ZBH · 8-K · 20260805PR335108

Gross Margin Drivers

ZIMMER BIOMET HOLDINGS, INC. · 2026-08-05 · Importance 39 · Surprise 50 · No source text

Gross margin declined to 61.6% in 2025 from 63.8% in 2024, a 220-basis-point reduction. Approximately $170 million of inventory and instrument charges, U.S. tariffs, Paragon 28 inventory stepped up to fair value, foreign exchange and higher intangible amortization reduced margin. Inventory charges reduced gross margin by 1.9 percentage points, inventory step-up by 0.4 points, tariffs by 0.4 points and intangible amortization by 0.4 points. A favorable volume, product and market mix partially offset the pressure by adding 1.0 percentage point to gross margin.

Key facts

• Estimated annual amortization expense based on intangibles as of December 31, 2025: 2026 $633.6 million, 2027 $619.8 million, 2028 $613.6 million, 2029 $564.9 million, 2030 $448.4 million. source
• Total identifiable intangible assets as of December 31, 2025: $4,717.3 million. source
• Gross carrying amount of technology intangible assets as of December 31, 2025: $3,833.1 million, accumulated amortization $2,322.5 million, net technology intangible assets $1,510.6 million. source
• Factors reduced gross margin in 2025: inventory charges (1.9 percentage points), inventory step-up (0.4), U.S. tariffs (0.4), intangible asset amortization (0.4); manufacturing costs +0.1 and volume/product/market mix +1.0. source
• Americas cost of products sold, excluding intangible asset amortization in 2025: $1,146.3 million. source
• Intangible asset amortization in 2025: $665.9 million. source
• Depreciation and amortization totals for 2025 by area: Americas $177.9 million; EMEA $64.4 million; Asia Pacific $60.4 million; Corporate items $125.2 million; Intangible asset amortization $665.9 million; Total $1,093.8 million. source
• Cost of products sold, excluding intangible asset amortization, was 30.3 percent of net sales in 2025 compared to 28.5 percent in 2024. source

Impact estimates