Stryker(SYK) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported robust organic sales growth of 10.1% in Q1 2025, with adjusted EPS of $2.84, reflecting a 13.6% increase compared to Q1 2024 [5][6][16] - The adjusted gross margin improved to 65.5%, up 190 basis points year-over-year, while the adjusted operating margin was 22.9%, an increase of 100 basis points [24][25] Business Line Data and Key Metrics Changes - MedSurg and Neurotechnology achieved organic sales growth of 10.7%, with U.S. growth at 11.4% and international growth at 8.2% [16][20] - Orthopedics saw organic sales growth of 9.3%, with U.S. knee business growing 8.3% and hip business growing 7.6% [20][21] - Trauma and Extremities businesses grew 15.2% organically, driven by strong performance in core trauma and upper extremities [22][58] Market Data and Key Metrics Changes - U.S. organic sales growth was 10.7%, while international organic sales growth was 8.5%, with notable strength in Australia, New Zealand, Japan, and Europe [15][20] - The company anticipates continued strength in procedural demand, particularly in robotic-assisted surgery [9][10] Company Strategy and Development Direction - The company completed the acquisition of Inari Medical, with integration going well and expected to contribute positively to the vascular division [6][12][51] - The company is focused on maintaining double-digit organic sales growth, with guidance for 2025 set at 8.5% to 9.5% [6][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of growth, citing strong demand and no major red flags in the operating environment [41][42] - The company is taking measures to mitigate the estimated $200 million impact from tariffs through pricing strategies and operational efficiencies [27][34] Other Important Information - The company is recognized for the fifteenth consecutive year on Great Place to Work's list of 100 Best Companies to Work For [7] - The company expects to launch Mako Spine in the second half of 2025 and Mako Shoulder in Q1 2026 [10][12] Q&A Session Summary Question: How is the company absorbing the $200 million tariff impact? - The company plans to offset the tariff impact through strong sales momentum, pricing strategies, and optimizing the supply chain [31][34] Question: What is the outlook for the orthopedics market? - The orthopedics market remains healthy, with strong demand and expectations for growth above the market average [36][37] Question: How is the launch of LifePack 35 progressing? - The launch is going well, with strong order pipelines and positive market reception [68][70] Question: What are the expectations for capital expenditures in 2026? - Early conversations suggest continued strength in capital demand, particularly tied to procedural needs [100][101] Question: How is the integration of Inari going? - The integration is progressing well, with strong early performance and alignment with Stryker's culture [51][52]