Stryker Corporation

Welcome to the third quarter 2023 Striker Earnings Call. My name is Krista, 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 an exhibit to Stryker's current report on Form 8-K 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 third 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 will provide opening comments, followed by Jason, with the trends we saw during the quarter and some other product updates. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A. Before I discuss the quarter, I would like to address the concerns around GLP-1 and what is being misunderstood. Our knee business is not at risk for a slowdown. There is an oversimplification taking place as it relates to the relationship between weight and knee replacements. This ignores the more important aspects of activity level and genetics we are in fact optimistic about the positive impacts of these drugs in both the short term and the long term in the short term it will help to make ineligible people eligible for surgery sooner and in the long term it will likely lead to more surgery as people increase their activity levels with that said the rate and persistence of adoption of these medicines is still a large unknown as there are significant barriers to this taking place. Lastly, as a reminder, we have a very diversified business with needs representing about 10% of our sales. Now, moving to our third quarter results, we delivered strong organic sales growth of 9.2% against last year's nearly 10% comparable despite one less selling day versus 2022. This performance included double-digit growth in med-surgeon neurotechnology and high single-digit growth in orthopedics and spine, reflecting a sustained robust demand environment and our team's strong commercial execution. Our results were strong across the globe with high single-digit growth in both the U.S. and international markets. In addition, we remained focused on our pricing initiatives, once again realizing positive overall price. we delivered quarterly adjusted EPS of $2.46, reflecting a 16% growth compared to the third quarter of 2022. This result was primarily driven from the strength of our sales, but also demonstrates continued margin recovery. Finally, we are narrowing our expectations for 2023 to the high end of our previously provided guidance ranges and now expect full-year organic sales growth of 10% to 10.5%, and earnings per share of $10.35 to $10.45 a share. Coming off full year 2022 organic sales growth of nearly 10%, a 10-plus percent organic sales growth in 2023 reflects the strength of our super low cycle of innovation and our team's sustained high performance. And we are encouraged by an important step in our margin improvement this year. 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 make-out, and an update on product launches. Procedural volumes remain strong, and we continue to expect patient backlog will support elevated orthopedic procedural demand through 2024. And while hospital staffing pressures and supply constraints continue in pockets around the globe, these challenges are resolving gradually and will continue to be a tailwind through the end of the year and into 2024. Demand for our capital products remain healthy in the quarter with double-digit organic growth in our endoscopy and instruments divisions. Our capital order backlog remains consistent with Q2 and elevated well above normal levels. Also, demand for Mako remains robust with strong U.S. and international installations, which will continue to drive our hips and knees business. Next, our product super cycle continues to drive positive momentum. In Q3, our 1788 camera platform moved to its full launch, which is gaining traction in the market and driving strong order growth. In addition, we received 510K approval for our Pangea plating system in our trauma and extremities division. Pangea will be the largest launch in trauma's history and is a very comprehensive system that will facilitate complete hospital conversion. We are gearing up for a full launch in the second quarter of 2024. We have also extended the capabilities of our Vocera platform to now be compatible with our newly approved Prime Connect stretchers, the first wireless stretcher on the market. This wireless feature can be added to existing and new stretchers and will help address patient safety in the emergency room setting. These launches will continue to support our growth for multiple years. Our Mako spine and shoulder applications are on track, and we've received positive feedback from surgeons who have been exposed to the technology. As a reminder, on November 8th, we are hosting our Investor Day with the theme Delivering Leading Growth, which will be webcast live on the Investor Relations page at Stryker.com. We will have prepared remarks from numerous leaders across Stryker, followed by a guided product tour for those attending live. We will showcase several of our exciting product launches with investors and analysts having the opportunity to interact with many members of our leadership. We're excited to provide our priorities and expectations for Stryker in the coming years. With that, I'll now turn the call over to Glenn.