Stryker Corp at Wells Fargo Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Larry Biegelsen - Wells Fargo - Analyst : Look forward to it. All right. So, Spencer, Stryker's orthopedic business had a really impressive first half of 2024, growing by our math, 8.5%, 9% adjusting for selling days. What drove the growth? And how are you thinking about the second half of the year and into 2025 for orthopedic and spine?

Question: Larry Biegelsen - Wells Fargo - Analyst : And so you touched upon it. That's helpful. Procedure volumes, I think, Kevin said on the Q2 call, July was off to a good start. How are you thinking about just volumes in general going forward?

Question: Larry Biegelsen - Wells Fargo - Analyst : And when you're talking about the mid-single digits and outpacing by 200 to 300 basis points, I think you're specifically talked about Recon?

Question: Larry Biegelsen - Wells Fargo - Analyst : That's helpful. And price, you touched upon it. Orthopedic pricing was low single digit -- or it was low, like not even less than 1%, close to flat.

Question: Larry Biegelsen - Wells Fargo - Analyst : Less negative, but a lot less negative. I mean it was --

Question: Larry Biegelsen - Wells Fargo - Analyst : Yes. negative 0.3%, negative 0.4% in Q1 and 2. Well, first half was negative 0.3%. Historically, it was like negative 2% to 3%. How sustainable is that?

Question: Larry Biegelsen - Wells Fargo - Analyst : That's helpful. On Q2, you talked about it being the best second quarter ever for Mako installations. Jason probably did.

Question: Larry Biegelsen - Wells Fargo - Analyst : And the capital, so the capital environment remains healthy in your view?

Question: Larry Biegelsen - Wells Fargo - Analyst : Spencer, so we had Zimmer here today. Before we move on and talk about some of your businesses, I'm just curious, they talked about an ERP issue negatively impacting their sales in the second half of this year, August on by 1% for the full year. I think we looked at it maybe that $75 million. Are you seeing anything in the market?

Question: Larry Biegelsen - Wells Fargo - Analyst : Okay. Thanks for that. And then turning to hips and knees, starting with Mako for knee. What's next for Mako from a technology standpoint? People ask, do you need a smaller version for ASCs? Or do you need a non-CT version? What's like the next major step?

Question: Larry Biegelsen - Wells Fargo - Analyst : The version for ASCs?

Question: Larry Biegelsen - Wells Fargo - Analyst : Right. So Mako is the new application spine and shoulder. So congratulations on the clearance for spine.

Question: Larry Biegelsen - Wells Fargo - Analyst : And what's differentiated about your offering?

Question: Larry Biegelsen - Wells Fargo - Analyst : So the implants are proprietary to the robot? Is it an open system? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, SYK.N - Stryker Corp at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo - Analyst : And are you ready to start doing implants, procedures?

Question: Larry Biegelsen - Wells Fargo - Analyst : So what does this mean for your spine business going forward from a growth standpoint?

Question: Larry Biegelsen - Wells Fargo - Analyst : So if I heard you correctly, '25 maybe in line but still in line with the market for at least for another year, it won't be until maybe '26 when you can accelerate?

Question: Larry Biegelsen - Wells Fargo - Analyst : Let's go to the shoulder then, okay?

Question: Larry Biegelsen - Wells Fargo - Analyst : All right. So shoulder is still on track?

Question: Larry Biegelsen - Wells Fargo - Analyst : Which is bigger now, reverse or anatomical? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, SYK.N - Stryker Corp at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo - Analyst : And why will the robot only be able to do reverse initially?

Question: Larry Biegelsen - Wells Fargo - Analyst : And how will your robot be differentiated from the Zimmer one that's approved for both anatomical and reverse?

Question: Larry Biegelsen - Wells Fargo - Analyst : Do you expect physicians -- for shoulder and spine, do you expect the majority of doctors who use it to buy a new Mako system? Or will it be -- it sounds like you're talking about the --

Question: Larry Biegelsen - Wells Fargo - Analyst : I mean, you just talked about shoulder just an upgrade for doctors who primarily do hip and knees and some shoulders. What about new capital?

Question: Larry Biegelsen - Wells Fargo - Analyst : I mean even if we think about upgrades, like just adding the application there's probably a pretty significant financial benefit to Stryker depending on what you charge for spine and shoulder upgrade. Is it a hardware upgrade as well as the software upgrade?

Question: Larry Biegelsen - Wells Fargo - Analyst : So I did back of the envelope math. I know you probably saw my numbers, 2,500 Makos in the field, my guess it's $200,000 ASP for the upgrade for spine and shoulder by my math, that's a $1 billion opportunity just for upgrades alone. How should we think about this --

Question: Larry Biegelsen - Wells Fargo - Analyst : It wasn't exactly on the fly. But how should we think about the financial opportunity for you?

Question: Larry Biegelsen - Wells Fargo - Analyst : And the other line, we book ROSA.

Question: Larry Biegelsen - Wells Fargo - Analyst : Yes. Mako, sorry. All right. That's probably my biggest [co-pod].

Question: Larry Biegelsen - Wells Fargo - Analyst : If that's my worst co-pod.

Question: Larry Biegelsen - Wells Fargo - Analyst : Okay. And let's move on. Sorry about that. All right. Trauma and extremities. Pangea, you guys have talked about that being a pretty -- a very significant launch for you guys. What are you seeing so far? And how should we think about trauma growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, SYK.N - Stryker Corp at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo - Analyst : So it's a pretty consolidated market. You're number two behind J&J [in 2Q]. What would it take for you to become number one? Is there a pathway in trauma?

Question: Larry Biegelsen - Wells Fargo - Analyst : And just going back to shoulder, the subscapularis sparing.

Question: Larry Biegelsen - Wells Fargo - Analyst : So I know I jumped around trauma back to shoulders. It's a little bit complicated because the reverse shoulder, you don't have the rotator cuff and that's the bulk on the market. You said, anatomical is where you would do the subscap sparing, I believe, but that's like the smaller and declining part of the market. Why is it important then to do subscapularis sparing?

Question: Larry Biegelsen - Wells Fargo - Analyst : All right. Sorry to jump around here.

Question: Larry Biegelsen - Wells Fargo - Analyst : So you get -- everybody gets asked about 2025. It's like just the price of the entry here. So how are you thinking about Stryker orthopedic spine -- orthopedic and spine growth in '25? Could Mako shoulder and spine, plus Pangea accelerate the growth or just continue the strong momentum we've seen so far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, SYK.N - Stryker Corp at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo - Analyst : Okay. A couple more questions in the few minutes we have left here. ASCs, I've always wondered how you guys coordinate between medsurg and orthopedics on the ASC side. How do you ensure alignment?

Question: Larry Biegelsen - Wells Fargo - Analyst : And one of your responsibilities is also business development?

Question: Larry Biegelsen - Wells Fargo - Analyst : Gaps in the portfolio, maybe explain to people also Vertos acquisition is actually interventional --?

Question: Larry Biegelsen - Wells Fargo - Analyst : But just so people know, interventional spine is not -- actually, your -- maybe Jason, you could explain. It's not -- I didn't ask about it early on because it's not under your --

Question: Larry Biegelsen - Wells Fargo - Analyst : Great. Spencer, Jason, thanks so much for being here. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:00PM, SYK.N - Stryker Corp at Wells Fargo Healthcare Conference