• Organic Sales Growth: Exceeded 10% for both Q4 and the full year 2024.
• US Organic Sales Growth: 10.6% for the full year.
• International Organic Sales Growth: 8.8% for the full year.
• Adjusted Operating Margin Improvement: 200 basis points in Q4 and 110 basis points for the full year versus 2023.
• Adjusted EPS: $4.01 for Q4 and $12.19 for the full year, representing 16% and 15% growth respectively compared to 2023.
• 2025 Guidance for Organic Sales Growth: 8% to 9%.
• 2025 Adjusted EPS Guidance: $13.45 to $13.70 per share.
• Cash and Marketable Securities: $4.5 billion at year-end.
• Total Debt: Approximately $13.6 billion.
• Cash from Operations: $4.2 billion for the full year 2024.
• Capital Spending Guidance for 2025: $800 million to $850 million.

• Warning! GuruFocus has detected 6 Warning Signs with FFIV.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stryker Corp (NYSE:SYK) reported impressive organic sales growth exceeding 10% for both Q4 and the full year 2024.
• The company achieved a 16% growth in adjusted EPS for Q4 and 15% for the full year compared to 2023.
• Stryker Corp (NYSE:SYK) successfully completed seven acquisitions in 2024, contributing to its strong financial performance.
• The company announced a strategic acquisition of Inari, expanding its presence in the fast-growing peripheral vascular market.
• Stryker Corp (NYSE:SYK) continues to see strong demand for its Mako robotic-assisted surgery systems, with record installations in the US and worldwide.

Negative Points

• The Spinal Implants business faced challenges in meeting performance expectations, leading to its planned divestiture.
• Foreign currency fluctuations had a negative impact on sales and earnings, with a $0.05 unfavorable impact on Q4 EPS.
• The acquisition of Inari is expected to have a dilutive impact on adjusted operating margin and EPS in 2025.
• There is uncertainty regarding the impact of potential tariffs on manufacturing operations in Mexico.
• The integration of new acquisitions and the divestiture of the Spinal Implants business may pose operational challenges.

Q & A Highlights

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.