Stryker Corporation

Welcome to the first quarter 2025 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 the discussions during this conference call will include forward-looking statements. Factors that could cause actual results that 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 that's an exhibit to Stryker's current report on Form 8-K filed today with 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 first quarter earnings call. Joining me today are Preston Wells, Stryker 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. Preston will then provide additional details regarding our quarterly results before opening the call to Q&A. In the first quarter, we delivered robust organic sales growth of 10.1% with double-digit growth in med-surgeon neurotechnology and high single-digit growth in orthopedics, despite one less selling day and a 10% comparable from a year ago. This performance reflects the sustained demand across our product portfolio and our team's vigorous commercial execution. Our results were led by a very strong U.S. performance, including double-digit organic growth from our trauma and extremities, neurocranial, medical, endoscopy, and instruments businesses, and strong high single-digit organic growth in our hips and knees businesses. Internationally, we had healthy growth across a broad range of markets with notable strength in Australia, New Zealand, Japan, and Europe. we continue to see international markets as a significant catalyst for future growth. We delivered quarterly adjusted EPS of $2.84 a share, reflecting 13.6% growth compared to the first quarter of 2024, driven by our strong sales performance and margin expansion. On the M&A front, we completed the acquisition of Inari Medical at the end of February. Integration is going well, and we're excited to have Inari as part of Stryker. Additionally, we have completed the sale of our U.S. spinal implants business. We're grateful to our former spine team members for their contributions and wish them continued success. We have momentum exiting Q1 and now anticipate full-year organic sales growth of 8.5% to 9.5% and adjusted earnings per share of $13.20 to $13.45. 2025 will mark the fourth consecutive year that we will hover around double-digit organic sales growth, following 9.7% in 2022, 11.5% in 2023, and 10.2% in 2024. The durability of our high growth is as a result of our commercial execution, extensive innovation pipelines across the company. Our guidance also implies that our operating margin expansion will be approximately 100 basis points, despite the negative impact of tariffs, dilution from Inari, and the loss of spinal implant contributions for nine months. Finally, I'd like to express gratitude to our teams for their unwavering dedication to our culture, exemplified by Stryker being recognized for the 15th consecutive year on Great Place to Work's 100 Best Companies to Work For list. Our operating model, exceptional talent, and differentiated culture continue to set us apart. 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 healthy in the first quarter, underscored by continued adoption of robotic-assisted surgery, we also continue to benefit from a stable pricing environment, favorable demographic trends, and the ongoing shift toward ASCs. We expect the strength in procedural demand to continue through the remainder of the year. Demand for our capital products was strong once again in the quarter with an elevated order book across our capital businesses. Mako continues to drive patient and customer interest, highlighted by our best ever Q1 for installations in the US and worldwide, with high utilization rates across the globe. We expect the sustained momentum from installations and utilizations will continue to drive growth in our hips and knees businesses. We continue to receive positive feedback on Mako Spine and Shoulder and remain on track for full US commercial launch of Mako Spine, in the second half of this year at Mako's shoulder in the first quarter of 2026. We recently launched our next generation Mako 4 smart robotic system. It features a larger monitor for improved visibility, a smaller OR footprint for fast setup and transport, and integrates more seamlessly with our fourth generation queue guidance system. We remain excited about the momentum Mako provides for our business. In addition to being the leader in robotics and orthopedics, we are also the leader in cementless knees, which continue to grow at a steady pace. During Q1, there are two publications showing 10-year survivorship, exceeding 99% for a cementless offering. Next, our latest platform launches continue to thrive in the marketplace. Our LifePak 35 defibrillator and monitor continues to experience robust demand, fueling a strong order book, and driving meaningful sales in the quarter. We are excited about the international opportunities that remain for LifePak 35 and anticipate launching in additional international markets later this year, including Europe and Japan. Our Pangea plating system also continues to drive strong growth, and increased awareness of our comprehensive offering of trauma products. We continue to progress through our launch case and expect to release Pangea in Australia and Canada this year and in Japan in the first half of 2026. Lastly, as Kevin mentioned in his remarks, we completed the acquisition of Inari during the quarter. Inari's performance to date was strong as we expected. and its results are reported within our vascular division that includes both the neurovascular and peripheral vascular businesses. In addition to Inari, our prior year acquisitions performed well as anticipated. With that, I will now turn the call over to Preston.