SYK - Earnings call transcript Q2 2021

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Operator

Welcome to the Second Quarter 2021 Stryker Earnings Call. My name is Mae and I will 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 conference remind statements. call I discussions that begin, this during will we like you to the Before include forward-looking that recent results in actual could materially Factors discussed are to the with filings differ most the SEC. company's cause non-GAAP include discussions measures. certain the financial Also, will most GAAP with on report to today's filed can today in SEC. financial Form be current the Reconciliations release to that Stryker's measures found the press is directly comparable an exhibit X-K call over to will I turn now the Mr. Executive Chief and Kevin Chairman Lobo, Officer.

sir. You proceed may

Kevin Lobo

Welcome to call. Stryker's first quarter earnings

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

call, comments and additional to XXXX. release note that an integration. with will XXXX before regarding today's contains For Wright will Q&A. Please our Glenn I results provide call details followed by Medical the press the both on opening our our Preston versus provide results then quarterly update opening

comparison. believe which our more relevant For versus performance this be of XXXX, our call, based provides a on commentary we will point

confidence organic Pacific, We outpaced Western continued the Canada, strong double-digit in some South pleased countries. despite posted X.X% For South Stryker as have result are we excellent With returned growth. sequential growth including our guidance half X% countries appreciation growth our Wright standout Each in and a of driven businesses. both in narrowing growth and total new the double-digit This U.S. continued emergency We Also have sports is also the This procedures Korea innovations, many the strong compared now Europe. increased our reflected organic first elective reflecting for in family. we organic these organic and hips XX% order to in XXXX quarter-over-quarter China, and full-year businesses ankle medicine both performances our we the all X.X% procedures, knees to to growth. by within care, product to COVID to across International Medical, improvement sales growth posted of we of to our fuller growth of in it was results with neurovascular, strong XXXX. capital that versus have posted very shoulder outlook. XX.X% Mako, a delighted major quarter recovery upward sales combined book from and products. U.S. and of rebound challenges in saw of were elective most see regions,

sales remainder the performance expect conversion and with Our EPS growth to of through performance our the increase future growth strong flow carried and in expectations. quarter. year, results cash Through the we our support in spending XXX% over rest adjusted the discipline do of margin of a

to be guidance sales to Our resiliency successful I on integration margins Medical I $X.XX people us share a the beyond. over combined full-year outlook bullish positions adjusted share. resulted raised of ongoing impressed earnings call with will well Wright continued for of XXXX per a $X.XX progress in turn the to continue has execution our now and with which and Preston. on culture, and

Preston Wells

second the focus combined performance comments ongoing quarter Wright and update Thanks Kevin. business, of an our the on extremities My integration today Medical. will trauma including of on

continued including execution [ph] the economies as key restrictions, and impacted U.S. trauma to the double-digit integration. the system. benefited growth minifrac world, Wright and performance The combined by businesses. to by TX recovery U.S. X% business by of ongoing as of including our The driven performance and from related and businesses growing During COVID-XX business, was extremities trauma XXXX. of a the outpace quarter strong quarter well rest strong which Medical trauma products the positively of plating unit a had were upper the performance worldwide the extremities in the compared in selling continues our was Alpha U.S. the reopening The

Our strength The completed Blueprint continued grew arthroplasty the portfolio behind total was enhanced reverse approximately strong U.S. adoption by in double-digits in performance with in planning of arthroplasty which the the upper continued business XX% shoulder extremities quarter quarter driving shoulder and software of Blueprint. one within growth. revision the upper number perform extremities remains using with reverse [ph] our cases

least As in which of the half are X% a trauma X% XXXX. year the when compared full our grow of the to business combined we approximately the result extremities business strong year, confident first performance and of the to grew in at for

progress team very has about We capacity. U.S. remain limited efficiency ahead now moving into Medical is and the with integration at begun in the months the and which expectations, selling nine The pacing through integration of pleased is the and cross a we are our of Wright integration.

We several to and in teams continue have integration work XXXX. execute cross executed including to countries the and during of second the successfully into priorities the further Germany, support we UK, fortify to processes supply plans chain the the selling key on the the as with Outside follow cross France, selling half expect activities. U.S., our markets, Japan to year China to

our portfolio, to also R&D, team design areas integration and processes. site on progress key including also strategy. processes other harmonization of consolidation activities, commercial manufacturing pipeline to the of are addition the harmonize long-term continues operational the operational distribution offices, strategies, and of make we In executing Within the and executing aligning sales on on

they healthcare mission serve. existing While Tornier and will the Perform the of also the pipeline. through now the that, patients I the Glenn. remained includes launch System, delivers on they for the our to has complex over turn and team to the Humeral call arthroplasty solutions With This moved projects simplest executing and clinical which in new recent critical surgeons procedures focused make the the better for offers most have integration, on

Glenn Boehnlein

my and comments results drivers. our on related Preston. Thanks I quarter will second Today the focus financial

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

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

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

XXXX of QX Compared XXXX, as number pricing XXXX. unfavorable in to included unfavorable. X.X% X.X% The XXXX and days QX quarter selling pricing the versus was the was QX second quarter same

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

a recovery the ramp in accelerated as the quarter eased the geographies. has we momentum impact During elective procedures of sales and most COVID-XX of pandemic saw

However, and ramp business. a by geography and elective be procedures on the recovery implant continues pronounced region orthopedic have to spine variable impact more of our and

the medical increased For procedural strong byX.X%, our demand neurovascular sales and products. organic products for the U.S. quarter continued recovery of reflecting Mako, business and

improvement sequential quarter all we of organic strong showed International our the strong XX.X%. During had sales businesses. U.S. growth in

and reflecting charges adjusted quarterly a Our quarterly of the Medical growth sales operating expansion partially offset acquisition and higher from EPS tax XX.X% rate. from Wright higher XXXX interest effective somewhat margin increased resulting $X.XX by

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

currency provide U.S. a will growth up sales segment of in an in I This performance. in organic sales trauma ramp elective had and growth growth Orthopedics knees our around X.X%, Now constant XX% reflects procedures and of X% including especially the an and some highlights of organic extremities.

internationally X% strong the strong the ease robotics strong cement. U.S. partially orthopedics as offset Mako lifted. XX.X% in knees back U.S. restrictions grew demand as COVID-XX the Mako a platform and reflecting Australia. started bone in sequential performances related momentum reflects to COVID in business improvement by Internationally Other have were organically for primarily Our Orthopedics in in grew which strong the impacts Europe, bounce declines reflecting our X.X% grew in

currency growth extremities of which growth X% growth skin trauma the closure on sales power comparable organic included to Medical was our and For tools. sales In in organic and comparable growth had trauma the business, X.X%, Instruments a X.X% in constant related growth XX.X%, double-digit by In included in which growth the upper MedSurg extremities basis. XX% products, offset had the includes evacuation, quarter, in instruments, which smoke and growth of delivered Wright U.S. U.S. quarter, primarily a partially lighted our U.S. growth slower and businesses.

growth had XXXX neurotech our of XX%. sales The performance general of products. As Neurotechnology business. Instruments very second organic instruments Australia. of reflects Endoscopy a division organic This four neurovascular Europe, X% medicine, care XX.X%. also had performances MedSurg and growth XX.X% all during This sports had strong organic in in U.S. XX.X%, had reflecting and medical a in EMC neurovascular, neurosurgical of reflects spine of XX%. the businesses; strong in and endoscopy, in strong growth very CMF, reminder, of our our growth approximately our strong growth Medical the growth double-digit performances emergency surgery, continued growth Canada approximately reflecting video organic of Internationally [ph]. had sales double-digit and US. growth across reflecting of businesses and business quarter

growth Maxface Our growth [ph], by Bipolar implants. organic neurotech XX.X%, Sonopet and nasal cryotherapy business of an strong Forceps, iQ, product U.S. in highlighted posted

Internationally ischemic. markets, of well Europe performance in growth by in products Neurovascular organic diversion our strong our all Neurotechnology had and and flow driven as categories U.S. significant Australia. XX.X%. including of and emerging other and Additionally, hemorrhagic China growth business was This demand as spine had

will in I operating focus quarter. Now on second the highlights

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

of sales, X XX.X% In of than Medical for offset and the adjusted combined saw as resulting the offset basis and Our reiterate XX up of we increase investment the which on our was of the the by additional summary, outstanding Wright second over we XXXX. positive year to the in basis expense, in quarter from income our This fixed impact momentum the sales XX.X% the improvement expense points in leverage sales of is the up Wright our a This Medical. the our interest momentum, Related performance deposits SG&A to quarter to operating the for in cost XXXX, second impact slightly better quarter, margin an discipline adjusted positive Medical over resulted primarily continued margin was which for Based and Wright disciplined of ramp decline of second cost the on was to of reflects acquisitions. improvement our dilutive guidance impact from cost, funding acquisition. excluding by XXXX. acquisition. with debt compared other XX of continue XXXX, earned quarter points the

tax tax some to included had our effective and adjusted of discrete of items return quarter income in our non-U.S. provision mix U.S., and adjustments. adverse impacted rate second XX% by an Our was

XX.X%. Our year-to-date effective tax is rate

XX% the year, some variability expect including the quarters, third effective tax quarter. with fourth more For rate the lower normalized in rate full slightly XX.X% in remaining a a the adjusted rate an we of and in to quarter

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

paid have of the of quarter the we for debt million we repaid down to acquisition debt. billion related term $XXX $X.XX Medical. fully of During Wright incurred borrowings loan the the Year-to-date

Turning revised of I management. approximately to provide performance cash $X.X year-to-date billion. and pipeline, the to growth guidance. Based working on of X% our organic the was be XXXX And operations our XX%. earnings sales This our will well the reflects of a focus second quarter, now as sales in summary as and we our in range expect cash continued capital from to net capital flow, results on orders performance ramp

Wright net Q&A. we adjusted we full-year ramp growth the full range per revised net be comparable improved rates share of currency will our to will $X.XX on net Based earnings sales guidance, performance extremities X% If approximately in Medical in the year diluted approximately be hold Wright recovery we open As continued $X guidance spend positively first for And months range for call in of by the to by foreign expect trauma the by including XX. near the range. least positively full up when X%. outlook, upper growth impacted and for exchange XXXX. and results exchange six facilitate current performance impact, for to our of diluted it and compared our year sales share positive included be be and expectations to impacted will to the to per with Consistent combined expect controlled now relates our for this at in now $X.XX foreign the consideration in full-year earnings previous levels, now the is expect we Medical,

Operator

Thank America. Your question Instructions] from of the you. Bob Hopkins Bank comes first [Operator of line

Your line open. is

Robert Hopkins

congrats strong good and on performance the afternoon, and entire across such thanks business. Well,

every metric. down beat essentially could You

So I state of the just questions and I'll them interest in upfront two time. have

one. Neurovascular, that more for you. question a is given thoughts outlook the we're acceleration kind The on first in just to comment you've share cases in just looking the Kevin also I market love on framed And more and That's you then question kind seeing? knee how rise is your question think, a just was little you your was for the wondering number the on business COVID that, of I'm give hip back that ischemic number of in hemorrhagic, would you. in there half acceleration mean was strength color, little there? maybe Thank and two color the for I

Kevin Lobo

thank Sure, you Bob.

improving. this. are Latin see overall deal to hip being is These able a and but the gradual seen some of are markets First really and disruption, the yes, actually in we've we to like are elective what America return point. we're very on of throughout we're procedures. deferrable that And the situation year done procedures need markets Delta be capable pockets to starting variant at with seeing knee, with other hospitals is the of increase of the And seeing

So is baked not the that and we full but to guidance. some our implant end but bottom only we feel businesses the and there our raise our believe to know going guidance, well we with that pretty our is as of sales disruption year enough capital have confident business, into we overall, be momentum across as

huge first to if going around or say, great right really you diverting ischemic have this quarter. XX%, outstanding had a not at we so cycle really relates our it's across we acceleration. so it stroke, look on Neurovascular, catheters. that aspiration would business I As hemorrhagic coils, now is flow It stents, product a an XX%, was

and fantastic growth Asia having performances covered in globally, bases the we're really have terrific really we including So Pacific.

will throughout the continue year. I have do we of rest expect strong to that So very performance this

Robert Hopkins

you. thank Great,

Operator

of the Your next Morgan. question of comes from line Robbie Marcus JP

open. is Your line

Robert Marcus

a key down on a add here. my a throughout capital going to the equipment, drivers on new of is the impressive Maybe out performance I'll sense get of really here, and business Bed the start going medical. the what so How in a product seeing like questions to quarter launch nice saw of you're one what I of MedSurg just And ProCuity would there? lot we There's health are? and also market the terms off, from two launches congrats me,

Preston Wells

is it Robbie, Hey Preston.

continue the you'd as Just also and in technology. to in seen pretty of terms capital we with strong we've the capital sales of quarters really really course overall see that Mako evidenced couple a if and and through of by continued environment and stable Medical our first said

and it strong obviously a specifically to there so emergency have We've the which talk certainly seen has As in U.S. the of just to there. that the We a of have that care the a we and our we out to that U.S. an have U.S. out customers, very starting pertains quarters be in uptick building in We've then launch launch well we're and really but itself, Bed and second, that kick I'll team business. Medical, as how and pleased just regards the continues to ProCuity from orders the With last lot to our it's performances started. starting momentum gotten about really also with outside ProCuity so of awareness outside couple U.S. as in really in well. and sales very see the been gone strong is the engagement off of in and lot

continue for we year to be this into really to ProCuity the Medical remainder go for of going So really expect as that we is a next. driver and

Robert Marcus

Great around heard whoever seasonality in coming maybe we're in the lockdowns, but excessive of and you to quarterly, quarter is from guys from Glenn an know quarter one of the don't third take investors guide weakness et concerns it, for out without people and with Kevin, environment still normal we've vacations that I concerns maybe over wants cetera. or doctors

Thanks. third wondering So able to expect and about seasonality fourth thinking I to we're to might that? how progression to quarter already when the back be and was you're third normal if or from second we

Kevin Lobo

thanks I've another as years, really that a noise, same prior to in very this of talk delay will know, the vacation, think could our quarter, softest procedure quarter. but I you've seasonally Yes, would that one I about seen QX month and month, question. likely you but maybe those really for what that's then to the to the within tends similar assume year's seasonality be and Robbie, comments. heard from some be

So you've I expect normal as seasonality, prior seen years. in

Robert Marcus

it Great, I Kevin. appreciate Thank you.

Operator

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

Your line open. is

Chris Pasquale

upper what you're sounds on That certainly was extremities more the continues the the little was for Wright The about lower XXXX? Thanks did bit do to update piece how that to business curious like extremities? probably talk seeing challenging Can It taking piece very questions. you in versus well. integrate, a encouraging.

Kevin Lobo

Yes, Robbie. thank you

first So you thank Chris. of Chris, all, sorry,

would quarter. all, First of the say in I the very second ankle did well business that total

and we're medical integration. with as back discretionary. in procedures, we As so are the but QX, of bit our I'm market on It KXM was better to more it spine is volumes do saw a procedures hips through grow. ankle a it you seeing stability in sales little with rest like just know, that disruption was is we more we the kind leadership is very of then elective put the bit, expect it those and much foot The quarter with and pleased that foot podiatric not early comes continue place improvement. lagging certainly will a that knees, We're with QX force, but coming a elective the and back, of seeing

mentioned Wright bullish company very I'm in And as delighted my remarks, to our this within have opening overall. I on So portfolio.

was it than we we a it deeper think it's good I acquired have appreciation, thought. frankly I think better knew and company we even I a when

Chris Pasquale

sound improve didn't continues give maybe us there probably and the of piece headwinds the for very then to you us look other but the business help the bone as color ortho sequentially what business. other did helpful. That's sense capital on bullish, And as contributions much to like? Mako Can the Mako cement resize a

Kevin Lobo

that one last continued Mako you to mean, of sure I very seen so be was Yes, months strength. businesses we've continues as the strong and really XX mentioned the for over

so certainly same course declining, has the see With we're pandemic other of cement, that why seeing won't sequential that of in So businesses. we a that's the We those, provide necessarily was of breakout that some by area of bone regards an that to by about and we'll a really think you a that's just to impacted but improvement be been overall some continuing terms about from and declines cement standpoint. category. Mako don't as offset detractor thinking in grow bone

Chris Pasquale

Thanks.

Operator

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

Your line open. is

Anthony Petrone

add another great I'll another Thanks, congratulations great on also quarter.

a I into and again. of just is couple points sort The from am second is would sort that procedures business, putting synergies? Kevin, to I'll how you half basis Wright, if will synergy number still Stryker cross And there's out there even long that hip assume of against on up backlog on internally would potential backlog the is as your the half you of wondering are recently and be selling specific think second deferred and me mentioned share one first that could XXX competitors the there sort of year, second what that as a some and of is driver quarter to of put that be one a net of trying on quantify this numbers that do you business? Thanks for and the next is, at into that amount extends knee the deferred well

Kevin Lobo

do we question hard a are know is. back new backlog, certainly that have What the of procedures so super and backlog that we there's a are trying predict know of that it's percentages we that patients. of into or to regards pandemic, different exactly last the haven't have what so going of from Yes, What is which result don't figure patients are patients as variables to into with out add we the to as scheduling over we mean, are year are capacity possible, those surgeons or finding would that to opportunity had first do work into number. that your level opportunities that a that same the try perform continuing to to to different lot specific deferred as is to I on through their many procedures. the expected

going any happened we're any And particular working that month, don't but backlog quarter this we of expect growth one figures be to sort that's see so something that we several we're expect the that in quarters. or that over to through next outside going

in us it with Medical, regards think about XXXX for we to several process. over as selling next continue is of into about other component So I is with for year and your year. the rest be to pleased expecting sure. Wright into the the cross you tailwind expect this mentioned that really that, we're It's start for something mentioned, as of quarters What is and to the We're question a you the that. thinking early next

for specific guidance which provided I as baked but the we've size business, the trauma at overall well. that X% the compared does that also haven't We we least include to within mentioned expect XXXX. provided synergy component as extremities a That grow to of and opportunity, it's combined overall

Anthony Petrone

thanks. Okay,

Operator

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

Your line open. is

Vijay Kumar

there have Mako, my utilization are you changed question. utilization? systems at used ground made on From having my for being to all has the changed, taking seen side environment and systems is these and pandemic Kevin, how in around robotic is on hasn't maybe an utilization pieces increase Thanks be post

Kevin Lobo

far the Thanks any in Vijay. really do haven't change operations, and being The any the to the we factor to of flow gating having change. patients is but seen not pandemic. procedures related overall so seen No we have post really hospital able utilization

for a ambulatory in surgery demand the We more seeing lot centers. Mako are

surgery a it's and shift to real As been lot tailwind. starting you is centers a us know, towards of for volume

is well. Our extremely offense ASC performing

in real surgery seen centers, are going a there procedure their but so And dynamic only No are that's change the percentage of into change. larger utilization. we've that our been Makos

Vijay Kumar

Kakuro in here much margins but variances, Glenn, one share XXXX and your have or reflected set here, Kevin what's right there Glenn. case driving [ph] shipping that's margins for operating been levels be calling up and about mix better Stryker, cost it helpful versus share, do doesn't gross That's the different peers? of for like your also this for which held you know gross seem adjusted at P&L I with annual looks mean your margins Is who in peers, have it's I guys even about kind versus out manufacturing on have better, curious margins guidance of We're your I'm half. anything peers. back to how the you manage your the margin performance maybe

Glenn Boehnlein

mix music Yes the and of our put be influence say, lot I have I se, related the will our but a peers biggest Group, also GQO factor margins. can't question that necessarily expect through impact maybe focus driving in we're speak will on [ph] of still that per is and Wright range your margins ears improved positivity to minus which of pricing so Medical. Wright the to in to for will really to show by fully will that gross also a year driving thing. that will right and our see guiding we'll lot the X% that and come margin, mix also benefit of offset the gross price, that that on start say, we will we we full seeing are see cost see roughly that fixed will and benefit we be good We're of Medical seeing leverage, going not still up the to I now little We'll bit margins. see typically a is the but that is be be Offsetting they which in those

Kevin Lobo

so just that to not efficiency we've organization has lot pressure there across kind has the like comment, just works years, material now. as broadly, really I'm and with I'd initiatives, add couple able are Yes, costs, a med our built purchasing but of the to raw delighted tech but with probably savings of the last for is of and way hearing industry you capabilities one offset on been been initiatives, those initiatives in tremendous which other input

but haven't and and also about others in components about certain are the experiencing so I we and frankly electronics humming to feel able supply now, chain been we're have Something resiliency. are good of really that the right we our with able prior some to speak experiencing, offset challenges and years, some organization really

Vijay Kumar

the numbers congrats. in here Thanks up shown clearly your Kevin peers. versus guys, that's Yes,

Kevin Lobo

Thank you.

Operator

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

Your line is open.

Matthew Miksic

Great, much. thanks so

one maybe one and upper So is And one the to mix and particular. the any great just cross color months now? up of wondering on off and sort sides towards robot talk trends the robots starting XX followup these quick you're whenever you are change sales between in little to convergence in that all of but on obviously and question that I for QX, from in effects of very extremities placements the had kind comes see that application versus I if any move mix On in or followup. was on have in particular two new could congrats if I news just and a Mako, those about seeing momentum, U.S. sequentially on a bit strong results you

Preston Wells

is Hey Matt, it Preston.

of Just trend a one I in terms and we the of towards were bit financing. we things to year of a identified robots mean that see approximately starting ago that mix, was a

new We've or still of in convergence, for but seeing selling lot to changes not excitement about shoulder, our there. and point. standpoint think Mako big that how report we're year, approach seen as that to a again market. that significant area a about no anything the mix a in With the mix regards we at we're Mako talked in nothing potential and this with changes Mako in from haven't any so last We

Matthew Miksic

Okay, then the knee on and business. just

a I what talked that of They those revisions demographic the through seeing of the one than areas, pandemic nine are the some of types those a more in coming were patients been revisions any things, or mix emergent. given your primaries during or procedures bit one was because be of more more of sort acute of of any One you're heavier ago since guess versus would maybe ever that just about color we've in something needed competitors an that are get primary that like months mix versus great? we're if through and shifts now, emergent

Preston Wells

area. report have variability, thing specific pandemic by seen variability. nothing of certainly that we a you're the to man, and so and that mean, by getting Yes is one area I the throughout lot geography in

nothing point of I would terms would specifically again, in to So, mix. I our that you

Matthew Miksic

much. so thanks Great,

Operator

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

open. Your line is

Joanne Wuensch

the I thank and accelerate or have color movement any seeing taking years Are for that around the you or that really. for to can We've afternoon that? same the talked question. Good ASC. there you you a is towards about two put

Kevin Lobo

Yes about the offense our the feel mean very would strong talked that acceleration leverage an full portfolio that able expect did We the a we that already we very that of our good regard our bring offense power in with about the and continue. certainly, pandemic this being really and to product have ASC setting. to and was with Joanne, starting We of regards to before. shift ASC create to trend about we've I and in

to shift believe able certainly trend. of we to satisfy So with and shift that that and be take we're have that advantage very comfortable products the that really

Joanne Wuensch

that say would ship think I that right when a the building product whole ASC it? a but suite, that is to just for have out But you about not a way you it's you're robot, assume

Kevin Lobo

the and to suites to an they center the orthopedic out the virtually with about way surgery room helmets knees, design, it and and procedures. all booms think they and way from foot power ankle everything lights and and hips the Joanne, beds shoulder, wear, that the we flight implants stretchers operating is, to to for the sports from the tools the the the procedures, building need right Yes medicine all to including required, that have table, the are

Just our of they those about what think it centers. absolutely gamut in need covers portfolio the surgery

an company huge contract So that one to operator life to done. that cover procedures really in easy are ASC be makes with portion being of a able to such for the

up beautifully that. really portfolio lines our for So

ago. years on that conformance worked that you also have couple read We have may deal recently this we we with a

started guides a we a launched Triathlon first in box. it our of AS-I name that cases it the The personalized knee call streamlined few of very official with cutting procedure. less have very, sterilization, a is for We provides offering kind of simplified

now And ago that a and so surgery years didn't would in the the that we be. but specifically as be launched, proving was frankly realize popular few ASC Masko designed that's for center to

So involves our we centers surgery won't some of across that products of some businesses. cannot, portion yes portfolio now have a both well a own said our robot, as our have as but huge MedSurg it because implant we

Joanne Wuensch

then has do question mark of And October, year you're your rounding you. second and that In my helpful. the thinking Thanks. M&A. announcement to Medical, timing That's [indiscernible]? with Thank change two does Wright

Kevin Lobo

rounding right. you're It is Wright two-year on the mark Yes, Joanne, Medical.

buying However, flow of cash only the impact into we're nine of Wright sort Medical. months

at sort And acquisition, so, of as we the kind and reduction tuck-in to announced we going the debt time focus of were of on M&A.

over we've we're months, the over the shorter are doing which debt our We'll growth good. and little opportunity paid honestly, working tuck-in move last of paydown, M&A sort of as upside. so look we smaller that the think just, we've billion deals, debt down BD what But that provide And seen on schedule that's do $X forward. be to And continue looking it for really to year. term ahead teams at we nine we'd is you've and we then this most been that actually thought for of so a

sort bring excited in new of of size And kind and at they that so look we're us to category. as deals

Joanne Wuensch

Thank you.

Operator

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

open. is line Your

Lawrence Biegelsen

afternoon. questions me. from good Thanks Two robotic for the Hi, question. taking

love don't like I I you're China, First, places the waiting going have hopefully those for backwards just about mix, placements? geographies and Japan, I'd had follow to new on think Mako, color I up. that's Mako two how US, rollout, of And OUS OUS one the hear on

Kevin Lobo

Yes, thanks, business OUS Certainly up. has our Larry. picked

up saw again. you down did continued Mako, in slow U.S. the our business pandemic, strong ramping but back the on As and OUS very that's business

operational same Japan and as with both all well China are We as on Brazil, three Russia. with applications, fully

to quite of in We one excited still behind have ones, starting sales now accelerate, later Japan is little and well. about. that's our has Brazil, probably first so a which so as Japan. few Russia Brazil, the And China have, really we're we bit started. it's

those is is little delayed to stages starting markets from demand surgeons, early exciting. bit there in well. four but by build was we're Brazil as a in the the So which and very we COVID, high are momentum

ahead. should it's exciting. the high United There's the for it very strong kind in surgeons, we when launched The to demand in performances it's So and of quarters us taking expect back total you here Mako States. knee

Lawrence Biegelsen

helpful. evaluating, publicly related guys talking started about evaluating from Kevin, people That's question, surgical more my robotic you have at Stryker robotics. having And

how participate take that in kind my in question. investment taking for important be of some at competitive question Thanks market? how you market And want it point? the investors this about might to to for it is that the is, think do Stryker So to

Kevin Lobo

Okay, question general thanks Larry. assume you're robotics. that I surgery, by talking about

Lawrence Biegelsen

that. sorry about Yes,

Kevin Lobo

Yes, no problem.

there's that Just be sure need for to really in I would robotics. want to clear. general us make say was surgery, no

running point. not strong this not can a something is look It has a that be but very obvious at attractive build or is potential, peripheral itself, a in us you but presents that big spoken we'll have areas it forward to this adjacencies good the be I've we not vascular, attracted move, we it's other a think Stryker. an something adjacency. about at big in. but this can neuromodulation, to like we'll we're we right A growth pathway at, the but is obvious As make not time, opportunity and see, something certainly are past, to continue if it's business clear that at in business, market and like But

Lawrence Biegelsen

Thank you.

Operator

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

Your open. line is

Pito Chickering

taking my thanks Good afternoon, questions. for and guys

margins guidance -- color The gross fourth first give one of the XXXX? little provided, of you has year that and can to the on quarter where that you a compared exiting as us bit SG&A you sort

Kevin Lobo

necessarily maybe margin, gross normalized gross won't in of a probably on spend. on On as be would that we I guidance SG&A. that what tell in businesses. at I we margin will SG&A, continued speak but that, impacting we terms orthopedic fully would you call business, what guess ramp aren't specifically ramped dependent look margin, those is gross or I can Sure, I to more plan on

we'll And as so growth, the course we SG&A fueling as ramp to of year. of look probably see sort this the up, over back increases continue in we

Pito Chickering

then lot pretty of we attention. get a into submitted about great. investor the quarter. Okay, of a We outpatient, not from ASC of a lot orthopedics obviously talked move significant to And inpatient hospital systems necessarily which but during the

department outpatient it of the has from impact products hospitals, surgeon does or certain impact moved the the move? As into of selections no it all at the

Kevin Lobo

the regardless the no on even outpatient, we're or continue the far, to seeing in. implant seeing surgeons Thus we're to impact not which operating implants, frankly with Yes, facility they're surgery any hospital to center. same choice, moving of operate

Pito Chickering

thanks Great, much. so

Operator

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

is open. line Your

Kaila Krum

Great. Hi, thanks taking for our questions.

next is growth spin Medical, you're recent around with Just be from for benefit the off? in will that more I associated any X% reason recent year? And saying impact of the Can grow Are that couldn't X% dislocation Wright combined this you XX% just there any you the to least drivers the at this you're of then, confident X% seeing business to year. guess, speak guys business? why detail sort any

Kevin Lobo

side, bit then fuel ankle doing it's was extremity those They're procedures, going the I'd elective, on we've fast extremities really ankle What to it business, the foot total knew new was the and will we're little just that you very, be to extra sing, before, tell And very United but especially a in product, growing about fire. States. well. going provide that's Kaila. which thanks, upper is the a tougher well. more the integration, lower extremely we acquisition the the And Yes, excited a to is launched really continuing but

performing product well. is overall, So the portfolio

well. And actually we plus a mid you kind next to procedures up the as Our sort very arrangements up But sales to we're this take little very lower started our extremities of if the longer it's on longer are going schedule. to be mid-single-digit little trauma in year. place having for going and a growth is have now on before assume knew of percent the is continues, should this ahead recall, we countries we and year, you with U.S. And of also that have and The hit OUS the moved really it we thinking elective a to core said these ramps good single forces integrating good basis, that a year that business integration year we they low their well. a and if year. six fully is combined stride. should when we take distributor

about about business. So by you future to of good next for overall give We're think going not the our very year, feeling our very extremities total I but it. network can tell guidance feeling trauma optimistic and

Kaila Krum

of Great, market, in thanks. this can Orthopedics? other the how of is or be contrast recovery compare what you've some And the of guess category compared the spine may of I areas terms seen on Thanks, with Kevin. then progressing you Thank sort just you.

Kevin Lobo

Yes, areas, that seen in Kaila, a ortho recovery. think other we just as in difference haven't to spine significant comparison we about

variability and being as and different it's before, been again, so just word mentioned the opportunity disruption I've pockets think really well. I key of

seen spine, different for say recovery we've that of in been And in we've elective would what our so, nothing than areas. significant that seen other the I terms it's

Kaila Krum

Great, thanks.

Operator

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

is open. line Your

Steven Lichtman

Thank of Certainly the into you. to for are Hi about business and first you are so underlying how guys. about your spine growth talk robotics spine? the outlook feeling and your what's and business, your latest thoughts on that what timing state

Kevin Lobo

so acquisition focus and to this and as move point is don't but about down expect to terms Spine timeline have opportunities we about in it's that Cardan next. the you we applications also progress with and guidance path before think We we looking but in a recovery the of we half break that are one back we'll as Mako, something and business the we've that robotics we underlying mean, of so are key that talked do for to of Robotics, that continue out at as different on of the continue that is through update and some options, and year. a those spine, in at couple of area. so our market happens sharing make in there. continue I of to this regards Mobius areas robotics, terms accelerate don't that growth to of Yes, With our we

Steven Lichtman

in And coming implant perfect. with months, about worker update Okay, the I for that from a here smart acquisition? a or any just center six on think then secondly bulk thoughts year,

Kevin Lobo

new do fairly terms No, smart believe have orthopedics. in that nothing a the and this new it's role implants play to point. the organization. still to of will and in still report I into in devices smart they mean, We obviously, at acquisition

down as And robotics, pathway, we that we it's we keep similar with will same -- get further that updated as so as on. something certainly you

Steven Lichtman

it. guys. Got Thanks

Operator

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

line Your is open.

Unidentified Analyst

on taking Yes, thanks for the is Mike. questions. David This for

do a separate The can first sales when plan. show dynamic different ASC, ASC one you the given you critical sales leverage just the force Does strategy just think current is market need or there network? on there's maybe more that and

Kevin Lobo

this approach call, is it our would excited Yes, we the on, but not have something we're And say offense about required ASCs. elaborate to a we market. have has different very approach. is really to I selling designed It way to a the in working custom on the

Unidentified Analyst

J&J think, for XX next the launch XX over great. And months? taking questions. just thanks talked in And so the to I Mako, Okay, then, the the on call expectations guess I U.S., it about [indiscernible]

Kevin Lobo

I say very, very to us, continue for expectations Mako well, Yes, would we well. expect to do

seen, it is an outstanding solution why buying third other like market, competitive and and here chances. their Makos. have entrants is results, so you've in we'd stay know are As and orthopedics great that we second to the validates into that delivers which fourth our hospitals robotics We with only

early orthopedics. It's comparison. fact the to like the welcome we so going to just days is And grow for robotics within them. we And that continue

Unidentified Analyst

you. thank Great,

Operator

comes Barclays. of Steed Travis question line the of next from Your

open. is line Your

Travis Steed

business, Hi, everybody, that the part the there and based tenders procurements question. thanks with a realized curious of volume your for seeing on just China small the I ground but you're the there. what China's

was update the that was at point there happen if next few in here some and to on months think an supposed I front? that

Kevin Lobo

the Hey, for question. Travis, thanks

any at major point China, In the terms it waiting We on is the process. feedback VDP we're something updates that's in of this don't ongoing. on is have

thing think is an And tenders, the we actually, China on you a focus business. component that smaller there's even to products one as of certainly is note, the our of then that business. part potentially mentioned under smaller I are our

as we something could just think impact our that about from the in mind to keep coming overall So business. VDP on be

And quarter. it know back we that thing our timing expect hear to in it. don't that is impacts third we a look to at something we one on have The So take expect any the point time, later just at in based we'll XXXX numbers. on the significant

monitor to XXXX. continue it we'll something as so into And and be we will we that go will contemplate

Travis Steed

double you just sports had get U.S. growing been I the you thank business in any can add color And to additional curious on there All update an both if and just you. helpful, specifically. know I OUS? that's there's right, digits, medicine wanted

Glenn Boehnlein

really to our XX% Yes, very would has say smaller strong business. had ASC [ph] the medicine OUS a growth. in new U.S. a the cadence in tailwind it's and so products the to And certainly quarter the I business. first offenses, sports in fueled of the we of shift great within addition much U.S. in growth RSC the

Travis Steed

thank you. Great,

Operator

comes of O'Brien Your next question Sandlers. Piper from the of line Matthew

Your line is open.

Matthew O'Brien

think fewer as what extremities for the than when there's overall that mentioned the you some the of that then, to of period faster of perspective the in there part, orthopedic taking traditional from is typically across in And for growth is going forward start questions. is we combined? the about go. because is growing than and that I trauma market, E at growth overall a see extremities, much to is T these and a product most reps overall know thanks growth so category is just X% and the the to that least you acquisitions places Great, that you Kevin, nine part XX-month trauma rep see dislocation different because

you see that dislocation we than the see? less typically maybe little So could be a

Kevin Lobo

had experience. dislocation we pleasant we foot the far, been way think are out stability the surprise know where we is provided now Certainly, a especially anticipated bit who really I on for spine. is. been our that's terrific know and And Yes, ankle the things right territory than their frankly, playing It's boss more and our quick their so products. side to to a salespeople what dislocation. And is, have less

if quarter, the I depressed And prior at integrations. market, learned some least moved would at remember X% year, not this have least more at a so, you you above from including time, we tell that is market, to speed growing the we think full the that right. first with because for we're lessons pretty

extremities first business of a this not the at kind of was it So all. as year year relates quarter to the normal

have the at and on the year, least to very extremities trauma market over So above progresses. basis combined I year growing think probably a full our and the X% business. our that's as good we'll that see core business both Feeling about

Matthew O'Brien

to business than better real XXs is, know specifically much over Got bundle I QX there your for this call can this you're ischemic well during then elsewhere? it, overall Neurovascular, years? calculations by couple that you're acceleration don't off and upper And there. I And I don't it's anyway, grow for the want And within doing low is teens, better the the areas that ability that. then thanks if specific market this category, to our than really to question are so are versus but that that positioned of guess just accelerating? you next much know QX,

Kevin Lobo

diverting for stent, easy didn't have we a that for an vector for so the was the catheter, stent, flow that we've years to of catheter, diverting it have very, with all of didn't growing stent very surpass to Well, already catheter. approach product But year, X.XXX, catheter for with us we aspiration what good. this have and strengthened the empty you seeing I the retrievers, portfolio stent and aspiration float is it's large growth. coils, are of rate already And attribute kind at that we're few a would fabulous We with our been acceleration last gap. an and deploy,

really, product well had So gaps. And let's the call is stent And stent an really, we've hemorrhagic them for the those, around and performing is exceptionally this plugged fantastic business world. we run. adjunctive really expansion well as China, Atlas global in

team there the versus We over are all prior acceleration; that have an call us by driven covering very this well, of bases product leadership is needs say cycle really I this the it executing but have products our exceptional acceleration of customers. years meeting year's has would been really excellent that the let's with that

Matthew O'Brien

Understood, thank you.

Operator

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

Your line open. is

Richard Newitter

Thanks you Wright are how few for operating that had questions. times you quarters mentioned Medical a taking now your for it kind belt under with pleased several you've Kevin, the of now.

You a the specifically to there in mentioned planned, times, or than upside Just you is other just, pipeline making blueprint. anything comment? in is better going you future? the blueprint surprising is integration It either embedded more excited about that than there really, few the curious, something or the just, is with

curious comment? I'm there's that foreshadowing if or Thanks. Just physician general execution there, something you're

Kevin Lobo

some so when leader we leader similar a we extremities lot have of then They had They buy upper for buy really a are lot pleasant And times leading excellent. we a been we extremities. their companies, they to Yes, are talent are our was knew way. to products. But along surprises for businesses. our is the there's Their was, And them it lower for management. infuse their good culture of business. we a Strykers. But that knew a

knees Medical. head Wright came Our from of

outstanding been has we've leader surprise. outstanding so for a me their And really I that had talent so positive an leaders, upper is extremities infusion that's sales of for one mean, and positive. been

fabulous I within extremities. had say leaders. key are opinion They key I upper second leaders opinion absolutely better than is both Stryker. lower work that and we on they would And leaders The key their opinion with say would

across And are me out pleasant to be better thought really than so little the thought really, the good, two to pipelines, just were turned a surprises. we applies and And board. that they those we they

you are a you don't the acquisition. a you certain deal, -- know, diligence amount do same those do things to due as get of So private you public with when there that do

had instincts, are those so going were be first we And we that than to be things better good, they instincts even thought. proving to

Richard Newitter

benefits the call. the there I just ASC question, product helpful potentially can there. and solution and appreciate then second initiative that the maybe That's there. And help that Thanks. conformance have the you offer

Thanks. that Just other could wondering robotics being capacities and thinking as an the where be we'll going of surgery solution ASC so thinking with kind eye well, of outside more else conformance forward go? adoption. about, in meaningful towards just And digital

Kevin Lobo

primary the sterilization are lot of ASC, our stockroom. they'd less a there sort Yes, less like in was like focus they'd constraint. And on hospitals about of concerned instrumentation up trays, that but their a like they'd less and taken being are space sterilization the

But there be be that more for acute, be to out So say first to is year the the months, the that interest most beyond let's commentary of because but ASC's, going of that. get. to of will on nine their are the see probably of sterilization our that's that'll say able that I on constraints gates, limited kind really next prime wouldn't say be to it's six I'd is focus let's the a ASC I would but

Richard Newitter

you. Thank

Operator

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

may You proceed.

Joshua Jennings

better us and don't front the franchise lot the proposition open current robots believe rule help and out spine you be in With Stryker’s just on commentary some on enabling the understand your the of done, the technologies get Stryker’s of launch. competitive market a review Mako we how business spine airtime value up can maybe can outlook just the of and the spine and on in had follow under

Kevin Lobo

working for we which robotics of guidance posted. time difficult, on do, other two Listen, thanks. believers a we do We us we going to and technology enabling then to that. that definitely we to believers Mako. the for we're keep We market big the beyond so was value it's procedures are that Mobius about have But space. the really, today screws, of and providing to take that in going get with are do and did those was applications in systems but and that and placement and But technologies. we imaging very obviously acquisition we'll have Yes, surgeons, we big to the really we is the are enabling like foray, spine develop aspect are the it's have robotics invest we in on. competitive first you believe we're excited think in with good want pedicle to the applications. could gap into And that, market, and something what on Mako, other Mobius continue systems

Joshua Jennings

Maybe for that. follow one and for Thanks may you be Glenn. up

future? cost these years? programs the Thanks the Thanks. taking and leverage have played in And how as moving the in been should investors the be of range to last towards of in hopefully margin the XX Wright acquisition, range Just thinking questions. the can about of moving for towards kind XXXX. P&L normalcy of all more you're amount operating anniversary XX expansion We've basis couple that Stryker an and had points we're for experience

Glenn Boehnlein

sure. Yes,

baseline acquired margin. you margin say operating if significantly as it of was, a that Medical first was think normal I normal a less all, Stryker's Wright was operating about through than think

So really was up it we think have better what could our at synergies to operating model, for worked integration pulling built you Wright on so we that and Wright into this the Medical. during Medical if that period, trying look we margins all drive had

looking at and we're into But really margin to where combined basis ways year up XX look a back this to at point, not expansion necessarily points. basis, XXXX. on I fast guiding our a for think forwarding little away, we'll and get of might I think XX next that's that normalized,

Operator

of Rose from of the next Your Kyle line comes call Canaccord.

Your line open. now is

Kyle Rose

taking Great, thank questions. the you very much for

have asked, So a we knee and attention little did setting. outpatient then opportunity if on of robotics at I just here. you maybe you months, course up sensor, investors obviously the mean, the of will I think I ALS that few months in in do there of lot and lot the see could but the of acquired on a been And the coming getting a happened wonder a a what have touch focuses ASPs knee in ortho XX the is bit what's about some you over the conference. box ASP last touch in the

So maybe just that into expectations conference? will set us the on

Kevin Lobo

conference. we big a listen, Yes, have this at don't reveal

we some As is conformance we broadly. talk about starting the can that's about quite takes have hip we'll get more a gain product time still especially but about you to steam, say with which talk talked that Triathlon AS-I, and Mako, new the be socialized going application to to bit, still

which of is to a In very have do surgeons well a surgeons sports rotator large as medicine repair the shoulder business, space from Medical. exciting Wright that product addition that approval within our sports the that, product by come balloon we in and recent as medicine for arthroplasty used cuff

that's as well also exciting as on product with Humeral so an product, Medical. that Wright mentioned to perform earlier Glenn So

get not So number was once last at look a a our new customers to our products, engaging conference scale, really year of to but and certainly customers forward again. with having an with that gap exciting back time frankly, it's really,

continuing we to going something have. not going really of that's be momentum the brand new unveiling, be just It's to that really already so more but what showing. And that we're we're

Kyle Rose

you're seen when types And procedures use outpatient the that or typically physicians do their, does when using move pricing that instrumentation to your go or standard you the driving same they're earlier, ASC team think is, implant of the I the that, out systems changes ASP in Great. second seeing, sets in any noted have question to contracting or there? hospital, initiatives you then engage on the

Kevin Lobo

much multiple businesses requirement; hospitals. the are really of No, capital are involve pricing. because that that thus far, than more of is we're not Stryker. we of change seeing any We're we, seeing But in seeing implant in we the seeing we what deals see

to different category involve do and real product the pricing. So tend on typically buy deals category, no but we that whereas four change or five hospitals product Stryker, businesses, by

Operator

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

Your line is open.

Unidentified Analyst

mentioned can quarters and the actually is would the recent [indiscernible] of drivers on it several COVID? just for Especially It of one in the quarters This questions. evacuation, side you fair for sustainability if Thanks just question, a question. be forward. great. great bit about going That's Hi, on little for taking for now. Matt. our you Maybe talk other growth growth a smoke

Kevin Lobo

absolutely. Yes,

evacuation in grow. smoke ability what us, very terms our of we're pleased So with does for business that and to

ourselves really also across as behind both that and we we market leaders broad businesses. within within of As look those our different look at of portfolio, it's actually it, endo and a divisions, businesses sits one instruments endo, our at couple

the legislation, really both going what driven expectations that market by of terms continues to continue to operating In outside desire operating U.S. really mean, safer we're expand free around room our to and a rooms. behind and in really I the smoke expand are, the U.S.

Unidentified Analyst

Thank you.

Operator

next line Johnson call Baird. comes Your the from of Jeff of

You may proceed.

Jeffrey Johnson

be you. Thank I'll Good guys. quick. afternoon,

just in all pooling I'd that couple a Kevin, these business, everybody, Thank That'd hip, to you bad in one, front? be momentum, Just seeing trauma, the numbers reporter of change we're from will surgeons you're helpful. talk for momentum you've wise your where guys with surgeons, tougher, maybe spine, any think to volatile an know market you it's be good or next always early a at four competitive be knees, And you. as wondering interested, you core that. can quarters share things and ortho seen areas tough shifts like of even getting in of on those kind

Kevin Lobo

It sort But totally surgeons good feels they're schedules, with their to trainings. it to up fill to would normal. us, listen, Yes, say isn't to back they're pockets disruption. are taking that be are starting getting There of coming normal. these meetings of I

be we guide, bullish can to businesses a to And and of performance I joint do pretty pulled of feel see had as in out guidance. the kind replacement those strong our well getting under like say before, of because business, complex, the sort and we've to back as it rhythm an you out. common going we're almost mean so to trauma it X% we those Wright integration extremities, to is plus pretty which Medical, organic, used involving was management, XX%, sales our we're

of engage say I do to have kind are is that customers And and ALS. and pretty back to would all to this ready our wind be at exciting able so

fairly be pretty opportunities based to offer those think hearing, to it I on conference, show what I'm big our be will can Stryker attended. think and will what the be and customers. are we great of And power to it us I well a for able

Jeffrey Johnson

four where months to positioning and six feeling over bit you're be worse areas just kind those accounts? the so, your of that about may a three last or of better orthopedics little in where in positioning or in a you seeing bringing change Anything your core competitive competitive

Kevin Lobo

I more same. the would of say

that's a been number you going continued killer number, any not good application strong if And very, the look business through has saw be is the will but Mako say If you very feeling there's I the performer. and to we're and upper that just be new dynamics I pretty one been very, I pandemic. bullishness, mean was Mako obviously quarter. will, that that to that continue mean, the knee other would in at that really that's the extremities But you probably to a I one continue strong, think out. probably with knee as very stands last

Jeffrey Johnson

you. Yes, thanks. Thank

Operator

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

Kevin Lobo

results for QX October. our to in you our all you. sharing look forward We Thank joining call. with you Thank

Operator

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

may disconnect. now You

Stryker (SYK) 28 Jul 212021 Q2 Earnings call transcript