Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the rationale behind the decision to sell the Spine business now? A: Kevin Lobo, CEO, explained that the decision was based on better opportunities to invest in other businesses. The Spine market is competitive, and Stryker has not had the same degree of innovation in implants as in other parts of its portfolio. The sale to VEB Brothers, who have extensive experience in spine, allows Stryker to focus on faster-growing spaces while partnering with VEB for enabling technologies.
Q: What are the expected financial impacts of the Inari acquisition, particularly regarding return on invested capital (ROIC) and earnings per share (EPS)? A: Glenn Boehnlein, CFO, stated that Stryker targets to get back to weighted average cost of capital (WACC) within five to seven years, and Inari fits this model. The acquisition is expected to be dilutive to EPS due to additional borrowings and interest expenses, but it will contribute positively to sales growth.
Q: How does Stryker plan to achieve the projected 100+ basis points operating margin expansion in 2025? A: Glenn Boehnlein, CFO, highlighted opportunities in purchasing, expanding low-cost manufacturing, and leveraging shared services. Stryker also expects to gain price improvements globally and benefit from natural leverage through sales growth.
Q: What is the outlook for Stryker's revenue growth in 2025, and how sustainable is this growth rate? A: Kevin Lobo, CEO, expressed confidence in achieving 8% to 9% organic sales growth in 2025, driven by robust pipelines, strong commercial execution, and ongoing product launches. He emphasized the durability of Stryker's growth, which has been consistent over the years.
Q: How is Stryker approaching M&A following the Inari acquisition, and what are the focus areas? A: Kevin Lobo, CEO, stated that Stryker remains on offense for tuck-in acquisitions, with a focus on adjacencies like Peripheral Vascular, urology, Neuromodulation, soft tissue robotics, and healthcare IT. The company has capacity for further deals, even with the debt from the Inari acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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