Stryker Corporation

Welcome to the third 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 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 as an exhibit to Stryker's current report on Form 8-K filed today with the SEC. I'll now turn the call 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 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 third quarter, we delivered robust organic sales growth of 11.5%. Our performance included strong double-digit growth within MedSurg and neurotechnology and nearly 10% growth in orthopedics and spine. This broad performance reflects healthy demand across our diverse product portfolio and our team's steadfast commercial execution. Our strong results reflect double digit organic growth from our medical, neurocranial, endoscopy, trauma extremities, hips and knees businesses. Our growth was well balanced between the US and international with both rising double digits organically. All international regions showed strength in the quarter, and we continue to see international markets as key catalysts for our long-term growth. We stayed active on the M&A front, completing several deals in the quarter. In September, we acquired Care AI, which strengthens our healthcare IT and wirelessly connected offerings. We also acquired Niko Corporation, which enables minimally invasive surgery for tumor and intracerebral hemorrhage procedures. Lastly, we acquired Virtos Medical, which provides a minimally invasive solution for treating chronic lower back pain caused by spinal stenosis and enhances our pain management portfolio. We remain committed to complementing our growth through acquisitions and have a strong deal pipeline and healthy financial capacity. We delivered adjusted quarterly APS of $2.87, reflecting 16.7% growth compared to the third quarter of 2023. Finally, we are narrowing our expectations for 2024 to the high end of our previously provided guidance ranges and now anticipate full year organic sales growth of nine and a half to 10% and adjusted EPS of $12 to $12.10. Our updated guidance reflects the continued momentum from our product innovation, healthy procedure volumes and terrific commercial execution across the globe. We are on track and remain committed to our goal of 200 basis points of margin expansion by the end of 2025. This includes 100 basis points of margin expansion this year while offsetting dilution from an M&A. 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 recent acquisitions. Procedural volumes remained healthy in the third quarter in line with our expectations and underscored by continued adoption of robotic-assisted surgery. We continue to expect strength in procedural demand through the end of the year. Demand for our capital products was strong in the quarter with an elevated backlog across our capital businesses. Patient and customer interest in Mako was highlighted by record Q3 installations both worldwide and in the U.S., with high utilization rates across the globe. We expect the sustained momentum from installations and utilization will continue to drive growth in our hips and knees businesses. Our latest platform launches continue to experience success in the marketplace. Our Pangea plating system is progressing well with a full launch expected in the U.S. by the second half of 2025. Our LifePak 35 defibrillator and monitor has a strong order book and sales have begun to ramp. Additionally, robust adoption of our 1788 visualization platform continues to contribute to the growth we are seeing in our endoscopy business. Lastly, we've begun early cases with both our Spine Guidance 5 software featuring Copilot and our Mako Spine robots. As with prior product launches, these spine offerings will be on a limited market release for some time as we refine training protocols. NACO Shoulder is on track to launch at the end of the year. We continue to receive positive feedback from surgeons who have seen these products. From an inorganic perspective, our 2024 acquisitions reinforce our dedication to improving outcomes across the continuum of care and our commitment to meeting our customers' needs. Year to date, we have closed seven acquisitions while investing approximately 1.6 billion to complete. In 2025, we expect these acquisitions will contribute approximately 300 million to sales. With that, I'll turn the call over to Glenn.