SYK - Earnings call transcript Q1 2021

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Operator

Welcome to the First Quarter 2021 Stryker Earnings Call. My name is Christine, and I'll be your operator for today's call. At this time all participants are in a listen-only mode.

Following the conference, we will conduct a question-and-answer session. [Operator Instructions] This conference call is being recorded for replay purposes.

would call remind will I during that begin, conference this include we like you to discussions Before forward-looking statements. cause the filings could also that actual differ to Factors materially discussed in the company's with recent most SEC. results are non-GAAP Also, measures. financial the include will discussions certain press most current today's report the X-K today that to on found the measures SEC. be exhibit with comparable Form directly Reconciliations is financial an GAAP can in release Stryker's to filed to I will turn now over Mr. call the Officer. Executive Lobo, Chief Kevin Chairman and

proceed may You sir.

Kevin Lobo

first Stryker's to call. Welcome quarter earnings

me today Boehnlein, Glenn are Wells, Vice Stryker's Preston Joining CFO; President Relations. and of Investor

Pacific businesses. call, Asia neurotech and international QX in continue comments remainder uptake of Mako, a additional performance, to This organic the driven the year versus our strong ongoing an integration. with installations. will each quarter before expect excellent regarding performances, that a model. had strong double-digit today's pandemic, a up these we For of franchises, and posting Wright QX X.X% XXXX. business will with Q&A. Despite we Glenn the trend I results provide call of details international followed results, by Medical the particularly in banner to of versus the our medical Mako strong XXXX, on opening Across outstanding sales presence the our followed Preston in a for benefits growth very the provide diversified QX was an including of posted then growth quarterly update opening by

knee impact procedures the start on hip expected businesses. the and were elective year, largest to impacted had As our negatively which

accelerating and compared where into seeing April single-digit we March XXXX. quarter However, as with the the and progressively trends the in April, growth U.S. mid are hip to improved knee throughout

within neurotech We parts improved instruments the quarter. capital small also and during of growth in saw

XXXX, normal in levels. equivalent volumes capital year to across XX% more These is of XXXX sign XX% us confidence of order to as to XX% In is which growth procedure day. up achieving addition, compared less versus growth picked guidance to give has full return businesses, selling pending our one growth our our which X% despite organic book sales to good organic a trends

shows XXXX release we a point XXXX for better press both and the XXXX, performance believe our versus is While comparison. that reference

and momentum cost Our will growth, has guidance it support disciplined and on spending EPS raised done a continued elaborate to in regarding will flow, management increase shortly. while cash Glenn be will our manner. future

our strategy comprehensive and We also first as captures social and the equity regarding carbon and which our our published well governance chain annual transparency. as quarter, environmental, diversity, supply commitments inclusion report during footprint,

build. are to strong progress a well We encouraged continuing we Preston. we start flashpoints leveraged the pandemic am Overall, with will deliver to tech momentum And I to positioned and making that while med by high over growth now are still is occurring, adjusted I the pleased to these are call areas. the at year of turn the are the with in end earnings.

Preston Wells

Thanks, Kevin.

in our performance activity. trauma integration an Medical on ongoing our Our quarter update combined on the the acquisition comments Wright recent extremities on focus and will most and today first business, of

during compared extremities Wright growing trauma despite including quarter, and of combined to impacts quarter. X.X% business the COVID restrictions the good ongoing During showed our Medical the resiliency XXXX,

of U.S. the in the along procedures in was Performance recovery driven throughout in nature, benefited initial business, and in February. upper expected inclement and trauma integration. elective Our which elective the by of extremities quarter, the ankle and foot Europe lower through from than sales with the weather is dis-synergies less stages

when businesses single-digit trauma the bringing delivered throughout in compared growth expect to the deliver the now and full We performance to combined has the of the first result of mid encouraged that a year with pace with business we and the together strong progress our XXXX. Wright quarter, team integration. the a business extremities for remain As the Medical

As from are close, to we the build plan now we resource integration that and we the have announced robust utilized to lengthy executing. previously, period mentioned

our and As progress and ankle. will the integration we driver move against of this We across has specialized through upper date three the teams business growth key team and To selling units organizations. with future core a be foot quarter, believe milestones. and focus trauma, made many extremities, established R&D distinct dedication commercial,

territory of also sales been establishing and portfolio and units, to the our Considerable strategies. team aligning made addition U.S. sales pipeline and establishment considerable dedicated sales with leadership, priorities. business identification on the cross-selling progress the made of In alignment channel including has integration, progress long-term

remain will as remainder integration the disruption. on focus of of key while a the minimizing priority integration complexity we sales the for balanced Our the XXXX

over conclude Over the cross-selling. our of sales the months. several we initiation will the And off next integration, few including U.S. markets integrations across quarters, will the next commercial kick international we

to teams Finally, tuck-in and continue execute identify development acquisitions. our dedicated on business

our quarter, function prosthesis our in leading demonstrate to joint and continue driving device a And personalized we of critical patient-specific driving acquisitions acquisition and of on leadership their I'll through and the the TMJ to of the business business, acquisition manufactures reconstruction market over now system. TMJ strategy temporomandibular of craniomaxillofacial the category Concepts, that patients. medical During a innovation hope role strategy and that a With Concepts purpose completed plays focus to supports our company Glenn. turn leadership medicine call form, growth. category restoring These

Glenn Boehnlein

Thanks, my I focus financial Today, will on [Technical Difficulty]. our comments the first quarter Preston. results and

in provided results release. financial press today's detailed Our been have

we the reminder, given in XXXX. throughout a as baseline XXXX variability normal more are it comparison to is As comments our providing

in was quarter. X.X% Our sales the organic growth

same number XXXX selling reminder, unfavorable X.X% less Compared X.X% the of versus one in included quarter QX as than a was pricing QX the this and XXXX As to quarter XXXX, unfavorable. days pricing XXXX. day was

Foreign impact sales. on currency had a favorable X.X%

cancellation, impacted primarily surgical the and in During the related negatively Europe procedure of quarter, sales. the the and COVID-XX continued impact U.S. pandemic our

sales products continued we in as the and Mako improvements quarter, demand in noted Asia-Pacific strong emergency U.S. end capital certain in However, quarter, momentum, our see fourth Also care did we our businesses. and saw the for results of in products. as primarily towards the the

quarter, strong by offset elective continuing the showed sales growth China, reflecting Japan, XX% For for of and somewhat in result positive of and demand by by organic X%, momentum the International slowdown pandemic, as sales Australia procedures the Canada. organic Mako, U.S. sales increased products. a in medical neurovascular products strong impacted

EPS as of an increased as charges by disciplined quarterly XXXX from well overall growth partially Wright costs. reflecting interest X.X% adjusted acquisition, Our from operating ramp-up the higher sales offset $X.XX resulting in

from currency by positively impacted first $X.XX. was Our foreign quarter EPS

by a of will robotic performance. XX.X% in for sales at related to decline offset highlights and segment our some an provide constant I around slowdown platform, including elected sales Now currency U.S. partially organic ortho our reflects primarily decline in in organic Orthopedics COVID-XX. X.X%, the bone grew strong growth X.X% of Other demand the cement. Mako this XX% procedures in reflecting declines U.S. of

strong XXXX. knees, organically, COVID-XX previously, Australia began U.S. and in related growth in March grew to segments and procedural noted March Gibson till especially orthopedic organic which compared momentum sales businesses see we our good as by reflects performances As orthopedics Japan. to in all the Europe X.X% delivering offset Internationally slowdown in with positive

by trauma. U.S. by primarily performances organic partially X.X% growth impacted For on growth growth power had Medical, the its at in This the declined offset waste Instruments of the extremities business, and products X.X%, which U.S. In strong was services in in X.X% U.S. sales of shoulder gains and growth and sales that slowdown management, a included continued quarter, business evacuation X% constant and impacted which includes smoke comparable its the U.S. U.S. In procedural X.X%. our quarter trauma currency business. tool includes delivered MedSurg comparable basis. Wright organic

and reflecting Neurotechnology growth and of instruments. currency organic reminder, Endoscopy sales strong ENT of growth XX.X% and businesses, U.S. was growth video its quarter. Europe, Canada, latter endoscopy quarter Australia, Sage medicine neurosurgical offset had double-digit Internationally The spine, and our had growth capital As slowdown interventional at and XX.X% grew at and across surgery, over of medical XXXX the medical gains emergency XX.X%. our businesses. and in of which sales care decline division growth during a performances spine partially an and in businesses. reflecting in organic organic reflecting had strong a and of organic Japan instruments in had by performance XX% business. some XX% sales constant a double-digit This X.X%, and The the of neurovascular sports XX%. a first the approximately which of growth businesses growth very reflects our U.S. MedSurg in general

nasal and our in neurotech reflecting implants. U.S. drill, strong Sonopet iQ, business XX% posted Our Forceps, organic growth Bipolar bioresorbable growth an neuro power of product

Additionally, and all neurovascular This and hemorrhagic, strong categories markets. China driven diversion ischemic. and Internationally performance we demand within XX.X%. by product our of including significant U.S. had emerging had in spine in business, was neurotechnology flow other organic growth growth

Now on operating I first quarter. the for highlights will focus

our reflecting adjusted gross was by business XX.X% of Compared sales to impacted XXXX points and our R&D margin quarter innovation. Adjusted Our focus unfavorable mix. from quarter XX primarily on first of approximately first basis gross spending in X.X% XXXX. continued margin price, the was was acquisitions

of as given fuel XXXX. in reflects decline sale, adjusted of to basis XX.X% certain XXXX over the the year This XX.X% Wright which with XXX operating summary, to for acquisition costs cost to points. Medical growth, was quarter XX basis was a as first future the first the SG&A XXXX. In is two of impact disciplined dilutive adjusted of compounding which was sales, the points our by quarter comparison of of ramp-up the combined quarter well Our unfavorable the margin

Wright margin, expansion to basis We Medical. over points guidance income to XX also income reiterate the and excluding other our expenses outstanding a Wright related increases and improvement to basis the margin expense the Related compared funding the XX in deposits first impact in XXXX debt earned of points our operating operating of increases saw we to in on investment Medical quarter for acquisition. of decline interest XXXX,

tax our Our an of rate adjusted of first XX%, given had mix income. quarter effective

expect circumstances tax guidance XX.X% the end Given XX.X%. we the and the our of for year, would for full our at current effective range year to be lower outlook of to the full rate

the the first quarter of Focusing we $X.X and debt and cash total sheet, balance securities ended billion. billion with marketable of $XX.X on

$XXX repaid of debt. we quarter, the During maturing million

of operations of quarter from the reflects the expect XXXX $XXX to be continue flow, to was integration. one-time organic cash of of continue management variable and recovery cash XX%. to Based the will the approximately to year-to-date quarter and the growth $XXX operating million. XXXX. expenditures ramp our first good and capital results X% that and performance This earnings be believe on Wright working current our Medical approximately continued procedures related performance net on sales Turning based We we continue will geography, into of the second environment, in range elective to to of region million

comparable I mid-single full and to in range. it We the to Wright extremities and in trauma sales continued in combined sales now be expectations the the compared will the for As on consideration in relates digits full Medical now of full call for per share our year for and has recovery growth Wright to for to range year, we expect Based when results $X.XX be for the Medical, performance in near sales up outlook. foreign discipline's now revised of quarter guidance positively the will cost our to currency earnings current net impact, If our management included we improved diluted positive including X%. the expect open exchange by diluted XXXX. $X.XX this by net be year full first expect approximately $X.XX. $X.XX impacted to Net adjusted year levels, positively earnings And Q&A. and per share rates hold impacted will be

Operator

[Operator Please Instructions] line Your from first question Marcus of Robbie comes proceed. from JPMorgan.

Robbie Marcus

a for and taking question. Great. the quarter Congrats on good thanks

the the it of Kevin, rowing the update in overall give the had outlook, growing most range, frame than in early So March script that didn't quarter in I in the the release quarter might first much quarter here. the good or had call Coming really some you on rest items just March. of the with was wide a maybe street quarters start better fourth you hoping ortho out mentioned second to way through color trends was developed. a in

on shake given maybe here start first quarter exiting some second trends I was seeing the thoughts So giving Thanks. off hoping quarter? you might could you're out with where

Kevin Lobo

was quarterly mid-single the providing currently by pandemic. Hi, can I business the if remarks my obviously thing knees that first would guidance, be what's most not indication is, is an say in happening. did were digits, and we're Robbie, We of to indicate give impacted I but in areas growing that going you the U.S. prepared that

notable. is So that pretty recovery

that's full and year predict but the the end March, we you back we – were the see If flash and January around can pull the territory can started very we good ahead pandemic, at where February, by end with to on feel that declining and into confirming you you in the look of we upswing. see to the organic Difficult sales growth. about points positive

April, that by May, month is June, parsing obviously difficult. very occurs in So it whether July

both The other small us the thing capital large is full for the up. capital, that on order picking confident capital makes both which year book very is outlook and equipment,

little feeling at the in growth get to has uncertain. pasting overall QX, obviously So XX% so first when bullish, but exact to you and quarter, start accelerate we're organic to to between QX X% QX X.X% the

Robbie Marcus

the you're it came is that the expense any as made here, management had for straighten thoughts just you've maybe And it. EPS comments true and second, our of the progression in just giving Medical models as earlier helpful. on and $X.XX of and Wright on first really out the some guidance think One That's I realize in dilution Appreciate about earlier call? here quarter of lot incorporate, seems to in not like but might've a Wright we year. Great. we Glenn, the

Glenn Boehnlein

activities certainly just Wright our Medical, relative to if about naturally as that that EPS. all early a you forces the incurring on think the costs mentioned. incur in Preston A of you cost as things and lot working and aligning to flow would and going well lot synergies impact did I be think Robbie, related – on of integrating Medical, Yes. was year that to the that reflected sales QX, need our of we just the we if in integration the Wright in through that are

are that'll play year. relative as the optimistic moving remainder we out we where the for think the we about I think forward sales, about it, to stand and how synergies of

so of a to then the expect as relates of benefit that lot EPS fully guidance that it did. like in guidance positivity – we our And we some sort contribute also for certainly encouraging that'll play include is and that reflected raising And out some that growth cost ramp sure in are a would how sending's to we the positioned and their management in properly year, to also innovation. to spending divisions make of we that up are will

back making sure not this innovation of And growth doing end anything development spending so we needed product will we hold and even that even other are year towards are fuel next to be that year. frankly the or to really

we I see went lot learn we So and the spending. from how we'll then, that think a growth we did that And work. through experience in

primarily as we are that the there so and to realize And fully expect savings year, full some to in it relates SG&A benefits costs.

kind it's the that lot us so of our balance guide. things of And of a to those confidence a had really raising in we get

Operator

Evercore from of Kumar question Vijay ISI. comes line the Your next from

proceed. may You

Vijay Kumar

question. commentary guys, a your half maybe given come the assumption, growth growth Is that on we're Glenn, guidance reasonable organic like looking double-digit, will April, back mid-single the Is One, a how assumption procedures XXXX? just half back, reasonable on thanks to it Hey back assumption? double-digit to for seeing questions we're seems taking be in back your here. is that perhaps versus my

Glenn Boehnlein

accelerating of to these as do get can, X% half end, throughout in math Yes, XX%. take the the the has terms we we'll time growth probably that Vijay, what of growth QX, continue in is it and see of in we'll really of will I do easily to and But sort the QX by great fact, assumptions to to back could to see you to think, as yes, get year the underlying I return QX. a and we normalcy then QX growth in accelerating see some the

Vijay Kumar

Kevin, the helpful. on one, That's capital for that in trends you quarter.

how I item Is year XX%, there mean I other – last you. trending? think number. catch-up within I driving that in Thank market? the Mako line was or acceleration XX%, placements from that's say what's ortho; Is sense a any any the an looking at strong there are capital heard on you end big that was trends,

Kevin Lobo

Yes.

a into Mako continued and you As had that the we terrific saw first quarter with quarter. fourth

it U.S. saw what So acceleration and banner absolute The pickup. Mako, was quarter positive international continued for its in but we first momentum, an was an markets. really the tremendous real saw we

Mako you year. And happening markets As approval started proceed know, end those of the to towards we the see new total quarter. new first last in some in at installations we

and So quarter an of it optimism, future the was that's growth. of early lot was in world booming really us first because implants the gives Mako that a around indicator that

Operator

comes Pito of Chickering question line next Bank. from from Your Deutsche

may You proceed.

Pito Chickering

for you the think on your on guys give very, end this strong very my And give what well grew Can versus or diverter? also questions. gains? Stents like us taking some markets market Atlas you it's growing morning, Surpass Good color the quarter. was share China. flow color more products very key you in been some Neurovascular Can any

what's driving you do is? curious, how and Just think sustainable that that growth

Preston Wells

Preston. Hey, its Pito

we on seen But think as Just growth neurovascular I I that with accelerating. think wanted I'd double-digit are with been gains that to that well. in market your and of space do with past those question. say has the follow-up pleased we're launches the mean, seeing some really in we've certainly, I shared you overall mentioned, that

into we that we're gotten XXXX. So capitalize those really throughout launches to starting XXXX, had as we've

And products. stands items, growth including of flow aspiration across and so those to good variety varying seeing a our

in done our with to brought same able as to how similar we been and markets thing again As other grow China, to it in we've neurovascular. those it technologies to relates there, markets

as neurovascular strong to we think we so business. really forward about looking year a that total are in And

Kevin Lobo

an team and is think across leadership the comment. one-quarter incredible beautifully one been just Just neurovascular. tremendous Preston I said, up to all wonder. hitting have compare, kind of a we is product they've cycle of categories. quarter-after-quarter really putting not just just I of add as our numbers This mean, really

year. this be So very a will strong

Pito Chickering

that a key Excellent. any in And March? end you Asia in the so at Thanks uneasy you obviously other markets Europe, us saw quarter follow-up of Can of the end what color give comps. in quick in as U.S. referenced question you markets and the for strength much. is

Kevin Lobo

Yes.

But as certainly a mean, So I quarter, a Europe saw recovery. just continued in throughout the was U.S. we terms we those areas of really I think as we Europe the bit procedural like out we saw saw the the we the But some markets, some we we similar terms of improvements of other impact in that in been front. behind similar other areas, know, volumes of the some mean, quarter. in of some might've on I UK the little and did little see ended as how impacts to those from saw fourth quarter. bit

our Glenn again, quarter as to is normalized levels. And more go so as mentioned, we that second back we're expectation getting into

other a those in we remain India Europe with U.S. there's Asia-Pacific, to in levels. back expect that bit little and and that talk some as But get will in normal course, Latin there, especially as the certainly to as out far Of America we do markets markets et coronavirus there, more restrictions, are like about impacted by cetera. and

Operator

from of comes Wells the Biegelsen Fargo. question line from next Larry Your

You proceed may

Larry Biegelsen

question. taking for afternoon. Thanks the Good

XX% had me; tap everybody's on and Stryker that And ASC's. shift. picture one, guess big knee are How pricing? I this procedures J&J to one being two Just your are for of And into to Kevin, concerned applications on now trend? about done this XX% hip in implant ASC's, for follow-up. positioned What you I thoughts questions is said

Kevin Lobo

no trend might a would say XX% pretty to Larry, the there's but that be little increasing I is doubt high, increasing rapidly. and that XX%

put We over we are with last the delighted ASC together two the offense that really years.

created, they need sales we have best we market of that for everything really the way go ASC, bring a We that the we and ASC. we a unique to in organization Stryker have because the new

knees we and management, guns, and have have we historical have lights, operating ankle [Technical Neptune medicine, and kind waste to tools, have of Difficulty] foot shoulder power tables, we have and we we We norms. sports compared hips have and

And in all of so you think and hips that, into account of XX%, a of to we going I context think X% knees sense are you to get those where can take be. if

Operator

line the Miksic Credit next Your from of question comes Matt from Suisse.

may proceed. You

Matt Miksic

taking much making. a just I'm and thanks the the pipeline wondering for Hi, questions. you're of follow-up the on of some guidance on and investments so some the

So in why follow-up. that's just one like it's raise just about bit I'm top is the of bit up sounds the a and guide the not slightly? I to returning I'm talk the As part mentioned more, to that if top – on curious if little growth case; take confidence I've it EPS a line wondering line.

Glenn Boehnlein

Yes. just Well, of quarter. Matt. the Thanks, first first through we're all

say unhappy the it next so twists thing couple the a fundamental businesses. or lot here top lots quarters. turns many down definitely of optimism there's performance and our the our all is We're at to boils that the seeing performance. three of And – thing line not QX that earnings would a guidance, in of QX I we're the that around with on current

that the a for April, year. which the Kevin where good indicator quarter And about as prospects could our good land. pretty future remainder order we're certainly of so what books, seeing think do in of sales are referenced we we accelerated feel and through I our the

like our just solid on we very many there's So businesses. momentum of many, feel that across

which why costs, the is just the EPS. that to that we're on, discipline going combined gives just didn't. also progress all is which we we of Wright of us Medical have confidence we strong I think We underpin should felt also raise our And that like that help making guidance, with

Matt Miksic

many you. I discipline Thank sort you that operating and takes innovation of said And investors in I That's investment. of programs, helpful. the appreciate. puts just, mentioned you sort margin you growth your continued Then had think it. think also which and Got

points, important more on of about or innovation second of basis You and bit a the talk maybe project maybe might wondering also a put most say importantly stack point if finer the then first or see later for next in program in in year? what we could or is near-term year or little terms that that you that

Kevin Lobo

Hey, R&D of can previous it's we the And go this we you terms investments of about think in and quarter our to of the think in particular, I we've and we're at in quarter elevated what R&D investment, you'll just spend see forward, terms that making look think if that you bit I probably in being look how Matt, our the over at quarters. as additional a think Glenn's compared terms about the it historical norms, platforms. of as in investment of I is, sales even and which rate in disciplined against that made sure percent referencing innovation we

to are track of on projects the As focus our is really of of that projects, as part to of it it the in our future to they beauty forward. the those units relates model as go for that mean, I important business each allows growth nature them decentralized we

And so be market and of type certainly investment innovation key launches talk that innovations about do really sense forum, as our so items we that to all new coming future. of that, terms And in in across in the that this made of we'll businesses. is being to that make product and have

Operator

question next of line comes Joanne Wuensch the Bank. from Your from Citi

You may proceed.

Joanne Wuensch

[indiscernible] how the you're over whether certain Two sort not that I'd questions be integration? it, goals? a faster metric in what of EBITDA afternoon. I'm your down sure What period And for to you. debt somewhat debt you you're measuring are and is that's Thank Wright debt or you good integrating curious debt it Thank than net or surprise sort as goals And pay front. towards. of Medical aiming the that question see time [indiscernible] then of expected. taking correctly,

Kevin Lobo

Hi, Joanne.

on times as it and debt we ratio that debt pretty EBITDA are what agencies the really bring this rating been We as as really pay at focus back our look clear the with levels of down In historical well. to to down of terms X.X goals well and on kind roughly. we've

towards next couple the of years, advantage quarter, We a about an in more of debt quarter billion what take what fourth we $X think a it we in too. plus if this year pay to we'll you billion, what down and a that we're about goal. – billion do. down opportunity that $X this of means think pay probably the paid-off you paid-off If about terms have We of we'll little

And so opportunities. But very Once that, where pay larger reaching we'll flow at down think that's a around of sort we we organization sort land. in think goals. on programs be to we'll those our territory debt we accelerate solid of looking do is focused the cash in

Glenn Boehnlein

on I a off And say maybe would I'll to Wright on, take we're start. very the question good Medical.

I as only maybe would recent this of other the if speed I'm KXM the our first overlap deals So done And the that good say which say And integration far one we've ballpark speed so than integration, history, quickly with people acquired I we've really, delighted with very with I the of Medical Wright products, to and deal. Medical. its pipeline of the proceeding the would that's kind more much making. Wright think decision back terms Nolvadex the in the the in same all is in deal of was

over. We lot of teams management has the come Wright Medical that are leading have leadership mixed a

making roles expected. leadership than bit we're a certain we cost terrific, level And momentum had side, and even of quickly progress I more the had So think little key the on in baked is a and this synergies. we

So is and overall delighted medical arbitrary very very future the with bright.

Joanne Wuensch

Thank you.

Operator

Your BTIG. next question comes from the Ryan line Zimmerman from of

proceed. may You

Ryan Zimmerman

the taking Great. Thank question. you for

U.S. your common first franchise the acquisition now and KXM ask getting about you so your want the assessment and So market expectations spine kind of spine and to your for flap of in the and back around is And business was very Sage in question second to quarter it this you it growth in strong like call then medical. business? up seems market that my just

that there business about to is up picking of Just expectation going be of that reloading so Thank forward? kind And – is you. could on some think within that sooner? procedures there how pantry cadence the dynamic

Preston Wells

of it's Ryan, Preston. those both Hey, questions. take I'll

other performance, is from that technologies, Like think – spine quarters. overall, enhanced we're mind a we've by our think spine the businesses, which by that same certainly of our we're recent across as the perspective, it's of impact to performance didn't quarter. encouraged perform being something of and last the we're Mobius you in particularly enabling Certainly about encouraged I our seen very a the result So out several way. of And back other in to expectations the the continuing being would keep to with over restrictions, I like acquisition COVID businesses; we think we in just a see terms part when we implant point the relation spine as to in last thing other think performance to certainly of this some I of levels and implant business level about saw the of you getting said, some business the high but I spine overall, market on by that.

I product slowdowns. was really it's think this it that procedural a to you it, impacted I by As mean, relates certainly hit Sage, the

that's time, of of But ready. more as, to catch-up well that, Sage the it of pick flow at And procedures a done stage as more in that stocking also process. began and through there's I the see to hospitals and are element back-up, get back-up the same recovery that think get procedures from happening perspective, back-up an pick as we'll ramp in the so terms as ready for to

Ryan Zimmerman

taking it. Thanks questions. for Got

Kevin Lobo

comment. Its to like one just add I'd Kevin,

the reason sometimes have medical gets think components it. little you I three a is different of our underestimated business and

that'll last new be this and towards later is That'll for district You end drive which models, the of have that very two bed per you Sage we the then year, four will and the growth the strong brand have of the little you then models have a emergency have costs, those the was acute business. and have instructors of launched care, bed defibrillators that acuity year. business care, a launched and ambulance the

care year you're more going emergency is so that different from year. you care this going latter Sage. of last pick-up the have from and have you so year care we And Sage, more and not three and bit a had acute well to get lot This as had little course care a into much should – businesses emergency contribution frankly acute

a the and... of on much So really than both is a business stable ago, overall Physio-Control decade was more high-growth it acquisitions based it

Ryan Zimmerman

Thank you question. for the taking

Operator

Your the of Pasquale next from comes line Guggenheim. from Chris question

may You proceed.

Chris Pasquale

taking the quick one thanks Hey, on for for questions. and Glenn, business the one unit. then you, one

to guidance, versus the how with for me the in guidance change related were there? performance? to EPS It the to expectations what was currency confirm clear change wasn't Just in operational much of components wanted

Glenn Boehnlein

at positivity some we the incurred $X.XX basically an $X.XX out in QX, we of some $X.XX year will there. think to Chris, and there's have full impact variability Yes. still just

it that's So we where got in.

Chris Pasquale

is a with expecting Was guidance. range? EPS relative guess, original were or same original the the there, to delta you there I as the that

Glenn Boehnlein

$X.XX I we're There's we to $X.XX. a thinking really wordsmithing, mean more we see now and of a be it's taught would guidance $X.XX the of $X.XX, sort it range original affirm might that

Operator

line the from of Anthony comes next Petrone from Your question Jeffries.

proceed. may You

Anthony Petrone

Hi, thank you.

one any on a bit if we're And about when wondering the was settling of digit a so questions, between single-digit of we competitive couple in Medical. a synergy trying impact of at ahead sort secondly, robotics, J&J that we wondering XQ about pandemic. sort grower. of competitive if hearing the get here robotics, selling growth Wright robot mid-single and landscape, out can there develops bigger think numbers, quite sort of the was effort the high just just pre-acquisition on On that of perhaps sort a launch. sense to a on I'm of launch then a just and one break Wright, pending, Just

And digit a rate? Thanks so lot. high to that single the get growth to back is what timing

Kevin Lobo

Yes.

competitive bullish remain the nothing's result to we And is uptick robotics, we're regards just launched I continuation we technology. of your with just seeing perspective, mean, our effort really had really in then we as super saw or also, from have in solution. on at a ROSA so all. done question the Mako our validation our And demand to Other going the we really systems you focus about overall, and and posted. changed it Mako saw really results quarter be what in that really the what first haven't So since that us that believe robotics for and anything, continues our the what we like of and is as selling a are they've Mako slowed and we And brings. the VELYS technology stay increased by they've down if to we strong best

And with so that something that from are we on look today. the a the technologies head-to-head to comparison it's market forward

mean, end again so a the kind single Wright high or off coming are and itself. there coming certainly some digits, the it's there. inclusive of there. business think you integration Obviously, of things the the in of There I dis-synergies our pandemic is Medical about pandemic, all is Wright are out that just business in still As through of that. we're like happening the And also terms own and the with cross-selling impact then associated there and of deal

that parsed we've terms different So, it's it. in components not out of the something of

extremities is the can I that of expect to total above trauma we'll think growth. up as get and market to see integration we through what business we performing back out work

Anthony Petrone

thanks a lot. Yes,

Kevin Lobo

remember The single that includes to existing – digit key thing mid middle business. trauma the growth at our

So just and That's that the extremities. combined Medical portion trauma Wright for right. wasn't the

of a of the And quarter the business, growing Medical but extremities combined trauma just first the be so faster because pandemic. wasn't will component Wright in obviously and

Anthony Petrone

you Thank much. very

Operator

from Oppenheimer. Your the question Steven next Lichtman comes line from of

may You proceed.

Steven Lichtman

guys. Thank you. Hi,

a market was – a U.S. penetration if perspective placement providing wise Mako color can from where think know us recent penetration you perspective quarters. really your helpful. First on you today. Any you give procedure I in perspective we're wondering question market I numbers from could been be at and provide would you where haven't is

Kevin Lobo

about specifics not you on where what mean base installation both U.S. global or versus some assumptions and of international. a you some sense a can fourth back I I from the at said in might Yes. obviously, that we sense look the think U.S. where more in providing many of that But quarter, will penetration we than about could and you that about but what if to perspective, you the you are we're go tell if is, hospitals what are a mean, a hospitals even then for is we wise. these would of and that potential take just the placement you that that or think But that are Mako one. fact carry you gives X,XXX so quarter I just make give able that think total total there

So of penetration. think of in line early the I with that terms bottom still it's days is all

taking opportunity robotics more Mako one terms taking So in out there of Mako as we and a of there is than and forward. lot look

Steven Lichtman

operating expecting? part And the Got relative yet it, integration top going is you to of great. forward the up to that still better that you're mentioned then the were is margin some Glenn, expense line and come confidence also synergies pull of you Wright, obviously Or as – well?

Glenn Boehnlein

a were well it's fair think, assessment. executing our that very I We're synergies on the Yes, planned in cost modeling.

we so, going through bit a flowing that's are revised favorability little to of And guidance. see that the

Operator

Your of next question Stanley. [indiscernible] comes from the Morgan from line

may proceed. You

Unidentified Analyst

what with sticking near-term? for second, countries? for through XXXX? and what's maybe seeing Japan? more Is more And Could results moving over see adoption for next talk thanks taking enthusiasm Or gradual XXXX detail kind of China year questions. Kevin, And bit are months? quarter. you now a the in the your APAC for we just expectations should what the China Hi, out these you're Mako an you strong a little your in inflection in a about XX just called the in

Kevin Lobo

Yes.

in pandemic first XXXX. you day to back very compare was the year last all, if So, the as going we affecting not even day And terrific China really to to had life growth, obviously XXXX, they quarter very had China. first you in terrific – had of but know – that quarter is a a XXXX in first obviously badly affected

as with small are other incredibly very very, is given to Mako – in China. China China. is in high we us certainly market companies, shares. whole, farther QX. very we're for Australia very a in relative still The but It just China we would I a in say in of double-digit our started will Japan outlook very growth where market be ahead good getting lower grew relative for So fast China positive

very but this a hasn't trend it's days, promising, one couple yet So stents. Mako high will towards for markets volume-based that but in our relative the just starting we given there'll procurement. be us encouraging. be know early seen effect for tendering volume-based of and for you've carved around very cardiac as relates going pipe overall the that's of out the that'll negative come our priority a to of to in course, to The which And growth but even But is down a noise procurement, China, that. and be remains to China position, it us related still businesses market

big in about we China. Japan So robotics both that still have markets Those going our very are and for significant those. runway in we're of excited both to then both and be progress

Unidentified Analyst

cash flow flow how for continues today you you cash to Great, kind for months Stryker maybe efforts generation XX you. your give and drive Glenn, question is versus just cash Glenn. us Just some come Thank XX, focused mentioned Could just of on color thank back? on discretionary momentum ago? flow. more a expenses you as

Glenn Boehnlein

around levels, the can Yes, like we that then whole the I the of we XXXX to that think course that we cash just reallocate of importance that the so one just got flow areas operate could organization of but and the terms M&A also cash management of at returns over just good cash company so flow better level that. things was in reduced provide things revenue flow and of garnered

So positioned to flow. manage I well cash relative are do we think organizationally

service lot of moving ongoing terms a more centers. standardized efforts of our shared have in to collections We

very so working with needs in better. and inventory efforts have businesses, inventory that We management we forecast can the closely

then on have also have of payable do We with also more sort terms that look terms are payable. strategies inventory we in how in much we And favorable serve we lastly, terms accounts hand of of and are terms more vendors on accounts terms at distribution how to in payment customers. of working efficient have to our

benefit so we of results the our just tightening us working improving certainly as that flow. of cash year look And up all is at this really capital, will

Operator

of line from Matt UBS. the Taylor from comes question next Your

You proceed. may

Matt Taylor

taking Hi. Thank you questions. for the

back the wanted And I what basically you and about big ask factor end. guidance. back QX. Last near on they be high your end, the to said in one quickly were swing front sense. asked end between the the makes you came end could So how things If quarter end, low and the the if on high the better the that come back low you about was near was that

about the And based thinking is of trends the is year? seeing you or that it? high towards still So how on the that for that leaning you're end you're the low guidance

Kevin Lobo

Matt. Thanks,

So first we still variability for variability and And certainly, a headed, we're think a the again, of happy we quarter. thing exactly provided great the taking the means guidance what have exists. about us reason, we're think into where good certainly if momentum, about as it put that we the with sales. obviously the there that for different we across it as think second about we that's our happening range continue out because – to But in lot marketplaces. there's we're overall And the as of that happened the because quarter, we range we as with momentum

that's think as it. would in quarter come about another results, update we'll So how we we'll to our I that about have think able talk second be And I certainly to that.

Matt Taylor

it When think long does of about was characterize how impacts or times the just timing about that? that the of us that order and of good a indirectly, your book, you you help directly that for of you in the a to that And talk and mentioned that could you've bit for its couple hoping land a which better terms little forecast? I an a implants Okay. indicator it got last us kind how is impact as start sign. does maybe percentage then sales strong could of the

Kevin Lobo

it's cases capital smaller think businesses, capital even our about capital items, coming you we because that Yeah, reference think items larger orders are so, I are in our book, in generally, or we placed in those the our think being the items when some well order because there. as in about about advance talk

at So those as we it's indicator look businesses. leading just the

our about X% and we XX% capital before about when our really being of our think so a about small talked capital capital talk about And about capital, as so large XX% total we or percent as items business. or being as being we've

talking those it think are items, of ones is the their the about when you our leading those our our again, indicator or so as just we're we strength return I financial we – it's impacting reference customers in to of book, And XX us about terms of the just generally think well. think that business. a about order So also and percent return positions procedures as if

Operator

Your from next question comes Company. and from Mike the Needham Matson line of

proceed. may You

Mike Matson

ask the on wanted that deal, as and of given how kind of many too that but the the there one on, I need M&A, put seen year, going I to the Stryker probably deals M&A. After the these acquisition, there now? integrate Hi. Wright not the do everything Wright some for on valuations a out companies did digest last to just really it's you funnel surprising versus so balance company – was haven't with and was pandemic you

Kevin Lobo

Yes, question. a no, good

largest was it talked about obviously we deal, the in our we history. when deal did the As Wright

a the one be tuck-in on so will we've Wright the continue well, as M&A, that focus of the would we we'll that M&A but talked of through we And to of about focus on things go integration more have variety.

smaller either placing at products or look we more into businesses. as our technologies existing So

back acquisition, the of go TMJ OrthoSensor and year. Concepts We talked to the the had so we end then the And about acquisition. just we today,

types Wright those we that through down as in the of near-term we've well. of integration go to continue to pay as debt the acquisitions about continue and the you'll So see talked

looking. that's that So is think I acquisitions one how key for mean about think I going about forward. we think as always point would I us we're

of able there presents whenever have dedicated our we're advantage commercial looking at the as it. business so We to they're opportunity the business out units, part and and targets, that itself, always of take landscape development evaluating teams

Mike Matson

spine. Okay, ask just then thanks. to one on And want

degree by quarter business. market procedural to I down of do there that quarter, but which market? the have the And was So for first first opposed part you the sense slow spine early and the the outperforming market, the good get growth on the affected knee you suspect that hip as any to you're in probably

Kevin Lobo

Yes.

can as think for about spine, business, So another elective that as think last as look there's and what And it certainly at component happened it's hip we it's what's spine the quarters. spine, at emergent thing example. generally I as it, as only that the several impacted mean, versus our of we business, think is we impacted. the but is knee over look own not I with we we see is more even about

level that we in we about haven't total slowdown lands regards where And so, same the think as to the market. seen of

pandemic, to the evaluate we're more to I once side. have a it's continue think as normalized to through something we get just we and going into come

Operator

SVB Your from next question line Leerink. comes from the Richard of Newitter

proceed. may You

Richard Newitter

are Just for COVID Kevin, throughout knees. period. trajectory different in the single-digit mid businesses with have characteristics you mentioned they relative XXXX different XXXX different and for comps and to deferral hips Those also

where to being was just substantially backlog I curious, of average a So the two especially hips of than trying and I'm that sense single an digits. get coming? higher dragged maybe to knees of that just mid the as is should difference mid single digits given be down between we categories, thinking

Kevin Lobo

which I'm positive of one both again, get selling April year. Both days last roughly days right. But all, going range. sort of of comp, versus XX say, higher to so, want of not growth month years to very sign. about It's And of single are They're doing the other first away apart. single-digit so digit I you're carried than Yes, one. don't two a are the mid is between with too in mid talking

definitely other point going the one. coming that tells first back that. a They're not performing better guidance an than to hips the you the good things back, are you and in coming of It's year indication, trajectory you for which one want we a just three both about improving, it's but too that's excited change, so, from it's overall. change a saw get the and a don't knees, positive And months I is providing but sign volumes and which be are to really with data

Richard Newitter

Okay. Thanks just follow-up. and a then

of to there in maybe is talk other a areas the some what elective recovery prospects your mentioned about Could bit like and spine EMT the half some March. in January dynamics to a You've little for nature procedure about thanks. talk recovery and looking back medicine, sports you just bit relative like little

Kevin Lobo

think, very quarter last Sports sure. Yes, grew grew the right. recovering in the are well, I quarter. double-digits fourth we have medicine, in actually our year. It double-digits Those mentioned remarks prepared actually in first

So We're seen started done they procedures. degree procedures impacted we inpatient you the have when the in that [indiscernible] frankly, a slow was that of we're centers EMT the the in haven't hospital. where down delighted surgery nice most same rebound. as are have pandemic because seeing are those negatively

be both grow in contributors so and are And XXXX. of performers to those areas to going strong strong

Operator

Truist from Securities. Kaila Your next comes of from Krum from question the line

proceed. may You

Kaila Krum

taking our for Great. thanks Hi, questions.

just little on be in acquisition can would could So speak a Concepts detail you TMJ additional the that be detail more there bit important the just just how bit mentioned any significant little about you a call, rationale, the helpful? or

Kevin Lobo

Sure.

fits really the hands terms about think our surgeons overall them sales are forces that products have to patients and out there go the fitting we as they serve them into serve. really that that finding out and acquisition, customers help and technologies again that it in strategy we and So the and of and

it's allowing position customers patients Concepts product TMJ replacement. go and actually that's needing So with to us really in service that that that are that TMJ prosthesis of adding to the bag and really in

Glenn Boehnlein

small But say it's deal. very would I overall, a

to Stryker. overall the CMF screen our needle size not of the mover It's So very your to really meaningful but going business, something very meaningful for this not big is maxillofacial that's Stryker. to a oral the overall hit radar for surgeon, of

meaningful you'll that, report And our as that very be be small overall in it's to that's report We'll so, strength. column, see the but results. a able you'll nothing really going that the to we acquisition to see

Kaila Krum

Got it.

you I'd ASCs. sort Are that what you. about more recent interesting I shift you're a hospital surprised there just you're negative in Okay, any positive market of with Kevin, or you your to customers? hear either just And hearing you're the to to from mean, and have helpful. the dialogue trends other high customers then love of mentioned seeing recent hearing in months. Thank level, your

Kevin Lobo

say is surprising speak Kaila, every wouldn't would I shift to but ASC, the to programs hospital I say Nothing, that you has underway. the

definitely I was that would the notable the prior pandemic. happening most That's is so, to say. thing accelerating. It And probably already

financial other is The actually thing good position. pretty they're that in

So that we've financial hospital gone unlike meltdown good. the whether through, was issues, the it actually prior very or liquidity crises other is

pause that And good the very the than hospitals order a as was hit. while first pandemic would that on procedures but coming are expected our through better and I of so, are financial frankly for a when there have little smaller certainly back, we're seeing some capital, the actually in position book capital,

Operator

from comes the question next from is line Baird. Your Johnson Jeff

may proceed. You

Jeff Johnson

hip and you as about as it's clarifying payments that could. in emergent the decent on Two Preston, market, and the amount a just assuming spine good but as not a market SpineJack XQ the maybe talking I'm Good guys. to were afternoon hear much you. with knee Thank and more XQ. pressured little if helped I questions pass-through

the So versus way assuming than kind you interventional on to Or we think when hip about X%, look at U.S. exclude X% at U.S. X% down versus differential point in and knee Is of spine be point? market would side? you're those of six that the that if this knee. that benefits, got less some growth spine a the right hip about core and differential down I I'm

Preston Wells

is gap think –driven about any I less we're pandemic, absolute I knees – that in the right probably by right lot I that the think Yes. take regional bet, there's in again middle there being there to if but impact emergent is I with I you of hips any mean, it's spine. and that a number think, that certainly think mean, not versus variability this. of the

take you range, that in think I some mean, probably I gap So, that's digit if right. small about single

Jeff Johnson

and right, enough. units your Kevin, a the All five involved typically ASCs comments And business interesting contract. fair in on be thought it’s I the

out think happening I ASCs seems you business like but not positioned of that cross level, and at there if at a correct units, model. there things well It wrong, lot this seems point, you more. I'm should to Does that hospital side we've for mean said historically historically that in be you're the obviously goes greater me like even just your the business guys? the is what that incremental bundling the gains seen than on given hospital share diversification ASC of at so be the historically,

Kevin Lobo

to, the customer to that There The you Yes, by business. have than way service that's ASC and it's the to Stryker is a does want want line buy people. very a very very They're interact many have perceive simple They the it's ASC of not they hospital. They is do sort with. XX can't as divisions sales people. not buying that and a great they don't and different The occurs elaborate point. departments and hospitals decentralized. very procurement at it in

portfolio what we just So the which is ASC. a perfect for we offense different fortunately ASC, they're orthopedic that looking the for. includes for a have And for sports have

so, yes, our offense. adapted And we've

with really about we If same the had it very And future. different different wouldn't We having our to interested, but this but The historically a the be as certainly frankly success have divisions our pattern. that continuing in ASC been is having the across looking – buying good is. as news is way portfolio, now. interested offense. continued isn't the the And used and I'm our customers and we've hospital hasn't we we're adapted we the sell, optimistic

Operator

from Piper the line Matt question next O'Brien of Your from comes Sandler.

may You proceed.

Korinne Wolfmeyer

Thanks is this taking Hi, for questions. on the Korinne for Matt.

Can quick for about how it perform year? hip little for you one going remainder us. how Mako bit one you the expect a is Just and talk to of the

Kevin Lobo

Yes, sure.

is launched XX%, couldn't the Mako we of you all simple as customers because of the do application last actually pandemic. if XX% upload software go our customers web doing the of new software. got not in information as remember, because the roughly accounts an servicing the of little account, over we it so sort We've of maybe We learn. the get to more bit with there really So software, than it's hip have to to year, new and it have just it a put out but to the have on they our

So training there's that regimen a actually goes with it.

but very feedback register, tilt, is customer up overall the it less speeds surgeon to make beneficial So, there as accounts a but about have surgeons are by second such procedure we're the all very Stryker as managing the installed is procedure in time have more And serviced – the the increasing quarter pelvic continue software that accounts software, more some hip will to length the quarter, information the growth in is and so This sure and excited new now, the the through team. right valuable find from before of takes of part discrepancies. There's they're through that good probably third our time. terrific. hip like

pandemic does able And the high move all it and as take throes positive, of our of we in implementation quickly like haven't we feedback the and and that this in touch due accounts but very regions. time we're our it to again because of the to requires in would as still been that so, servicing all

Korinne Wolfmeyer

you. Thank

Operator

Josh from Cowen. next comes line Jennings from Your the of question

Your line is open.

Josh Jennings

questions two Kevin, the just on business. knee

robotic share ASCs? knees, Thanks us have in to patient wanted for for instrumentation improves platforms do our a competitive to you the you And just for ASC the question, approval That's pivot you evolving had have that the questions. robotics and Do U.S.? the the see overrepresented sorry, the do understand the unprecedented help success pairing of the assumption you your with that are – is from sanity the from to strategy implant. And triathlon any received that for can just how you've – particularly second implants here, at with just, you but your positioning, then that see check just you specific question the introduced implants four higher how rest in the And other First ASCs? knee triathlon. now big ASCs era? the than strategy of taking three robotics of

Kevin Lobo

a Okay, I'll try are great. there, few to them There questions cover all. in so

frankly, And initially of welcome. requires two customer with when imagined, terrific with to the the this of That's have would procedures. we the an there all, involve will a very signed that first we ASC some manual Conformis, in because So, for We're a ago that won the that ASC, was success deal is Mako – Mako, use will deals I than and using less have it custom solution where really deal ASC they for area more not success simple having designed is honestly, is don't will much really we've the Mako. where the solution ASCs, be ASC. the be sterilization deals designed years

we're look forward approval we So, and able that customers. ASC to to FDA get that excited to offer to our being

point. you think feel asked I at I do ASCs? share. over-indexed whether it's know, I we're about a Preston, think you this for have market don't in fairly representative

Preston Wells

this think it's mean, growing it's representative I now. point. a fairly right but segment, think that I Yes, at obviously, I representative are

Kevin Lobo

implants, able high still to and And chances – real to no going the relates in very it's short-term the well. high would our anything. change of to being we Yes, continue as I need it tell robotics. you to but have do We're like to of adoption early,

We to we more the XX% trials. long to bone I are exploring that has is grow that sparing the that use have something more quarter, science in of [indiscernible], runway able area our it's that ACL cementless are that but place, of as that from knees those talked types something a different fourth it Longer-term but an over do think implants go. that of require keep about to continues – in But we're IDE I cementless, still is a think is will don't standpoint.

implants of think be that'd occurred imminently, launched new a a only kinds that be I thinner, be – into but is future will to that implement the are to are to able robot be will able that nothing that patient. So do

the and I the runway in of for continued future, very with growth. let's the three we we're a long pleased So it have next the that's portfolio say call two, but kind years, near-term, longer-term think

Josh Jennings

a Thanks lot.

Operator

any now questions There Mr. over Kevin this the for are at will further time. to no Lobo I turn conference closing remarks.

Kevin Lobo

for you you thank all forward QX July. Thank in So, look our results you. joining our to call. with We sharing

Operator

and you, you Thank gentlemen, Thank participating. concludes for this conference. today's ladies

now You may disconnect.

Stryker (SYK) 28 Apr 212021 Q1 Earnings call transcript