Stryker Corporation

Welcome to the first quarter 2024 Striker Earnings Call. My name is Christine, 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 for 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 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 first quarter earnings call. Joining me today are Glenn Bainline, Stryker's CFO, and Jason Beach, Vice President of Finance and Investor Relations. For today's call, I will provide opening comments, followed by Jason, with the trends we saw during the quarter, as well as some product updates. Glenn will then provide additional details regarding our quarterly results before we open the call to Q&A. In the first quarter, we delivered organic sales growth of 10%, with double-digit growth in med-surg and neurotechnology and high single-digit growth in orthopedics and spine, despite one less-selling day and tough comparables from a year ago. This reflects our team's continued strong commercial execution. Our results were led by very strong U.S. performance, notably in instruments, medical, endoscopy, trauma and extremities, and MAKO. Internationally, growth momentum continued against strong double-digit growth organic sales comparables from the first quarter of last year. We expect this growth rate to accelerate for the remaining of the year as international remains a significant opportunity for us. We delivered quarterly adjusted VPS of $2.50, reflecting 16.8% growth compared to the first quarter of 2023, driven by our strong sales performance and margin expansion. As anticipated, we've begun to accelerate our M&A activity. We just completed the acquisition of MFPHD, a leading provider of modular stainless steel wall systems. This further enhances our communications business unit portfolio within endoscopy and helps us meet our customers' needs for turnkey operating room design and construction. At the end of the quarter, we also closed on our acquisition of SURF within our HIP business. Our deal pipeline is strong, and we expect to be active over the course of the year. With one quarter behind us, we now expect an increased full-year organic sales growth of 8.5% to 9.5%, and we are increasing our adjusted EPS range to $11.85 to $12.05 a share. Coming off organic sales growth of 9.7% in 2022 and 11.5% in 2023, this guidance demonstrates the durability of our high growth and is a testament to our commercial strength and extensive pipeline of innovation across the company. Also, it reinforces our ability to meet our target of 200 basis points of operating margin expansion by 2025. Next, I want to thank our teams for their ongoing commitment to talent and culture, which is reflected in the recognition of Stryker for the 14th year in a row as one of Fortune's 100 best companies to work for. Our operating model, talent, and culture are true differentiators for us. In addition, we recently published our fourth annual comprehensive report, which captures our commitment and disclosures on corporate responsibility. I will now turn the call over to Jason.

Thanks, Kevin. My comments today will focus on providing an update on the current environment, capital demand, and select product highlights. Procedural volumes remain strong in the first quarter, in line with our expectations, driven by continued adoption in robotic assisted surgery, demographics, a stable pricing environment, and healthy patient activity with surgeons. And while pockets of supply constraints remain, our supply continues to be stable overall. Demand for our capital products remained healthy in the quarter with continued elevated backlog across our endoscopy and medical divisions. Our MAKO direct to patient campaign continues to perform well, which contributed to our very strong MAKO growth with record first quarter installations in both the U.S. and internationally. This will continue to drive our hips and knees businesses. In April, we performed our first cases using the Pangea plating system in our trauma and extremities division and are gearing up for a full launch. Pangea is the largest launch in trauma's history as it offers a comprehensive system that will enable larger hospital conversions. Next, we received approval from the FDA for our new LifePak 35 defibrillator and monitor. This is a flagship product within our emergency care business unit and was one of the catalysts for our acquisition of PhysioControl. LifePak 35 is a modern platform with a touchscreen interface that brings advanced connected capabilities to improve workflow. We will launch this product at the end of Q2 and it will have a multi-year benefit to our medical division. Lastly, Mako Spine and Copilot are pacing to launch in Q4, followed by the shoulder application at the end of the year. We continue to receive positive feedback from surgeons who have been exposed to these technologies. With that, I will now turn the call over to Glenn.