The paragraph details the commencement of the Stryker First Quarter 2025 Earnings Call, led by Kevin Lobo, Chair and CEO, accompanied by Preston Wells, CFO, and Jason Beach, Vice President of Finance and Investor Relations. The call includes forward-looking statements and non-GAAP financial measures. Kevin Lobo notes that Stryker delivered a strong first-quarter performance with 10.1% organic sales growth, marked by double-digit growth in MedSurg & Neurotechnology and high-single-digit growth in orthopedics. This growth, despite challenges such as one less selling day and a 10% year-over-year comparison, is attributed to sustained product demand and effective commercial execution, with the U.S. market performing particularly well.

In the second paragraph, the company reports strong international growth, particularly in Australia, New Zealand, Japan, and Europe, and sees these markets as important for future expansion. The quarterly adjusted EPS increased by 13.6%, driven by strong sales and margin growth. They completed the acquisition of Inari Medical and sold their U.S. Spinal Implants business. They project organic sales growth of 8.5% to 9.5% and adjusted EPS of $13.20 to $13.45 for the full year. The company highlights its consistent high growth due to effective commercial execution and innovation. Despite challenges from tariffs, acquisition dilution, and the business sale, they expect a 100 basis point operating margin expansion. Stryker is recognized for the 15th year as a top workplace, crediting its strong operating model and culture. The paragraph concludes with a transition to Jason Beach discussing the current market and products.

In the first quarter, procedural volumes remained strong, driven by the adoption of robotic-assisted surgery and favorable market conditions. The demand for capital products, especially the Mako system, boosted growth in hips and knees businesses. There are plans to fully launch Mako Spine in the U.S. later this year and Mako Shoulder in 2026. The new Mako 4 smart robotic system has been introduced with improved features. Cementless knees showed high survivorship rates, and new platform launches like the LIFEPAK 35 defibrillator are experiencing robust demand with plans for international expansion, including in Europe and Japan.

The paragraph discusses the financial performance and expansion efforts of a company. The Pangea plating system is driving growth in trauma products, with launches planned for Australia, Canada, and Japan. The company acquired Inari, adding strength to its vascular division. Organic sales growth reached 10.1% in the first quarter, benefiting from favorable pricing and despite currency challenges. U.S. and international sales showed strong growth, with adjusted EPS increasing by 13.6% from the previous year. The MedSurg and Neurotechnology segment saw significant organic sales growth both domestically and internationally.

The paragraph details the company's strong organic sales growth across various segments. Surgical technologies and medical businesses in the U.S. achieved double-digit growth, with significant contributions from endoscopy, sports medicine, emergency care, and Sage businesses. The vascular and neurocranial segments also saw notable growth. Internationally, MedSurg and Neurotechnologies achieved 8.2% growth despite supply disruptions, with significant contributions across various regions. Orthopedics, particularly knee and hip businesses, experienced substantial growth driven by robotic-assisted procedures and innovation in product offerings. Overall, the company's diverse portfolio and geographic reach facilitated this impressive performance.

In the highlighted quarter, Pangea's trauma performance led the company's growth, while the U.S. spinal implants business remained flat and other orthopedic business declined. International orthopedic markets, however, saw an 8.8% organic growth. The company's adjusted gross margin improved to 65.5%, boosted by manufacturing efficiencies and pricing strategies, while the operating margin increased to 22.9%, offset slightly by increased SG&A spending related to the Inari acquisition and other growth investments. Adjusted other income and expense rose by $24 million due to interest expenses from debt issuances, predicting a full-year 2025 expense of $430 million. Additional debt and cash were used to fund the acquisition.

The company has updated its 2025 financial guidance, taking into account factors like increased interest expenses and lower interest income. The first-quarter adjusted effective tax rate was 13.7%, and the full-year tax rate is expected to be between 15% and 16%. Year-to-date cash from operations was $250 million, influenced by net earnings and one-time Inari deal costs. The company's strong first-quarter results have led to an increased organic net sales growth forecast of 8.5% to 9.5%, amid favorable pricing and slight foreign exchange challenges. The adjusted EPS guidance remains at $13.20 to $13.45, considering a $200 million estimated tariff impact and potential foreign exchange effects of up to $0.10. Efforts to offset these impacts include sales momentum, manufacturing efficiencies, and disciplined spending.

In the paragraph, the speaker, Preston Wells, discusses the impact of tariffs on their company, estimating a $200 million hit based on current conditions. He clarifies that this estimate does not include items paused for 90 days. To mitigate the impact, the company plans to leverage strong sales momentum and potential price adjustments. Additionally, they are evaluating discretionary spending to help offset the tariff costs.

The paragraph addresses strategies to optimize the supply chain and mitigate short-term impacts of tariffs, with positive effects from foreign exchange trends. Tariffs will affect the cost of goods sold, while mitigations will appear in operating expenses and overall financial performance. Marcus Robert highlights strong performance in the orthopedic market, with significant growth and share gains, particularly through the Mako system and hip business. Demand remains strong, with expectations of market growth in the 4-5% range. The company is optimistic about its joint replacement and trauma/extremity businesses. The discussion wraps up with acknowledgment and introduction of the next question from Larry Biegelsen of Wells Fargo.

In the article paragraph, Larry Biegelsen congratulates the company on its impressive Q1 performance with 10% organic growth and discusses the guidance for slightly slower growth in the upcoming quarters. Kevin Lobo mentions that while there's potential for continued strong growth and no major concerns from a top-line perspective, there are some supply chain disruptions in the medical segment. Preston Wells discusses the company's focus on achieving a 100 basis point improvement in operating margin for the year, acknowledging potential impacts from tariffs later in the year.

The paragraph discusses the company's performance and outlook concerning gross margin, operating expenses (OpEx), and capital expenditures (CapEx). The company aims to achieve an improvement of 100 basis points through various initiatives affecting gross margin and OpEx, despite facing challenges like tariffs. The impact of Inari is contributing positively to the business mix. Joanne Wuensch from Citi asks about the CapEx environment and the progress with Inari, which has been part of the company for two months. Jason Beach responds by highlighting strong double-digit growth in the company's capital businesses, while Kevin is expected to address the Inari-related inquiries.

The paragraph discusses Stryker's positive business outlook, mentioning the successful integration of Inari with Stryker's culture and leadership changes, with Tim Lanier leading Inari due to his experience in the peripheral vascular space. The conversation also highlights Stryker's strong international hip segment growth, boosted by the SERF acquisition and significant organic growth, despite the Insignia stem not yet being launched in Europe, though it is starting in some Asia Pacific markets. The dialogue between Kevin Lobo and Ryan Zimmerman from BTIG focuses on the durability and performance of Stryker's hip business outside the U.S.

The paragraph is part of a conversation about the performance and prospects of a company's Hip and Trauma and Extremities businesses. The speaker, Kevin Lobo, discusses the benefits gained from the SERF acquisition and the successful launch of products in the U.S., which will contribute to organic growth from the second quarter. They highlight the success of the Pangea plating system in the Trauma and Extremities segment, noting its strong performance and popularity among surgeons in the U.S., despite not being approved internationally. The continued strong growth in the upper extremities line is also emphasized. Overall, the company is optimistic about the division's future performance. Following this, a new question is posed by Travis Steed regarding the impact of tariffs and currency exposure.

The paragraph discusses multiple topics related to tariffs and the potential impact of maintaining high tariff rates. Preston Wells addresses a series of questions, initially focusing on tariffs, noting that the current focus is managing the $200 million cost estimated for this year due to uncertain future conditions. He mentions that part of this cost will affect the balance sheet and be amortized as products are sold in the subsequent year. Regarding discussions with AdvaMed about medical devices, Wells notes ongoing conversations but indicates there is currently no general exemption for medical devices from tariffs.

The paragraph discusses plans for margin progression and the impact of tariffs on a company's financials. Travis Steed and Vijay Kumar talk about how the company is focusing on short-term plans based on current knowledge and mitigation factors. Vijay Kumar asks about margin cadence and tariff impacts, particularly distinguishing between China and Europe. Preston Wells responds, stating the company aims for consistent margin improvement throughout the year, expecting a 100 basis point increase by year-end. Tariffs will be more impactful in the latter half of the year, but the company plans to offset these with mitigation strategies, aiming for a balanced impact on margins.

In the paragraph, the discussion centers around the business's exposure to tariffs, noting only 2% of their business is in China. Vijay Kumar asks Kevin Lobo about the LP 35 launch in the Medical segment, which Kevin reports is going well with strong order uptake despite pending international approvals and supply chain challenges. The high purchase price requires time for customer trials and budgeting. This product is expected to contribute significantly to growth, particularly with prior generation defibrillators aging in the marketplace. The conversation concludes with the operator introducing David Roman from Goldman Sachs, who wants to discuss the pricing environment further.

The paragraph discusses the company's strategic focus on pricing and market expansion efforts. Preston Wells highlights the importance of pricing strategy for the company's MedSurg, Neurotechnology, and Orthopedics businesses as a way to counteract tariff impacts. Additionally, David Roman asks about the progress on the Pangea product rollout. Jason Beach responds by stating that the product is gaining momentum and positively impacting the Trauma and Extremities segment, with rapid progress towards a full market release and geographic expansion following updates discussed at AOS.

The paragraph discusses the launch timeline and geographical rollout of the Pangea system, with plans to release in Australia and Canada later this year and in Japan by the first half of 2026. The U.S. launch is ongoing, with additional components being introduced throughout the year, contributing to growth. The conversation then shifts to a question from Philip Chickering regarding the impact of tariffs on inventory, with Preston Wells explaining that the effect varies across different business lines depending on sourcing strategies, making it difficult to predict a uniform impact timeline.

The paragraph discusses the impact of tariffs on run rates by the end of the year, with an emphasis on the fourth quarter as a good indicator of current tariff rates. It also highlights that in the orthopedic category, revenue was flat year-over-year due to a shift in customer behavior from purchasing to leasing Mako systems. This trend has been observed over the past year and is not necessarily indicative of the overall capital expenditure environment, but rather a reflection of how medical robots are being acquired. Often, rentals eventually convert into direct sales. Additionally, the paragraph mentions the introduction of the Mako 4 system and includes brief dialogue between Philip Chickering and Preston Wells, with Philip welcoming Preston back and an unidentified analyst named Phil asking questions.

The paragraph discusses the company's strategy and thoughts on mergers and acquisitions (M&A) following the sale of its Spine Implant unit. Preston Wells highlights that the company is in a strong liquidity position and can access debt markets if needed. Their focus is on maintaining their investment-grade credit rating while exploring available opportunities. Kevin Lobo emphasizes that the company's top priority is integrating tuck-in acquisitions that enhance their existing businesses, as these are known to drive significant value. Their business development teams are actively identifying targets for potential acquisition, even after completing their acquisition of Inari. They continue to explore other market adjacencies, such as peripheral, but prioritize tuck-in opportunities over these.

In the paragraph, Kevin Lobo discusses the continued collaboration between Stryker and VB Spine after the Spine divestiture, focusing on the Mako Spine launch planned for the second half of the year. He explains that although working with two separate companies might introduce some complexities, both companies are committed to the partnership, especially regarding the Mako robot and VB Spine implants. The relationship will remain strong as they leverage the same sales force, and both companies will generate revenue from their respective products. Additionally, there's excitement around the Copilot product from Stryker's Neurosurgery business, which complements the Mako system. Overall, the teams are collaborating effectively, with optimism for future joint endeavors.

In the paragraph, Jason Beach addresses questions about capital expenditure (CapEx) and the outlook for 2026. He explains that discussions about 2026 are still early but expresses confidence in their capital mix strategy, with a portion allocated to large items like booms and beds and another portion tied to procedures involving smaller equipment like cameras and power tools. He is optimistic about sustained demand if procedures remain robust through 2025 and into early 2026. Kevin Lobo then comments on Inari's product lineup, highlighting the strong performance of FlowTriever, ClotTriever, and Langflow, and mentions ongoing R&D improvements without revealing specifics.

In the paragraph, the company discusses the recent launch of their product, Artix, which has received positive customer feedback and is expected to contribute to future growth. The company expresses excitement about having Inari in their portfolio due to its strong management team. During a Q&A, a representative from Nephron Research inquires about the company's strategies to mitigate tariff impacts in 2026, particularly regarding their manufacturing footprint. Preston Wells responds by stating that the company is not currently speculating on 2026 due to the rapidly changing situation. He notes that there have been no changes to the company's manufacturing plans, highlighting the challenges of relocating manufacturing operations. The company is exploring dual sourcing opportunities to mitigate tariff impacts.

In the paragraph, Kevin Lobo addresses concerns about potential disruptions at the FDA due to recent layoffs. He explains that although there was a short-term disruption, most of the positions were quickly reinstated because the industry funds many of these roles through user fees. As a result, there are no significant slowdowns anticipated in product approvals. Moreover, another analyst, Matthew Miksic from Barclays, inquires about discussions with hospitals regarding budgets and the growth in the shoulder robot market. He asks for insight into what's driving this growth and expectations moving forward.

In the paragraph, Jason Beach addresses the positive capital expenditure environment in hospitals, noting that their capital businesses are growing significantly both in the U.S. and globally. Kevin Lobo then discusses the continued success and growth of their Shoulder business, which has been thriving even before their acquisition of Wright Medical. He highlights several innovative products such as the modern shoulder system, Shoulder iD, and pyrocarbon hemiarthroplasty, which have fueled excitement and solidified their leadership in shoulder arthroplasty. Additionally, he mentions their Blueprint software, which uses AI to assist surgeons in selecting the appropriate implant. Overall, their product portfolio and management expertise have driven high growth in the Shoulder business.

In this paragraph, Patrick Wood inquires about further details on the Endoscopy business and the Mako Shoulder release. Kevin Lobo responds, noting that the Shoulder business is performing well even without the substantial influence of the Mako system, which is still in limited release. The expectation is that Mako will be a significant contributor to growth from 2026, particularly beneficial for surgeons who perform fewer shoulder procedures. Feedback on Mako's glenoid component is positive, and future developments include adding the humeral portion. Regarding Endoscopy, the 1788 camera is thriving with customers, and sports medicine is experiencing double-digit growth, highlighted by the success of the AlphaVent Knotless shoulder product.

The paragraph discusses the strong growth in the company's sports medicine business, primarily driven by organic growth through their shoulder product offerings. Despite making only three small acquisitions—Pivot, IV, and InSpace—the company has developed a robust implant portfolio. Additionally, their Endoscopy division and new lighting product, Oculan, have also contributed to growth. The company's focus on international markets is highlighted as a potential catalyst for future growth, particularly given the recent U.S.-centric acquisitions, which have resulted in 75% of sales being in the U.S. The paragraph ends with Shagun Singh asking about growth expectations internationally and long-term expectations for gross and operating margins. Kevin Lobo addresses the first part of the question, indicating a focus on international growth potential.

The paragraph discusses the international growth potential of Inari and the Neurovascular business, highlighting that only a small percentage of Inari's sales are currently international, whereas the Neurovascular business has more sales outside the U.S. Despite regulatory delays, particularly in Europe, there is confidence in the success of their products. Mako's international success, especially in Japan, is cited as a model. With only 25% of the company's total business abroad, there is significant growth potential. Jason Beach and Shagun Singh then discuss financial goals, mentioning that while gross margins aren’t guided publicly, operational margin expansion is aimed at 30 basis points by 2026. Mike Matson asks about updates to revenue guidance, particularly regarding an unfavorable foreign exchange impact.

The paragraph is a part of a financial earnings call discussing the company's revenue growth, currency impacts, and divestiture of its Spine business. Preston Wells clarifies that while they expect some unfavorable currency impacts affecting EPS, specific figures from the Spine divestiture haven't been disclosed. The proceeds from the sale will be received over time through milestones and may be used for debt repayment or future M&A opportunities. Caitlin Cronin congratulates the company on a successful quarter and inquires about the performance of recent acquisitions and strong orthopedic (Ortho) performance. Jason Beach states that surgeries are increasingly moving to ambulatory surgery centers (ASCs), and Kevin will address the M&A aspect.

The paragraph discusses the company's growth in performing knee and hip surgeries at ambulatory surgery centers, noting an increase each quarter, including the first quarter, which has been beneficial for their business. Kevin Lobo mentions that seven deals closed last year are performing well, with the Artelon and Vertos deals standing out for their strong starts. He highlights the success of integrating new products where they already have an established sales force. Then, Danielle Antalffy from UBS asks about the potential impact of a recession on the company's business, expressing interest in understanding which areas might be more vulnerable or resilient, especially concerning capital equipment.

In the paragraph, Kevin Lobo addresses concerns about potential capital budget slowdowns due to changes in Medicare or economic conditions. He asserts that there are no signs of a slowdown, as their order book and backlog are strong and extend to the end of the year. The company isn't experiencing inertia or cancellations from hospitals, although there is a slight shift in payment forms. Demand remains high, particularly for urgent procedures and elective surgeries like hips and knees. The company feels confident enough to raise guidance, suggesting no immediate threats or red flags in their outlook.

In the final segment of the Stryker earnings call, Matt Taylor from Jefferies asks about the potential impact of tariff removal on the company's financials. Preston Wells indicates that while they won't provide specific numbers, the removal of tariffs would help increase the company's bottom line, and some of the savings would be reinvested into the business. Kevin Lobo adds that the company would likely raise earnings expectations without the tariffs. The call concludes with Kevin Lobo expressing optimism for the year despite tariff challenges and looking forward to sharing future results. The call then ends.

This summary was generated with AI and may contain some inaccuracies.