SYK
#Well, thanks.
First of all, just to clarify, the greater than 30% growth was aided by the acquisition of SBi, so on our organic basis, we grew around 20%.
Still a very, very impressive number, given the multiple quarters of organic growth that had exceeded 30%, but we are really excited about the potential.
We're still penetrating ---+ new markets are very exciting because they are hard to predict.
You don't really know because you're continuing to penetrate the market where more and more implants are being used.
Getting a total ankle, it was a huge move for us in the foot and ankle market.
It was a big gap.
That acquisition is really just starting to gain steam, so we still think we have plenty of growth ahead for our foot and ankle position.
I would say we haven't seen any real change in volumes in the first quarter beyond the normal seasonality that we see.
So nothing that has changed dramatically there.
I think it's too early given what we got the clearance of the Stryker power brands on MAKO to point to that.
As you've seen, we've had really good momentum there for a while and I think it's just the strength of the overall portfolio.
Yes.
So this is a continuation of the strength that we've had over time.
Nothing that we would point to, although it's still early with ---+ the deals haven't closed and you typically see that disruption occur later in the integration process.
Whether or not that translates into any share shifts, we're not assuming that.
We're really well-positioned between our portfolio and the MAKO line and the underlying strength that we're seeing in foot and ankle.
But I wouldn't point to any disruption that we're seeing of any significance at this time.
Yes.
It's too early.
Certainly, if there is disruption, we'll be well-positioned to take advantage of it, but at this point, it's too early to see anything.
Really, the overall value proposition of MAKO hasn't changed and it builds on improved patient benefits and clinical outcomes.
And we think we're going to be uniquely enabled to be able to show procedural enhancements and improved patient experience and then improved patient satisfaction.
We think, with this technology, the consistency and reproducibility of the surgery is really going to elevate and allow for greater standardization and better overall outcome.
And then longer-term, hopefully a next-generation of implants that, regardless of surgeon skill, is simply not achievable today with traditional [planar cuts].
No, we haven't.
And it's early.
Obviously, we don't have the total knee and that's going to take time.
Even when it gets approval, it's going to be a methodical and measured ramp-up as we train and educate.
Clearly, MAKO is something we're very excited.
The Ortho team is very excited about it.
But if you really look at the history of Stryker, with all the different businesses and franchises we have, all rolling out products, it's much more a story about singles and doubles and the totality of all those products that drives the organic sales growth.
It's very rarely any one single product that we would point to.
While MAKO has the potential, obviously, to be a big driver, overall, it's the totality of that portfolio.
Yes.
Again it's going to be a very measured launch post-approval, and we're still in the we filed with the FDA stage.
Then when we get the clearance, we're going to have to be very measured.
We're going to have to train and educate to make sure the surgeon experience is appropriate.
We don't want to mess this up.
There's going to be upgrades that have to happen from a software standpoint.
So it is something, as we've articulated in the past, it's going to be a number of quarters before we start to really see the trajectory that's indicative of us taking market share gains and nothing has changed with that expectation.
What we saw in our due diligence is a range of people.
There's the early adopters with any new technology.
There's those who want to see more of an established clinical brand of implants, and that's what we're doing as we add the hip power brand, for example.
And then there's those who want to wait and see more indications.
So I'm sure there are surgeons out there who want a total knee before they are really going to be convinced to go the robotic route.
That's just indicative of the various waves of technology adopters you see, both with a robot or any new technology.
Your market estimates on a global basis for Trauma and Extremities are ballpark, and we're really pleased with the performance we're doing there.
I don't think we want to get into that type of multi-year projections, in terms of the revenue potential.
But clearly we're very pleased with the momentum we're seeing, the ability to consistently take market share.
We think that's going to remain the case going forward.
Yes.
I would see this as we see with Neurotechnology, Sports Medicine, Trauma and Extremities, these are really growth businesses for Stryker and they have been for multiple quarters.
In the years ahead, we're going to continue to focus on them.
If you think about upper extremities, we're still a relatively small player in upper extremities, and for us, that's an exciting area for the next few years.
There are established players.
It's not like foot and ankle, which is a brand-new market, but for us there's plenty of room to grow in the upper extremities space.
Even with some of the products we acquired through the SBi acquisitions, we think are well-positioned there.
So for us it definitely has been a great business for the past multiple years and we continue to see that as an exciting growth business in the years ahead.
It was clearly a big part of our booth presence and the focus and the excitement that we saw at AOS was around MAKO, which is great to see because it obviously reinforces our long-term conviction.
We've been in the capital business for a long time with our MedSurg businesses and see a very similar pattern, where you have strong year-end capital sales as hospitals are looking to use up budgets and then the appropriate drop-off in the first quarter.
So nothing about that sequential decline surprised us and it should really be reflected in expectations going forward.
It's not always going to be perfectly aligned with what we saw this year, but it's pretty indicative of the pattern of capital sales.
Yes.
I'm not going to get into a lot of details, since we haven't yet launched the product.
It will be launched probably in the next 6 or 12 months, sometime in that time frame.
But what I could tell you is it's going to be integrated into the light source that we have and that will be a huge advantage versus having to purchase additional capital.
So the product we feel very good about and it will integrate exactly right into our light source.
It will be very convenient, and it will obviously be lower cost than having to purchase extra capital.
It'll operate as you would expect.
It will light up the [cholangio] ducts.
You'll be able to see very clearly as you are doing your dissection that you won't be able to have any injury.
So it's a safety play.
We are very excited about it, but again, we haven't launched it yet and more details will become available as we get closer to the launch.
Hey, <UNK>.
Normal supply issues.
There's nothing significant that we would call out that was of major concern, which is why we have visibility in terms of the supply returning around that.
It related to our power tools.
We should have that resolved to allow for a much stronger performance with respect to Instruments in the second half of the year.
With MAKO, it will be largely resolved or will be resolved during the second quarter.
Yes, but I would think about this more like a back order, and back orders happen in our industry a lot.
So it's not like we're off the market, it's just that we don't have a the degree of supply that we normally have to be able to fully meet our customer orders.
So that's why when I ---+ in my prepared remarks, I talked about this really be a delay.
Back orders, what typically happens is you lose the sales for a period of time but you don't lose the sale to another company.
The sale just gets delayed.
And that's what we are experiencing in the instruments area, as well is in MAKO.
I wouldn't go beyond this year.
We're always going to be watching and watchful, but I'd say, for this year, at least thus far this year, we haven't seen any change whatsoever related to either trauma or our reconstructive division and don't expect to see much, at least over the course of this year.
We're always going to keep an eye on it, but thus far, no change whatsoever.
Yes.
We obviously don't provide all the details by country.
What I can tell you is Japan really did turn around in all of our divisions except for Reconstructive.
So Reconstructive, given the surgeon relationships, does take a little longer to try to gain that business back, but I was very encouraged with Trauma, with Spine, as well as our MedSurg businesses.
The ERP systems are all resolved.
We are regaining share slowly, but I would expect that, certainly by the third quarter, we should be back to the same level of market share that we had in the past, so I'm really pleased with how the new Management has approached the challenge, like I say on Spine and Trauma, ahead of schedule.
Recon is going to take a little bit longer.
I would say there is a small components because we did the acquisition---+
CHG.
Earlier in the year.
Earlier in the year, but it's largely organic growth.
Virtually all of it's organic growth.
And it's very reflective of just the strength that we're seeing in the capital markets right now.
We feel good about this because it's been several quarters of them really outperforming.
How much of that is a shift of dollars out of IT priorities.
It's very difficult to get that level of granularity.
What we would say is we do feel good about the momentum that we're seeing in capital across the board, the supply issues notwithstanding, because clearly we were seeing the demand there.
I wouldn't point to anything specific that we are seeing in that business.
It was clipped modestly, as we mentioned, by the MAKO supply issues.
But there's nothing major that we're seeing in the market or different on the competitive front.
Obviously haven't seen everybody report so far but nothing that we would call out.
To me it seems like a very stable market.
Our performance is starting to improve and that's what I spoke about just earlier on the call, that our Management team and some of the products that we've launched in the MIS space, where historically, we had less presence in MIS, is starting to help us gain momentum, so it was modestly better in the first quarter and I would expect that trend to continue.
Based on the numbers that <UNK> was talking about, we'd need maybe one-third of that level, maybe a little bit more to offset the dilution that's occurring at the same time from the share issuances.
Probably ---+ it's just a few million.
It's not much associated with that.
Yes, it's pretty small.
Okay.
Thank you.
Thank you all for joining our call.
Our conference call for the second-quarter 2015 results will be held on July 23.
Thank you.
