Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the interim condensed consolidated financial statements and corresponding notes included elsewhere in this Form 10-Q. Amounts reported in millions within this Quarterly Report on Form 10-Q 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.

Executive Level Overview

Results for the Three and Six-Month Periods ended June 30, 2024

In the three and six-month periods ended June 30, 2024, our net sales increased 3.9 percent and 3.5 percent, respectively, when compared to the same prior year periods. Net sales growth in both periods was driven by a combination of market growth, new product introductions and commercial execution across the organization. These favorable items were tempered by negative effects of 1.7 percent and 1.5 percent from changes in foreign currency exchange rates in the three and six-month periods ended June 30, 2024, respectively.

Our net earnings were $242.8 million and $415.2 million in the three and six-month periods ended June 30, 2024, respectively, compared to $209.6 million and $442.1 million in the same prior year periods, respectively. The increase in earnings in the three-month period was due to the net sales increase, lower expenses due to our 2023 Restructuring Plan and cost savings initiatives, and lower research and development ("R&D") spending on the European Union Medical Device Regulation ("EU MDR"). The decline in earnings in the six-month period was primarily due to charges from our 2023 Restructuring Plan which was instituted at the end of 2023 and continued into 2024, including $81.1 million in employee termination benefits-related charges recognized in the six-month period ended June 30, 2024. The additional costs from our 2023 Restructuring Plan were partially offset by higher net sales, lower expenses due to cost savings initiatives, and lower R&D spending on the EU MDR.

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 recent foreign currency exchange rates, we expect foreign currency to negatively affect year-over-year net sales by approximately 1.0 percent. We estimate operating profit will increase in 2024 when compared to 2023 due to higher net sales, leverage from fixed operating expenses and lower expenses due to 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 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 tables present our net sales by geography and the percentage changes (dollars in millions):

		Three Months Ended
		June 30,
		2024				2023				% Inc
United States		$	1,106.2			$	1,068.9				3.5		%
International			835.8				800.7				4.4
Total		$	1,942.0			$	1,869.6				3.9
		Six Months Ended
		June 30,
		2024				2023				% Inc
United States		$	2,205.4			$	2,129.2				3.6		%
International			1,625.8				1,571.4				3.5
Total		$	3,831.2			$	3,700.6				3.5

Net Sales by Product Category

The following tables present our net sales by product category and the percentage changes (dollars in millions):

		Three Months Ended
		June 30,
		2024				2023				% Inc
Knees		$	801.1			$	771.4				3.9		%
Hips			506.5				504.3				0.4
S.E.T.			469.5				442.7				6.1
Other			164.9				151.2				9.1
Total		$	1,942.0			$	1,869.6				3.9
		Six Months Ended
		June 30,
		2024				2023				% Inc
Knees		$	1,589.3			$	1,533.9				3.6		%
Hips			997.6				997.1				-
S.E.T.			922.1				876.1				5.2
Other			322.2				293.5				9.8
Total		$	3,831.2			$	3,700.6				3.5

The following tables present our net sales by geography for our Knees and Hips product categories, which represent our most significant product categories (dollars in millions):

		Three Months Ended June 30,													Six Months Ended June 30,
		2024				2023				% Inc / (Dec)					2024				2023				% Inc / (Dec)
Knees
United States		$	441.2			$	437.7				0.8		%		$	899.3			$	885.9				1.5		%
International			359.9				333.7				7.8					690.0				648.0				6.5
Total		$	801.1			$	771.4				3.9				$	1,589.3			$	1,533.9				3.6
Hips
United States		$	259.0			$	254.3				1.8		%		$	513.8			$	506.6				1.4		%
International			247.5				250.0				(1.0	)				483.8				490.5				(1.4	)
Total		$	506.5			$	504.3				0.4				$	997.6			$	997.1				-

Demand (Volume and Mix) Trends

Changes in volume and mix of product sales had positive effects of 4.8 percent and 4.5 percent on year-over-year sales during the three and six-month periods ended June 30, 2024, respectively. Market growth and new product introductions contributed positively to volume and mix trends.

Pricing Trends

Global selling prices had positive effects of 0.8 percent and 0.5 percent on year-over-year sales during the three and six-month periods ended June 30, 2024, 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 success in offsetting negative effects of pricing pressure due to internal initiatives and being able to pass some inflationary impacts on to customers.

Foreign Currency Exchange Rates

For the three and six-month periods ended June 30, 2024, changes in foreign currency exchange rates had negative effects of 1.7 percent and 1.5 percent on year-over-year sales, respectively. If foreign currency exchange rates remain at levels consistent with recent rates, we estimate there will be a negative impact of approximately 1.0 percent on full-year 2024 sales.

Geography

The 3.5 percent and 3.6 percent net sales growth in the U.S. in the three and six-month periods ended June 30, 2024, respectively, were driven by market growth and sales of our ROSA® Robot. Internationally, net sales increased by 4.4 percent and 3.5 percent during the three and six-month periods ended June 30, 2024, respectively, when compared to the same prior year periods. These increases were similarly driven by market growth in most of our international markets and by the timing of certain export sales. Our International sales were negatively affected by 4.1 percent and 3.5 percent due to changes in foreign currency exchange rates in the three and six-month periods ended June 30, 2024, respectively.

Product Categories

Knees and Hips net sales benefited from market growth and new product introductions in the three and six-month periods ended June 30, 2024. However, Knees and Hips net sales were negatively affected by 1.6 percent and 2.4 percent, respectively, in the three-month period ended June 30, 2024, and were negatively affected by 1.3 percent and 2.1 percent, respectively, in the six-month period ended June 30, 2024 due to changes in foreign currency exchange rates. S.E.T. net sales increases in the three and six-month periods ended June 30, 2024 were primarily the result of growth in our sports medicine, upper extremities, and craniomaxillofacial and thoracic products. Other net sales grew in the three and six-month periods ended June 30, 2024, driven by net sales for our ROSA Robot.

Expenses as a Percentage of Net Sales

		Three Months Ended															Six Months Ended
		June 30,										% Inc /					June 30,										% Inc /
		2024					2023					(Dec)					2024					2023					(Dec)
Cost of products sold, excluding intangible asset amortization			28.5		%			28.1		%			0.4		%			27.8		%			27.7		%			0.1		%
Intangible asset amortization			7.4					7.4					-					7.5					7.3					0.2
Research and development			5.6					6.3					(0.7	)				5.7					6.2					(0.5	)
Selling, general and administrative			38.0					38.8					(0.8	)				38.5					39.0					(0.5	)
Restructuring and other cost reduction initiatives			2.1					1.3					0.8					4.3					1.8					2.5
Acquisition, integration, divestiture and related			0.3					0.4					(0.1	)				0.1					0.2					(0.1	)
Operating profit			18.1					17.6					0.5					16.1					17.8					(1.7	)

Cost of products sold, excluding intangible asset amortization as a percentage of net sales increased in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. The increases were primarily due to higher excess and obsolete inventory charges and higher manufacturing costs. These higher costs were partially offset by lower royalty expense. The

reduction in royalty expense was partially the result of agreements we entered into in 2023 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.

Intangible asset amortization expense increased in amount in the three and six-month periods ended June 30, 2024 compared to the same prior year periods due to the 2023 acquisitions, the buyout of certain royalty-related licensing agreements as described above and other technology-based asset purchases.

R&D expenses decreased in amount and as a percentage of net sales in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. The decreases were driven by lower spending on our initial compliance with the EU MDR as we continue to make progress on the approvals of our products, and lower expenses due to our 2023 Restructuring Plan.

Selling, general and administrative (“SG&A”) expenses increased in amount, but decreased as a percentage of net sales in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. The increase in expenses was due to selling and distribution costs that are variable expenses which increase as net sales increase. Additionally, we recognized higher bad debt-related charges driven by a bankruptcy at a significant U.S. healthcare system, instrument-related costs were higher due to new product introductions, and we recognized higher charges on various strategic initiatives. These higher costs were partially offset by lower expenses due to our 2023 Restructuring Plan and lower expenses from our cost savings initiatives.

In December of 2023, 2021 and 2019, we initiated global restructuring programs. We also have other cost reduction and optimization initiatives that have the goal of reducing costs across the organization. We recognized expenses of $41.5 million and $165.9 million in the three and six-month periods ended June 30, 2024, respectively, and $24.4 million and $66.3 million in the three and six-month periods ended June 30, 2023, 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 the 2024 periods when compared to the 2023 periods primarily due to additional expenses related to the 2023 Restructuring Plan that had just been initiated at the end of 2023. For more information regarding these expenses, see Note 4 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report.

Acquisition, integration, divestiture and related expenses decreased in amount and as a percentage of net sales in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods, primarily due to the timing of changes in fair value estimates of contingent consideration.

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

In the three and six-month periods ended June 30, 2024, we recognized gains of $2.0 million and $1.9 million, respectively, in our other income (expense), net financial statement line item compared to a loss of $1.2 million and gain of $6.5 million in the same prior year periods, respectively. The year-over-year changes in the three and six-month periods were the result of lower net losses from changes in foreign currency exchange rates in the current year periods compared to the same prior year periods in addition to losses recognized on our equity investments in the current year periods compared to gains recognized in the prior year periods.

Interest expense, net, decreased in the three-month period and increased in the six-month period ended June 30, 2024 when compared to the same prior year periods. Our interest expense, net, has been favorably impacted by new borrowings at lower interest rates that replaced previous borrowings, and unfavorably impacted by increased losses incurred on our fixed-to-variable interest rate swaps in the current year periods.

In the three and six-month periods ended June 30, 2024, our effective tax rate (“ETR”) was 19.6 percent for each period, compared to 24.2 percent and 21.5 percent in the three and six-month periods ended June 30, 2023, respectively. The 19.6 percent ETR in each of the three and six-month periods ended June 30, 2024, respectively, were primarily driven by our mix of earnings between U.S. and foreign locations. The 24.2 percent and 21.5 percent ETR in the three and six-month periods ended June 30, 2023, respectively, were primarily driven by the reorganization of the ownership structure of certain wholly-owned subsidiaries in the second quarter of 2023. 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 generally 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 began 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 these items on our financial results.

Segment Operating Profit

																		Operating Profit as a
		Net Sales								Operating Profit								Percentage of Net Sales
		Three Months Ended								Three Months Ended								Three Months Ended
		June 30,								June 30,								June 30,
(dollars in millions)		2024				2023				2024				2023				2024				2023
Americas		$	1,199.3			$	1,156.2			$	636.9			$	619.9				53.1		%		53.6		%
EMEA			432.4				402.9				149.7				132.0				34.6				32.8
Asia Pacific			310.3				310.5				121.1				115.3				39.0				37.1
																		Operating Profit as a
		Net Sales								Operating Profit								Percentage of Net Sales
		Six Months Ended								Six Months Ended								Six Months Ended
		June 30,								June 30,								June 30,
(dollars in millions)		2024				2023				2024				2023				2024				2023
Americas		$	2,385.8			$	2,297.5			$	1,276.2			$	1,228.8				53.5		%		53.5		%
EMEA			877.2				828.5				302.7				281.5				34.5				34.0
Asia Pacific			568.3				574.6				214.4				205.5				37.7				35.8

Americas

In the Americas, operating profit increased in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. Operating profit as a percentage of net sales declined in the three-month period ended June 30, 2024 and was flat in the six-month period ended June 30, 2024, when compared to the same prior year periods. The increases in operating profit were primarily due to higher net sales driven by market growth and new product introductions, coupled with lower royalty expense as a result of agreements we entered into in 2023 to acquire intellectual property through the buyout of certain licensing arrangements. However, operating profit as a percentage of net sales declined in the three-month period and did not improve in the six-month period due to higher bad debt-related charges in the current year periods driven by a bankruptcy at a significant U.S. healthcare system.

EMEA

In EMEA, operating profit and operating profit as a percentage of net sales increased in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. The increases were due to higher net sales driven by market growth, improved pricing and timing of certain export sales, lower expenses driven by our 2023 Restructuring Plan and cost savings initiatives, and reduced royalty expense as a result of agreements we entered into in 2023 to acquire intellectual property through the buyout of certain licensing arrangements.

Asia Pacific

In Asia Pacific, operating profit and operating profit as a percentage of net sales increased in the three and six-month periods ended June 30, 2024 when compared to the same prior year periods. 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 the three and six-month periods ended June 30, 2024 when compared to the same prior year periods due to changes in foreign currency exchange rates, the negative net sales impact was partially offset by higher hedge gains recognized in the current year periods from our hedging program. As a result, net sales volume growth, lower royalty expense as a result of agreements we entered into in 2023 to acquire intellectual property through the buyout of certain licensing arrangements, and lower expenses driven by our 2023 Restructuring Plan resulted in higher operating profit and operating profit as a percentage of sales in Asia Pacific in the 2024 periods.

Liquidity and Capital Resources

As of June 30, 2024, we had $420.1 million in cash and cash equivalents. In addition, we had $1.0 billion available to borrow under our 2024 364-Day Credit Agreement, and $1.5 billion available under our 2024 Five-Year Revolving Facility. The terms of the 2024 364-Day Credit Agreement and the 2024 Five-Year Revolving Facility are described further in Note 8 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report.

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 were $597.4 million in the six-month period ended June 30, 2024, compared to $655.6 million in the same prior year period. The decrease in the 2024 period was driven by higher bonus, income tax and restructuring-related payments in the 2024 period.

Cash flows used in investing activities were $442.0 million in the six-month period ended June 30, 2024, compared to $392.5 million in the same prior year period. 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, and investments in enterprise resource planning software. The decline in property, plant and equipment additions was driven by lower enterprise resource planning software spend as that project was getting closer to being fully implemented, in addition to the prior year period including investment in a corporate aircraft which did not recur in the current year period. In addition, in the six-month period ended June 30, 2024 we entered into agreements to acquire the ownership rights or gain access to various technologies that were recognized as intangible assets, acquired two businesses and invested in a debt security.

Cash flows used in financing activities were $142.0 million in the six-month period ended June 30, 2024, compared to $316.1 million in the same prior year period. In the 2024 period, we borrowed a net $115.0 million under our Uncommitted Credit Facility and used those proceeds, along with cash on hand, to repurchase $199.5 million of our common stock. In the 2023 period, we borrowed a net $145.0 million under our revolving credit facilities and used those proceeds, along with cash on hand, to repurchase $281.9 million of our common stock. We also repaid $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 June 30, 2024, $388.9 million of our cash and cash equivalents were held in jurisdictions outside of the U.S. Of this amount, $44.0 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. We generally intend to limit distributions 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.

Our concentrations of credit risks with respect to trade accounts receivable are 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.

Material Cash Requirements from Known Contractual and Other Obligations

At June 30, 2024, we had outstanding debt of $5,834.7 million, of which $1,878.0 million was classified as current debt. Of our current debt, $850.0 million of senior notes mature on November 22, 2024, $863.0 million of senior notes mature April 1, 2025, and the remaining $165.0 million was outstanding under our 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 8 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report.

In February and May 2024, our Board of Directors declared a quarterly cash dividend 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, which expired on May 29, 2024. In May 2024, our Board of Directors authorized a $2.0 billion share repurchase program effective May 29, 2024, with no expiration date. In the three-month period ended June 30, 2024, we repurchased approximately 0.9 million shares for $95.4 million. As of June 30, 2024, $1,904.6 million remained authorized under the May 2024 program. Between July 1, 2024 and August 5, 2024, we repurchased an additional 1.9 million shares for $207.0 million, resulting in $1,697.6 million remaining authorized under the May 2024 program as of August 5, 2024. We used cash on hand and additional borrowings under Uncommitted Credit Facility to fund these repurchases.

As discussed in Note 4 to our interim condensed consolidated financial statements in Part I, Item 1 of this report, 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 $107 million was incurred through June 30, 2024. 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 June 30, 2024. 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 $341 million was incurred through June 30, 2024. 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 to occur in 2025.

As discussed in Note 12 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report, 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.

As discussed in Note 15 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report, we are involved in various litigation matters. We estimate the total liabilities for all litigation matters was $208.2 million as of June 30, 2024. However, litigation is inherently uncertain, and upon resolution of any of these uncertainties, we may incur charges in excess of these estimates, and may in the future incur other material judgments or enter into other material settlements of claims. We expect to pay these liabilities over the next few years. Additionally, 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 condensed consolidated balance sheets. These estimated payments could range from $0 to approximately $395 million.

Recent Accounting Pronouncements

Information pertaining to recent accounting pronouncements can be found in Note 2 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report.

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. There were no changes in the three-month period ended June 30, 2024 to our critical accounting estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Cautionary Note Regarding Forward-Looking Statements and Factors That May Affect Future Results

This quarterly report contains certain statements that are forward-looking statements within the meaning of federal securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, the words “may,” “will,” “can,” “should,” “would,” “could,” “anticipate,” “expect,” “plan,” “seek,” “believe,” “are confident that,” “look forward to,” “predict,” “estimate,” “potential,” “project,” “target,” “forecast,” “see,” “intend,” “design,” “strive,” “strategy,” “future,” “opportunity,” “assume,” “guide,” “position,” “continue” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on current beliefs, expectations and assumptions of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual results to differ materially from such 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 affecting us, our suppliers, customers or payors, 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 spinoff transaction and the subsequent liquidation of our retained interest in ZimVie;

the risk of additional tax liability due to the recategorization of our independent agents and distributors to employees;

the risk that material impairment of the carrying value of our intangible assets, including goodwill, could negatively affect our operating results;

changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations;

changes in general industry and market conditions, including domestic and international growth, inflation and currency exchange rates;

the domestic and international business impact of political, social and economic instability, tariffs, trade restrictions and embargoes, sanctions, wars, disputes and other conflicts, including on our ability to operate in, export from or collect accounts receivable in affected countries;

challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the FDA and 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.

Our Annual Report on Form 10-K for the year ended December 31, 2023 contains detailed discussions of these and other important factors under the heading “Risk Factors.” You should understand that it is not possible to predict or identify all factors that could cause actual results to differ materially from forward-looking statements. Consequently, you should not consider any list or discussion of such factors to be a complete set of all potential risks or uncertainties.

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.

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. This cautionary statement is applicable to all forward-looking statements contained in this report.