Stryker Corporation

Welcome to the second quarter 2023 Stryker earnings call. My name is Todd and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Following the conference, we will conduct a question and answer session. 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. Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is in an exhibit to Stryker's current report on Form 8K filed today with the SEC. I will now turn the call over to Mr. Kevin Lobo, Chair and Chief Executive Officer, you may proceed, sir.

Welcome to Stryker's second quarter earnings call. Joining me today are Glenn Bainline, Stryker's CFO, and Jason Beach, Vice President of Investor Relations. For today's call, I'll provide opening comments, followed by Jason, with the trends we saw during the quarter and some other updates. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A. In the second quarter, we delivered organic sales growth of 11.9% with double-digit growth in both med-surgeon neurotechnology and orthopedics and spine. This comprehensive performance demonstrates the diverse and attractive markets that we play in and our ability to drive growth through strong commercial execution. We are also pleased with the continued positive outcomes of our globalization efforts. Our international business demonstrated strong performance with double-digit growth, complementing our strong and fast-growing U.S. business. In addition, we continue to see traction with our pricing initiatives, again delivering positive pricing in the second quarter. During the quarter, we continue to realize improvements in component availability, although disruptions remain in parts of our business. Our teams have demonstrated good agility in addressing these situations, proactively mitigating much of their impact. We delivered quarterly adjusted EPS of $2.54 a share, reflecting 13% growth compared to the second quarter of 2022. This result was primarily driven from the strength of our sales, but also marks the beginning of our margin recovery. We expect margins to continue to expand throughout the remainder of the year. Finally, with half the year behind us and our solid momentum, we have increased our expected full year organic sales growth to a range of 9.5% to 10.5% and increased our expected earnings per share to $10.25 to $10.45 per share. I will now turn the call over to Jason.

Thanks, Kevin. My comments today will focus on providing an update on the current environment, as well as capital demand, including MAKO, acquisitions, and an update on product launches. Procedural volumes have largely recovered to pre-COVID levels in most countries. And while volumes are strong, patient backlog still remains, and we believe the elevated orthopedic procedural demand will continue well into 2024. While volumes have largely recovered, hospital staffing pressures and supply constraints continue in pockets around the globe. These challenges are resolving gradually, as we expected, and will continue to be a moderate tailwind as we move through the second half of 2023 and into 2024. Additionally, demand for our capital products remained healthy in the quarter, as evidenced from the double-digit organic growth of our medical, instruments, and neurocranial divisions. Also, demand for Mako remains robust with strong U.S. and international performances, which is helping drive our continued growth in hips and knees. Next, capital order backlog remains elevated well above normal levels. Also, during the quarter, we executed a small tuck-in deal and also closed on the serous endovascular acquisition. Furthermore, our product super cycle continues to drive positive momentum. In late Q2, we successfully completed a limited launch of our 1788 camera platform and are poised for full launch in Q3. We also received FDA clearance for cranial guidance, our newest application under our Q guidance platform. This empowers surgeons to quickly plan a safe surgical approach using multiple imaging modalities and then navigate instruments with specific surgical procedures. Finally, we remain on track for the launch of our LifePak 35 defibrillator outside of the U.S. in the fourth quarter of this year and in the U.S. in early 2024. These launches will continue to support growth over multiple years. With that, I'll now turn the call over to Glenn.