Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, August 3, 2021. Following today's presentation, there will be question and answer session. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Keri Mattox, Senior Vice President, Investor Relations and Chief Communications Officer. Please go ahead.

Thank you, operator, and good morning, everyone. I hope you are all well and safe. Welcome to Zimmer Biomet's second quarter 2021 earnings conference call. Joining me today are Bryan Hanson, our Chairman, President and CEO; and EVP and CFO, Suky Upadhyay. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties in addition to the inherent limitations of such forward-looking statements. Additionally, the discussions on this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included within our Q2 earnings release which can be found on our website, zimmerbiomet.com. With that, I'll now turn the call over to Bryan. Bryan?

All right. Great. Thanks, Carrie, and thanks to everyone for joining us for our call this morning. As we're all aware, obviously, given the news recently, COVID is still very much with us, and we're watching it very closely, as you can imagine. But given that, even we've seen some real progress since our last call, and I think that's obvious to everybody. The world has not returned to normalcy yet, but travel is returning. We have more team members in our offices, and I am personally looking forward to attending the AAOS meeting in about a month in San Diego. So really looking forward to that meeting. We have a lot of great technology that we're going to be able to showcase there and just really happy it's going to be a person again, finally. I want to thank, in that same vein, thank our team again for their dedication to safety, and really just across the board, their commitment to making all of our ZB manufacturing facilities and offices as safe as we possibly can. You, our team members are the driving force for this progress that we've seen in our own facilities and certainly in our communities as well. Also, I want to say that I hope in our investor community that you're continuing to stay safe and have been hopefully able to travel over the last few months to see family and friends. This is an opportunity for us to take advantage of some travel as we begin to turn to more of a normal environment, of course, not there yet, and we know this isn't happening consistently anyway in all regions. But overall, we are encouraged and we're doing our part to keep this moving forward. And every single day, we are supporting our customers…

Thanks, and good morning, everyone. For this morning's call, I'm going to discuss our Q2 results, walk through the updates we've made to our full year 2021 financial guidance and provide color around our current expectations for the third and fourth quarter. Moving forward, unless otherwise noted, my statements will be about the second quarter 2021 and how it compares to the same period in 2020. And my revenue and P&L commentary will be on a constant currency or adjusted basis. Also, I'll provide constant currency revenue growth versus 2019 as we think that is a more relevant comparison for this quarter. Net sales in the second quarter were $2.027 billion, a reported increase of 65.3% and an increase of 60.7% on a constant currency basis versus the same period in 2020. When compared to the second quarter of 2019, net sales were flat on a constant currency basis, and we did not have a material impact from selling days. Overall, consolidated and regional results were slightly better than the expectations we provided on our last quarterly call, with growth versus 2019 in the Americas and Asia-Pacific and sequential improvement in EMEA. For the quarter, the Americas increased 68.3% or up 1.9% versus 2019. We continue to see variability by country within the region with the U.S. growing 66.2% or 3.3% versus 2019. EMEA grew 80.5% or down 7.3% versus 2019, with continued COVID pressure being a factor. We did see improvement in EMEA as we moved through the quarter, and we expect that trend to continue through the back half of this year. Lastly, Asia-Pacific grew 24.4% or 2.8% versus 2019 in spite of some unexpected headwinds. While the region has been largely stable in recent quarters, it was impacted late in the second quarter by channel inventory contraction…

All right. Thanks, Suky. And I'm going to now just hit three topics before we move to Q&A. First, I want to talk about execution in some of the product and pipeline highlights that we have under that category; second, I'm going to talk about our progress against active portfolio management, which is a big effort for us, obviously; and then third is innovation. And inside of that innovation, how we believe we're going to be able to drive attractive long-term growth that ultimately will deliver value to you, our shareholders. So let's start with our team's execution. And I've said this before, and I'll continue to say it, that the things that ZB was able to directly control over the past year, 1.5 years, the team -- they've executed against it, they delivered against it. And I'm very proud of the team for doing that during a time of significant turbulence around them. And in Q2, in the recent weeks, we've hit key milestones with our ZB products and our solutions. ROSA for Partial Knee was approved back in April, as we've talked about before. And our first patient surgery was actually performed early in the quarter, and we've continued to see good traction with that technology so far and great feedback so far. And it's important for us because partial knees, I think most of you know, is a market where ZB has a sizable market share position. So we're very excited about the possibilities here, not just from a revenue standpoint, but also the potential impact for patients in the surgery area. And then if I just look at ROSA overall, we did see another strong quarter in Q2 of market demand and traction with ROSA total knee as well with placement momentum broadly continuing across the…

Thanks, Bryan. [Operator Instructions]. With that, operator, may we have the first question, please?

[Operator Instructions] Our first question comes from Josh Jennings with Cowen.

Bryan, I was hoping you could just share how internally your team has been tracking Zimmer Biomet's U.S. hip and knee market share and any breakout of the progress in the De novo revision segments would be helpful. And then as you think about your revenue growth acceleration journey post spin, do you envision the introduction of enabling and sensor technologies driving that positive mix shift and expanding or accelerating U.S. knee and hip WAMGR up into the mid-single digits? Or how do you see the U.S. large joint markets growth evolving in the next coming years?

Yes. No problem, Josh. Let me start maybe with the second part of your question because I would say beyond sensors, just what we define as ZB edge, which is the interconnected technologies that actually do full data for the patient journey. We really do believe that those technologies, including robotics, sensors in the body, mymobility, OrthoIntel, so on and so forth, will absolutely bend the curve when it comes to growth rate in knees and hips in other areas as well because we would proliferate those beyond just knees and hips. So just I do believe that, that technology, which is being absorbed by the folks in orthopedics right now does provide us an opportunity to enhance our growth rate as an organization for two reasons: one, because I do believe that we can get that share of wallet benefit or mix benefit for procedure; and two, I really do believe it sets us up to take share from the competition because it's unique to us. So yes, on the second question, I see that as being able to enhance our growth rate. When I think about the share, I'm pretty focused on this, as you would imagine. This is something that in a turbulent market, we got to pay attention to it. And when I think about the last five quarters that we've seen we just had abnormally large spreads between the top and the bottom player in large joints. This speaks to just a very turbulent market that we're experiencing because of COVID. And inside of this, I'm ultra focused on share gains or losses because it's the very thing that would tell us whether we're performing well versus our competition because the market itself is difficult to understand. And I'm focused on this in regular times,…

Our next question comes from Vijay Kumar with Evercore ISI.

Bryan, both of my questions into one. Back to your prior comments here on share gains versus the market. But I guess, discrete is focused more on near-term sequential trends here. Why would Zimmer perhaps be seeing different trends versus your peers? I think you made some comments about the backlog burn being a little bit slower, et cetera. Maybe put that in perspective for us? And my second question is, your ROSA, I think one of the key advantages of the system is ease of use, the higher throughput. Given there is a backlog, are you seeing increased traction here or customers appreciating this speed advantage of ROSA? And what does that translate to a total installed base or share gains perhaps for Zimmer?

Yes. So maybe I'll start with the ROSA throughput. And as you probably remember, we spent a lot of time thinking about the design characteristics of ROSA is one of the primary things we want to focus on is to make sure that we did not disrupt the surgical flow and certainly did not want to add time to the surgical procedure. And that has benefited us. There's no question. I mean, to me, it wouldn't matter whether we're in a COVID environment or a non-COVID environment. That is something that our surgeons are pursuing. And they very much appreciate the fact that it's not disrupting their flow, and it's not dramatically increasing any the times to do procedures. So that is a benefit for us for sure. And again, I don't think it really matters whether you're in a COVID environment or not, that's just a benefit. One of the things relative to share gains that you talked about and our view on backlog, I don't know that our outlook and what we've described is really any different than anyone else who plays in large joints like us with such a significant share position. It seems pretty consistent with -- to me anyway. If I think about the deferred patients, I'd just say that like most people at this point, that just becomes more challenging now as time continues to be added to the equation. It's just unprecedented right now that what we're dealing with, just given how long this has gone on. And there are just too many variables in my view, just to really size this appropriately, and I think anyone would probably say this now. But that said, we still believe that there's been no structural shift in the disease state. That's what we've been saying…

Our next question comes from Anthony Petrone with Jefferies.

Hope everyone is doing well. And maybe just a quick follow-up on backlog. Is it safe to assume, Bryan, that it's still sort of at least a $700 million opportunity and that perhaps could certainly extend into 2022, but maybe even beyond a bit. It sounds like perhaps that's where you're headed. And then a few quick follow-ups on Persona iQ does sound to us from our checks that there is pent-up demand for the sensing capability. So a few questions here. Do you need to be standardize on ZB edge to take full advantage of the implantable recorder? And will Persona iQ actually drive additional surgeon reimbursement over time?

Sure. So maybe I'll start with the backlog just because it's maybe a simpler answer. I just -- I don't want to try to size it because I think it's gone on too long. And as I said before, I just don't know how you look at this unprecedented situation and try to put a size to it. All I would say is that based on our assumption of no structural change in the disease data, it's got to be big. I'll just -- I'll leave it at that, but I don't want to try to size it. And yes, my current thinking is based on the data points that are available to us, is that it's likely going to be a slower role with that deferred patient group coming in. And that would indicate that this should take a while for us to work through it. That could change at any time, but that's the data points that we have right now. Relative to iQ, I'm glad that you're hearing there's pent-up demand because certainly, we're feeling that as well, and we're getting excited about the launch, the pending launch. And we still obviously cannot market the technology because we don't have FDA approval, but we do believe that, that should be coming soon. And yes, we're excited about it, but you do not actually need to have the full ZB edge infrastructure to take advantage of it. What we would like to see people do is to have mymobility and the Persona iQ combined because we believe the combination of the data collection between those 2 is extremely beneficial, but you don't really even need that. But that would be the goal for us to have that move in concert and be able to have the mymobility in concert with the iQ implant. And we do feel that all the components are there for remote patient monitoring. That's the whole idea behind this. Through mymobility, through iQ is to be able to remote patient monitor. And as a result of that input provided, be able to make decisions on what you do or don't want to do with the patient. And so we believe that we have what would be required for a surgeon to get a reimbursement for RPM. That's the way we're looking at it today. At the end of the day, that's not our decision on whether it happens or not, but we do believe we have the components to make that available to surgeons.

Our next question comes from Steven Lichtman with Oppenheimer.

I'll ask my two upfront. Bryan, you talked about the momentum sequentially in ROSA. Obviously, we saw that in the reported numbers. As we think about the implant pull-through opportunities, can you give us a sense of what percent of placements are going to accounts that are competitive accounts or ones where you have low share. And then, Suky, just as a follow-up on gross margin in the first half an ahead of the second half of 2020. Do you see upside to your original expectations for 2021 on gross margin, which I think was to be about in line with the second half of last year?

Great. So I'll go ahead and start with the ROSA question, and then Suky, I'll pass it off to you. I would just say that, yes, again, we're excited about the traction we're seeing. And as the way I look at this, it's not just the traction that we're seeing with ROSA, I'm excited because there seems to be a significant openness in orthopedics for technology. And that's really important, I think, for two major reasons. One, because I truly do believe the technology is going to change the care paradigm for patients. You're going to get better outcomes as a result of it. And when you have that happening, I believe more patients will enter the funnel because they're going to have higher confidence in the procedure. Remember, there's still 20% of me patients that are not happy with the outcome. And if we can reduce that through technology, I believe you've got patients sitting on the side that would enter the funnel, which is good for everybody, patient included. So I'm very happy to see momentum in ROSA, but I'm even happier to see technology adoption in orthopaedics overall. And when we think about our placements, it's interesting because we focus in two major areas. We spend most of our time in platinum accounts and gold accounts. And both of those would just be very large accounts. The difference between the 2 would be platinum. We have a higher share position. And in gold, we have a lower share position. But those are the two areas that we concentrate mostly with ZB edge and ROSA. Now what's interesting about that though is even when we go into that platinum account, it's very rare that we would have a homogeneous new usage in the account. So even when we get a platinum customer that is using us in knee, to move into ROSA, we typically get competitive conversions to ROSA because you have competitive surgeons in those accounts. And of course, in gold accounts, you get the same thing. So it's almost every placement that we have very rarely otherwise, provides an opportunity for us to get a competitive conversion. And hopefully, that helps with the way we're thinking about ROSA.

Yes. Stephen, it's Suky. You're right. When we talked about gross margin for 2021, we talked about it being stable to back half of 2020, right? We said it may not be the same for each quarter because there are a lot of variables that impact gross margin. But we said broadly that it would be in line or stable. And that comes off with many years of declining gross margins. So it's a good first step and in actually seeing that stability. First half fortunately was a little bit better than the back half of last year, and so we're encouraged by that. We expect the second half of this year to be pretty much in line with the second half of last year, so very consistent with how we've previously guided. When you average those two together, the first half of this year being a little stronger in the second half being in line, that would suggest that the full year should be slightly better than what we saw in the back half of last year. So we're encouraged by what we're seeing there. I do want to just thank and recognize the supply chain team as well as the commercial team for a lot of great efforts on our cost down initiatives, looking more strategically at P&L and really looking for opportunities to become more efficient in our cost of goods just overall. So seeing some good progress so far. So we're encouraged, and that's how we thought about it, and that's what's baked into our guidance moving forward.

Our next question comes from Larry Biegelsen with Wells Fargo.

Suky, I just want to make sure I'm understanding the second half revenue guidance and cadence. When I look back before 2020, the last five or six years, Q3 is typically down about 6%. And Q4 is typically up about 11% sequentially quarter-over-quarter. Based on your comments earlier, I thought I heard you say Q3 would be down maybe 3% but Q4 would be up, call it, 14% to 15% to kind of get to your midpoint of your guidance. So it's better than kind of we've historically seen. Can you comment on July trends? And am I right to think that you expect a little bit better seasonality in the second half of 2021 versus what you've typically seen?

Yes, absolutely. So my comments earlier in the call were really versus 2019. And so that's kind of where I'll play for this answer. We do expect to see seasonality on an absolute basis, Q3 generally tends to be lower in absolute sales other than Q4, and we expect that to play through for the second half of this year as well. We do expect half of this year as well. We do expect versus '19, where Q2 was about flat, as we mentioned earlier for the third quarter to step up. And as you suggested, that is a little bit better than what we've seen underpins the continued recovery, which ultimately underpins our guide for the back half of the year. And then again, for that to step up again sequentially in Q4, again, all versus 2019. So that's how we currently see it. And again, it's pretty much based on that continued recovery that we've already seen in Q2. What we've seen early on in Q3, we're not going to talk about individual or specific months as we move through the rest of this year. But so far, what we've seen in July underpins and supports what we've provided earlier today.

Suky, let me just add some color to that. I just -- when I think about what Suky just referenced that we've got a pretty significant assumption in our guidance range that says COVID pressure doesn't get worse and the recovery builds through the second half. But we didn't just assume that. There are some proof points that we're seeing, and that might speak to your question, Larry, maybe a little more. There's really kind of two things that we're seeing that would give us confidence in that assumption. And the first one is that even with the recent virus surges that are all over the news, I mean, you can't look at the news any time during the day and not see something about the virus surge, but it doesn't seem to be translating into the same significant revenue disruption that we've seen in the past and certainly not helping us, but it's not translating into that same kind of revenue disruption we've seen in the past. So -- and I believe that's likely because we've got more vaccines out there, obviously, which is impacting the way people feel when they get sick. But also, I just think that hospitals seem to be managing this patient population better. And the second kind of proof point for us when we thought about this as an assumption inside the guidance range, is that the vaccine is available. I mean let's face it. It's available globally anywhere. Anybody who wants it can get it. And I truly do believe even though it stalled a bit in certain parts of the world, I do believe as people get more educated on the Delta variant and the risk associated with that. That may be a good motivator for people to come in that have been waiting to actually get the vaccine. And so those are kind of the proof points that we have that give us confidence that we should see the continued recovery in the back half.

Our next question comes from Chris Pasquale with Guggenheim.

Two Questions. Just trying to understand some of the moving pieces in the quarter a little bit better. First, can you quantify at all the impact of the China inventory drawdowns? It did seem like Asia Pacific was the source of the shortfall versus consensus in hips and knees this quarter. So it would be great to just understand magnitudes there a little bit better. And then can you put any numbers around the ROSA contribution this quarter. The other revenue line was a big upside driver. Just be helpful to know how much of that came from increased system volume versus that shift in the preference between placements and upfront purchases for your customers?

Yes. So maybe Suky, why don't I take a shot at the ROSA piece and then I'll pass it to you on VBP impact. But on the ROSA side, I probably don't want to speak specifically to the dollar amount, but obviously, it was a big enough shift for us to talk about it. So that might help you kind of size it in your mind. But what I would tell you is that the way I think about it, is in a normal quarter, what we would typically see is better than 50% of our placements being done through a long-term contract, which is -- we actually like that because it does link us to the customer, and it usually has a competitive pull-through commitment as a result of that arrangement. And in this quarter, we just saw that flip. The higher than 50% move to upfront purchases which is different than what we've seen in the past. What I don't know for sure is that that's going to continue. I mean clearly, there were budgets that were available to people, they flexed those budgets that could continue. Hey, I'm happy either way we place ROSA. We're going to be very flexible with our customers as we go forward and make sure that we're there to support them. Our preference, as I've said in the past, is those long-term contracts, but I'll take an upfront sale as well. So hopefully, that helps on the ROSA side and then Suky, I'll pass it to you on the VBP impact.

Yes, sure. Thanks, Bryan. Yes, as we noted, Asia-Pacific sales were impacted in the quarter really by two things. One is the VBP impact that we talked about, which was essentially some distributors taking some inventory contraction ahead of VBP. And the second was we did see surges late in the second quarter in some of our larger markets like Japan and Australia and New Zealand that also slowed some of our growth down. And that hit pretty much across both of those VBP as well as slowdowns in our recon business. But it was encouraging that despite those headwinds that we were able to manage through that and actually grow the region a little bit ahead of expectation. And we would expect that growth to continue in the back half of this year. Regarding China VBP, for competitive reasons, we're not going to size that. It was a contributor. We're not the only contributor in that performance in Asia-Pacific, as I mentioned. I think the important thing is how do we think about this going forward? We've looked at VBP and done a number of scenarios based on what we know at this time. Again, the final rules, pricing and volumes aren't expected to be issued for let's call it another few months, but that timing has been shifting around, so it could continue to shift. But based on what we know today, we don't expect there to be a material impact from inventory change going forward. And that's what's represented in our guidance moving forward. But again, we're going to learn a lot more about VBP over the coming months, and we'll update you as we learn more. But again, it was great to see that Asia-Pacific did grow through that. And I would say also, fundamentally within China, we're seeing very strong demand. And so obviously, that was the first market to be impacted by COVID-19, and it was the first market to recover, and we continue to see good strength and progression in that market. And as you know, we're a leader within China and expect to maintain that leadership position as we move forward.

We'll take our next question from Matt Miksic with Credit Suisse.

I have one on S.E.T and just a follow-up on ROSA, if I could. So on S.E.T, Bryan, or Suky, if you could provide some color on sort of the components within that business that was driving some of the strength, at least upside to our estimates trauma, was it extremities? Was it sports is a little smaller, but was that where you saw some of the strength? And as I mentioned, I have one follow-up on ROSA.

Yes, that's one of the highlights that I saw in the quarter. Clearly, we are heavily penetrated when we think about our overall revenue in large joints. And as I think everybody has been saying and recognizing large joints have just been a little slower to recover than some of the other categories that we have. And what I've been very happy to see is our strength in said, and we believe that, that's going to continue through the back half of the year, pretty across the board, we showed good performance. Standouts for us were sports, the upper extremities business for sure was solid, trauma was solid for us. And of course, when we look at our CMFT business, our thoracic business was quite strong as well. So we're excited to see that the tuck-in acquisition that we did in CMFT is playing out the way we expected. And then some of the acquisitions that we did that were really just product launches, filling out gaps that we had in sports and also in the ASC, they're also providing benefits right now. And that was the whole idea, right, to fill out that product portfolio. As a result of that, have a fight and have a right to fight and win. And that's playing out right now. So we're feeling good about the strength in S.E.T, probably have more confidence now in that being able to continue on a go-forward basis just given what we have in the portfolio. So very happy to see that strength in S.E.T, and we would expect that to continue.

And just a follow-up on ROSA. So I don't think many of the other folks putting robots into the field are seeing the kind of shift back to capital that you're seeing. It seems like it's been pretty stable. And I'm wondering maybe if you could talk a little bit about the mix of accounts, maybe the mix of ASCs or the larger centers. And if there's any change in the mix that might be driving some of that preference for cash payment versus commitment to long-term contracts?

Yes, sure. Really, no dramatic shift. I mean even if I think about U.S., OUS, for instance, we typically do, it's not always exactly this way, but if I look at the number of quarters and just kind of aggregate them, we typically do kind of a 70-30 split U.S., OUS, and that was pretty consistent in this quarter. For us, again, we did see that shift. We believe that it's mainly because people have more budget right now on the capital side. I don't see a shift in our customer base that drove it. So nothing that just stands out for me. It's just more that there was capital available. People like to flex the capital when they have it. And some customers just don't want the long-term contractual obligation, bringing a piece of capital in, they'd just rather buy it. And so I think that's really the corporate, there's nothing beyond that, that I've seen. Now we'll certainly pay attention to it as we go forward, but nothing that was disruptive in any way relative to mix that would have changed that change in placements.

Our next question comes from Rick Wise with Stifel.

Bryan, maybe just to start with M&A, you obviously highlighted that M&A remains a top priority. And I heard you about the WAMGR accretive and you listed some areas. How do we think about the next 6, 12, 18 months? Do you feel like you have a lot of targets. Do you feel like you have a lot of opportunities? Do you feel like you're moving faster? And the points you mentioned about robots and smart implants, et cetera, et cetera. I mean do we envision that it's more about acquiring enabling technologies or incremental technologies that enable you to achieve that? Or no, you're ready for something larger freestanding to accelerate? And then I'll ask a second question.

Okay. Maybe just quickly here, and I'm going to pass it to Suky because at the end of the day, the M&A strategy is only as good as the funding for it. So obviously, we're both focused on moving this forward. But let me maybe pass it to Suky. He can give you the same color I would on what we're looking for from an M&A standpoint, but also give some color on how we're feeling about our firepower there. So Suky?

Yes, absolutely. So we continue to build out, I think, an attractive pipeline of potential tuck-in targets. Very consistent with what Bryan said earlier about things that are mission-centric where we have the right to win, strategically makes sense, financially are strong and have a low level of synergy disruption and very consistent with sort of the deals we did at the back end of 2020, which so far through the integration process, we're very pleased with how those are progressing. So we're going to continue to look at opportunities very similar to those. And the good thing is our firepower continues to build. And with the recovery of the pandemic, we're seeing our EBITDA improved significantly. We've turned the corner on the second quarter of 2020, which was a cliff for us, as you know, a trough, if you will, on EBITDA. And with a rolling 12-month EBITDA number as we sunset the second quarter of 2020, we're seeing a pretty big step up in our EBITDA number and a nice improvement in our overall leverage ratio. When you combine that with the debt paydown we've done so far, the debt paydown we're committing to in the back half of this year, and the over $1 billion on the balance sheet, we feel we're in a stronger position than we have been for the last 15 months to And so I feel really good about where we are and how we're moving forward on that. I would also say, another big component of that is our spin transaction. We're really pleased with how the team has been progressing on that. We've made significant progress with our tax private letter ruling, great progress with our carve-out financials and our 10x, which we hope to file in the not-too-distant future with the SEC on a private basis. Good progress from BofA in formulating this go-forward strategy and building out his team. So just overall, really, really impressed with how the team has handled this in the backdrop of also integrating those transactions we did at the back end of last year. So that muscle, that capability that we've been building over the last couple of years is really playing out to our benefit right now.

Got you. Go ahead, Bryan. Go ahead.

Yes, just going to say, and you are right, I mean the two areas where we're spending a lot of time right now when we look at targets and are pulling that bolt-in of targets, it would be around enabling technology. A great example of that is what we did with Canary in that relationship that's been created, and that's going to then obviously spin out IQ for knee, but also sensors and other areas and body as well. And then we'd be looking at near adjacencies very much like what you've seen recently from us in sports to ASC, thoracic areas that we feel confident we have a right to win. They are accretive to our overall weighted average market growth and they're profitable. Those are the things that we're looking at today. And as Suky said, the firepower opens up and we'll begin to flex that firepower in those areas.

I just as a follow-up, I was reflecting, Bryan, on your comment about -- specifically about revision where you said capability now opening the door to competitive conversions. I was reflecting just that maybe you could flesh out your comments here. I mean, I get it that revision specifically will help, but -- so Persona iQ so well continuing rollout of ROSA, et cetera, et cetera. Just my question is, as we reflect on the next 6, 12 or 18 months, what should we imagine? What are you thinking about as the biggest driver of competitive conversions and share gain, is it these incremental products? Is it the totality of everything? Is it something about execution? Just trying to understand where you'd have us focus on thinking about that kind of a concept?

Can you hear me okay? What I would tell you is that the -- that's kind of the beauty of the situation why my confidence is high that we're going to continue to see share gains as we have over the last four quarters spot. That's because we just have so many shots on goal. If you think about knee in particular, we already have ROSA out, and that's getting great traction ROSA Partial was just launched. Persona revision has been out for a while, but the momentum is still very strong. And there is that spin-off opportunity to get the typical total knee. You still have mymobility driving conversions. You haven't even launched Persona iQ yet. So all of these give us an opportunity to create a differentiated environment for our customer and provide the opportunity for not only that share gain or mix gain, but also competitive conversions. And specifically on revision, the reason why I bring it up is typically in somebody's practice, you get about 10% of the overall revenue associated with provision, and it's more like 90% comes from your typical total knee. And many times, we use that revision as a tip of the spear to convert a surgeon that is a competitive surgeon because they love the revision system. And that gets us in the house then to try to pursue that much larger portion of the business, which is your standard knee. So that's why I keep going back to that, we have significant dollars now that we're paying attention to, where we have a revision customer that is using a competitive total knee system, and that gives us a great opportunity and kind of a hunting ground to go to, to get those conversions, but it's certainly not the only area that would give us the opportunity to take share. It's pretty much all of these.

Lauren, we probably have time for maybe one more question.

Up next, we have Matthew O'Brien with Piper Sandler. Matthew O’Brien: Thanks here. So Bryan, just a little bit more on the knee side of things. When I look at your numbers, I know what you're saying about over the last several quarters, you're trending in the right direction. But when I look at the last two, it seems like things have flattened out a little bit. If not, you're actually down a little bit on the knee side in terms of share. And so I'm just wondering, especially in the U.S., that's actually down versus '19 here in Q2. Are there things that are impacting you specifically because you are the biggest player in the market? Are there some higher volume accounts that are on vacation? Are you in bigger COVID hot spots more training on the partial knee side that has slowed things down a little bit for you guys versus what we've seen from some of your peers?

It's so hard to say. And that's why I was referencing before when I look at share gain or loss, I never look at and spend too much time on a specific quarter, even when things are typical. But in these crazy times, so many things can impact your performance versus the market. So again, I try not to get too worked up about any given quarter. It could be. I mean the fact is share right now in a specific part of the country for instance, can be meaningful to whether you do better or worse than the competition because that particular state or county could be challenged by COVID more than others. So there's always those things that could impact a specific quarter. That's why when I look at over a four quarter period of time that usually eliminates those hotspots. And that's why I feel more confident and more comfortable with more of that trend, which -- through that trend basically eliminates the noise, I'm going to put air quotes around the "noise" of a specific quarter. That's why I still feel confident that we're in good shape that we have all these shots on goal that we should continue to take share. But hey, I'm disappointed. I look at the quarter, I don't really care what the reason is. I want to win every single quarter and this one we didn't. But again, I'll look more at the trend and take more from that on the prediction of share taking in the future. And I would just say in a nutshell, I believe that we're going to be net share takers. Matthew O’Brien: And then just really quickly on ROSA placements. I think you mentioned more -- a better trend line on the OUS side. So can you just talk a little bit about what you're seeing internationally as far as ROSA placements go? And then here in the states, there's been some talk about some moving into ASCs. And just in terms of ROSA placements, what are you seeing in terms of where these things are going higher volume accounts that you're getting into inpatient or even in the ASC or even on the ASC side of things?

Yes, that's a nice thing. I feel really good about our distribution. We're taking advantage of momentum in the ASC. The ASC absolutely loves the fact that we're an efficient robotic system that they're all about efficiency in the ASC. So there's been a benefit for us there for sure. We've seen it in the hospital as well. We've seen it around the globe in Europe, Middle East and Africa as well as Asia-Pacific. So I'm just very pleased with the distribution of the technology across pretty much all sites of care and around the globe. And again, we focus our attention, not always, but let's call it, 80-plus percent of the time in those larger accounts. We're spending our time in those goals and platinum accounts because that's where the big payback is if you're going to spend the time. So again, the distribution has been good. I mean it's been across settings, across region, and we've been focused on the larger accounts for sure.

Thanks Matt for the question. And I think that brings us to 9:30. Bryan, I'll turn it back over to you just for any closing remarks before we wrap up.

Yes. Thanks, Keri. I wouldn't mind making a couple of comments here. And first of all, thanks for spending time with us here this morning. I just want to say, and I think this is probably obvious to everybody. We certainly have an outsized dependence on elective procedures versus really any of our med tech peers or competitors, particularly large cap companies. We're just an outsized impact there. And as a result, we're very sensitive to COVID ebbs and flows. And we spend a lot of time as you would imagine, analyzing this. And we try to remain prudent in our expectation setting as a result. And because we've seen it. We've seen it first hand that COVID can move our business pretty rapidly given that dependence on electric procedures. And this has been what was reflected in the updated guidance and why our implied range for the back half is still pretty wide because again, there are things that can happen here to move us up or down pretty rapidly because of that dependence on elective procedures. Now relative to Q2 specifically, and Suky said this before, even with some of the unexpected challenges that we had in the quarter, hey, we delivered better-than-expected results, which I think speaks to two very important things. Number one, and this is more short term, but it's important, the recovery from COVID is moving in the right direction. Now it's definitely not happening the way we anticipated. I don't think it is for anybody. But it's moving in the right direction, nonetheless. And the two, and I think this is important, not just for now, but the long term, our team continues to execute and deliver against the things we can control and both of these things were deeply considered in our updated guidance. And this gives us confidence that continued recovery through the back half of the year is going to happen. And we see a path to end 2020 at 4% to 5% organic growth, at 4% to 5% we've been talking about without the need for any material benefit from clearing the deferred patient queue. And I got to say, given where we started just a few years ago, and with COVID in between, with very flat to negative growth with consistent share losses as a company. I for one, is super proud of the team for putting ZB in this position. And I look forward to not just talking about it, but delivering it for you our customers and our patients. Okay. With that, we'll go ahead and end the call, and we look forward to talking to you again soon. Thanks so much.

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