Earnings call transcript Q2 2023

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Operator

Welcome to the Second Quarter 2023 Stryker Earnings Call. My name is Todd 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. 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

Chair Lobo, Chief call over to will Executive I turn Kevin Officer. now the Mr. and

may proceed, sir. You

Kevin Lobo

to Stryker’s second Welcome quarter earnings call.

Vice Stryker’s Joining Relations. of are Glenn me today CFO; Boehnlein, and Jason Beach, President Investor

For our today’s other I’ll opening results call the quarterly some provide updates. saw we Jason comments, followed then call, before the opening trends with and Q&A. provide the to Glenn regarding quarter details during will by additional

attractive second comprehensive the in growth and MedSurg In growth sales we demonstrates to execution. in organic drive performance with through the that Spine. quarter, of strong and growth double-digit XX.X% and commercial and our and markets Orthopaedics This we ability Neurotechnology, play both delivered diverse

with continued We pleased globalization the also positive our outcomes efforts. are of

Our our strong business. growth, international performance complementing demonstrated fast-growing U.S. business double-digit and strong with

see positive to quarter. continue our we again with delivering addition, In initiatives, pricing pricing second the in traction

During although realize of the quarter, parts improvements we continued availability, remain disruptions to in in component our business.

margin much the but a proactively beginning primarily of Our We adjusted quarter in $X.XX marks result our teams strength was agility have the of of our of sales XX% reflecting share, driven their impact. mitigating growth good This these of situations, the addressing quarterly EPS compared XXXX. recovery. second from also demonstrated delivered to

throughout continue to the year. of expect remainder We to the expand margins

range our to momentum, share. and earnings X.X% half share year expected per of growth expected a to $XX.XX the to have increased per to Finally, us our and XX.X% our year organic sales increased full with solid behind we $XX.XX

Jason. over now turn to call the will I

Jason Beach

Kevin. Thanks,

on volumes the launches. update And in well backlog providing will believe including and will to and product levels recovered comments while capital demand, largely today acquisitions on the orthopedic Mako, are Procedural continue as as have current we remains, well procedural countries. volumes still on elevated demand My patient strong, an into focus most XXXX. pre-COVID environment update an

volumes as half the move XXXX second pressures supply we we recovered, to and largely While have resolving the and are continue tailwind moderate hospital gradually be will constraints and pockets of These staffing into expected in challenges globe. around a continue as through XXXX.

Medical, from healthy drive U.S. demand strong double-digit and our performances, in Additionally, organic the remained remains Mako evidenced growth continued is which hips divisions. international and as the demand of Neuro our capital knees. Cranial with for quarter robust in products Also, our Instruments for growth helping and

poised we for completed launch levels. above the cycle acquisition. Cerus platform remains super in we and of deal QX, momentum. a capital elevated, successfully late to small drive camera backlog normal are well Next, during order Endovascular full continues XXXX also positive Furthermore, product In and a QX. tuck-in executed the quarter, Also, launch our closed limited on our

our surgical safe clearance navigate plan quickly modalities with and approach also using Guidance, surgeons imaging empowers for then FDA received surgical newest This to our specific We platform. under Guidance a procedures. Cranial multiple Q application instruments

the years. These launch growth this XXXX. early the the U.S. year Finally, XX over U.S. of our in the for on will of continue and of track quarter we remain multiple fourth LIFEPAK to in defibrillator launches outside support in

turn the to I’ll Glenn. that, now call over With

Glenn Boehnlein

Thanks, Jason.

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

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

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

XXXX. in in X.X%. quarter the was were days The selling average quarter’s favorable impact by pricing second line The with from

and our of Neurotech pricing see for We positive which positive to the quarter. U.S. contributed from MedSurg trend businesses, particularly all our continue a initiatives, pricing in

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

quarter, the organic positive and sales impacted was sales our most growth Adjusted momentum International emerging by XX%, across Canada, particularly markets. EPS of XX.X%, growth sales international our organic In Europe higher markets, up was Australia, $X.XX. $X.XX offset U.S. was adjusted in most expansion, XX.X% higher of from income rate quarter exchange, XXXX, the operating driven currency which and sales of impact the tax was and by a by margin partially unfavorable foreign of

by currency In and Now, quarter, I our segment has both double-digit surge quarterly highlights U.S. organic account. growth growth Neurotechnology Technology growth XX.X% power XX.X%, Surgical international sales led around smoke XX.X% some business. XX.X%, the growth in was product organic organic of From and which management, and of a of the sales by strong included organic performance. tools, will growth. provide sales U.S. and growth of evacuation had MedSurg waste led Instruments constant perspective,

launch this the organic in had comparable. muted ProCare continued in the completed product a its Consistent of Sage, of with The camera supply organic the growth reflecting emergency XXXX care and growth quarter. strong in very three XX.X%, sports legacy Endoscopy prior QX. during transition and sustainability businesses. U.S. of included sales improvement the strong X.X% Medical between limited to the growth camera second camera, of period also benefited sales camera in Endoscopy business against late growth the strong performances This medicine its launches quarter. its new and related care, and contributed acute U.S. in businesses, from and all had

forceps lines. reflecting business. sales Space had organic in strong Neuro of Max X%, which had Cranial Neurovascular product organic our and bipolar sales included U.S. double-digit our performance in growth of U.S. X.X%, Mill, hemorrhagic growth a growth Bone

Internationally, growth VBP Neurovascular’s Cranial impacted XX.X%, performances Australia Europe, Neuro this Geographically, double-digit in in sales businesses. MedSurg growth reflecting and of included and had medical be to Canada. strong in growth negatively and China. our continues organic Neurotechnology by

constant of internationally. which Orthopaedics XX.X%, U.S. in growth growth organic and currency sales organic the had and and both Spine included XX% of XX.X%

procedures. knee position Knee robotic-assisted Our which reflects U.S. business in XX.X% organically, grew market-leading our

growth reflecting growth. procedural and business Our hip X.X% grew fueled hip stem Hip our U.S. continued strong Insignia primary organically, by

business performances Extremities upper strong and with organically very strong Trauma ankle. and and in U.S. all XX.X% grew led across foot businesses by Our extremities growth

led enabling X.X%, businesses, by performance Q the including Interventional technology grew business Spine U.S. recently Navigation the launched our of Guidance and Spine System. Our

Our U.S. X.X%, specifically and declined the to of primarily rentals mix strong quarter. Canada driven Internationally, organically, installations performances related impact organically changes, the and in markets. grew Mako Other more including in by deal Australia, XX.X% Ortho most emerging Orthopaedics Spine

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

was basis in buy the Our spot points productivity favorable, partially of slight of the sequentially of pressures, XXXX adjusted XX second gross easing to change approximately benefit of driven of by improved by compared the impact decreases basis XX.X% and XX currency margin exchange. the This purchases, and cost from QX primarily certain XXXX. price, quarter points was foreign offset

sales, ramping product of XX the quarter an of decrease Adjusted of which for R&D XXXX represents second basis related XXXX, due costs primarily to spending in from comparable X.X% points launches. higher the to was a

Our adjusted due XX sales, investment disciplined to SG&A growth. was quarter a than to of spend which support XX.X% ramp higher basis our and XXXX, was points of of the second

We to of as expect percent we year line our XXXX growth. full for in SG&A as continue with be sales invest a levels to

points quarter, of favorable sales performance on driven In our pressures, primarily XX.X% by adjusted basis was was aforementioned margin XX is This approximately which of summary, gross XXXX. quarter margin. operating certain the primarily of easing to the the second cost for

for interest than driven expense quarter Adjusted the was slightly increased by and of million higher XXXX, other $XX expense. income

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

XX% guidance of be XX%. to XXXX, we tax in the effective range rate For reiterate to year our full

securities Focusing on of the the the year-to-date was million the $X.X balance $XX.X balance total million payments and of Approximately $XXX sheet. second a marketable ended quarter $XXX remaining with and billion. We term and loan debt cash quarter, of of million. $XXX debt down in reflecting billion paid of

Turning to cash flow.

reflects and of from $X.X Our billion. higher receivable performance results earnings This year-to-date cash collections. accounts is the operations net

strong impacted year, in to our strong our our the foreign capital will positive both with sales per organic Based equipment which earnings and included be impacted be on for the first we EPS now of be to with from unfavorably of we now anticipate full be X.X% X.X% to for range in to year, share $XX.XX results, the per exchange year-to-date performance are the currency to continued our momentum, guidance. by $XX.XX adjusted near $X.XX procedural adjusted trends, of for expect in year share in unfavorably our hold XXXX slightly expect half levels, together positive $X.XX If the pricing range share. year. the growth to Considering be rates will full XX.X% sales current approximately sales we and backlog of per

will I the up for And open Q&A. now call

Operator

JPMorgan. with question from ahead. [Operator Instructions] Marcus first comes Our Please go Robbie

Robbie Marcus

a me. great here. for quarter on Two Congrats

like Ortho like of the you’re looks and on It and good taking you’re top the amount a knees across line. hips, First, bottom more a quarter. in still beat great trauma. Looks extremities, raising both than share

Just of beat? up love moving on we these than gets confidence the any the some trends think sense going but you the get as touched margin side to continue. about would on you comfortable to the year, them, what the And of elevated more of gives you it balance a that are visibility

Kevin Lobo

demand and surgery confidence to of based Hi pandemic. the through good Robbie, there since sort it’s seeing talked last off I’ll was in a about start procedures. year, the on of the quarter pent-up the Kevin. with that talking third We’ve this physicians sense backlogs,

we the That expected year. coming into So, certainly has out. elevated procedures played

backlog of even in two-month longer, space. surgery long months. surgery the -- And is probably heard the these from You’ve comments like more four they similar are providers some a backlogs

our confidence for growth. that’s into which year to procedures. for of us going end gives procedural that see we also And turn for then, that the we’re see through there’s in capital, the and to equipment ongoing demand this that that so And Glenn And margins. to used again, continue year next I’ll small elevated

Glenn Boehnlein

Robbie. Yes. Hey

cost we quarter, really some positive in As last some and pressures started year. and mentioned, got see the of easing the we we to QX certainly as felt of had I that through

everything of supply also say we improvements feel are That’s think to rosy. the starting I chain. to not in some that is

pressures feeling our we’re We amortization will material. certain QX, not transportation, still in spot in some QX have spot I been near last of the labor, impact buys And inflationary that from getting commodities, spot of of the electronics. buys But say are year. in buys

I that our gives in like think confidence margin into QX good we’ll I So that improvement move QX. gross feel continued as and see we me

margin and feel it And the down gradual really will so, that we op we’ll way to feel improvement, the line. all

Robbie Marcus

it. on always next to Great. year the for but you future really we’re me unfortunately, year, take And however or maybe happy the follow-up want to are with People out focused so looking just far already. a you for and both of

these talked You Kevin, about, trends continuing.

You cycle in have MedSurg. the super

continuing trends that XXXX elevated kind Just you’re be? XXXX thoughts? about how thoughts back and we should we of think these operating to any How how do might -- getting XX.X%. out of far your on I on or know about think laser-focused margin

Kevin Lobo

openings Well, Jason’s we basis will I or crystal than expect be that comments to positive ball the the points next have back think basis into more trends say it pandemic don’t the year. XXX exactly, I in well in through elevated last continue a do XXX was procedural points year.

to off expect of going elevated. So Neptune quarter. latter is to of exciting, of products XXXX only like is at a that S to [ph] super this the be the start -- great something cycle part widely within is instruments, kind -- but look The start we

defibrillator new going a to next. a impact more that’s So, next b that’s coming got big year,

ProCuity launches, multiple are these year. So, is

We have continue altogether of medical the that chair it’s new launched Amazing year, Xpedition. category and next this the new brand will QX that into year. launch that product stair of

of of growth really lot continuation a across our strong So, businesses.

going continue -- year. company high-growth a be you So, what to expect next going to into should

Yes.

sorry, Let a I forgot let me just question. -- me was it finish. long

So yes, margins our and returning absolutely growing to thereafter. to margins committed we pre-COVID then are

very a in marked a first step quarter This that evolution. step, big really important

Operator

take question Biegelsen Larry our Fargo. We’ll with next from Wells

Larry Biegelsen

echo Thanks on question. for I’ll impressive very congratulations the a And taking Robbie’s here. quarter

So products. the wanted new to I MedSurg, start on Kevin,

And outlook? in Vocera What that in endoscopy the impact after in second And drove might impacted anniversaried. what one how and how the camera you growing ‘XX? And talk expect organically I do what’s XX% Medical to new the be Just that? follow-up. QX? did ‘XX And had Vocera about from quarter? have the And

Kevin Lobo

Okay.

our well. our fine. And okay, company. You camera the That performing continues the really had launch And got limited a It really you of is Listen, gone really, a thought. back great follow-up. in tell a hasn’t QX. making of no the there a the the really you and just of we’re launch, got performance start test to half impact. sure the about that’s have endo was few But the business, the be I’d really excited extremely started. we cases product side on as MedSurg that will already, What in is segment full

QX, to start and more accelerate see will year. you’ll next So that some will QX in even and impact in accelerate that

As you in the know, launches you’ve past. seen these

year up picks be even higher one. really it sometimes one, year So even than year two,

So, going but impact lot a QX, it see There’ll really, ramp. QX, next in will we’re to be in impact -- some of start year. but to

it year, really it’s in big endoscopy. So do camera endoscopy then start see why picks really these no end up on at the is to but from impact slow a the new it you with too, that’s a bit last softer, QX little And product. and had comp of down launches,

a quarter-to-quarter. move does around X rolling in fourth percent and a quarter, you Medical years, really from has become if if another stellar over quarter, we at business. quarters, the real And But that the bit a X well. quarters, is as had high-growth consistent a absolutely high-growth had rolling past Medical division. XX-plus overall, six look little an recall, It you growth, large, this

Now misunderstood say, would the of I I businesses, or think underestimated our portfolio. business honestly, probably one in most it’s

Vocera, You’ve Sage the gaining cot year. got Sage, bed which as X referenced. PrimoFit. at the beginning still steam. ProCuity last launches, Physio-Control, frame integration Power-PRO of you’ve new a But got ambulance has new of you

stair more safety. And mentioned. have Xpedition’s also a chair on You I then lot there’s awareness that

awareness. So our a there’s lot more AED portfolio,

based AEDs I and would compression for LUCAS a in product demand team the management all the safety, fantastic new chest on automatic say Medical. So really

very So, Medical Probably time a I business next quarter? again a high-growth expect long will will I do for expect to XX% not. But to come. that continue be

and the specifically then to expected. And ramped quarter in as -- both we related Vocera, orders it sales

of and of and it’s as we through said pick remember, year QX up orders. up you in this going to picked talked QX of as sales QX, after sort both -- went you about QX being the So flat integration kind of to sort QX, we both meaningfully, we meaningfully well

And so the a contributor, are strength portfolio. really also entire but across they

Larry Biegelsen

in be Thank different Just you. follow-up the the of stronger comps the are you. I’ll year? very just QX Glenn, really we rest QX QX. to about QX? the my brief. And Thank growth thinking and for relative keep in Should cadence

Glenn Boehnlein

to plays that against, but not up a that against Yes. and seasonally the I grow QX probably it of year, super look the you big I into in last focus QX a big how if much we’re couple think mean, number at $X.X a quarter, going you The on things. number. billion comp usually was is we’re is strong quarter, comp. that which

nicely, I little will you’ll I of year higher then slightly So, think the a QX, our comp, well within you’ll see growth what that that is in and come down bit see because guidance. we’ll but end the think

Operator

We’ll question with from next Chickering Pito take Bank. Deutsche our

Pito Chickering

How that or you talk then we getting and lower hospitals? costs Medical. gross looking the quarter? the on the follow-up that you revenues so the And the And as back costs And in that bolus XQ a reduce half reduce in the days about and backlog? margin should better year? a is A backlog, CapEx the view did revenues much and backlog increase improvement Microchips, of that guys be of on Can increasing last you in the changed as in are normalizing also good from that as for was sort quarter. or pretty should XX for nice has on Very the possible CapEx environment?

Jason Beach

our backlog some there to in continue see and our high higher bolus. your with. year levels, to standpoint. from environment a about strength the came it capital But was the very business, It’s But capital follow we as I we think then a the than we at on. if was, question as look be continues I’ll into great you And at backlog, what about here environment, think think Jason. you even maybe start

So, there still capital the side. on strength

Pito Chickering

inventory much sounds nature, tailwinds in in one the you more were should of on in of gross the margin permanent those said Can pretty the deflation pressures the on how have refresh guys us of balance then and start margin. seeing, the -- And these on you you Okay. P&L. year. when sheet? half many XQ back transferring And lot like improve months we’re gross It a that to

waiting and Just wondering that the the in simply the if by third gross by that’s fourth key transfer. duration sort of improvement driver margin to of for quarter

Glenn Boehnlein

Yes.

I think quarter impact spot inventory in X product, in buys. quarter of the depending from second on generally, the of way the sort inventory anywhere its first turns the and really thing And was to months. worked the through big and that those sits X

we sort against reduced the So Keep of still that rest QX. will spot impact in But year. of fact end and mind QX in me the gross working we’re we that rest improvement this headwind of getting gradual for in that buys buys, of of year. that I yes, generally we see the see be confidence will of like the spot impact this have the the should to this feel inflationary just mere gives margin we

Operator

Vijay from take Evercore next with our We’ll Kumar question ISI.

Vijay Kumar

Are mentioned from we ‘XX that guidance should about certain the impressive, pretty know something a XX% comps worry Kevin, you is product perspective? fiscal organic. tailwinds. I

it help it of us like some these sustain contextualize ‘XX. looks XX%. could Just into that procedure that And trends, given

Kevin Lobo

X.X% Yes. organically last Thanks, we grew Vijay. year. Remember,

year well cycle we Again, on tremendous. had is procedure are year a demands we’re and innovation growing we have The strong. last So, that. as this good pretty of top

above of growing businesses. every we’re you as though markets in one growing even very -- see, our market we’re elevated, the We’re fast virtually

at for Medtech. is to this that the the yes, us growing already -- be able we’re bag. going fast, half high to year, end XX%. already over in gives QX confidence to And the last was we’ve of grow year the abnormally And continue that So year

in do those surgery guidance, slowdown in reflect the playing demand, expect, But aging we growth just ball, rate backlog little activity, based we do you a it, So -- causing our more of right, a comps. to we injuries. name related of a bit people pick on population,

tailwind. year continue mean will of could our think that’s be current I visibility. -- see to it. obviously, we that much a through that’s this next but how change, So we And

this, called It’s flow-through we in hospital last this still And expected anxious dealing if terms actually much equipped called we it’s better flare-ups than see. going are to here done. certainly were to staffing. is we QX and They’re of of it in frankly, we you recall, we that little of with and materializing, but kind sort what year, their of are a the and procedures There expected. get hospitals there, gotten better, than are patients procedures better better

Vijay Kumar

on Glenn, I’m XX actually That’s crazy about one that’s when helpful, looks track, basis for you. operating the next Is we’re north maybe Kevin. the margin how at assuming on points side like expansion should model, in curious there’s thinking fiscal sustainable leverage. look well year. It of inflation be for ‘XX. something nothing of you this we

Glenn Boehnlein

it’s are to expanding say, we me I things XX basis -- planning on XX meeting. force absolutely to that we every doable, Yes. points of want getting the you absolutely to our in would going back tell investor to. We mantra old was something and year you’re to our all divulge But

this the over continue yet. think is longer through just We’re think out I you’ll something ongoing don’t I expansion us. that that want inflation continue pinpoint margin will we the I the we that yes, as for. to of have. to some higher term, something But it’s we’ll There’s But to these forward P&L. solve number a of look see working through don’t costs

Kevin Lobo

add, to to I thing one Glenn The so XX. wasn’t referring XX when you ‘XX, Yes. necessarily would said

rhythm. We’re that a of ramp back and thereafter major a on into kind to a then to on get And normal focus get XX.X%.

at in Day you Analyst we’ll around clarity more give the that November. So,

Operator

Sandler. We’ll take with Piper from Matthew our next O’Brien question

Matthew O’Brien

biggest stacked want last don’t quarter at look you had really here. them for of in too hips I one I make quarters. the knees, you competitor out two-year guys outperforming growth in much been when versus massively rate your to the in But several

knees. two, This really quarter, up in specifically the tightened between delta you it

or side, there’s the as or the that terms So if to able I’m of should just forward, maybe and so? go market knees on you that you or cementless being in we seeing the robotics outperform out significantly over in anything about wondering just in call year should you’re hips competitively, think next

Kevin Lobo

our just Yes. to OUS, Look, actually happy And Mako in the starting business. getting with growth going. started. ramp pretty It’s OUS. at we’re getting I’m look is really really double-digit Knee

is So probably that the to that In the I’m on strong. outperformance cementless. massive going excited. going of you overly and States. Mako before we’re see some And very of the get saw not And was United to one U.S. quarter, backs outside performance

hips the fastest well knees. QX. Knee used We’re wasn’t and hips one, in covered in and still to you be past, or and the and company. didn’t in And hips the both, you growing you Hip other, from It well knees knees, grew remember grow -- we

So, really run. own different. absolute rollout in portfolio seeing anything market-leading not our with which no, on as and our our execution an Insignia, the has focus home continue been robotics We strong we’re

to perform well. We’re to very going continue

Matthew O’Brien

the on year to flipped I’m some side, kind from a of appreciate now pricing we’re working assuming And then through tailwind. Kevin. those know benefits. it’s I headwind I of this But that, a

you’ve to long-term these even So, as tailwind positive got pricing as Thanks. another ‘XX be is ‘XX or and well into going contracts? for Stryker

Glenn Boehnlein

Yes.

product. we product longer-term is price. compared think exact is make we positive I couple executed Ortho that year. much in look that has some mind negotiations. sales prior would comparison gaining product our generally the less this And price had very what of But, is we’re in same contract say sort we year, I and seeing that too of to without at Keep MSNT larger, on by if report general, negative maybe includes around targeted XXXX. that of a providing program And looked that we kind on I’ll initiatives comments guidance

about see that I But a set increases you on especially say think we the necessarily currently gain feature say, you to provided. would going that products in that we that number on increases if included generally we’re next-gen launch, that’s to prices, not products, price the meaningful when we bring newer market So, these for isn’t on price. or we next-gen technology tell

think do continue I that this So, game that It’s we’ll a going price to sure. our part think see for to grown tailwind. and be year, certainly we’ve I of plan it’s muscle as a

Operator

question Ryan We’ll Zimmerman take our next from with BTIG.

Ryan Zimmerman

Congrats on we a growth done really It was hemorrhagic. deal Neurovascular. When Cerus the nice really the quarter, and especially little been UK, look before, ask, has to X% U.S. bit guys. at Kevin, I it’s pretty slower wanted in what see, a but impressive. to in in the Cerus about organic nice is

what kind contribution when U.S. U.S. see in doing your that and are we curious in in I’m expectations to for Neurovascular. X% start growth so, And especially the really organic if of the numbers, you’re

Kevin Lobo

Yes.

is say thing in Cerus that United has States. yet approved first the the not I’d So

approval the We had from So now. a launched Cerus, new -- So, catheter as want catheter, benefit Tetra look you that to everybody growth are X% had think XX products. just ongoing make small Vecta that I clear to that right? as catheter. no United right I trials that. know coil States. well in forward XX size the We two We’ve to that

at hasn’t But the a was little that in we in performs a and be OUS, when a step had and new happening for It quarters, based in It’s at going if look Obviously, the product two what’s lot back wait the all. really last a does terms pleased the in products for few to very -- at us of driving extremely of been impact arm excitement helps bit growth. challenge and the happen in has of can’t U.S. big to we’re closed know the excited you up it been quarter, this So United it a deal. we approval. the shot we And more that States. definitely well on see quarter. during that the hemorrhagic and the

Ryan Zimmerman

that ask Yes. just you No I robotics. And a at your on on hear We programs. and given SNIS Shoulder We week. question. this to saw much that wanted say didn’t Spine follow-up commentary about What’s there cycles Spine. Shoulders some other shoulder Mako thinking potential is spine. so latest timing, competitors launch kind and/or your about there and and forth out on of from

Kevin Lobo

new Nothing Great. to Yes. report.

what Spine and year. in kind shoulder end in activity said on schedule next We’re towards this before. half year the have And spine. next of and space. We concerned not of in we’re with of Globus about frankly, know robots had back Medtronic the competitive we already really

really Q with are technology starting Guidance. our enabling about excited overall We

that launching We have we’ll an additional Spine. be product Mako and

first So, by really for the is shoulder tools someone we’ll it Spine, technology If suite concern in end really in of about. next enabling compelling of else year have we’re doesn’t a which excited me the least.

gas patient a platform using amazing. reality, HoloLens for which it’s whether with icing we’re tech going right growth on very whether that quarter. is the it’s And after Mako, and now an shoulder, to on after amazing matched cake ID, quarter technology feed We business is already. the on to powerful it’s whether extremity technology, have procedure already upper Blueprint amazing We have use be do enabling to virtual quarter that with cooking will just Blueprint Blueprint that the

Operator

We’ll take RBC. our Singh next from question Shagun with

Shagun Singh

growth deal then just driving on of could M&A strong touch refresh could and what’s trauma I allocation valuation if And the interest? just your and durability? and areas side, the just in you. the us you on if on in was priorities terms capital Thank product there size of wondering you

Kevin Lobo

Yes, sure.

Medical is stop Vocera. past, debt, us given deals. on up from then as close So we’ve doing that did the Cerus. on paying right We in not the and we one debt does within deal on small as Wright we That allocation said -- our instruments, down first capital we built well now as little focus

But this having So year. we’re all They’re and nice at They’re tuck-ins lists pipelines. deal the really teams very all still active. looking they’re discussions. are their primarily building having out

of terrific use to That get again, gets as priority paying and we’ve able moment, on had back that. is to we’re certainly we’ll really offense. on first M&A. a position and the so our can’t M&A, down with our offense the cash record of cash. debt be And will first we I wait doing But track mean, strong, be be back at

part? what’s So, the second

Jason Beach

Trauma.

Kevin Lobo

Yes.

Medical business tell every The double-digit So to growing Wright and upper extremities up. strong you starting Foot trauma, quarter. has Ankle I’ll growth acquisition pick been spectacular. very really this

actually So we’re Wright terrific was been about Medical. quarter then with core the has big of double-digit and excited Ankle this in strong trauma And growth. really performance Foot a beneficiary

was focus. trauma the growing. And core as It paying they’re business in extremities was much trauma. diluted Ankle, sort faster past, focusing in to on more were we and focusing on really not because attention our of Foot So its core

We a dedicated now GammaX. trauma R&D focused had launched product We Alpha team leadership resources. obviously, the they TX on have core launch. And with great

products to plan We’re going launch excited OTA later some soon, show PeriPRO we to have innovations in at the about fall. other

on So, trauma really and they portfolio, refreshing focus really great core a quarter the well. had as excellent

trauma. the terrific well providing our not is Medical quarter. So, deal, again, focus core just fueling growth in actually units performed all three core extremities very business, more Wright in which it’s the benefiting business And it’s trauma,

a long very come. expect we continue trauma, business to to be time for So high-growth to a

Operator

question next with TD our Jennings from take We’ll Josh Cowen.

Eric Anderson

hear your Eric on for curious was Josh. to around smart implants. is This I thoughts

are just One if your updated to of your And thoughts smart updates would a that as from moving closer is hear implant great any hear to be work OrthoSensor, technology, and full your curious of there around to to there. launch I share well. competitors was a

Kevin Lobo

measure be that smart interesting. think implants obviously wearable implant. the from Yes. is smart Listen, outside a on have to dynamics are MotionSense basically to the which is We similar measured going I

all range interesting. these factors, think I motion, of So it’s

We’re compelling Will important selection? will patient the would call to that we’re with not that that think of will procedure? that affect something be, sure yet And is to something more a affect in do that data. but quite learning going that and future. be do what it’s How -- I So it investigational have. to approaches it more I could

care, the metrics. to should what which both track really discounting patient OrthoSensor does we matters don’t and the know that measuring wearable you’re post-surgery it. the have the to what is in and patient are than we’re have femur industry range lot, on share that answers. loop have learn more that’s there feedback tibia is to We don’t attaches in really -- and affect we well -- as a don’t others a not I patient maybe it meaningful. of So as launched about how other a MotionSense, to selection, other we implants using, that they maybe period, -- so the And going be which mobility is anything we will

then lot it’s questions, We have data new from. of and give that we going learn to can us a

the that’s So how I’d characterize at moment.

Operator

take our Miksic from We’ll with next Matt Barclays. question

Matt Miksic

the other I more question you in comments hospitals taking as-you-go Mako, really, forth already, came that’s that robots. I wanted lot a as robots, revenues you we’ve in mentioned deal sort to quarter. -- came this that one and in in of you’re hoping option sure back as rental folks ask an something up aware dollar folks the different from leasing if to of Mako because and flexible heard affecting and an a mix, of or made, for increase a increase tonight I other in well I’m on from apologize calls. this terms of guess, arrangements mix But deal And

correlated follow-up, different past, have in operating want well, if you’re the wondering how pay are of to whether it, words, are about In could arrangement other second, And that of capital I’m one we sort of sort want with that? endowments growth could. something. that -- I know a ASC? hospitals it, Kevin, the was I you’re seeing for that scale in curious First, sort have they different wondering in I this. of early whatever, there’s about like how preference for market. you And hospitals the like seeing hybridization or commercial if I’m rich, talked used we and into to a the think to on you how let’s on, shift lease kind some of but pay with think or I’m Mako, tightly hospitals have some in

Kevin Lobo

Yes, sure. Thanks.

and hospitals in scenario. financed ASC the ASC I have budgets the you is all Mako of is part ASC’s do. of ownership the the deals because growth They obviously ASCs what virtually the the tell with So physician are would don’t is increasing capital

rental penetration more all financing, because financed, increases, as virtually the automatically happen yes, to ASC type are deals going they’re ASC. So

dynamic, Your the what maybe I to it’s capital I well, just don’t if you even think you the the do. if and to I hospital you charged need the -- question capital, are I hospital not have spend then around sort have me talk that let systems maybe competitive of for, says, about being

some we suite. not we book, a route And where or whether for order cash It cash the for value agnostic one healthy doesn’t to want the us because so, has to doesn’t from get on opting to over to that. really want in get past time the cash it. full strong maybe would finance go yes, get the it have and we day fuel we’re been we our financing really buy really purchased, to and us, And matter the they Whether have but on value implant that the growth. they them concern offer certainly are and

Matt Miksic

with just it’s -- quite yet, that I kind the And in of in imaging mean an for the of on functionality. really you know tumors but fluorescence what having we’ve opportunity this mentioned but really versus imaging -- what the not pretty -- does was camera Any around I of of the to past? different shape big effect margins experienced and and product sort to last camera this phase you surgical of sort cycle can great. of quite in and quickly and expectations sense side. things test differentiated a that represent a launch, cetera, early new of camera in provide on you early cycle that and later color are the endoscopy That’s terms just this sort interest, takes of what up the the notch, et your any

Kevin Lobo

get imaging ahead fluorescence overlay but myself, and where the That when little XXXX Look, didn’t and had of between was and fluorescence. have to me XXXX then white from still to in right, early first pretty Yes. it’s too black you you Thanks. a for the fluorescence toggle was meaningful. a deal, big

pretty good this ICG, This to the with -- -- the steps. lung, right, into addresses wildly fabulous to really, exciting with But pharmacological good. not quite general and issues. So into surgery, This beyond get we ability We was historically, you’re is that -- weren’t are big bladder. It’s tumor dies had as also extremely agents. a it margin those in is but where use to for those get ability camera sports as new really exciting neuro strong. camera

prior could cases this the Yes, well. some So, really about very less in is it. performing have this so have I any be to far I’m But excited even potentially feedback we test our wouldn’t more. The early gone little it’s expect pretty launches, good a front. that really features be exciting. than

Operator

We’ll our Wuensch Joanne Citibank. with next take question from

Joanne Wuensch

waive the you. we impressive. lot a you I margins for apologize, about on if give operating about you’re think how it, there’s year? far? going even half should tonight. And next year, or your on But And willing of if should those think full guide Thank the a curious into were year to that this how really can we I’m back

Glenn Boehnlein

think the in especially we mentioned not material a Yes, operating and gross easing I’ve saw spot of before, really cost in are about honestly, in Joanne, improvement, They yes. QX, We margin of material. weren’t in material we some really buys some QX. performance of -- QX, terms margins, they’re you good of not if sort in as -- pressures, our just

I more we’re supply, feeling is also gains. back the of thing, now that better we’re think other to too, just sort of have evening that productivity we that

that margins back this kind in because some we’re you guide say our gross about we some us some that improvement year. on for of point, this improve year -- think gradually as they’ll the this do rest confidence we’ll that but still us see of going think the not will things at of feeling of And of so good half obviously, roll and into this gives confidence. all we give year, those But the inflation, we improve other of that gradual performance than should next we’re that And to year. next to see for

Joanne Wuensch

at question update. you or margin time of think even analyst an about post-pandemic you environment more how next normalized is the maybe together go-forward, meeting in all this expansion year-over-year basis? on But a operating do sort for Maybe regular an the gather a

Kevin Lobo

that just the to XXXX. that would Yes, sprint this back laser-focused repeat to trying are call, in Joanne, earlier on, asked, the I’ll we in think I question was had we I say, XX.X%

XX way. an consistent I get of especially high passes. year, more then year to think to back like a know And progression kind try as a to once so like move And to level, don’t a to on see with more of nice kind kind we’re annual, to after We’ll specific this back way growth time organically. more experiencing exact the moderate, more after that. year that number, of going something going margins expand margins wanting you’re get to I we’re get more that bps. us in ambitious But we

margin to try we’re see and the that expect move falloff those a looking to faster But restore had margins. clip since more at expansion. we’ve You’re to in meantime, normalized ‘XX to going the given

Operator

Rick from question Wise Stifel. next our take We’ll with

Rick Wise

international us was little the almost color perspective U.S. quarter’s as but Kevin, would little than give strong you just slower obviously, I double a really a hoping on pace. digits, the your and performance, performance solid first more very as

excellent terms back of And we in in picture a here? strong the You talked where just are the so your sustainability, parts. And emerging what’s initiatives? key drivers just sense? to of just just question about highlighted your procedure ask some going -- markets. on couple And recovery You Thanks to see maybe Europe is to normal I’m quarter. in volume the great the of maybe larger with sustainable How perspectives How much. one a this?

Kevin Lobo

Yes. five last Thank a has while, U.S. but you. exceeded growth Look, us international the growth. has years, took international -- it the

we below frankly, for spectacular. Now are what have most this market still shares quarter to absolutely But obviously, have the U.S. in pretty growth our the the believer the in in up good growth of very markets. we’re making lost and because time continue years U.S. was international a international ahead,

And so us. upside in front significant of we have

Japan. to normal normal to back normal Australia. Procedure They’re Europe. volumes are everywhere. in back They’re normally back to in pretty much much back in pretty They’re

that in hurt us, quarter the was market China. frankly, the So,

China drag our VBP also in an having neurovascular that business. So because continues be both Spine impact, impacting to a of

in to starting really So a in Asia in terrific continues And But China had we pick to Mako a is up spite I’d international. of drag. growth that really bit be Pacific. of say that, steam

growth Europe. really presence great produce that good knees starting that’s both well, the Japan, I many as indicator for already in up. have that’s international leading come a India, the market. pretty then XX, we camera that terrific to And for will momentum in continues. hips And pick as a really of to in and quarters it’s But it’s really So also think China, launches exciting Asia Pacific,

where growth be every So, to quarter, expected to we’d the continue Even now. another steady Europe we’re kind progress. and of still quarter. going and strong in not Europe. just like had strong That’s It’s we’re

were started and So, expect X, this over year. take we we X where number one something or But Transatlantic just about cameras, model, this when if that number is sometime things to of you think X we the like takes those time.

States. share Our in the where power United It’s is Australia. and in crossed XX%, it’s where in XXs, it low but tools it’s it the was not not still is

in very So, a steady continues be should something international that way.

that’s consistent. where years, it very, has kind last growing the small, very have base. but a it’s area been very still in small And the markets, of Just as we’re emerging opportunity, the five off we most nicely,

Operator

of We’ll Travis from take our Bank with Steed question next America.

Travis Steed

Hey, upfront. the up taking of thanks both ask I’ll mine for question.

comments? just more providers for margin it the if seeing and of payers of And question you’re could a frame given slower some then you, have the compares those of about how curious kind kind I normal if was Glenn. a payer some summer seasonality you talked July. or seasonality, Some of of

in this normal if cost is we kind the second Just as more since a half the curious operating second margin off use should environment this new half? jumping the year point of

Kevin Lobo

sorry, little hearing a your was quality hard you. sound Listen,

you And in seasonality comment asking you’re month. July saw one strange saw And the half don’t you year. like I of our we’re think something a about guidance normally we on would expecting look second July. tell good pretty I if raised -- And -- certain out to to part But you there’s the then the get nothing that have was And margin. month dynamics call for really one And want I happen. into I -- want of that second think do sometimes important really don’t the I month. July. we

Glenn Boehnlein

Yes. Travis, operating margin question? can you terms of repeat that in the

Travis Steed

this of is I’m the that Yes, in just curious given forward, going second the a this is half margins new year just sorry. point off half? of second if kind jumping more the normalized for cost environment

Glenn Boehnlein

couple say would I of a No, Yes. things.

quarter. of QX It’s our highest seasonally margin First all, is always higher. performing op

wouldn’t So, say I be necessarily that should that jumping the off.

of sort good would year is, out off and I the be think from if guidance we’re you end where to of the that figure angling our where jumping could at, you kind back point. up

Operator

take We’ll question Antalffy Danielle with our UBS. from next

Unidentified Analyst

much Hagan at Simon both takes -- I look much when and underlying quarter. as This to Can you trend about potential ortho And the pricing, towards have and younger market such talk one [ph] puts older and innovation on Danielle. you some the older patients? of factors Congrats strong on growth for treating the is follow-up.

Kevin Lobo

to of people now It’s I of really Yes. different aren’t active what backlogs older earlier, Look, get surgeons procedures the seen done, out want more done. the get who’ve people their referenced kind there, who -- procedures we’ve are surgery as to that trends demand than patients past. been in there the frankly, -- want

So see right? real procedures and rise. Mako a on continues continues to Percent we the be cementless continues hips done to Percent rise. to continue us, the done terrific for of of rise. of Percent being utilization. robotics to wins Mako increased to innovation So day, continues

of continuation prior not new. trends. So that’s Those are a

aging of we for continue And so there period the every pent-up coming and waiting It’s population, dynamic. going demand time. of day, XX,XXX come XX. to new that just isn’t some turn they’re some they’re to some people patients of And for, kind kept the

have the from that’s about. COVID side. on that And really And Stryker, that are our is a there demographics excited so our side. we we’re on There for hangover is portfolio

with Direct and we’re that, we’ve the was uptake of critically Insignia hip done fantastic which addressing stem in terrific our stem, seeing and In Anterior that growth hips. important, driving is

So in really product the we hips. year, in the was and to as if new an launched because segment last has growth that us that’s our important really really of and of for growing up, kind look picked the you -- that of procedures addressing

Unidentified Analyst

what were follow-up, one just just really off talking And of you about.

do joints competitive States, and innovation? continued in given you how in continue to position yourself United gains, expect do large at Looking you see driving share where the the

Kevin Lobo

Insignia chances. stopped. excited A we on have for our Look, the our on the demand system about. with gap hasn’t we’re best hip really side. market, Mako filled huge really we We which We’ve the like know

XD-printed We awesome have with Trident hip II. an cup

with more surgeons We head data offering, a cementless start confidence way on future. cementless. course, on huge have out which, Terrific coming in the ahead, will excellent of we’re five-year that in the publications which cementless, give even

team there’s so things And other the looking at. are

really our to we’re -- shore hinge year later that product come with going some exciting pretty And products up exciting. have revision. We that’s to this out

revision as on the have not-too-distant to Mako well future. plans have in We

-- There user going sit software incremental the we’re so residents. improve sort are experience, done. just everything for to not We the additions. improve already of So X.X launched to we’ve ago on not long tight training just of that

that and hand, going to a to winning And we’re we play so, think have we hand. continue

Operator

our Company. take from with question next We’ll Matson Mike & Needham

Mike Matson

just Guidance does ask you wondering it of something time spine? had before. It maybe I’m Is Mako sounds an of bring more give kind systems like overview navigation of you’ve how is System sort or in I And want this spine. one us about then latest I to version? when do in know different, into just kind could Q doing if well. fit you it it’s the of it. the

Kevin Lobo

well. Yes. fastest didn’t the ported is camera. What the that use this to this eventually Homegrown, a camera will do party on And we market. the quick. has lightning you to camera tell I’d It third Mako as be is

user It able of terms procedure. experience is that being to do So -- camera. be have terrific able in terrific see the that your to same will and really make

we’ve gotten feedback outstanding. the So, is

So, really we’ve excited that of at Mako spine, foot always and you’re forward. this good Q our this that we’re experience but is the user going to to And transfer navigation, putting with been have sort really best about. will

before impact. in fill really So application. we this is important launched, for once having this a to Mako -- And this robotic market us Mako’s is have even an will the it need already think

you technology another used have vision coming for appropriate early in about of we’ll tell A on that’s also But that. to We enabling details product out to me the our you at instruments time, give going what by the is. Spine that little be group.

that, to platform Spine. is very give compelling for technology So Mako combined enabling going us with

Mike Matson

and not you thought heard Okay. kind whether Got the this comment business? ask And companies. on I latest it. is I assume on having it we’ve material the But about have early, it or you just any guidance, issue, then I’d any some impact exposure sort Russia because other sanctions about just there’s your of but of anyway from can are given

Kevin Lobo

in should we’re and business industry kind really Russia approval but sanctions, they our of impact, negative be It expect, not That’s go a yes, it what we the on have Obviously, Stryker. was -- the the by should sanctions. business products humanitarian a the it’s picture overall for negative should so and to be honestly, Yes. is very through meaningless all But are Stryker. did a lockstep you with process. abiding would it abiding as obviously But industry-wide response by have it’s -- did small of impact. material that in lengthy. Yes, working the

Operator

come with from Securities. Our Newitter last question will Truist Richard

Richard Newitter

quarter. a right, the areas so at conference an question few on first the I in be months much Congrats your existing quarter, to Kevin, what going, could you interest about a were businesses. back There’s investor you? asked think across of

So though, of mind. obviously, still is top M&A,

So you? could I’m most investment And you of for where the think kind are where be do holes? the incremental just curious

Kevin Lobo

it’s a question. good Look,

talked the interested think we’re that in. I I’ve about adjacencies

job how tuck-in Those and different of targets. our near-term targets building create needle we that are lot financials I well. They existing for And we’re a And of really move sales don’t for terrific is there’s their able looking demand. at the know you businesses that sort to us feed returns foremost, evaluating tuck-in. that’s to but those tremendous overall Stryker, lists wish force of and Stryker. and very for our they’re very, do really think Each financial First the when growth, one sell, always do. of to

to I adjacency you, space, the interested change in the adjacencies no would we’re tell in. that

stimulation, about stimulation, in before. there’s nerve think of in I parts deep What there’s I a and And a future. brain is And peripheral big stimulation spinal as neuromodulation, I be past. within one the to to you mentioned cord treatment apnea. know there’s believe talked obviously, lot I’ve part stimulation, tell you is would of electrical do neuromodulation’s them that. sleep the going I’ve different There’s

I on tell been and time, haven’t of you little spinal challenging now, on adjacency more those way in position cold I a market talked bit past. But the that to better, kind cash next would we’ll we otherwise, the up the our have and only talked probably in debt that that’s starting able significant little our in it, are as in into cold so our of right aren’t on still and the year. I’ve hopefully, -- cash frees stimulation. QX very we’ve we’re a If other size Over about thing every the hot build a a move of maybe adjacencies said be much probably about past. I a more cord up, make radar And to one screen. tuck-ins just

Richard Newitter

on of a high businesses sight just the rollouts Mako, you good that’s transformative line to or back the years maybe single technologies Spine. in year, that’s then but have follow-up away. X better and X.X It’s not of pretty And few product yet obviously but digits with seemingly one Thanks.

think So around? just from I comes or out do of and stabilization of as look higher then spine ‘XX grind guess, a here we kind when

Kevin Lobo

Yes.

enabling Guidance, that But but yes, probably our that. have expandable Spine than really to about still the I I’d couple both, we good probably no of prefer it. a that what think portfolio bit. We’ve looking the we’re But question stabilization, is feeling like tech So a Q already at. would with word it’s gaps gets bolstered market, excited. grind, tough right? we’re a us is about We fill. Obviously,

coming game come on I Mako, enabling technology. secret Q. about and not of ahead Q shown we’ve instrument be And wait. will some be on with out yet. kind coming. from this be so talked and the I think used competitors least other us put surgeons Guidance. yes, ready the with that But the at have par launch it’s the in robotic Unfortunately, of probably platform with able of The will will launch the to It’s us which instruments, will then a we compatible before will It put to

our kind market assume doing period now, hear of going we’re keep So of hear could more hold to that typical of in to to get we’re that’s about is wouldn’t where -- we than try with to like which and business you’ll grow going own earlier that kind what probably Stryker. line yes, start growth, -- of right you’ll a about until to time, Mako. we’re we then But I

Operator

Thank remarks. you. to At back time, call to this like over closing I Lobo the would turn for Kevin

Kevin Lobo

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

Operator

We second your earnings thank today’s you This participation. Stryker’s call. does conclude quarter for

You time. at any may disconnect

Stryker (SYK) 3 Aug 232023 Q2 Earnings call transcript