing activities

(311.7)
(291.1)
33.4
(86.4)
(134.9)

11.8

(258.3)
(187.9)
89.4
–
(99.8)

(65.4)

(273.6)
(143.6)
1.9
(8.4)
–

(19.6)

(778.9)

(522.0)

(443.3)

(325.0)
499.8
(86.3)
–
(33.9)
(200.9)
101.1
–
(10.3)
(5.8)
(4.0)
(692.2)
(6.1)

375.0
–
(1,275.8)
83.0
(242.9)
(201.2)
78.1
540.6
–
(1.6)
–
(126.4)
(4.5)

–
1,599.8
(2,654.8)
–
–
(200.1)
122.5
–
(8.9)
(13.2)
(145.0)
–
(6.3)

Net cash used in financing activities from continuing operations

(763.5)

(775.7)

(1,306.0)

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

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year (includes $100.4 and $27.4 at January 1, 2022 and

2021, respectively, of discontinued operations cash)

Cash and cash equivalents, end of year (includes $100.4 at December 31, 2021 of discontinued

–
–
–

–

0.9

40.1

(71.5)
(7.2)
(68.1)

(146.8)

(14.5)

94.9
(60.3)
–

34.6

(13.2)

(102.8)

(323.6)

375.7

478.5

802.1

operations cash)

$ 415.8

375.7

478.5

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.

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. We disposed of our remaining shares of
ZimVie in February 2023. 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 through the date of the
spinoff in 2022 and in 2021 as the spinoff represents a strategic
shift in our business that has a major effect on operations and
financial results. 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. Amounts reported in millions
within these notes to the consolidated financial statements are
computed based on the actual amounts. As a result, the sum of
the components may not equal the total amount reported in
millions due to rounding. In addition, certain columns and rows
within tables may not sum to the totals due to the use of
rounded numbers. Percentages presented are calculated from
the underlying unrounded amounts.

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. Such estimates include, but are 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, the recoverability of other long-lived assets and
unrecognized tax benefits. 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 $272.7 million,
$254.4 million and $255.4 million for the years ended
December 31, 2023, 2022 and 2021, 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 used 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 2023, 2021 and 2019, we approved separate
new global restructuring programs intended to further reduce
costs and to reorganize our global operations. Restructuring
charges for the years ended December 31, 2023, 2022 and 2021
were primarily attributable to these programs. See Note 5 for
additional information regarding these restructuring programs.

We have also initiated other cost reduction and
optimization projects that have the goal of reducing costs
across the organization. Costs related to these projects are
included in our “Restructuring and other cost reduction
initiatives” financial statement line item.

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:
• 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.

• Employee termination benefits related to terminating

employees with overlapping responsibilities in various areas
of our business.

• Dedicated project personnel expenses which include the
salary, benefits, travel expenses and other costs directly
associated with employees who are 100 percent dedicated to
our integration of acquired businesses and employees who
have been notified of termination, but are continuing to
work on transferring their responsibilities.

• Contract termination expenses related to terminated
contracts, primarily with sales agents and distribution
agreements.

• Changes to our contingent consideration liabilities related to

our mergers and acquisitions.

• Other various expenses to relocate facilities, integrate

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

Inventories – Inventories are stated at the lower of cost

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

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.

Software Costs – We capitalize certain computer software

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.

• Income and expenses related to providing ZimVie certain

Instruments – Instruments are hand-held devices used by

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.

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 $75.1 million and $78.4 million
as of December 31, 2023 and 2022, respectively.

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 numerous 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 years
ended December 31, 2023 and 2022, we recognized a gain of
$2.5 and a loss of $116.6 million, respectively, 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. We disposed of
our remaining shares of ZimVie in February 2023.

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

There were no accounting pronouncements that we

adopted in 2023 that had a material effect on our financial
position, results of operations or cash flows.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”)
2023-07, Improvements to Reportable Segment Disclosures,
which is an amendment to ASC Topic 280 -Segment Reporting.
The ASU requires more detailed and disaggregated

segment information, including the disclosure of significant
segment expense categories and amounts for each reportable
segment. The ASU also requires certain annual disclosures to
also be made in interim periods. The ASU is effective for fiscal
years beginning after December 15, 2023, and interim periods
for fiscal years beginning after December 15, 2024. The
guidance will be applied retrospectively unless retrospective
adoption is impracticable. Early adoption of this ASU is
permitted. We are currently evaluating the impact this ASU
will have on our financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09,
Improvements to Income Tax Disclosures, which is an
amendment to topic ASC 740 - Income Taxes. The ASU improves
the transparency of income tax disclosures by requiring greater
disaggregated information about an entity’s effective tax rate
reconciliation and requiring additional disclosures and
disaggregation of income taxes, among other amendments to
improve the effectiveness of income tax disclosures. The ASU is
effective for fiscal years beginning after December 15, 2024. The
guidance will be applied prospectively with an option to apply the
guidance retrospectively. Early adoption of this ASU is permitted.
We are currently evaluating the impact this ASU will have on our
financial statements and disclosures.

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 senior notes due in 2022
which had an outstanding principal balance of $750.0 million.

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. These
agreements include a Transition Services Agreement (the
“TSA”), a Transition Manufacturing and Supply Agreement
(the “TMA”), a Reverse Transition Manufacturing and Supply
Agreement (the “Reverse TMA”), and various other
agreements 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. Most TSA
services were completed as of December 31, 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, 2023,
2022 and 2021 were immaterial.

We initially 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
recognized 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 years ended December 31, 2023
and 2022, we recognized a gain of $2.5 and a loss of
$116.6 million, respectively, 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. 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
transfer of our ZimVie common shares as part of the
settlement resulted in a $49.1 million noncash financing
activity for the year ended December 31, 2023.

The Forward Exchange Agreement was accounted for at fair

value, with changes in fair value recognized in non-operating

other (expense) income, net and was included in the net gain
related to our investment in ZimVie for the year ended
December 31, 2023, as discussed above. The most significant
input into the valuation of the Forward Exchange Agreement was
the price of ZimVie shares. The fair value of the Forward
Exchange Agreement as of December 31, 2022 was $1.1 million
and was 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, the results of our spine and dental

businesses have been reflected as discontinued operations
through the date of the spinoff in the prior years presented.
Details of earnings (loss) from discontinued operations
included in our consolidated statements of earnings are as
follows (in millions):

Net Sales

Cost of products sold, excluding intangible asset

amortization

Intangible asset amortization

Research and development

Selling, general and administrative

Restructuring and other cost reduction initiatives

Quality remediation

Acquisition, integration, divestiture and related

Other expense, net

For the Years Ended
December 31,

2022

2021

$147.8

$1,008.8

53.5

14.0

10.5

89.4

0.4

–

40.9

0.3

380.6

86.2

61.3

480.5

3.3

0.2

76.8

0.5

Loss from discontinued operations before income

taxes

Benefit for income taxes from discontinued

operations

(61.2)

(80.6)

(2.4)

(37.2)

Loss from discontinued operations, net of tax

$(58.8) $ (43.4)

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.

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

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 2023. 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 2023. 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

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,

2023

2022

2021

$4,288.8

$4,012.4

$3,853.9

3,105.4

2,927.5

2,973.4

$7,394.2

$6,939.9

$6,827.3

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

For the Years Ended December 31,

2023

2022

2021

$3,038.4

$2,778.3

$2,647.9

1,967.2

1,894.9

1,856.1

1,752.6

1,696.7

1,727.8

636.0

570.0

595.5

$7,394.2

$6,939.9

$6,827.3

Knees

Hips

S.E.T

Other

Total

Restructuring

In December 2023, our management approved a new
global restructuring program (the “2023 Restructuring Plan”)
intended to optimize our cost base and drive greater
efficiencies throughout the company. The 2023 Restructuring
Plan is expected to result in total pre-tax restructuring charges
of approximately $100 million. The pre-tax restructuring
charges consist of employee termination benefits, and other
charges, such as consulting fees. The expenses incurred under
our 2023 Restructuring Plan are reported in our “Restructuring
and other cost reduction initiatives” financial statement line
item. The following table summarizes the liabilities recognized
related to the 2023 Restructuring Plan (in millions):

Balance, December 31, 2022

–

Additions

Cash payments

Non-cash activity

Balance, December 31, 2023

Expense incurred since the

start of the 2023
Restructuring Plan

Expense estimated to be

recognized for the 2023
Restructuring Plan

Employee
Termination
Benefits

Contract
Terminations

Other

Total

–

3.6

12.8

(1.0)

2.4

5.0

2.4

14.2

–

9.2

–

9.2

$ 9.2

–

$ 3.6

$ 12.8

$85.0

–

$15.0

$100.0

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 $180 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
expenses. The expenses incurred under our 2021
Restructuring Plan are reported in our “Restructuring and
other cost reduction initiatives” financial statement line item.
The following table summarizes the liabilities recognized
related to the 2021 Restructuring Plan (in millions):

The following table summarizes the location on our
consolidated statement of earnings and type of cost for our
2019 Restructuring Plan (in millions):

Cost of products sold,

excluding intangible asset
amortization

Restructuring and other cost

reduction initiatives

Year Ended December 31, 2023

Employee
Termination
Benefits

Contract
Terminations

Other

Total

–

17.4

$17.4

–

$ 8.2

15.9

33.3

$24.1

$41.5

Employee
Termination
Benefits

Contract
Terminations

Other

Total

Balance, December 31, 2020

–

– $

–

In the years ended December 31, 2022 and 2021, all

expenses related to the 2019 Restructuring Plan were
recognized in “Restructuring and other cost reduction
initiatives”.

Additions

Cash payments

Foreign currency exchange

rate changes

Balance, December 31, 2021

Additions

Cash payments

Foreign currency exchange

rate changes

Balance, December 31, 2022

Additions

Cash payments

Foreign currency exchange

rate changes

19.5

2.3

10.3

32.1

The following table summarizes the liabilities recognized

–

19.5

33.6

–

2.3

10.3

32.1

49.5

16.6

99.7

(43.4)

(27.8)

(23.9)

(95.1)

0.8

10.5

6.0

1.0

25.0

22.0

0.1

3.1

9.3

1.9

38.6

37.3

(12.5)

(30.2)

(9.6)

(52.3)

related to the 2019 Restructuring Plan (in millions):

Employee
Termination
Benefits

Contract
Terminations

Other

Total

Balance, December 31, 2020 $ 37.8

$ 10.9

$ 15.1

$ 63.8

Additions

Cash payments

7.3

18.5

49.2

75.0

(28.7)

(12.9)

(64.2)

(105.8)

Foreign currency exchange

rate changes

(1.6)

–

(0.1)

(1.7)

Balance, December 31, 2021

Additions

Cash payments

14.8

29.1

16.5

0.7

–

40.1

31.3

69.9

(13.4)

(7.3)

(33.3)

(54.0)

0.2

0.8

0.1

1.1

Foreign currency exchange

Balance, December 31, 2023

$ 4.2

$ 17.6

$ 2.9 $ 24.7

rate changes

(1.6)

(0.9)

(0.4)

(2.9)

Expense incurred since the

start of the 2021
Restructuring Plan

Expense estimated to be

recognized for the 2021
Restructuring Plan

$ 59.1

$ 73.8

$ 36.2 $169.1

Balance, December 31, 2022

28.9

Additions

Cash payments

17.4

(2.1)

Foreign currency exchange

9.0

–

6.4

4.1

$ 44.3

41.5

(3.4)

(27.7)

(33.2)

$ 60.0

$ 80.0

$ 40.0 $180.0

rate changes

(0.4)

–

0.1

(0.3)

Balance, December 31, 2023 $ 43.8

$ 5.6

$ 2.9

$ 52.3

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
$370 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,
including costs to close a manufacturing facility.

Expense incurred since the

start of the 2019
Restructuring Plan

Expense estimated to be

recognized for the 2019
Restructuring Plan

$125.7

$ 35.0

$158.7

$ 319.4

$155.0

$ 35.0

$180.0

$ 370.0

We do not include restructuring charges in the operating
profit of our reportable segments. We report the expenses for
other cost reduction and optimization initiatives in our
“Restructuring and other cost reduction initiatives” financial
statement line item because these activities also have the goal
of reducing costs across the organization. However, since the
cost reduction 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,

2023

2022

2021

$99.8
16.7

$83.1

$105.0
16.9

$ 88.1

$76.0
17.2

$58.8

We had two equity compensation plans in effect at
December 31, 2023: 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, 2023, an aggregate of
7.7 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, 2023 is as follows (options in thousands):

Outstanding at January 1, 2023

Options granted

Options exercised

Options forfeited

Options expired

Outstanding at December 31, 2023

Vested or expected to vest as of December 31, 2023

Exercisable at December 31, 2023

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Intrinsic
Value
(in millions)

Stock
Options

7,944

$121.94

127.96

(733)

96.17

(280)

135.28

(725)

131.46

6,221

$123.29

6,176

$123.23

5,012

$120.83

5.0

4.4

$44.3

$44.1

$41.0

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

We are required to estimate the number of RSUs that will

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:

Dividend yield

Volatility

Risk-free interest rate

Expected life (years)

For the Years Ended December 31,

2023

2022

2021

0.8%

0.6%

27.7% 30.2% 30.3%

3.5%

1.9%

0.7%

5.0

5.4

Weighted average fair value of options

granted

$36.65

$32.07

$43.91

vest and recognize share-based payment expense on a straight-
line basis over the requisite service period. As of December 31,
2023, we estimate that approximately 1,347,105 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, 2023 was $84.5 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, 2023, 2022 and 2021 based upon our
stock price on the date of vesting was $26.9 million,
$20.3 million, and $40.0 million, respectively.

Intrinsic value of options exercised

(in millions)

$ 23.2

$ 20.5

$ 54.6

Inventories

Tax benefit of options exercised

(in millions)

$ 4.4

$ 4.0

$ 10.8

As of December 31, 2023, there was $18.7 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 1.2 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

December 31, 2023 is as follows (RSUs in thousands):

Inventories consisted of the following (in millions):

Finished goods

Work in progress

Raw materials

Inventories

As of December 31,

2023

2022

$1,831.2

$1,655.0

246.5

307.5

230.9

261.3

$2,385.2

$2,147.2

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, 2023, 2022 and 2021 were $155.2 million,
$137.3 million and $117.3 million, respectively.

Property, Plant and Equipment

Property, plant and equipment consisted of the following

(in millions):

Outstanding at January 1, 2023

Granted

Vested

Forfeited

Weighted Average
Grant Date Fair
Value

$147.85

127.47

124.73

147.16

RSUs

1,198

1,225

(265)

(351)

Land

Building and equipment

Capitalized software costs

Instruments

Construction in progress

Accumulated depreciation

Outstanding at December 31, 2023

1,807

$135.97

Property, plant and equipment, net

$ 2,060.4

$ 1,872.5

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.

Depreciation expense was $390.2 million, $399.6 million

and $408.1 million for the years ended December 31, 2023,
2022 and 2021, respectively.

We had $30.8 million and $17.0 million of property, plant

and equipment included in accounts payable as of
December 31, 2023 and 2022, respectively.

As of December 31,

2023

2022

18.9

19.2

2,245.9

2,093.4

552.2

518.2

3,748.6

3,683.5

200.6

144.1

6,766.2

6,458.4

(4,705.8)

(4,585.9)

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, 2023

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

$ 54.4

Cross-currency

interest rate swaps

5.4

Derivatives not

designated as hedges,
current and long-term

Foreign currency

forward contracts

0.4

Total Assets

$ 60.2

Liabilities

Derivatives designated
as hedges, current
and long-term

Foreign currency

forward contracts

$ 3.7

68.1

144.7

Cross-currency

interest rate swaps

Interest rate swaps

Derivatives not

designated as hedges,
current and long-term

Foreign currency

forward contracts

1.6

Contingent payments

related to acquisitions

141.7

Total Liabilities

$359.8

–

$ 54.4

5.4

0.4

$ 60.2

$ 3.7

68.1

144.7

1.6

–

141.7

$218.1

$141.7

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

–

$ 72.8

–

6.8

Cross-currency
interest rate
swaps

Derivatives not
designated as
hedges, current and
long-term

Foreign currency

forward contracts

1.8

Forward Exchange

Agreement

Investment in ZimVie

1.1

45.5

–

45.5

6.8

1.8

1.1

–

Total Assets

$128.0

$45.5

$ 82.5

–

Liabilities

Derivatives designated
as hedges, current
and long-term

Foreign currency

forward contracts

$ 5.5

–

$ 5.5

–

49.6

172.0

Cross-currency
interest rate
swaps

Interest rate swaps

Derivatives not
designated as
hedges, current and
long-term

Foreign currency

forward contracts

3.3

Contingent payments

related to
acquisitions

17.4

Total Liabilities

$247.8

–

49.6

172.0

3.3

–

17.4

$230.4

$17.4

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 December 31, 2022, we valued these shares
based upon the market share price of ZimVie less a discount to
reflect that the shares are not registered. We disposed of these
shares in February 2023.

The value of the Forward Exchange Agreement as of

December 31, 2022, was 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 regulatory milestones, and are
valued using discounted cash flow techniques. The fair value of
sales-based payments is based upon significant unobservable
inputs such as probability-weighted future revenue estimates
and simulating the numerous potential outcomes, and changes
as revenue estimates increase or decrease. The fair value of
the regulatory milestones is based on the probability of success
in obtaining the specified regulatory approval.

Contingent payments related to our acquisition of
Embody, Inc. (“Embody”) in February 2023 are to be settled
by issuance of our common stock and cash payments. The
Embody acquisition is discussed in Note 10. During the year
ended December 31, 2023, we issued 0.1 million shares of our
common stock valued at $15.5 million and paid $0.7 million of
cash as the regulatory milestone related to the Embody
acquisition was achieved. The fair value of common stock was
determined to be $143.84 per share, which represented the
average of our high and low stock prices on the settlement
date. To minimize dilution from issuing shares for the
milestone settlement, we repurchased 0.1 million shares of our
common stock in June of 2023.

The following table provides a reconciliation of the
beginning and ending balances of items 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, 2022

New contingent consideration related to the 2023

acquisitions

Change in estimates

Settlements

Ending balance December 31, 2023

Level 3 -
Liabilities

$ 17.4

138.5

16.0

(30.2)

$141.7

Changes in estimates for contingent payments related to

acquisitions are recognized in the Acquisition, integration,
divestiture and related line item on our consolidated
statements of earnings.

10. Acquisitions

On February 14, 2023, we completed the acquisition of all
the outstanding shares of Embody, a medical device company
focused on soft tissue healing, that expands our portfolio for
the sports medicine market. Initial consideration consisted of
the issuance of 1.1 million shares of our common stock valued

at $135.0 million and $19.5 million of cash for a total value of
$154.5 million. The fair value of our common stock was
determined to be $127.34 per share, which represented the
average of our high and low stock prices on the acquisition
date. To minimize dilution from issuing shares for the Embody
acquisition, we repurchased 1.9 million shares of our common
stock in the three-month period ended March 31, 2023. The
Embody acquisition includes additional consideration of up to
$120.0 million in fair value of our common shares and cash,
subject to achieving a future regulatory milestone after closing
and commercial milestones based on sales growth over a three-
year period. We assigned a fair value of $94.0 million for this
contingent consideration as of the acquisition date. The
estimated fair value of the contingent consideration liability
was calculated based on the probability of achieving the
specified regulatory milestone and by simulating numerous
potential outcomes for the commercial milestones and
discounting to present value the estimated payments.

On April 28, 2023, we completed the acquisition of all the

outstanding shares of a privately held orthopedics medical
device company that expands our portfolio in the orthopedics
market (“April acquisition”). The initial consideration
consisted of $15.0 million of cash and includes additional
consideration of up to $8.0 million in cash, subject to achieving
future regulatory milestones.

On October 6, 2023, we completed the acquisition of all the

outstanding shares of a privately held orthopedics medical
device company that provides us new surgical technology that
can be used in procedures across multiple product categories
(“October acquisition”). The initial consideration consisted of
$42.2 million of cash and includes additional consideration of up
to $33.0 million in cash contingent upon achieving certain
commercial milestones based on sales growth over a three-year
period. We assigned a fair value of $21.5 million for this
contingent consideration as of the acquisition date. The
estimated fair value of the contingent liability was calculated
based on the probability of achieving the commercial milestones
and discounting to present value the estimated payments.

On November 15, 2023, we completed the acquisition of a
privately held technology company by acquiring certain assets,
liabilities and employees of the technology company
(“November acquisition”). The November acquisition expands
our technology and data capabilities and solutions across
multiple product categories to better serve our customers. The
initial consideration consisted of $60.7 million of cash and
includes additional consideration of up to $20.0 million in cash
contingent upon achieving a commercial milestone based on a
certain sales target which must be achieved by December 31,
2025. We assigned a fair value of $15.0 million for this
contingent consideration as of the acquisition date. The
estimated fair value of the contingent liability was calculated
based on the probability of achieving the commercial milestone
and discounting to present value the estimated payment.
These acquisitions are collectively referred to in this

report as the “2023 acquisitions”. Refer to Note 9 for
information regarding the issuance of common stock and cash
payments related to the contingent consideration liabilities
that have occurred subsequent to the acquisition dates.

The goodwill related to the 2023 acquisitions represents
the excess of the consideration transferred over the fair value
of the net assets acquired. The goodwill related to the 2023
acquisitions is generated from the operational synergies and
cross-selling opportunities we expect to achieve from the
technologies acquired. A portion of the goodwill is expected to
be deductible for U.S. income tax purposes. The goodwill
related to the Embody, the October and the November
acquisitions is included in the Americas operating segment
and the Americas Orthopedics reporting unit. The goodwill
related to the April acquisition is included in the Asia Pacific
operating segment and reporting unit.

The purchase price allocations for the 2023 acquisitions
are preliminary as of December 31, 2023. We need additional
time to evaluate the tax attributes of the transactions, which
may change the recognized tax assets and liabilities. We are
also evaluating certain contingent liabilities as of the
respective acquisition dates. There may be differences
between the preliminary estimates of fair value and the final
acquisition accounting. The final estimates of fair value are
expected to be completed as soon as possible, but no later
than one year after the respective acquisition dates.

The following table summarizes the preliminary estimates

of fair value of the assets acquired and liabilities assumed
related to the 2023 acquisitions (in millions):

acquisition date, the $36.3 million of IPR&D was reclassified to
a definite-lived intangible asset and began amortizing over the
applicable estimated useful life.

During the year ended December 31, 2023, there were no

material adjustments to the preliminary values of the 2023
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 following two years, of which $4.0 million was paid in the
year ended December 31, 2023.

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 this acquisition (in millions):

Current assets

Intangible assets subject to amortization:

Technology

Trademarks and trade names

Customer relationships

Intangible assets not subject to amortization:

In-process research and development (IPR&D)

Goodwill

Other assets

Total assets acquired

Current liabilities

Deferred income taxes

Total liabilities assumed

Net assets acquired

$ 13.1

144.0

3.5

40.1

36.3

215.0

4.8

456.8

8.2

37.7

45.9

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

$410.9

customer relationships were 10 years and 4 years,
respectively.

The weighted average amortization periods selected for

technology, customer relationships and trademarks and trade
names were 15 years, 8 years and 13 years, respectively. Upon
receiving regulatory approval subsequent to the Embody

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, 2022

Goodwill

Accumulated impairment losses

Purchase accounting adjustments

Other acquisitions

Currency translation

Impairment

Balance at December 31, 2022

Goodwill

Accumulated impairment losses

2023 acquisitions

Currency translation

Balance at December 31, 2023

Goodwill

Accumulated impairment losses

Americas

EMEA

Asia
Pacific

Total

$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

201.4

28.8

–

544.6

8,580.2

13.6

(5.5)

215.0

23.3

8,273.5

1,326.8

552.7

10,153.0

(7.7)

(1,326.8)

–

(1,334.5)

$8,265.8

–

$552.7

$ 8,818.5

As discussed further in Note 10, we completed

acquisitions during the years ended December 31, 2023 and
2022, resulting in additional goodwill.

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 2023, we
estimated the fair value of our Americas Orthopedics and
Americas CMFT reporting units using the income and market
approaches. In the annual 2023 test, each of the Americas
Orthopedics and Americas CMFT reporting units exceeded
their carrying values by more than 50 percent. 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. We fully impaired
the goodwill related to our EMEA reporting unit during the
fourth quarter of 2022, as discussed below.

During the year ended December 31, 2022, we recorded a

goodwill impairment charge of $289.8 million in our EMEA
reporting unit, 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 did
not decline proportionally to revenue as many inventory-
related and certain expenses are based on the U.S. Dollar. In
addition, inflationary pressures 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 EMEA reporting unit
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 EMEA
reporting unit and considers differences between our
reporting unit and the comparable companies.

In estimating the future cash flows of the EMEA reporting

unit, 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 unit 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.

There were no goodwill impairment charges for the year

ended December 31, 2021.

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.

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

As of December 31, 2023:

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

$ 3,177.4

$ 473.2

$ 523.8

$ 5,130.7

$ –

$ 172.7

$ 9,477.8

(1,894.2)

(295.1)

(289.9)

(2,495.4)

–

(108.4)

(5,083.0)

–

454.6

–

7.0

–

461.6

Total identifiable intangible assets

$ 1,283.2

$ 178.1

$ 688.5

$ 2,635.3

$7.0

$ 64.3

$ 4,856.4

As of December 31, 2022:

Intangible assets subject to amortization:

Gross carrying amount

Accumulated amortization

Intangible assets not subject to amortization:

Gross carrying amount

$ 2,954.3

$ 388.5

$ 518.0

$ 5,073.1

$ –

$ 174.0

$ 9,107.9

(1,700.2)

(250.8)

(258.7)

(2,198.8)

–

(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

We recognized IPR&D intangible asset impairment
charges of $3.0 million and $16.3 million in the years ended
December 31, 2022 and 2021, 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. There were no
IPR&D intangible asset impairment charges in the year ended
December 31, 2023.

Estimated annual amortization expense based upon
intangible assets recognized as of December 31, 2023 for the
years ending December 31, 2024 through 2028 is (in millions):

For the Years Ending December 31,

2024

2025

2026

2027

2028

$572.7

553.7

532.3

517.9

509.8

In the year ended December 31, 2023, we entered into

12. Other Current Liabilities

agreements to acquire intellectual property through the
buyout of certain licensing arrangements. These new
agreements and the related payments eliminate the various
royalty payments that would have been due under the terms of
previous licensing arrangements through 2030. These new
agreements benefit us by expanding our ownership of
intellectual property that we may use in the future. We
recognized intangible assets of $86.1 million related to these
agreements which will be amortized through 2030. The fixed,
contractual payments made under these new agreements are
reflected in investing cash flows in our consolidated
statements of cash flows.

Other current liabilities consisted of the following

(in millions):

As of December 31,

2023

2022

Other current liabilities:

License and service agreements

$ 114.7

$ 147.5

Salaries, wages and benefits

Litigation and product liability

Customer rebates

Accrued liabilities

417.1

146.2

180.0

627.7

336.2

205.6

149.7

582.3

Total other current liabilities

$1,485.7

$1,421.3

13. Debt

Our debt consisted of the following (in millions):

Current portion of long-term debt

Short-Term Term Loan
Uncommitted Credit Facility
Five-Year Credit Agreement
3.700% Senior Notes due 2023
1.450% Senior Notes due 2024

Total short-term debt

Long-term debt

As of December 31,

2023

2022

–
50.0
–
–
850.0

83.0
–
375.0
86.3
–

$ 900.0

$ 544.3

1.450% Senior Notes due 2024

–

$ 850.0

3.550% Senior Notes due 2025

3.050% Senior Notes due 2026

5.350% Senior Notes due 2028

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

863.0

600.0

500.0

257.5
750.0
253.4
317.8
395.4
552.3
552.3
(29.1)
(144.7)

863.0

600.0

–

257.5
750.0
253.4
317.8
395.4
533.6
533.6
(30.1)
(172.0)

Total long-term debt

$4,867.9

$5,152.2

At December 31, 2023, our total current and non-current
debt of $5.8 billion consisted of $5.9 billion aggregate principal
amount of senior notes, which included €1.0 billion of Euro-
denominated senior notes (“Euro Notes”), and $50.0 million of
outstanding borrowings under the Uncommitted Facility Letter
(defined below), partially offset by fair value adjustments
relating to interest rate swaps totaling $144.7 million and debt
discount and issuance costs of $29.1 million.

In 2023, we redeemed the $83.0 million outstanding
principal amount of our Short-Term Term Loan and the
$86.3 million outstanding principal amount of our 3.700%
Senior Notes due 2023.

On November 28, 2023, we completed the offering of
$500.0 million aggregate principal amount of our 5.350%
Senior Notes due December 1, 2028. Interest is payable on
these Senior Notes June 1 and December 1 of each year until
maturity. We received net proceeds of $499.8 million.

On August 28, 2023, we entered into an uncommitted

facility letter (the “Uncommitted Credit Facility”), which
provides that from time to time, we may request, and the
lender in its absolute and sole discretion may provide, short-
term loans. Borrowings under the Uncommitted Credit Facility
may be used only for general corporate and working capital
purposes. The Uncommitted Credit Facility provides that the
aggregate principal amount of outstanding borrowings at any
time shall not exceed $300.0 million. Each borrowing under
the Uncommitted Credit Facility will mature on the maturity
date specified by the lender at the time of the advance, which

will be no more than 90 days following the date of the advance.
The Uncommitted Credit Facility and borrowings thereunder
are unsecured. Borrowings under the Uncommitted Credit
Facility bear interest at floating rates, based upon either an
adjusted term secured overnight financing rate (“Term SOFR”)
for the applicable interest period, the prime rate, or lender’s
cost of funds, in each case, plus an applicable margin
determined at the time of each borrowing. The Uncommitted
Credit Facility includes customary affirmative and negative
covenants and events of default for unsecured uncommitted
financing arrangements. We were in compliance with all
covenants under the Uncommitted Credit Facility as of
December 31, 2023. As of December 31, 2023, there were
outstanding borrowings of $50.0 million under the
Uncommitted Credit Facility.

On July 7, 2023, we entered into a new five-year revolving
credit agreement (the “2023 Five-Year Credit Agreement”) and
a new 364-day revolving credit agreement (the “2023 364-Day
Revolving Credit Agreement”), as described below. Borrowings
under these credit agreements will be used for general
corporate purposes.

The 2023 Five-Year Credit Agreement contains a five-year
unsecured revolving facility of $1.5 billion (the “2023 Five-Year
Revolving Facility”). The 2023 Five-Year Credit Agreement
replaced the previous revolving credit agreement entered into
on August 19, 2022 (the “2022 Five-Year Credit Agreement”),
which contained a five-year unsecured revolving facility of
$1.5 billion (the “2022 Five-Year Revolving Facility”). There
was approximately $520.0 million in aggregate outstanding
borrowings under the 2022 Five-Year Credit Agreement at the
time it was terminated, which borrowings were repaid in full
through borrowings under the 2023 Five-Year Credit
Agreement on July 7, 2023 in the same amount and on the
same interest rate and margin terms.

The 2023 Five-Year Credit Agreement will mature on
July 7, 2028, with two one-year extensions exercisable at our
discretion and subject to required lender consent. The 2023
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 2023 Five-Year 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
2023 Five-Year Revolving Facility at a rate determined by
reference to our senior unsecured long-term debt credit rating.
The 2023 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 2023 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 2023 Five-Year Credit Agreement as of
December 31, 2023. As of December 31, 2023, there were no
outstanding borrowings under the 2023 Five-Year Credit
Agreement.

The 2023 364-Day Revolving Credit Agreement is an
unsecured revolving credit facility in the principal amount of
$1.0 billion (the “2023 364-Day Revolving Facility”). The 2023
364-Day Revolving Credit Agreement replaced a credit
agreement entered into on August 19, 2022, which was also a
364-day unsecured revolving credit facility of $1.0 billion (the
“2022 364-Day Revolving Facility”). There were no borrowings
outstanding under the 2022 364-Day Revolving Facility when it
was terminated.

The 2023 364-Day Revolving Facility will mature on July 5,

2024. Borrowings under the 2023 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 2023 364-Day Revolving Facility at a rate
determined by reference to our senior unsecured long-term
debt credit rating. The 2023 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 2023 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 2023 364-Day Revolving Credit
Agreement as of December 31, 2023. As of December 31, 2023,
there were no outstanding borrowings under the 2023 364-Day
Revolving Credit Agreement.

used to redeem a portion of 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 senior notes due April 1,
2022. A $100.0 million draw under a previous credit facility,
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.

On November 15, 2021, we commenced cash tender offers

to purchase certain outstanding senior notes. The proceeds
from a 2021 senior notes offering, together with cash on hand,
were used to pay for the senior notes purchased in the cash
tender offers. 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.

The estimated fair value of our senior notes, which
includes our Euro notes, as of December 31, 2023, based on
quoted prices for the specific securities from transactions in
over-the-counter markets (Level 2), was $5,602.1 million. The
carrying value of the outstanding $50.0 million principal
balance of the Uncommitted Credit Facility approximates the
fair value as it bears interest at short-term market rates.

At December 31, 2023 and 2022, the weighted average

interest rate for our borrowings was 3.2 percent and
3.2 percent, respectively. We paid $200.6 million,
$161.7 million, and $219.0 million in interest during 2023,
2022, and 2021, respectively.

Borrowings under our revolving credit facilities have been

14. Accumulated Other Comprehensive Income

executed with underlying notes that have maturities of three
months or less. At the maturity of the underlying note, we
elect to either repay the note, borrow the same amount, or
some combination thereof. On our consolidated statements of
cash flows, we present the borrowings and repayments of
these underlying notes as net cash inflows or outflows due to
their short-term nature. The gross borrowings and repayments
in the prior years’ consolidated statements of cash flows have
been reclassified to a net amount to conform to the current
year presentation.

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 on two Japanese term loans.

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

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. In the year ended December 31, 2022, due to the
spinoff of ZimVie, certain foreign entities were completely
liquidated. In a pro rata spinoff of consolidated subsidiaries’
assets and liabilities, the distribution of these net assets is
recognized through equity instead of net earnings. Therefore,
the foreign currency translation adjustments of those entities
that were completely liquidated were reclassified to retained
earnings. Similarly, we had entered into instruments

designated as net investment hedges against certain of these
same foreign entities. We reclassified the portion of the net
investment hedge gains (losses) deferred in foreign currency
translation adjustments related to those entities to retained
earnings. 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, 2022
AOCI before reclassifications
Reclassifications to statements of earnings

Balance December 31, 2023

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

Foreign
Currency
Translation

Cash
Flow
Hedges

Defined
Benefit
Plan
Items

Total
AOCI

$(169.3) $ 69.6
71.1
(77.4)

9.9
–

$(79.6) $(179.3)
71.5
(83.2)

(9.5)
(5.8)

$(159.4) $ 63.3

$(94.9) $(191.0)

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)

Amount of Gain / (Loss)
Reclassified from AOCI

For the Years Ended December 31,

2023

2022

2021

Location on
Statements of Earnings

$94.1
(0.7)

$54.8
(0.8)

$ (0.8) Cost of products sold
Interest expense, net

(0.6)

93.4
16.0

54.0
8.0

(1.4) Total before tax
(0.1) Provision for income taxes

$77.4

$46.0

$ (1.3) Net of tax

$ 6.1
0.3

$ 5.8

$ 0.2
(1.2)

$(14.0) Other (expense) income, net
(3.8) Provision for income taxes

$ 1.4

$(10.2) Net of tax

Total reclassifications

$83.2

$47.4

$(11.5) 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,

Before Tax

Tax

Net of Tax

2023

2022

2021

2023

2022

2021

2023

2022

2021

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

$ (2.9) $(87.3) $(54.8) $(12.8) $36.0
17.0
(8.0)

100.5
(54.0)

84.8
(93.4)

13.7
(16.0)

102.5
1.4

$45.1
16.1
0.1

$ 9.9
71.1
(77.4)

$(123.3) $(99.9)
86.4
1.3

83.5
(46.0)

assumptions

(17.0)

95.9

96.9

(1.7)

18.9

18.5

(15.3)

77.0

78.4

Total Other Comprehensive (Loss) Income

$(28.5) $ 55.1

$146.0

$(16.8) $63.9

$79.8

$(11.7) $ (8.8) $ 66.2

15. Derivative Instruments and Hedging Activities

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, 2023 and December 31, 2022, 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, 2023 was $23.9 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, Chinese
Renminbi, 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.

Carrying Amount of the Hedged Liabilities

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

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

$851.3

$823.9

$(144.7)

$(172.0)

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, 2023, we had receive-fixed-rate,

pay-fixed-rate cross-currency interest rate swaps with notional
amounts outstanding of Euro 700 million, Japanese Yen
54.1 billion and Swiss Franc 125 million. These transactions
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,
2023, Euro 100 million and Swiss Franc 50 million of these
cross-currency interest rate swaps matured at a gain of
$6.0 million and a loss of $3.0 million, respectively. 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 Net Investment Hedges

Derivatives Designated as Cash Flow 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

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, 2023, we had obligations to
purchase U.S. Dollars and sell Euros, Japanese Yen, Canadian
Dollars, Australian Dollars, Korean Won, Swedish Krona,
Czech Koruna, Thai Baht, Taiwan Dollars, South African Rand,
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 2024 through April 2026. As of December 31, 2023,
the notional amounts of outstanding forward contracts entered
into with third parties to purchase U.S. Dollars were

Income Statement Presentation

Derivatives Designated as Cash Flow Hedges

$1,531.1 million. As of December 31, 2023, the notional
amounts of outstanding forward contracts entered into with
third parties to purchase Swiss Francs were $449.4 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
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 $1.25 billion to $1.75 billion per quarter.
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

2023

2022

2021

Location on Statement of Earnings

2023

2022

2021

Foreign exchange forward contracts

$84.8

$100.5

$102.5

Cost of products sold

$94.1

$54.8

$(0.8)

Forward starting interest rate swaps

–

Interest expense, net

(0.7)

(0.6)

$84.8

$100.5

$102.5

$93.4

$54.1

$(1.4)

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

sheet at December 31, 2023, together with settled derivatives where the hedged item has not yet affected earnings, was a net
unrealized gain of $71.6 million, or $63.3 million after taxes, which is deferred in AOCI. A gain of $68.2 million, or $56.4 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):

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

2023

2022

2021

Cost of
Products
Sold

Interest
Expense,
Net

Cost of
Products
Sold

Interest
Expense,
Net

Cost of
Products
Sold

Interest
Expense,
Net

$2,083.8

$(201.2) $2,019.5

$(164.8) $1,960.4

$(208.4)

–
–

–
(38.9)

–
–

94.1
–

–
(0.7)

54.8
–

–
(4.0)

–
(0.7)

–
–

3.1
6.4

(0.8)
–

–
(0.6)

–

33.7

–

21.6

–

37.5

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

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

2023

2022

2021

Other (expense) income, net

$4.4

$(26.1) $(1.8)

Other (expense) income, net

Loss on early extinguishment of debt

–

1.1

–

12.0

These gains/(losses) do not reflect losses of $21.6 million, gains of $5.3 million and losses of $3.7 million in 2023, 2022 and
2021, 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, 2023 and 2022, 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

As of December 31, 2023

As of December 31, 2022

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Other current assets

$ 58.4

Other current assets

$ 73.2

Other current assets

Other assets

–

17.2
5.4

$ 81.0

Other current assets

Other assets

6.8

16.6

–

$ 96.6

Other current assets

$ 1.2

Other current assets

$ 3.1

Other current assets

–

Other current assets

1.1

Total asset derivatives not designated as hedges

$ 1.2

$ 4.2

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, 2023

As of December 31, 2022

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Other current liabilities

$ 13.9

Other current liabilities

$ 8.0

Other current liabilities

33.3

Other current liabilities

Other long-term liabilities

11.0 Other long-term liabilities

Other long-term liabilities

34.8 Other long-term liabilities

3.3

14.5

46.3

Other long-term liabilities

144.7 Other long-term liabilities

172.0

$237.7

$244.1

Foreign exchange forward contracts

Other current liabilities

$ 2.4

Other current liabilities

$ 4.6

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, 2023

As of December 31, 2022

Location

Gross
Amount

Offset

Net Amount
in Balance
Sheet

Gross
Amount

Offset

Net Amount
in Balance
Sheet

Other current assets

$58.4

$13.0

$45.4

$73.2

$7.1

$66.1

Other assets

Other current assets

Other current liabilities

Other long-term liabilities

Other current liabilities

17.2

1.2

13.9

11.0

2.4

8.2

0.8

13.0

8.2

0.8

9.0

0.4

0.9

2.8

1.6

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

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,

2023

2022

2021

$(37.4) $113.1

$129.6

(16.9)

6.4

103.0

$(54.3) $119.5

$232.6

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 except for
one insignificant plan; 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

2023

2022

2021

2023

2022

2021

$ 0.4

$ 0.7

$ 0.9

$ 15.5

$ 22.7

$ 24.7

18.7

11.7

10.5

15.7

5.4

4.9

(30.1)
0.1

0.2

2.8

(30.8)

(29.8)

(22.5)

(14.3)

(15.6)

–

0.3

7.8

6.4

0.3

8.6

(2.6)

(4.4)

(2.2)

(5.0)

(4.1)

0.8

0.5

(4.3)

2.5

$ (7.9) $(10.3) $ (3.1) $ (0.5) $ 5.5

$ 12.7

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

2023

2022

2021

2023

2022

2021

5.25% 2.86% 2.04% 2.60% 0.67% 0.63%

–

2.33% 2.27% 2.39%

6.75% 6.75% 6.75% 3.17% 1.83% 2.09%

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 (gain)
Settlements
Translation loss (gain)

Projected benefit obligation - end of year

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2023

2022

2023

2022

$366.8
0.4
18.7
–
(20.1)
15.1
(0.3)
–

$ 503.1
0.7
11.7
–
(23.5)
(125.2)
–
–

$567.9
15.5
15.7
24.1
(48.1)
31.1
–
48.2

$ 807.9
22.7
5.4
24.5
(64.3)
(186.2)
(2.3)
(39.8)

$380.6

$ 366.8

$654.4

$ 567.9

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

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

2023

2022

2023

2022

$396.2
57.6
0.4
–
(0.3)
(20.1)
–

$499.5
(81.5)
1.7
–
–
(23.5)
–

$667.2
31.9
19.9
24.1
–
(48.1)
56.7

$821.2
(93.8)
19.8
24.5
(2.3)
(64.3)
(37.9)

$433.8

$396.2

$751.7

$667.2

$ 53.2

$ 29.4

$ 97.3

$ 99.3

For the Years Ended December 31,

U.S. and Puerto Rico

Foreign

2023

2022

2023

2022

$54.5
(0.1)
(1.2)

$30.9
(0.1)
(1.4)

$117.8
(1.4)
(19.1)

$119.9
(1.4)
(19.2)

$53.2

$29.4

$ 97.3

$ 99.3

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

2023

2022

2021

2023

2022

2021

5.38% 5.37% 2.70% 2.21% 2.65% 0.73%

–

2.34% 2.25% 2.48%

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

2023

2022

2023

2022

$1.3

$1.5

$27.2

$26.8

–

8.6

7.9

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

2023

2022

2023

2022

$380.6

$366.8

$640.3

$548.6

1.3

–

1.5

–

24.9

8.6

24.5

7.9

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,

2024

2025

2026

2027

2028

2029-2033

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.

U.S. and
Puerto Rico

Foreign

$ 24.4

$ 37.1

25.7

25.9

26.3

26.8

38.9

37.0

37.8

36.9

133.5

173.3

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, 2023

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

$ 2.5

296.2

135.1

$2.5

–

296.2

135.1

Total

$433.8

$2.5

$431.3

–

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

Equity securities

Intermediate fixed

income securities

$ 5.0

263.2

128.0

$5.0

–

263.2

128.0

Total

$396.2

$5.0

$391.2

–

The fair value of our foreign pension plan assets was as

follows (in millions):

As of December 31, 2023

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
Fixed income securities
Other types of
investments

Real estate

Total

$ 28.5
160.9
181.3

185.3
195.7

$ 28.5
148.2
–

–
–

–
12.7
181.3

185.3
–

–
–
–

–
195.7

$751.7

$176.7

$379.3

$195.7

As of December 31, 2022

Fair Value Measurements at
Reporting Date Using:

Asset Category

Total

Cash and cash
equivalents

Equity securities

Fixed income securities

Other types of
investments

Real estate

$ 21.9

136.0

168.8

175.0
165.5

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

$ 21.9

122.6

–

–
–

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

–

13.4

168.8

175.0
–

We expect that we will have minimal legally required
funding requirements in 2024 for the qualified U.S. and Puerto
Rico defined benefit retirement plans, and we do not expect to
voluntarily contribute to these plans during 2024.
Contributions to foreign defined benefit plans are estimated to
be $18.2 million in 2024. 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 $60.4 million, $48.5 million and $46.3 million related
to these plans for the years ended December 31, 2023, 2022
and 2021, respectively.

17.

Income Taxes

The components of earnings (loss) from continuing

operations before income taxes consisted of the following
(in millions):

–

For the Years Ended December 31,

2023

2022

2021

–
165.5

United States operations

57.0

$(242.4) $(118.8)

Foreign operations

1,010.3

645.9

617.8

Total

$667.2

$144.5

$357.2

$165.5

Total

$1,067.3

$ 403.5

$ 499.0

As of December 31, 2023 and 2022, 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):

The provision 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,

2023

2022

2021

0.5

$175.3

$ 44.3

19.5

16.1

7.2

118.5

(14.7)

104.1

138.5

176.7

155.6

(125.2)

(74.8)

(16.7)

45.6

1.6

8.8

(83.5)

(19.4)

0.8

(96.3)

(64.4)

(102.1)

Provision for income taxes

$ 42.2

$112.3

$ 53.5

December 31, 2023

Net income taxes paid

$ 215.2

$326.6

$ 258.4

Beginning Balance

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

Ending Balance

$165.5
9.4
3.5
17.3

$195.7

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

our effective tax rate is as follows:

For the Years Ended December 31,

2023

2022

2021

U.S. statutory income tax rate

21.0% 21.0% 21.0%

State taxes, net of federal deduction

0.2

3.2

(2.8)

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

Tax benefit relating to foreign derived

intangible income and U.S. manufacturer’s
deduction

(0.3)

(1.8) (10.3)

(0.2)

0.7

–

1.1

5.8

15.3

0.3

0.9

(0.5)

1.3

–

0.1

1.1

(0.8)

(2.9)

0.4

Deferred tax liabilities:

Fixed assets
Intangible assets
Foreign currency items
Lease asset
Other

Total deferred tax liabilities

As of December 31,

2023

2022

$ 122.2
466.5
–
48.8
41.2

$ 111.6
466.8
23.0
47.2
49.2

678.7

697.8

Total net deferred income taxes

4.3

$ (67.4)

At December 31, 2023, net operating loss, tax credit
carryovers, and capital loss carryovers are available to reduce
future federal, state and foreign taxable earnings (in millions):

R&D tax credit

(0.6)

(2.0)

(2.2)

Expiration Period:

Share-based compensation

0.1

1.8

(0.2)

Net uncertain tax positions, including interest

and penalties

Other

(16.0) (14.6)

2.9

(0.1)

(0.2)

(0.1)

Effective income tax rate

4.0% 27.9% 10.7%

1-5 years

6-10 years

11+ years

Indefinite

Net
operating
loss
carryover

Tax
credit
carryover

Capital
loss
carryover

$ 50.6

$20.3

$0.1

11.0

281.9

140.8

59.0

1.3

1.2

484.3

81.8

–

8.0

8.1

Our operations in Puerto Rico benefit from a tax incentive

Valuation allowances

$411.5

$39.5

$8.1

grant which expires in fiscal year 2026.

The remaining valuation allowances booked against
deferred tax assets of $5.5 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 such that they

would not result in significant U.S. tax costs. These
distributions could come from foreign subsidiaries earnings
that were previously taxed in the U.S. as a result of the
transition tax or tax on Global Intangible Low-Taxed Income
(“GILTI”). These previously taxed earnings would not be
subject to further U.S. federal tax. 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 later 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 enacted tax laws and regulations and at current foreign
currency exchange rates.

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
Accrued liabilities
Share-based compensation
Accounts receivable
Research and development

Lease liability

Other

Total deferred tax assets

Less: Valuation allowances

As of December 31,

2023

2022

$ 204.0
484.3

$ 187.9
476.2

81.8
8.1

27.9
92.4
44.4
23.0
103.9

52.6

25.2

72.9
7.8

36.7
99.1
36.6
25.8
47.9

51.6

51.1

1,147.6

1,093.6

(464.6)

(463.2)

Total deferred tax assets after valuation

allowances

$ 683.0

$ 630.4

The following is a tabular reconciliation of the total amounts of
unrecognized tax benefits (in millions):

For the Years Ended December 31,

2023

2022

2021

Balance at January 1

$ 521.0

$558.6

$619.4

Increases related to prior periods

68.7

25.0

11.5

Decreases related to prior periods

(206.2)

(78.2)

(12.7)

Increases related to current period

8.7

19.0

7.3

such payments prior to final resolution. We record any
prepayments as income tax receivables when we believe our
position is more likely than not to be upheld. We assess our
position on these disputes at each reporting period. 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 2019.

–

(2.0)

(65.1)

The IRS has proposed adjustments for tax years 2010-

Decreases related to settlements with

taxing authorities

Decreases related to lapse of statute of

limitations

(0.3)

(1.4)

(1.8)

Balance at December 31

$ 391.9

$521.0

$558.6

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

$ 251.6

$360.1

$426.4

We recognize accrued interest and penalties related to
unrecognized tax benefits as income tax expense. During 2023,
we released interest and penalties of $45.3 million, and as of
December 31, 2023, had a recognized liability for interest and
penalties of $89.1 million, which does not include any increase
related to business combinations. The $206.2 million decrease
related to prior periods and the $45.3 million release of interest
and penalties primarily resulted from unrecognized tax
benefits determined to be effectively settled during 2023.

During 2022, we accrued interest and penalties of
$18.1 million, and as of 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.
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.

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 $270 million decrease to a $20 million increase.

We are under continuous audit by the Internal Revenue

Service (“IRS”) and other foreign taxing authorities in the
jurisdictions where we operate. In addition, some jurisdictions
in which we operate require payment of disputed taxes to
petition a court or taxing authority, or we may elect to make

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, primarily 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 continue to vigorously contest the
adjustments, 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.

The IRS has proposed adjustments for tax years 2016-
2019, primarily related to the U.S. taxation of foreign earnings
and profits, which could result in additional material tax
expense if we are unsuccessful in defending our position. We
disagree with the proposed adjustments and intend to continue
to vigorously contest the adjustments. We do not expect a final
resolution of these issues in the next 12 months. No payment
of any amount related to this matter is required to be made, if
at all, until all applicable proceedings have been completed.

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 audit, appeals, or litigation.

In other major foreign 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, 2023.

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

For the Years Ended
December 31,

2023

2022

2021

Weighted average shares outstanding for basic

net earnings per share

208.7

209.6

208.6

Effect of dilutive stock options and other

equity awards

1.0

0.7

1.8

Weighted average shares outstanding for

diluted net earnings per share

209.7

210.3

210.4

For the years ended December 31, 2023, 2022 and 2021,

an average of 2.7 million options, 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.

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.

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.

In 2023, the segment operating profit measures our CODM reviews were revised. Certain support function costs from our
operating segments are now included in Corporate items. We have reclassified these support function expenses in the prior years to
conform to the current year presentation.

In 2023, our CODM started reviewing accounts receivable and inventories as part of operating segment performance. In prior

years no asset information was reviewed. Accordingly, we have included these operating segment assets in our 2023 and 2022
disclosures, rounded to the nearest million as presented to the CODM.

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

Net Sales
Year Ended December 31,

Operating Profit
Year Ended December 31,

Depreciation and
Amortization
Year Ended December 31,

Segment Assets
As of December 31,

2023

2022

2021

2023

2022

2021

2023

2022

2021

2023

2022

Americas

EMEA

Asia Pacific

Total

$4,624.1 $4,295.5 $4,102.1 $ 1,948.9 $ 1,819.7 $ 1,726.9

$145.9

$142.1

$143.1

$1,218.0

$1,172.0

1,592.4

1,456.6

1,477.2

1,177.7

1,187.8

1,248.0

524.6

422.6

404.1

419.6

405.9

418.3

67.2

62.3

64.4

63.5

71.4

66.7

679.0

355.0

664.0

350.0

$7,394.2 $6,939.9 $6,827.3

Corporate items

Intangible asset amortization

(1,056.9)

(1,127.5)

(1,145.0)

114.8

(561.5)

(526.8)

(529.5)

561.5

Goodwill and intangible asset impairment

–

(292.8)

(16.3)

–

129.6

526.8

–

127.0

529.5

–

1,575.6

1,342.7

–

Total

$ 1,277.7 $

696.3 $

860.3

$951.7

$926.4

$937.7

$3,827.6

$3,528.7

We conduct business in the following countries that hold

20. Leases

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

United States

Other countries

As of December 31,

2023

2022

$1,265.1

$1,101.8

795.3

770.7

Property, plant and equipment, net

$2,060.4

$1,872.5

U.S. sales were $4,288.8 million, $4,012.4 million, and
$3,853.9 million for the years ended December 31, 2023, 2022
and 2021, 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.

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
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,

2023

2022

2021

$59.7

$62.4

$71.1

Cash paid for leases recognized in operating

cash flows

$62.8

$65.2

$70.5

Right-of-use assets obtained in exchange for

new lease liabilities

$77.8

$72.0

$88.8

As of December 31,

2023

2022

Right-of-use assets recognized in Other

assets

Lease liabilities recognized in Other current

liabilities

Lease liabilities recognized in Other long-

term liabilities

203.8

52.9

174.4

196.4

53.0

167.3

Weighted-average remaining lease term

5.8 years

5.9 years

Weighted-average discount rate

2.8%

2.1%

Our variable lease costs are not significant.

Our future minimum lease payments as of December 31,

2023 were (in millions):

For the Years Ending December 31,

2024

2025

2026

2027

2028

Thereafter

Total

Less imputed interest

Total

$ 57.7

48.1

39.3

31.3

20.9

50.1

247.4

20.1

$227.3

21. Commitments and Contingencies

From time to time, we are involved in various legal
proceedings, including product liability, intellectual property,
stockholder matters, tax disputes, commercial disputes,
employment matters, whistleblower and qui tam claims and
investigations, 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 contingencies 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, 2023, 2022, and 2021, we recognized
$21.6 million, $65.9 million and $201.0 million, respectively, of

net litigation-related charges. At December 31, 2023 and 2022,
accrued litigation liabilities were $244.1 million and
$349.2 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). Most of the cases in the MDL have been resolved.
Other related cases are pending in various state and federal
courts and in courts in Canada, and additional claims may be
asserted in the future. 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”). On December 27,
2023, the FDA notified us that the warning letter relating to
the Warsaw North Campus had been resolved.

FDA Form 483 inspectional observations: We are in the

process of addressing various FDA Form 483 inspectional
observations at certain of our manufacturing facilities. The
ultimate outcome of these matters is presently uncertain. 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

Indemnifications: As part of the ZimVie spinoff, we
agreed to indemnify ZimVie for certain legal and tax matters.
Our responsibilities for legal indemnification were subject to a
maximum amount that has been met and paid as of
December 31, 2023. 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.

Contractual obligations: We have entered into

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 $440 million.

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, 2023, 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

Audit and Other Services

• Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;

• 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

• 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, 2023. 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, 2023, 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,
2023 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, 2023 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.

During the fourth quarter of 2023, the Audit Committee of our Board of Directors approved the engagement of

PricewaterhouseCoopers LLP, our independent registered public accounting firm, to perform certain audit, audit related and tax
services. This disclosure is made pursuant to Section 10A(i)(2) of the Exchange Act.

Trading Plan Arrangements

During the three-month period ended December 31, 2023, no members of our Board of Directors or officers (as defined in
Rule 16a-1(f) of the Exchange Act) adopted, amended or terminated any contract, instruction or written plan for the purchase or
sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule
10b5-1 trading arrangement, as defined in rules of the Securities and Exchange Commission.

Change in Control Severance Agreement Amendments

Because we are filing this Annual Report on Form 10-K within four business days after the triggering event, we are making the

following disclosure under this Item 9B instead of filing a Current Report on Form 8-K under Item 1.01, Entry into a Material
Definitive Agreement and Item 5.02, Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers:

As part of the ongoing evaluation of its executive compensation programs, the Compensation and Management Development
Committee of the Board of Directors of the Company reviewed the existing forms of Change in Control Severance Agreement for
executive officers and approved certain modifications to the Change in Control Severance Agreements with executive officers that
were entered into subsequent to 2009, in order to better conform to observed peer competitor practice. Therefore, effective as of
February 19, 2024, the Company (or one of its subsidiaries) entered into: (i) an Amendment to Change in Control Severance
Agreement (the “U.S. Amendment”) with each of Ivan Tornos, President and Chief Executive Officer of the Company, and Suketu
Upadhyay, the Company’s Chief Financial Officer and Executive Vice President—Finance, Operations and Supply Chain, the form
of which U.S. Amendment is attached hereto as Exhibit 10.51; (ii) an Amendment to Change in Control Severance Agreement (the
“Swiss Amendment”) with Wilfred van Zuilen, Group President, Europe, Middle East and Africa, the form of which Swiss
Amendment is attached hereto as Exhibit 10.52; and (iii) a Deed of Amendment (the “Hong Kong Amendment”; together with the
U.S. Amendment and Swiss Amendment, the “Amendments”) with Sang Yi, Group President, Asia Pacific, the form of which
Hong Kong Amendment is attached hereto as Exhibit 10.53. Messrs. Tornos, Upadhyay, van Zuilen and Yi are referred to as the
“Executives.”

The Executives’ underlying Change in Control Severance Agreements provide for certain payments to an Executive if their
employment is terminated in certain circumstances in connection with a change in control of the Company, and also imposes limits
on such payments. Prior to the Amendments, the Executives’ Change in Control Severance Agreements provided that, if amounts
payable to an Executive under the Change in Control Severance Agreement or otherwise in connection with a change in control
would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise
Tax”), then the value of those payments would be reduced to the extent necessary so that the payments would not trigger that
Excise Tax. The Amendments modify this provision so that, if amounts payable to an Executive under the Change in Control
Severance Agreement or otherwise in connection with a change in control would be subject to the Excise Tax, then the value of
those payments will either (i) be reduced to the extent necessary so that the payments will not trigger that Excise Tax, or (ii) be
paid in full, depending on which course of action would result in the better net after-tax result for the Executive, taking into
account the Excise Tax and any other applicable tax. Other than the Amendments, the Executives’ Change in Control Severance
Agreements continue in effect without further change.

Copies of the forms of the U.S. Amendment, Swiss Amendment and Hong Kong Amendment are filed as Exhibits 10.51, 10.52

and 10.53, respectively, hereto and incorporated by reference. This summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the full text of each of the forms of Amendment.

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 10, 2024 (the “2024 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 2024 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 2024 Proxy Statement.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information required by this item is incorporated by reference from our 2024 Proxy Statement.

Item 14. Principal Accountant Fees and Services

Information required by this item is incorporated by reference from our 2024 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 Statements Schedule

Schedule II. Valuation and Qualifying Accounts (in millions):

Description

Allowance for Doubtful Accounts:

Year Ended December 31, 2021

Year Ended December 31, 2022

Year Ended December 31, 2023

Deferred Tax Asset Valuation Allowances:

Year Ended December 31, 2021

Year Ended December 31, 2022

Year Ended December 31, 2023

Balance at
Beginning
of Period

Additions
Charged
(Credited)
to Expense

Deductions /
Other Additions
to Reserve

Effects of
Foreign
Currency

Balance at
End of
Period

$ 58.6

$12.4

$ (9.0)

$(1.9) $ 60.1

60.1

78.4

22.5

5.1

(7.6)

(5.1)

3.4

(3.3)

78.4

75.1

$527.3

$(2.6)

$(61.5)(1) $(3.1) $460.1

460.1

463.2

3.0

(3.1)

2.0(1)

3.7(1)

(1.9)

463.2

0.8

464.6

(1) 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

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 (incorporated by reference
to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed February 24, 2023)

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (incorporated
by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed February 24, 2023)

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)

Exhibit No

Description

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)

Form of 1.164% Notes due 2027 (incorporated by reference to Exhibit 4.16 above)

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 4.19 above)

Form of 3.550% Notes due 2030 (incorporated by reference to Exhibit 4.19 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 4.22 above)

Form of 2.600% Notes due 2031 (incorporated by reference to Exhibit 4.22 above)

Ninth Supplemental Indenture, dated as of December 1, 2023, 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 December 1, 2023)

Form of 5.350% Notes due 2028 (incorporated by reference to Exhibit 4.25 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 August 21, 2023, by and between Zimmer Biomet Holdings, Inc. and Ivan Tornos
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed August 22,
2023)

Change in Control Severance Agreement, dated as of August 21, 2023, by and between Zimmer Biomet
Holdings, Inc. and Ivan Tornos (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report
on Form 8-K filed August 22, 2023)

4.16

4.17

4.18

4.19

4.20

4.21

4.22

4.23

4.24

4.25

4.26

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

10.9*

Exhibit No

Description

10.10*

10.11*

10.12*

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*

Chief Executive Officer Confidentiality, Non-Competition and Non-Solicitation Agreement, dated as of
August 21, 2023, by and between Zimmer Biomet Holdings, Inc. and Ivan Tornos (incorporated by reference
to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed August 22, 2023)

Form of Change in Control Severance Agreement with Rachel Ellingson, Paul Stellato, 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)

Form of Confidentiality, Non-Competition and Non-Solicitation Agreement with 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)

Exhibit No

Description

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
August 25, 2023 (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on
Form 10-Q filed November 7, 2023)

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)

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)

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)

10.28*

10.29*

10.30*

10.31*

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

Exhibit No

10.45

10.46

10.47

10.48

10.49

10.50

10.51*

10.52*

10.53*

10.54*

31.1

31.2

Description

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)

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 July 7, 2023, 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 July 10, 2023)

364-Day Revolving Credit Agreement, dated as of July 7, 2023, 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 July 10, 2023)

Form of Amendment to Change in Control Severance Agreement with Ivan Tornos, Suketu Upadhyay,
Rachel Ellingson, Lori Winkler and Paul Stellato

Amendment to Change in Control Severance Agreement dated February 19, 2024 between Zimmer
GmbH and Wilfred van Zuilen

Deed of Amendment dated February 19, 2024 between Zimmer Asia (HK) Limited and Sang-Uk Yi

Form of Change in Control Severance Agreement with Mark Bezjak

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

97.1

Zimmer Biomet Holdings, Inc. Compensation Recovery Policy, effective October 2, 2023

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 with Embedded Linkbase Documents

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 23, 2024

ZIMMER BIOMET HOLDINGS, INC.

By: /s/ Ivan Tornos
Ivan Tornos
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/ Ivan Tornos

Ivan Tornos

/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

/s/ Louis A. Shapiro

Louis A. Shapiro

President, Chief Executive Officer and Director (Principal
Executive Officer)

Chief Financial Officer and Executive Vice President –
Finance, Operations and Supply Chain (Principal Financial
Officer)

Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)

Director

February 23, 2024

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, 2023, 2022, 2021, and 2020
(in millions, unaudited*)

Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,277.7

$ 696.3

$ 860.3

For the Years Ended December 31,

2023

2022

2021

Inventory and manufacturing-related charges(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible asset amortization(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill and intangible asset impairment(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18.3

561.5

–

Restructuring and other cost reduction initiatives(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151.9

Quality remediation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition, integration, divestiture and related(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Litigation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

European Union Medical Device Regulation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

21.7

10.1

56.1

Other charges(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10.6)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,086.9

$1,893.8

$1,837.3

$1,531.0

For the Years Ended December 31,

2023

2022

2021

2020

Operating Profit Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17.3% 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)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.2

7.6

–

2.1

–

0.3

0.1

0.8

Other charges(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(0.1)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.2% 27.3% 26.9% 25.0%

Amounts and percentages are presented on a continuing operations basis. Amounts reported in millions are computed based on the actual
amounts. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding.
Percentages presented are calculated from the underlying unrounded amounts.

(1) Please refer to page numbers 82-83 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, 2023, 2022, 2021, and 2020
(unaudited*)

For the Years Ended December 31,

2023

2022

2021

2020

Diluted Earnings (Loss) Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4.88

$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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.05

2.13

–

Restructuring and other cost reduction initiatives, net of tax(4)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.53

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

0.10

0.03

0.21

–

Other charges, net of tax(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.07

Other certain tax adjustments(11)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(0.46)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7.55

$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. Per share amounts are computed based on the actual amounts. As a result,
the sum of the components reported may not equal the total amount reported due to rounding.
Inventory and manufacturing-related charges include excess and obsolete inventory charges on certain product lines we intend
to discontinue, the acceleration of depreciation and fixed overhead costs expensed immediately related to a manufacturing
plant shutdown, 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, 2021, and 2023 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, in the case of the December 2021 program, 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 consulting fees, project management expenses, retention period salaries and benefits and relocation costs.

(5) We addressed 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
required us to devote significant financial resources. The majority of the expenses were 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 have 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 patent litigation and product liability litigation. 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. A conditional extension of the
transition period has been implemented until December 2027 and 2028 depending on the legacy medical device’s risk class. 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
contract terminations, a gain related to an asset sale, and gains and losses from changes in fair value on our equity investments
including our investment in ZimVie, among other various costs.

(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, 2023
(unaudited)

For the Year Ended December 31, 2023

Reported
% Growth

Foreign
Exchange
Impact

Constant
Currency
% Growth

Geographic Segment

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Product Category

Knees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

S.E.T. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–%

(2)

–

(1)

–

Corporate Information (As of March 11, 2024)

Shareholder Information

Headquarters
Zimmer Biomet Holdings, Inc.
345 East Main Street
Warsaw, IN 46580, U.S.A.
+1-574-373-3333
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, 2018 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

2018

2019

2020

2021

2022

2023

Zimmer Biomet Holdings, Inc.

$100.00

$145.38

$150.84

$125.16

$130.55

$125.57

S&P 500 Stock Index

$100.00

$131.49

$155.68

$200.37

$164.08

$207.21

S&P 500 Health Care Equipment Index $100.00

$129.32

$152.12

$181.56

$147.32

$160.64

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.

This annual report is printed on paper that contains 10% post-consumer waste.

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