Stryker Corporation

Welcome to the second quarter 2024 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 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 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. Reconciliation to the most directly comparable GAAP financial measures can be found in today's press release as an exhibit to Stryker's current report on Form 8K filed today with the SEC. I now turn over the call 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 Finance and Investor Relations. For today's call, I'll provide opening comments, followed by Jason with the trends we saw during the quarter and some product updates. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A. In the second quarter, we delivered strong organic growth sales of 9% against last year's nearly 12% comparable. Our performance included high single-digit growth across both med-surgeon neurotechnology and orthopedics and spine. This broad performance reflects our diverse business model, sustained demand for our products, and our team's strong commercial execution. Our organic growth was well-balanced between the U.S. and international, with both growing roughly 9%. Our strong results were led by double-digit organic growth in instruments, neurocranial and Mako, and high single-digit growth in our medical, endoscopy, neurovascular, trauma and extremities, and knee businesses. Internationally, our organic sales growth accelerated from the first quarter, with strength in Europe, emerging markets, Australia and New Zealand, and Japan. As we expand our global share, we continue to see international markets as a key catalyst for our long-term growth. On the M&A front, we continue to execute on our offense. In July, we completed the acquisition of Ardalan, which specializes in innovative soft tissue fixation products for foot and ankle and sports medicine procedures. Also yesterday, we closed our acquisition of Molly Surgical. Molly offers wire-free soft tissue localization technology that allows surgeons to precisely mark the location of lesions for removal during breast cancer surgeries. Molly's differentiated technology enhances our endoscopy portfolio. We remain bullish about our deal pipeline, and we expect continued activity as we move into the back half of the year. We delivered quarterly adjusted ETS of $2.81, reflecting 10.6% growth compared to the second quarter of 2023. This performance was primarily driven by the strength of our sales, as well as continued expansion of our margins. Finally, we are raising our expectations for 2024 and now anticipate full-year organic sales growth of 9% to 10% and adjusted earnings per share of $11.90 to $12.10. Coming off full-year organic sales growth of 11.5% in 2023, our updated guidance reflects the strength of our capital backlog, innovative product portfolio, healthy procedure volumes, and passionate commercial execution across the globe. 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 remained robust in the second quarter, driven by strong fundamentals, increased adoption of robotic-assisted surgery, and healthy patient activities with surgeons. We continue to expect strength in procedural demand as we move into the second half of the year. Demand for our capital products also remained healthy in the quarter with continued elevated backlog across our endoscopy and medical divisions. Continued patient interest in MAKO contributed to our best ever second quarter for installations worldwide and in the U.S. with high utilization rates across the globe. Also in the quarter, we reached over 1 million robotic total knee procedures performed to date with MAKO and Triathlon. We expect the growing momentum in installations and utilization will continue to drive sustained growth in our hips and knees businesses. Our recent product introductions highlight our commitment to innovation and the durability of our innovation cycle. Pangea's comprehensive plating system complements our market-leading nailing portfolio and will enable sustained above-market growth in our core trauma business. We expect Pangea availability to continue to ramp and reach full launch in the U.S. by the second half of 2025. Next, our LifePak 35 defibrillator and monitor continues to drive significant excitement in the marketplace. This flagship product within our emergency care business unit was launched near the end of the second quarter with a strong order book, and we believe it will have a multi-year benefit to our medical division. Lastly, we announced this morning that we received FDA clearance for our Spine Guidance 5 software featuring CoPilot, which introduces smart powered instruments to our cue guidance ecosystem. This innovative technology is designed to support surgeon precision by providing auditory and sensory alerts when approaching anatomical boundaries during spinal procedures and enhance patient safety and outcomes. Co-Pilot is an important step on our development pipeline, which also includes MAKO Spine. MAKO Spine with Co-Pilot is on track to launch in Q4, and MAKO Shoulder is on track to launch at the end of the year. With that, I will now turn the call over to Glenn.