Zimmer Biomet : 2021 Annual Report

Financial Highlights*

(Dollars in millions except per share amounts)

% Change 2020-2021

Constant

Sales by Geography

2017

2018

2019

2020

2021

Reported Currency(1)

Sales by Product Category

AmericasEMEAAsia Pacific Consolidated

$4,845

$4,837

$4,876

$4,336

$4,800

11% 11%

1,745 1,213

1,802 1,294

1,747 1,359

1,391 1,298

1,671 1,365

20% 16%

5% 3%

$7,803

$7,933

$7,982

$7,025

$7,836

12% 10%

% Change 2020-2021

Constant

2017

2018

2019

2020

2021

Reported Currency(1)

KneesHipsS.E.T.

$2,747

$2,789

$2,780

$2,378

$2,648

11% 10%

1,872

1,919

1,932

1,751

1,856

6% 5%

1,538 1,069

1,596 1,045

1,653 1,022

1,526 897

1,728 1,009

13% 12%

Spine & Dental

13% 12%

Other Consolidated

577 $7,803

584 $7,933

595 $7,982

473 $7,025

595 $7,836

26% 25%

12% 10%

Net Sales

Zimmer Biomet recorded net sales of $7.836 billion in 2021, our net sales increased by 11.6% compared to 2020 primarily due to the significant deferral of elective surgical procedures at the onset of the COVID-19 pandemic in 2020.

Operating Profit (Loss)

Our 2021 operating profit improved from 2020 due to the recovery of elective surgical procedures when compared to the deferrals that occurred during the onset of the COVID-19 pandemic in 2020. In addition, there were significant goodwill impairment charges in 2020 resulting from decreased expected future cash flows due to the pandemic.

17

18

19

799

2,426

34

2,210

1,138

2,189

(88)

1,609

780

2,035

Diluted Earnings (Loss) per Share

Diluted earnings (loss) per share improved in 2021 due to the recovery of elective surgical procedures compared to the significant deferrals at the onset of the COVID-19 pandemic in 2020. In addition, reported diluted earnings (loss) per share in 2020 included a significant goodwill impairment charge resulting from decreased expected future cash flows due to the pandemic.

8.90 8.03

7.37

5.67

1.91

(1.86)

(0.67)

20

21

17

18

19

20

21

17

18

19

20

21

17

18

19

20

21

GRAPH KEY

(1)

ReportedAdjusted(2)

"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 92.

(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; expenses related to certain R&D agreements; 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 89-91.

*All historical financial information is for WholeCo Zimmer Biomet; amounts do not reflect spinoff of ZimVie, Inc.

To Our Shareholders,

In 2021, the Zimmer Biomet team remained intensely focused on creating value - despite another challenging year impacted by the COVID-19 pandemic. I am proud to report that we made great progress in the continued transformation of our business and further strengthened our position as a leading medtech innovator.

While 2021 brought market pressure, particularly given the proportion of Zimmer Biomet revenues driven by elective procedures, it also presented our company with the opportunity to deliver against our corporate strategy. Zimmer Biomet continued to execute for our team members, for our shareholders and, most importantly, for the customers and patients that we serve.

I want to take a moment to thank all of our Zimmer Biomet team members for their unwavering vigilance and dedication to our safety protocols over the past year, and their unmatched focus on our mission to "alleviate pain and improve the quality of life for people around the world."

Key Achievements in 2021

Zimmer Biomet continued to drive innovation across the patient journey with our integrated digital and robotics products - all of which help us use data to unlock insights, add value, enhance the user experience and improve patient outcomes. Focused work in active portfolio management, crisis response and planning throughout COVID-19, a commitment to Diversity, Equity and Inclusion within the workplace, along with a defined engagement strategy for our team members, were also notable achievements for the company over the course of the year.

Highlights of Zimmer Biomet 2021 accomplishments include:

• • Innovative, Enabling Technologies and Solutions: In 2021, Zimmer Biomet focused on innovation to

  drive long-term growth. The company delivered multiple robotics launches, debuted the world's first-and-only "smart" knee implant, offered new functionality with mymobility® and unveiled our ZBEdge™ ecosystem of connected technologies.

• • Active Portfolio Management: We announced and made significant progress toward the spinoff of our Dental and Spine businesses, which was completed ahead of schedule on March 1, 2022. We also accelerated restructuring programs to streamline our operational footprint, offset inflationary pressures in our business, address stranded cost from the spin transaction and create capacity to reinvest in our business.

• • COVID-19: Prior to COVID-19, Zimmer Biomet developed comprehensive crisis response plans and initiated contingency drills - including for pandemic events - across our operations, which helped prepare our business and create enhanced disaster recovery plans that have been a significant benefit throughout our response to COVID-19. Throughout 2021, we continued to aggressively secure our global supply chain and manage the unique challenges presented by each new COVID-19 wave. Due to these efforts, we continued to keep our team members safe and serve our customers without compromising product quality and safety.

• • Commitment to Diversity, Equity and Inclusion: Zimmer Biomet further advanced our commitment to creating, supporting and celebrating diverse and equal workplaces and communities. We established year 2026 representation goals for women and people of color (POC) in the organization, guided by internal and external benchmarks.

• • Team Member Engagement: Through the implementation of a comprehensive engagement strategy, we engaged team members frequently for a more holistic view of their experience as we strive to be a Best and Preferred Place to Work. In 2021, we implemented quarterly performance check-ins, as well as a global, social recognition platform and new, expanded resources to nurture well-being and deliver even greater transparency in our communication for our team members.

Our progress during the year was recognized with Zimmer Biomet being named one of America's Most Responsible Companies 2021 by Newsweek, along with several other awards that highlight our company as a leader in the industry, including PM360's Trailblazer Award for Best Medical Device Company and inclusion on Forbes' list of Best Employers for Diversity.

The Year Ahead: Moving Our Mission Forward in 2022

I continue to remain highly confident in the Zimmer Biomet team and our business momentum. While some uncertainty due to the global pandemic remains, I truly believe that we are ready and well-positioned for success and that our strategy is absolutely working. The transformation of our business is well underway and I'm excited about the value we can create for our shareholders moving forward.

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

Sincerely,

Bryan Hanson

Chairman, President and CEO, Zimmer Biomet