SYK - Earnings call transcript Q1 2022

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Operator

Welcome to the First Quarter 2022 Stryker's Earnings Conference Call. My name is Brika, and I'll be your operator for today. [Operator Instructions]. This conference call is being recorded for replay purposes.

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

proceed, You sir. may

Kevin Lobo

to Welcome you. Stryker's earnings Thank first call. quarter

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

provide comments, as regarding saw will followed will recent with I the update on we additional Preston our Glenn call, trends an before opening during call today's For details opening results then provide acquisitions. well to by quarterly the Q&A. quarter the as

growth Endoscopy, and businesses, For the quarter, and organic Instruments sales double-digit our led Neurotechnology from growth by with exceeded Neurocranial. MedSurg X%

Spine Our delivered organic growth recovery emerging growth, throughout posted highlighting highlighted markets. quarter. single-digit in by procedural high mid-single-digit Internationally, double-digit organic we and growth, Orthopedics the and Europe businesses

quarter, the robust we our for During have capital products. continue to demand

had shipment large product our a challenges, as supply meaningful delays result affecting ongoing businesses. of mostly capital we However,

and spot For ongoing first to from premiums despite quarter XXXX of we the adjusted buys. inventory significant pressures reflecting the growth of inflationary on delivered the $X.XX, quarter, compared impacts EPS

these will half chain of year. the moderate We the spot throughout expect in they supply second the pressures with although on year, persist to buys less reliance

deliver growth rate new tech. of chain sales, of In addition, product of our healthy supply of continued end the remain we we the on continue at to Despite outlook ongoing the the in pressures business, X.X% continue the COVID a high expect in of to our at pipelines. continued volatility certain invest in demonstrating world, and regions and sales R&D focus our we to med confident

of very us, of our chain With and earnings of our sales previously impact expect earnings full end quarter our organic dynamics, share. now X% behind in despite of we per a range spending, year these the and ability adjusted XXXX. leverage guidance the $XX pressure end order with one share continued book lower at to strong guidance range our X% high our macroeconomic discipline However, to a $X.XX supply the to growth will towards as mentioned, deliver on expect

quarter, the and innovative of During and the creation excited ahead. portfolio complementary to will also value strong closed years that our deal brings Vocera we We the division. Vocera, acquisition in highly Medical that the I'm this drive believe about

to as XX,XXX, For. for is culture this maintaining base talent Finally, leaders recognition reflected thank XXX our I year to has of of Fortune's I which row in positive the Over as commitment our am and ongoing one culture, pleased grown. would Best in XX,XXX to our from have Stryker and Companies about the our moved XXth for Work employee time, our to like we a

healthier macroeconomic I we on also published I to the turn the now believe commitments quarter, responsibility: pillars stronger comprehensive which our our report addition, our social X of during people, In environmental, governance and details annual and captures strategy and disclosures our corporate second the Overall, start will the positioned am business. pleased good over our the year future. despite and for environment planet challenging with Preston. call to well are we and

Preston Wells

geographic Thanks, environment, trends current on My the the on focus including Kevin. today the comments update an quarter. providing will during and procedural

eased. Omicron January by Wright the and an of recovered the COVID-related progress provide In continued will update business. volumes the After initial being procedural the impacted the Vocera sequentially on delays as Medical in I integration variant, throughout integration of addition, and restrictions quarter

is world. be there shortages, which the our Extremities. disruptions procedural This staffing recover more overhang implant-related scheduling and is normal volumes Knees, including Spine hospital volumes -- see to continues Hips, while causing levels, we businesses, impacting some While towards primarily improvement around seeing in from we're

to recovery, continues install base. from growing double-digit benefit to Mako procedural the In in the Knees growth our addition

as also COVID-related quarter to which strong the new Geographically, product March, and the the single we quarter, lockdown expect improvements should during see the along while the over Within recovered Asia in United have strict beginning restrictions saw XXXX. capital and end Insignia towards March. America, in our in been States, impacts. China, throughout We orders, grew carried quarter, of tailwind were seen Ankle, result across Japan COVID-related Demand bolstered COVID the of resulted penetration. of our With Europe parts double-digit the impacts the a cities incorporates volumes see to Hips more major trends in rates procedural in the and volatile and in to for continues our ongoing remained with Insignia products well platform, order business proceed which Upper regions. Hips, from capital In impact a those book other strong Procedural for business, new launch double-digit continued peak X.X high by widely digits we quarter the country. on the Australia which negative region beginning China that procedures in the in growth & be of Hips second strong the the Extremities during including robotic the driven products to in also Latin software, in Hip more and due in growth year. Stem, Mako Mako into Foot to

the and of the cameras, business our is and procedural and portfolio, XX% Endoscopy within XX% recovery demand from like our lights, coming quarter procedures. reminder, capital from items across support our The our that including than coming sales Instruments, a volumes. up in total surgical the and capital capital small strong products robotics, large capital under facilitate which with occurring Neurocranial tools products less remainder As makes small beds, booms power of like

ongoing components installation challenges. care macro result including These because material have solid shortages the businesses of related raw electronic a the While the challenges in shortages, in care to experienced quarter. our within our raw will had limited hospital continue medical of material we headwinds, in units. from both was largest delays growth and impact primarily business the as growth capital second quarter, business, staffing be and pronounced our acute The emergency to

customers ensure We with partner more meeting capital we are to immediate closely to our their continue and longer-term requirements.

On confidence demand U.S. our Extremities to Foot growth. gives Ankle the business U.S. over which In basis, strong, quarter, Turning Trauma of our together to its is which across turn to is during during double-digit the strong and working our in while I the momentum us key performances the in continues integration improving in all The progress of & in business summary, the excellent are And to maximize Upper the by growth Extremities. to regions, are early forma volumes environment a led & finally, remains underlying double-digit we activities. well the the continue and teams drive market-leading macro the quarter. Vocera integration Wright remains pro procedural Medical our the Glenn. integration was pleased how stages, are U.S. volatile, call with products for Vocera which and continued ability With reflected that, to opportunity. its will both

Glenn Boehnlein

provided results the first comments quarter structure. Thanks, based drivers. quarter, our our Preston. financial Similar Today, related reporting will I on on and focus will last sales to my new be comments

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

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

The in QX impact quarter first unfavorable in quarter's The X%. XXXX. days from average selling the were with was pricing line

Foreign currency sales. impact had unfavorable an X.X% on

of and impact sales COVID-XX the the quarter, eased surgical momentum has as of the U.S. procedures During we accelerated recovery in the saw Europe. a pandemic and

constrained by been impacting businesses electronic our supply sales component However, products continuing challenges business. primarily Medical and our MedSurg has our the shortages, capital growth especially chain in and

robust demand to continued be from our order be to book Our strong. continued customers as very capital has has

the sales in of impacted reflecting in increased U.S. impacts markets, COVID sales For positive by many Australia, China. somewhat sales and showed X%, momentum of in Canada International growth and by our by offset double-digit quarter, growth organic Europe emerging lingering businesses. organic strong XX.X%,

margin a pressures. increased rate Our partially sales inflationary EPS $X.XX by adjusted reflecting quarterly offset tax of and higher X.X%, gross growth,

EPS quarter impacted Our XXXX. negatively foreign versus from $X.XX currency first was by

led by growth Now highlighted care of organic of growth Neurotechnology had recently sales MedSurg XX.X% Sports includes I will XX.X%, reflecting Instruments somewhat included across which growth highlights businesses, X.X%, quarter, growth of strong Medical some portfolio, products evacuation currency in and the with and challenges February, organic our management, Endoscopy supply acquired in acute sales XX.X%, of constant their organic and primarily businesses, growth businesses. our provide U.S. sales U.S. growth communications and XX.X%, segment in organic U.S. In performance. performances growth of had and of including our sales business, had by care of which XX.X%, aforementioned offset and U.S. SurgiCount, their growth which their smoke closed products. around products. The their by performances growth. double-digit strong in Technologies waste orthopedic Surgical instruments impacting Steri-Shield emergency business, reflecting Medicine Vocera chain organic stage solid the video had sales

significant quarter, for by emergency demand. very orders care in the strong During saw we growth acute and care also driven our businesses,

we certain expect and XXXX. to the Medical constraints, to for certain another reduction strong customer year of supply these normalization Assuming orders of environment in contribute

Spine the currency performances solid business growth growth surgical and and double-digit sales of a Neurovascular which in included of The decline comparable Neurovascular and growth strong strong MedSurg this X.X%, Internationally, reflecting organic drills growth in our This Neurotechnology growth ramp-up growth sales U.S. U.S. organic included organic Endoscopy XXXX. included in the products. growth XX.X%, impact businesses. organic constant in an & of X.X% organic of Our Australia. had X%, in had posted sales of very max and during China versus quarter. procedures XX% the X.X% NSE reflects Neurocranial in space, and the which business the approximately U.S. of of posted Orthopaedics bioreabsorbable Geographically,

reflecting grew our Our in by underlying of organically Hips market primary X.X% the fueled Insignia growth hip U.S., Stem dynamics. strong launch improved and Hip the business

U.S., robotic XX.X% market-leading recovery business procedures and reflecting of organically knee in procedures. our mentioned the Knee grew Our previously strong the in position

business Ankle, U.S. reflecting Extremities Upper Foot and Our Trauma & XX.X% organically, grew double-digit in Biologics. growth Extremities &

Our limited during to products. and growth had hospital U.S. organically of of QX in operational X.X% by staffing of cycles the as the impact challenges organically, Makos our U.S. in Spine Comparatively, business place XX%. performance the ortho XXXX, the other purchasing technology led ortho ability our quarter. lengthening Other grew enabling declined

grew somewhat another in in year offset Australia, Internationally, for Hips normalization strong surgical by Canada Knees we and Spine procedures the up well in reflects Orthopaedics & XXXX. as ramped Mako the as of in and environment, in challenges Assuming performance Japan, China. strong COVID Europe customer X.X% momentum organically, which expect lingering as a strong

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

to the first adversely to as at from spot gross of purchases transportation adjusted XX.X% gross our shortages. points XXXX. year, primarily unfavorable was and steel of on components, as margin premium quarter inefficiencies Compared raw impacted approximately components was due market the other Our to operational margin of by and basis pressures the material XXX labor, prices electronic prior aforementioned costs related well electronic inflationary

adverse provide. related We commitment a will first XX in versus funding future impacts to to point basis expect was increase be quarter our R&D pronounced Adjusted of sales, year. spending more throughout these half XXXX, XXXX reflects it continued first represents to X.X% and the growth this of the this and of innovation continue and which

and well Other of This offset primarily in and is as and by gross which resulting fixed of expenses Our sales offset first XXXX. lower as to for was income expense the points the XXXX, momentum inflationary from sales, an challenges SG&A hiring as support sales, points In of our other quarter margin expense. was continued first in is discipline. X XXX unfavorable This XX.X% approximately basis discipline quarter XX.X% summary, quarter, the of by by innovation, decreased our and growth. XXXX. compared gain lower basis certain and driven which margin operating resulting to to compared impacts to investments future ramping continued interest reflects investment primarily the quarter cost performance the leverage, in was cost first somewhat cost adjusted of equity

an quarter had first tax reflecting XX.X%, rate discrete of items. geographic mix Our and the adjusted effective of certain impact tax

an For adjusted of the to XX% continue XX%. full expect to rate tax year, effective we

Vocera marketable balance cash billion, to the the includes billion which $X.X and debt on the of $XX.X acquisition. total with we $X.X billion debt and additional Focusing of the sheet, first quarter of raised fund securities ended

During Moody's at downgraded credit long-term the A- at BBB+, and our rating from long-term quarter, to was rating our was S&P BaaX. reaffirmed at

Turning to cash flow.

capital of the prebuying net component focus million. $XXX on certain Vocera cash operating for and stock million compensation the results cash payments management, impact charges Our QX This of of are flow. working earnings operations from partially in related accounted offset that performance to the and was approximately the inventory electronic continued acquisition for reflects $XXX by

included reversely uncertainty, sales growth to continues adversely in X% we expect by $X.XX end Given results, near to of of the hold in for Adjusted to X%. by earnings approximately guidance the the impact full on full equipment our the dynamic we If consideration diluted the environment, be continued to supply $X.XX This that range. is the of year, net procedure Based in throughout share book year supply foreign recovery related guided be full to expect the with foreign year performance first chain approximately performance rest levels, and QX to quarter our now impacted strong the XXXX pressures, anticipated environment X.X%. exchange organic including considering currency and environment sales COVID rates and chain current assumes challenges, first a the capital our towards this experienced previously order net half our year impacted high range the quarter of and currency. the second of year. in improve returning the the in during inflationary per normal

could towards environmental inflationary to adjusted costs, chain transient guidance our supply and continued spot previous per $XX of the end the that buying including earnings We pressures more share cost assumes net low of share. $X.XX The particularly end our range of adjusted impact expect persists, of longer-term per and guidance sales macro -- the volatility includes earnings challenges. lower range

as environment, will I the We we'll And to guidance evaluate will continue the and up our now changing necessary. open updates for provide call to Q&A.

Operator

[Operator Instructions].

we from question Kumar first Vijay Evercore comes ISI. of The have

Vijay Kumar

on on And I couldn't cycle. comps? comp, just There's the Or year-on-year. capital Congrats one line questions how down help cycle a here? environment, lot the to perhaps different? talk the includes tough I with Kevin. been a which book, was capital but it's [indiscernible]here. item, Mako hospital it observe Maybe on understand about it's the anything order a strong other was do of budget Maybe capital your

Kevin Lobo

Vijay. Yes. Sure,

primarily strong. and with significantly you growth coming that quarter. And actually tell liquidity quarter. I'd First, that in added orders hospital had in receive because partially other And order as to result, actually book projects opening the were a in not orders the construction of or into very been have we remarks, delayed. mentioned also some the electronics, their quarter. first is strong as in our grown to the our staffing large has in of capital first year, we We double-digit still the shortage very but ability disrupted a capital either because strong concerned of I'm for about the short shortages ortho of because hospital's

year had for And order year. Our is did overall. order strong comp capital prior a going for very the strong. they're lot have Mako have strong. the from very, installations, very But strong. for is We a very delays order big book Mako of and book in is The our book actually to all of we a certainly,

also you pandemic. degree the strong from saw business throughout Hip You Endoscopy, to Mako Medical, challenges no the actual saw capital, is were strong lesser larger Mako -- The orders meet concerns, Instruments, Knee benefits a orders primarily the to to growing that in able results that but the performance in meeting demand and Mako. in had our capital, really largely overall, Neurocranial. we sales for in of small we're But is those the the and fact, results

Vijay Kumar

a you towards you And line like back through to back when looks start organic, high the it conservatism your recovery really X% Certainly, for seems That's look perhaps strong trends some the one X% top little there is the To one at maybe us If comps the for now pointing average half? maybe perhaps conservative, back half. half. X% guidance a assumptions are walk are in here. off persist, do the is X% like here, guys the guide helpful, of on Kevin. end, baked the

Kevin Lobo

we're going tell quarter, second I by Well, to give comps. the But very quarter, difficult Vijay. not you is would guidance have what we

the these remember, a last capital right of chain yes, that do because easier. QX demand you're the I would quarter and comps was If second supply you And are bit lot orders QX, the strong. to our year extremely we pressure. that little of get a say the for nervous about still meet and ability

us continued the -- is there range little what and certainly, volumes. start guided. pretty We continues that sales the to what an that of well, good year in strong than uncertain. better the today, play there So do for strong is at about to procedural the given the because a pretty But conservatism to do into book. based potential high improvement out If we've improvement feel of bit know even that end based is order we we just on assume and environment original the the

Operator

the have Credit from now Matt from We Suisse. Miksic next question

Matthew Miksic

Congrats these question you on follow-up, a sure I'll then -- Kevin, just because on to quick question are are I'm ask is wondering, expect are if all quarter. you I Vijay's having that at all next in quick words, you several disadvantage going I one follow-up. that the just across hospitals aren't over And that quarters? these robots have at and Or systems into -- large is about competitors say really challenges But the to put other would putting strong have the moment? things capital competitively right. trends, this this X robot the a follow-up that's folks -- a and otherwise a are would

Preston Wells

Hey, Matt, Preston. it's

seeing that across It's the You're right. board. we're something

be hospitals equipment around really it's installed to put macro the the elements that's and get driving in of As the ability more to it. Kevin it able said, for

And something from well. everybody so as that is that facing folks that's heard several

at not something So us all. disadvantage a that puts it's at

very we're about and to deliver headed for where Mako we As strong for Kevin mentioned, we're expecting feel Mako this what year.

Matthew Miksic

was interest Or sense here some digest the on we us couple be here Great. forward? quarters It is should just confident described. feel give need I'm that these like the us how wondering then some could Or turned in nice if on to you going you hips? that corner? should give really bump some of a up just you've back of the a there there's really perspective. And follow-up Hips, a of Or the of that we about sort trialing? do you to launches

Preston Wells

Yes. certainly I just we pleased initial launch launched at are would very the Insignia say with AAOS. as we that of recently

as think forward So from it's Hips. indication about expect we certainly we and to what drive an going our

of happy So the launch. the initial we're with phases

We expect along provide recovery of to Insignia volumes. will the Mako, tailwind with along with a procedural continue

Operator

We Robbie now Marcus have a question JPMorgan. of from

Robert Marcus

P&L, Congrats was it a end. you I on fourth second, maybe still the hoping these quarter. on us could and couple to into flows building through impacts the as at were the cost nice P&L we third a during and albeit walk as sizing of and the of down the of lower presentation, and quarter? start hold range, mentioned cadence thinking I just ask about times wanted some the you and you out to headwinds guidance able

Glenn Boehnlein

QX increase, QX to the that in looking gross to Robbie, with that here QX. I QX think gave end would pronounced full January, upper our like would on XXX back for points the where going trending pressure you I is Yes. we're year. we we most that, of And of margin. easing and And that tell XX it is discussed I tell feel guidance if probably when some and it's to you basis in about

we're in also prices also of buys are of going the costs, in there If related a related inefficiencies obviously, these But shortages, to exorbitant driving facilities. of labor little spot then types that, increases labor, distribution manufacturing our bit just and costs feeling you the might we're warehouse are think up. chips And are supply or for that, paying be own about that the electronic components. and because pretty where there supplier

is products putting another a where just supply seeing obviously up mode the to to know So all We're is has our last of seeing the pressure customers, a of normally I'll freight a freight. lot those is because real in our margin. would I freight increases. just overnight a more of gross thing seeing deliveries. place the we're lot tightness and And air mention, even Then we're and tight chain probably of come economical that use lot our we other on of ability deliver for this more when are calls

very you as tell about that about backing these -- going permanent And that a if we're So Insignia terms product we're R&D. P&L, We it's to costs honestly be not see to that do continue in is our these to transportation growth and as spending of able Hip, easing Launches important we we I all the of in some the I some as of are that robust. longer that what fuel inflationary think keep going term, spend. pipeline of like it we're implying just but it. think off would the little up, keep long to fund compounding innovation as we R&D, really what of labor kind we're of then more than for costs down pressures. other think costs, you probably moving

And it's down cost more our long to discretionary commissions. SG&A, pay the in we're moderate pay because we well continue are is On the as -- have SG&A as of to there But sales there important single us. some sales costs. them selling, force them tried further to out biggest to the and going

guidance the tax. moderation Beyond and gave we that, and some income other I expense, on you have in

I trending that. of all line in much pretty with So we're think

Robert Marcus

be within well of chip shorten a that and be appreciate order in, Baxter it they're they book the If and this sneak as book able to from you'll order XXXX? growing sell-through could lot follow-up expectation you, should a morning, throughout your have like the I one I that. quick improve, hoping clear heard that XXXX. Great. we to able to supply and Is

Preston Wells

Robbie. Yes,

It's I through certainly the think And certainly bit think days we're than the the certainly, we're going suppliers more with to we disrupted get we're about backlog. that that will through. And a to Kevin as supply those quarter we as later mentioned, chip and challenges. year. second believe actively early that still little work working part be with trying confronted of

So -- year. way we'll work We're think it entirety throughout and not about overall upper certainly be the exceeding that through getting as upper that or end, guidance would we end the to our backlog. the that through working of all

the So is now, doing through we're getting what and really for it focused remainder right of just on the supply working the year.

Operator

Larry Fargo. now We Biegelsen have of Wells

Lawrence Biegelsen

with I the to wanted pricing. -- Just inflation and start

guys correctly. managing X like are I looking kind that So just to And your what's I'm better, able you price it? a got at if are you ability have where at QX, price? little follow-up. guys versus And take And how cost? to QX the looking if looks offset It rising of I'm

Preston Wells

Yes, thanks question. Larry, for the

ways. few a we're it So looking at different

able So price. that really And obviously, on that how areas going at up we are price be in we've change focus going our had as appropriate looking particularly at at businesses we But the looking as side, CTG point that contracts some have our some in been that MedSurg are MedSurg beyond future, in to around structure. business, we we as continue on same that, time. do at businesses. projects appropriate will we are as be looking coming all orthopedic just the internal we historically a looking price at cost at actions price are businesses we with gain our reminder, our along whatever and to the X.X have Neurotechnology forward. actions some look on But that of again, And we'll that thing, we of

continue So rise a looking that way with at to the are to inflation. help in as we

Lawrence Biegelsen

expectations for on the and is on guys, then lockdowns And like seems but helpful. for and I what the you're from there the on quarter? then color VBP horizon it's That's there's know the And it the for you small Neurovascular, Recon, anything second more if a little to delayed your ground Trauma China which seeing there?

Preston Wells

Yes.

it about that. X% So China, is VBP, It's Larry, small. you about are extremities, by as joint than think half our impacted products being currently are total less replacement, business. And on of mentioned, trauma that and so those of

our that before. so talked have And that about factored we into We've guidance.

from So play early Neurovascular, that this and at year we're replacement to level. activities trauma days. a a it's are joint out expecting really province There some standpoint. happening

we're process and there early don't in XXXX. still any So major for expect impacts that really

In through this seeing everybody wave, towards thing we're having saying policy regards out And on would is second continue as an from impacts, go expect ground Where procedural we on the latest volume. to that play with COVID terms is determined. we're But expect impact to look of probably half same is volumes. what terms probably easing in quarter. the goes certainly it they in the that there, we to the The else hearing. strict of lockdown I think, back still to be procedural

Operator

is from Joanne question The with next Wuensch Citi.

Joanne Wuensch

and the in talking of expectations fiscal this revenue spend it little to a Vocera, your time year? in for growth bit want of I closing about

Preston Wells

question this in prepared the general my our remarks, the talked teens. I When February. sales for very thanks where the the it's on mean Joanne, I mentioned both. Yes, we in announced in the as marketplace expectations the are and we about deal, early. mean deal growing just market I we closed in

into we it put integrated more our that able But it we more and of hospitals. that initially. be the And we're businesses hands going to into accelerate continue to able as to expect so Vocera would to growth get by being

we're again, accelerating the But year. So we'll of integration. terms throughout in do we expect that be early early, days the

Kevin Lobo

employees of the in had only Joanne, a of And key no month good able we add, that we very been it's to had I'd employees whatsoever in far the identified, We lot were a integration thing all of disruption retention. Yes. retained. terms the so frankly, cycle. of sales though have is so The retain March, good even early, the efforts,

so far, so on the and good, early, is it very prospects. while So bullish we're

good into So the a year future. Vocera very this having continuing obviously and year

Joanne Wuensch

on a EPS little impact point your expected have updated what to an But we is and this we EPS? and that, guidance. and put your incorporated organic Because revenue, have revenue range, finer on in would assume is I

Kevin Lobo

guidance. incorporated in updated is It our

we the modest quarter, expect bottom see a the double-digit Every -- shows very to the we them strong you'll the you'll what from And will it Vocera we As see bottom there's it numbers. see in top certainly you said line. continue. impact inorganic line. said the growth on up, that where on And line on beginning, is

So to growth. a going fuel starting be really, year next year it accretive It more We're nothing to will this there. really add good be will year, and the

Operator

of We now have Deutsche Pito Chickering Bank.

Philip Chickering

more to question pressure the provide came sort XXXX. is in color you versus labor? this materials products permanent around freight pressures. Can on I'm the raw like percent just of let's versus labor, understand much inflationary trying some stick on what One of how

ends said to fourth do last quarter? end trending that you talked that points the about What You the assume prices XXX you in are the basis of quarter. high

Preston Wells

Yes.

the seeing fluctuate mix that So Peter, Like and mean the business. shortages, Glenn I continue airfreight said, more we of freight supply in to does shortages to we where provide are of breakout the terms on things in if depending like on aren't some around of we going various have that. it that's based are. increases parts

we be Certainly, portions some are permanent we provide it Glenn where through some of and more this will be go as more in that of that to nature will mentioned, going transient as breakout. be that lands. do to expect, there going So

the continue our out, still guidance impact guidance of as I year, laid range And early. expect certainly but throughout certainly, we to do that we the think provided. within have as we we about it we're think we the that

Philip Chickering

you they're the lot that Okay. about to inflation talking And of about seeing. then a recently, hospitals supply talking they're

Just back price help should have there how some these of kind inflationary ability the the geographies? about guys different think question, do that different on with pricing you off or And some pressures? we for to to of pass price divisions you think

Preston Wells

Yes.

that It different. our on that yes. for will of mean evaluating and we're based We're in businesses, geographies are the be in the So actions the is will and it looking different I I in, contracts answer be pricing different we businesses think are at place across different types that. sure.

business this, across going a geographies. as be about different be a it we not different units it's approach will our across our very one-size-fits-all think to deliberate and So

Philip Chickering

Let me price to during of kind -- we the end that or year? if we much X% Or quarter, of flat? first how that, in think quantify can negative a the just get price the year I sort

Preston Wells

Yes, guiding we're something that not on.

Operator

a have Ryan question BTIG. now of We from Zimmerman

Ryan Zimmerman

guidance, a on comments to supply continue that expect long-term I buying transient spot follow you couple up EPS things. want on challenges. Glenn, to said of more you on your and

how incremental thought. there, mean, I lower? in than think go end I -- on they initially I incorporated more you night, about low saw are last Hologic at messaging. that like if derisked that I components some much how who comfortable have you think gets you I wouldn't for companies was pretty to mean that mean headwinds that market this how clear the your we of have worse electronics these guess? as XX, X I But of have electronic

Kevin Lobo

probably pressure. the and terms spot amount of up is look in that pretty currently similar And ongoing would of inventories prebought sort I at QX And QX of in I going availability. chip that you our we am terms do from up that tell I component I That's What tough we But question. inventories. building think activity see of mean of is I buying don't I I they inventory. have building crystal in Yes. kind are our I do the I'm have I can have market. see to also in what and a have that suppliers how input ball. that a have to looking

and so And think right now, be expect also it sort can I as do terms in will at little to that's QX come where impact ease best in the look bit of in where eyeballing guidance of and terms I I in in. of that think the P&L the our of has I QX. And a I

Q now. still guidance a to activity we're because -- we seeing guidance I based get from lower saw within on our we think didn't from pathway January the this

Ryan Zimmerman

the and having the we U.S., about profile do today, there. comp. in Okay. then appreciate as comments Kevin, particularly that But the a appreciate I I market, about Neurovascular tough color think product And the how Neurovascular of long-term of quarter? given at? back And segment kind kind growth this we're gets growth in we to the you the you rate rate? where think And saw about performance long-term the sustained what that

Kevin Lobo

was We Yes. -- ischemic of a comp competitive from there just market tough is question. the from also the this a no the term. great bit time activity time in had fabulous We a There's business. of Look, quarter-to-quarter. I still see It's in side to this think U.S. market. long a

of will growth weren't U.S. but the growth in very activity, going we alarming. because So and pick nothing have QX lower And and was the neurovascular will competitive the little strong globally, QX. to have we in year expecting It a We're up double-digit than certainly year. QX, we a expected double-digit too a in U.S.

treating of stroke and So pipeline it's the long-term reason, business. Neurovascular, fraction have with is that good know we very in a And be I this there that the the still great a going great for only market. today. have We're over small a patients leadership that to that team

Operator

now We of Saxon & Company. Needham have David

David Saxon

backlog procedures Hips Just a concentrated or so, if Spine? wanted kind if come back? or whether those seeing sense you're on it's Knees where to get seeing you're of And

Preston Wells

the Yes. question. Thanks for

XX up as in So last the in terms procedures of we've really backlog done. the patients the backlog, months built had previous as calls, hadn't over said many has

into new past that the quarter. this saw the procedures backlog we of hard was certainly, with patients It's entering to uptick say So funnel. what done versus being that portion

some backlog through, been to sustained full piece that down. So that's for be worked to there it's worked backlog has going But of recovery. really, the take a to be

So we're to that's recovery quarters to and get all normal going back way down. being thinking the many about backlog of that

it's of be coming all products of going are terms across more In those deferrable. really to where that it's from,

that as that really, sustained previously, to coming work of we've full So that But products of the going down. see Hips, backlog expect said normal Knees, will some it's that Spine, we Extremities from. would to take several quarters

David Saxon

U.S. spine just Great. on Okay. growth. X.X% And the

Just you a did from growth? And market perspective? you wonder, driving how your think what's share

Preston Wells

terms overall with an But we're market look procedures of We're just we in impact on with at and portfolio. happy having Knees, We're pleased growth the with Hips product early our recovering, pleased it's the assessment. certainly Spine. Yes, like quarter.

do will levels And normal that more expect come so rest back the continue Spine of to the throughout we year. to benefit as procedures

Operator

The next Matt is Sandler. Piper of question from O'Brien

Andrew Stafford

presumably changing use customers on want a bit postpandemic Is more result that question. in little environment obviously -- the pandemic operated of maybe or translating the proposition This the hostile up are follow changes Vocera is high-level I to compared in from a We're which with your just Matt. for transitioning on will all? thinking about case Drew value environment, Vocera how have a to for of some at couple last years. to

Kevin Lobo

that's out think this I -- pandemic. in I and now, errors nurses Vocera engaged, that over. acute for that's pressure the that And shortages the made a workflow, are put Well, tailwind care going timing that and the their is hospital, their perfect during that to ensure able on think being aren't there system help being not very solutions looking the nurses health be improved was particularly obviously should with the keep so hospitals help is right are are our

a load easier. for to makes couple when this nurses. jobs It because the continue in years will of it does we They're for have Vocera cognitive think I tailwind happier next last their much reduced provide really hospitals. their

excited. really We tailwind. think and a multiyear is this So timing is really ideal, our we're

Operator

have now Loop of Jason Wittes Capital. We

Jason Wittes

on year? related should what think for a anticipate cash having And flows. get when is we you sort point from Stryker? that, of And flow could How Obviously, Vocera-like-sized cash Just you expenses. this cash to some acquisition another from to generally where inflationary see you're that your guess back flows? do impacting speaking, impact P&L generation we I

Glenn Boehnlein

you I'll the Yes. the cash one. I'll about M&A have tell I'll and one, what, talk flow take Preston

So earnings to pressures foremost. on through flow. those of all cash places. with as that flows, And feeling We're year and the cash long flow flow see through we'll that inflationary the all way a couple first

we'll and can prebuying where we're I inventories in normal have. under inventories other to you because we that increases the sure supply, in conditions, see see think enough position inventory that wouldn't we may be, thing material a necessarily that raw is make we're have

to cash relative place. are good guidance performing where performance seeing would CapEx options still in sort in -- flows terms employees' that XX% of working I In and to fundamentals a deliver to acceleration still of million think to a related free us $XXX we're in the impact XX% I flow of will think cash stock. in And terms really their related of land, the the conversion, Vocera capital. still those to excluding that We're of spending, related acquisition, payout I expect to so

So to we'll range. that, aside from XX% be still that in XX%

Preston Wells

Yes.

So continue as forward, of well. we'll acquisition pay is in focus to in move be previously, debt. as Vocera And going terms of deal, the to way we've sorry, following the terms we first the evaluate certainly down our opportunities then on -- of said activities along as tuck-in

is depend larger deals really of to things. a it going Vocera, As on type about we think like couple

going the to not to just larger-sized about the one, is we're it's then Glenn Certainly, deals cash I really mentioned to number right opportunities. do the think, second as be do to be flow performance, I opportunities. before. And mean going going them. the just

we overall, the just thinking Vocera-type-sized complete to type deal. in have to that back tuck-ins eventually I about and to space bandwidth operate get and it, think, those still continue a

Matthew Miksic

dynamics impacting Just I about there? appreciate there Or were installing still mishear just hear staffing detail. a maybe on Mako right now I Did that you of curious sort some that? earlier If installations for did that the I could systems. issues Mako. clarification I specify

Preston Wells

correct. No, that's

when about across areas impact hospital. staffing been an at staffing, lot has we I the component, but times a of staffing nursing think immediately types just different think talk of we about all the

delays so installations or of seen with construction some have Mako delays some well. as projects in our during the by impacted was lot we've And that in led of a quarter even in items, just to capital those larger that

Operator

next Morgan Our question Stanley. from from comes Drew Ranieri

Andrew Ranieri

given X System factors guidance product and a your with I on stall XXXX. you But in a kind enabling power guys power they growth pricing I limited that Q chain more does know pull-through mean, really the highlighted spine or But were here of tools Just then could in launches follow-up. tools? the of expect that these just and any benefits more AAOS, had products I we macro here, or with disruptions. XXXX supply to deliver what technologies question, there

Kevin Lobo

is guidance giving at not on I those terms products, XXXX. guidance there's would still I in -- not obviously early But we're say Q Yes. process. still this approval mean, in point, no the of

standpoint also ways So in early of terms the in go a terms tools, power to But a still of out that launch year. getting from we're next we still there. similar next have

in terms at of major impacts what point, for it on to So no this next have year. update or expectations our might numbers

Andrew Ranieri

Insignia, for it with just then tray, it's ASC I usage. think was highlighted instrument attuned And more also Okay. that

of environment at may So anything be receptive? platform seeing the recent is Or launch just that you're that are masking with uptake being the ASCs general the ASCs? there there new shows really that is any

Kevin Lobo

Yes.

in just though say only not even very been it we of hospital. the recently, So Insignia And for the ASCs. popular what course, ASCs, has product I'd the is incredibly interior, feedback positive. is launched ideal But also the in in which, very is direct

sizes, the we it the delivering fit offsets, And what a we thought. so terrific on great for design Surgeons really the that have the product. are it's finding approaching

be accelerate up least with in and next this actually the field, the it for the deployed QX, sets into phase this couldn't more pick So of tailwind year. launch. our happier actually and more it will a be we And as see initial and business, you'll are at QX through launch Hip will

Operator

have now We Cowen. of you. Thank Jennings Joshua

Joshua Jennings

upside end guiding getting we're range, X% range. to margin to bit up X% by that the driving you Just least but the Glenn, potentially at just better? to help you're that thinking about expansion Can through in fourth quarter. some the operating the talked a tailwind, getting the one top earlier the on little margin top frame of Just two, year, to you maybe guidance that about revenue natural just not

recovery be even was Any and Just that and from in volume Knees would but tailwind Kevin Knees curious, Spine but far mean, Hips quantification, it's just and be? not strong volume quickly. Hips could is recovery increased hard, margin than the directionally. on little just market probably why impactful helpful natural I Preston how then just in recovering recovery And so or XXXX? versus Spine as any slower thoughts on is bit Spine. And a

Glenn Boehnlein

your kind Yes, Josh, get I above think could we op of margin right, what XX%. the heard is of lift question that's I performance out sales

the above of And couple overhang. that would delivered inflation kind things. XX% a gross margin have So we anything still of that and

that you sort pressure. items. incur would we when But that we some there's pierce of a feel of growth those that are expense we incur natural correct So operating leverage that larger double-digit through

XX% I So that expect you're would where that in you see seeing at us margin now excess roughly. level of delivery the the op

that for it to be accretive So would sure.

Kevin Lobo

even knee market more second your spine around was you question spine some the elements the deferrable. the growing knee to less of market that growing market, spine the did hip on and basis and And a market. dollar the have than versus faster acute were market pre-pandemic, was procedures hip On go if back Yes.

hip and as as the And knee business did. so it much didn't nearly decline

as much quite Knees. fast So been of as that, not much then, as therefore, a not as pickup market And frankly, Hips hasn't and a decline. historically a of growing in

in with Mako we our quarter, delighted been So enormous in business Hips seeing you're driver. those leading our are long this We're you out if Knee has were the the -- an a play just dynamics, time. I market our at think, look Knees and for certainly that here. performance

roughly procedures are in United X knees every cementless. X States the are of cementless out going in Our

surprising. to see a it's But out number, how our when I'm number played competitive we reports business. see Spine not But Knee moving the faster those as have advantage surprised well. our up to real excited that So me, with else you're markets the not Hip out. play that but is everyone than We'll to now have that seeing growing

Operator

a now SVB question from Danielle from We Leerink. have Antalffy

Danielle Antalffy

you to line there's impacts as whether just the things like about see in saw lot way, going trying different directionally, that, you did quarter? far the supply balls constraints you the the down backlog. not question X any then pressures if what impact top can to ask I on but that I supply on follow-up constraints nail between as to Just I'm I supply of in And even the the have and inflationary quantify, a am constraints quarter the from COVID that -- going ask the but a know to is there's quick air per in se,

Glenn Boehnlein

-- we But primarily to in going -- still Yes. impact capital with quantify as businesses, there which to I was that. that we're know strong No, our mean specifically our pretty MedSurg that regard in had growth are businesses where a result. just that nothing sales those are.

an from medical component others. we're as some opposed to that the primarily not But going in electronic mentioned, As business of the standpoint, something to quantify. we

Danielle Antalffy

the worked of at I is chain how term? how acute impacting I'm this through is all? about And less Okay. these I reconciles growth, way, sort all once The trying on appreciate down backlog. the for if this that. means midterm at we're think a getting meaningful backlog growth And guess hospital to staffing a is what referral COVID getting and near of have really -- period, and of issues sort impacts midterm about I in then commentary this question still just there what such is, the being there's I'm

Glenn Boehnlein

No.

I XX I irregular procedures. about way understand we've activity to months these is correctly, I think regards this mean if the your think to have had of I with question think we

And people in new keep as grow. that had just quite they're whether going to haven't entering the been And time is then mean that patients number we that procedures as see going forward, frankly, done deferred to the I we're backlog, currently funnel, the funnel. see to throughout funnel. continue that part we're we've they've seen period, from result, of what so whether going of the a

be something X all. a of pronounced backlog, saying that's to we're I that whole think not a slowdown with longer-term there's process. what you're why or see don't this So going funneling going to And something at through be going month, we're in any going be kind quarter work to down to from to it's the see going particular people that's a it's

So be to I that pretty rate to see growth think steady you're continue just just and growing. going

Operator

Truist. Richard Newitter now the the final have We of from question line on

Richard Newitter

wondering one, your was that's I be if where of The wondering to some through came potentially, Stryker's offer possibility even positioned of areas So a there? I'm trying than perhaps you reason might just going other med to was the if take or I opportunity advantage there the contracts, willing setting. by I the to the bit to tech companies renegotiated ASCs the are going areas, where to be competitive and to tariff first pricing one potential think in might better some back commentary. price your ask, mind. of in immediately some particular, just comment

Kevin Lobo

given not the we're our really than easier to Yes. portfolio. get In be as Every get other across earlier, pricing Look, going the -- call. Preston you places, it's see look to not contracts. to to on places do it's nature tactics, obviously which at into of competitive environment, our see the report the mentioned strategies, given going something quarter, you'll reasons, inflationary are for products. But actions we the going really going to impact, I'm but our we're disclose we overall this price, some

Richard Newitter

just then one one. And Okay. enough. last maybe Fair

you're think expect of chain that reconciling appropriately. that want for lower said end, comments end this at you per earnings and assumes And I that earnings persist X improvement said that you remainder assumes pressures XQ I'm towards move lower make at steering sure the guidance you XQ. you the throughout supply of just the said least, the those share. as I year. But to also you into some

Glenn Boehnlein

Yes.

what feel I will we're conceptualizing, how we you're communicate saw the right? term, us similar think impacting short in QX QX. think to trying inflation I is, in inflation in

And we'll the impact environment of the which impact that's a of feel QX in bottom free QX. in standpoint back up, the expect from our the to for order backlog helps also start lesser the We also that also to capital the been line. and also which feel a that of mix book sort Plus, on more expect means we comparable procedural one we'll improve, line. to starting top of delivering

Operator

Thank some you. further the to no questions. Kevin hand I for to call And There like over are remarks. final would back

Kevin Lobo

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

Operator

call. This Thank conclude today's does you. conference

now may lines. your You disconnect

Stryker (SYK) 29 Apr 222022 Q1 Earnings call transcript