Stryker Corporation

Welcome to the fourth quarter and full year 2023 Striker earnings call. My name is Luke, 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'll conduct a question and answer session. This conference call is being recorded for replay purposes. Before we begin, I'd like to remind you that discussions during this conference call will include forward-looking statements. Factors that could cause actual results of different material 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's an exhibit to Stryker's current report on Form 8K filed today with the SEC. I'd now like to turn the call over to Mr. Kevin Lobo, Chair and Chief Executive Officer. You may proceed, sir.

Welcome to Stryker's fourth 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, MAKO performance insights, and updates on recent acquisitions. Glenn will then provide additional details regarding our quarterly results and 2024 guidance before opening the call to Q&A. First, I want to recognize and celebrate our achievement of surpassing $20 billion in sales. We continue to be a high-growth company with a focus on our mission to deliver for our patients and customers. As we begin 2024, I am very excited about our future. We are in a strong position with robust demand across both procedures and capital, easing macro constraints, and a strong pipeline of innovation. I want to thank our over 50,000 employees for their unrelenting determination, agility, and performance. We've delivered terrific sales growth of over 11% in Q4 and the full year, despite strong comparatives from the prior year. Our commercial execution, including many successful product introductions, was excellent across our businesses and regions. Globally, for both Q4 and the full year, we had double-digit organic sales growth in instruments, endoscopy, medical, neurocranial, hips, knees, and trauma extremities. For the full year, we also had double-digit organic sales growth both in the U.S. and internationally. Spine and neurovascular also demonstrated good performances while making notable advancements in future innovations and acquisitions. It was a comprehensive performance across our businesses, and we have built significant momentum entering 2024. For the sixth straight year, our international sales growth excluding China VBP, outpaced our strong U.S. business. Canada, Australia, and most emerging markets had double-digit growth, while Europe and Japan grew in high single digits. International continues to be a large growth opportunity for us. Next, we delivered quarterly and full-year adjusted EPS of $3.46 and $10.60, respectively, which represents 15% growth for Q4 and 13% growth compared to the full year of 2022. This was driven by our strong sales, but also demonstrates our continued operating margin recovery. We remain focused on driving high growth now and in the future through investments in organic innovation and M&A. We expect and continue to deliver sales growth at the high end of MedTech, which is reflected in our full year 2024 guidance of organic sales growth of 7.5% to 9%. This growth, combined with an accelerated market expansion plan, translates to adjusted EPS of $11.70 to $12 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 MACO, BOSERA, and our recently announced agreement to acquire CERF. During the quarter, we saw strong procedural demands. We continue to expect the ortho markets will remain strong in 2024, driven by continued adoption in robotic-assisted surgery, demographics, a more favorable pricing environment, and healthy patient activity levels with surgeons. While supply constraints continue in pockets around the globe, our supply is stable overall and gradually improving. Additionally, demand for our capital products remain very robust in the quarter, with double-digit organic growth in medical, instruments, and endoscopy. Hospital CapEx budgets remain healthy, and our capital order book remains elevated as we enter 2024. Next, specific to MAKO, we had a record quarter of installations globally. The progress of our MAKO offense, including our recent direct-to-consumer campaign, has resulted in strong growth of our install base alongside continued increases in utilization. In the U.S., we saw 60% of knees and 34% of hips performed using MAKO as we exited the year. Globally, we exited the year with just over 40% of knees and nearing 20% of hips performed using MAKO. We had momentum and a significant opportunity remains as MAKO adoption increases. We are nearing the two-year anniversary of our Vocera acquisition and remain very excited about the acquired assets as it provides a platform for us to be at the intersection of medical devices, software, and clinical support. With integration activities now complete, which included a migration toward the cloud as well as a commercial reorganization, we are pleased with the accelerating double-digit sales and order growth achieved as we exited the year. In 2023, we saw many cross-sell wins, including new bed business leveraging Vocera. Also, we completed the seamless experience created between the Vocera platform and both ProQIDI and our new wireless stretcher. This year and beyond will bring even more integrations and enhancements with a focus on scalability, user experience, automated workflow, and documentation. We expect strong double-digit annual sales growth to continue for years to come, and we are excited to have Ocera as part of the Stryker family. Lastly, we are progressing with our recently announced agreement to acquire Surf, and we expect the deal will close this quarter. With that, I will now turn the call over to Glenn. Thanks, Jason.