Stryker Corporation

Welcome to the fourth 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. The following conference will include, will conduct a question and answer session. The conference call will be recorded for replay purposes. For your planning purposes and given amount of content we have to cover, in the event the call runs long, we plan to end the call no later than 6 p.m. EST. 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 most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliation to 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 over the call 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, Andy Pearce, Group President, MedSurge and Neurotechnology, and Jason Beach, Vice President of Finance and Investor Relations. For today's call, I'll provide opening comments, followed by Andy, who will expand on our strategic rationale for the pending Inari acquisition. Jason will then follow with the trends we saw during the quarter and some product updates. Finally, Glenn will offer further details on our 2024 results and 2025 guidance, as well as financial elements of Inari Medical and Spine, before we open the call to Q&A. First, as you saw in our press release, Glenn has decided to retire from Stryker, affected April 1st, after a very successful nine-year tenure as RCFO. He'll be replaced by Preston Wells, who most of you know from his time in the investor relations role. I would like to thank Glenn for his outstanding leadership and great partnership with me and Stryker Leaders as we grew the company significantly, delivered consistent strong financial results, and have positioned it very well for the future. Now let's move to our 2024 results, which were excellent, both for Q4 and the full year. Against double-digit comparatives from a year ago, organic sales growth exceeded 10% for both Q4 and the full year. Globally, for the full year, our instruments, endoscopy, medical, neurocranial, and trauma and extremities businesses all delivered double-digit organic sales growth. Full year U.S. organic sales growth was an impressive 10.6%, and international organic sales growth was 8.8%. International results were led by strong performances in Canada, emerging markets in Europe. International continues to represent a significant opportunity for both our legacy businesses and recent acquisitions. We also had excellent earnings performance, including the dilutive impacts from the seven acquisitions that we completed in 2024. We exceeded our adjusted operating margin goals, delivering an improvement of 200 basis points in Q4 and 110 basis points for the full year versus 2023. Our quarterly and full year adjusted EPS of $4.01 and $12.19 represents 16% growth for Q4 and 15% growth compared to the full year of 2023. This comprehensive performance demonstrates the durability of our high growth offense, driven by organic innovation, focused M&A, and terrific commercial execution, as well as strong earnings power. We have momentum entering 2025 and expect to continue delivering sales growth at the high end of MedTech, which is reflected in our full year 2025 guidance of organic sales growth of eight to 9%. This growth combined with continuing operating margin expansion translate to an adjusted EPS of $13.45 to $13.70 per share before considering the impact of Inari Medical, which Glenn will cover. We also announced an agreement to sell our spinal implants business, which has faced challenges in achieving our performance expectations. This sale will place the spinal implants business in the hands of new owners that have extensive experience in the spine market, and it allows us to better align our resources. We continue to be excited about Interventional Spine, which is one of our fastest growing businesses and was bolstered by the recent acquisition of Virtos Medical. Additionally, we remain committed to enabling technologies for the spine market, including our acute guidance system, co-pilot, and MakoSpine. These portfolio decisions reflect a continuation of our strategy to drive category leadership in attractive, high-growth end markets. I will now turn the call over to Andy.

Thanks, Kevin. Our entry into the peripheral vascular market is a logical adjacency to our neurovascular division. given their complimentary product portfolios and parallel sites of service. With the acquisition of Inari, Stryker will be a leading player in the fast-growing area of mechanical thrombectomy treatment for venous thromboembolism, or VTE. Mechanical thrombectomy for VTE represents the $15 billion addressable opportunity globally, with the US comprising nearly $6 billion of that opportunity. Today, less than one-fifth of treatments for VTE are addressed with mechanical thrombectomy, and we therefore believe this opportunity will expand over time as hospitals and clinicians look to elevate the standard of care for VTE. We believe Inari solutions, which are supported by clinical research demonstrating their effectiveness, represent a significant opportunity for our portfolio. Since bringing its clot-triever and flow-triever products to market in 2017, Inari has seen tremendous revenue growth in excess of 20% annually with a gross margin profile of approximately 85%. In addition to its treatments for VTE, Inari has invested in four exciting therapies to address unmet needs in other patient populations. These emerging therapies include chronic venous disease, dialysis access management, acute limb ischemia, and chronic limb threatening ischemia. Together, they represent over $5 billion of incremental market segment opportunity globally. We believe Stryker's international presence can help Inari more rapidly into global markets. In recent years, Inari has made strides globally and is currently helping improve patient outcomes in over 30 markets, primarily in Europe and certain parts of Asia. Its international business is approximately 7% of sales. Stryker has long been a global leader in interventional neurovascular procedures. And with the addition of Inari, we will be equipped with a more comprehensive interventional endovascular portfolio. By leveraging the R&D and clinical capabilities of both organizations, we will have a greater opportunity to accelerate innovation and meet customer needs. From a commercial perspective, we are excited about the great synergies that exist between our teams. Inari brings significant operational infrastructure, which includes a commercial organization with attractive call points, including interventional radiologists, vascular surgeons, and interventional cardiologists. Inari's strong commercial model and patient-focused mission aligns well with Stryker's culture and our go-to-market strategy at Neurovascular. Finally, I would like to thank and recognize Drew Hikes and the entire Inari leadership team for building a strong mission-driven company that is improving patient lives. Inari has done an incredible job establishing this segment and driving adoption through extensive clinical studies and commercial excellence over the last 10 plus years. I'd also like to thank the Stryker team for their tremendous efforts in bringing together our two companies. With our track record in M&A, we have conviction in our ability to drive a successful integration, deliver innovative solutions to our customers, and create significant shareholder value. With our long history of investing in customer-focused technologies, we look forward to achieving best-in-class performance through a world-class Salesforce, a highly complimentary and clinically compelling product portfolio, and an exciting pipeline to ensure we continue to grow this segment. And with that, I will now turn the call over to Jason.