Stryker Corporation · NYSE:SYK
Stryker — Investor Day (November 2021)
70 slides from Stryker's investor day presentation, Nov 18, 2021
Slide 1: Analyst Day 2021
Analyst Day 2021 Analyst Day 1
Slide 2: Analyst Day 2021
Analyst Day 2021 Preston Wells Vice President, Investor Relations 2021 Analyst Day 2
Slide 3: Agenda
Agenda Overview Kevin Lobo, Chair and Chief Executive Officer Financial outlook Glenn Boehnlein, Vice President, Chief Financial Officer Cost Transformation for Growth update Viju Menon, Group President, Global Quality and Operations Orthopaedics and Spine Spencer Stiles, Group President, Orthopaedi
Slide 4: Disclaimer
Disclaimer Forward-looking statements This presentation contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from tho
Slide 5: Overview
Overview Kevin Lobo Chair and Chief Executive Officer 2021 Analyst Day 5
Slide 6: Mission and values
Mission Together with our customers, we are driven to make healthcare better. Values Integrity Accountability People Performance We do what’s right We do what we say We grow talent We deliver 2021 Analyst Day 6
Slide 7: Celebrating years of making healthcare better
80 Celebrating years of making healthcare better Copyright © 2021 Stryker 2021 Analyst Day 7
Slide 8: Our people and culture keep us growing
Our people and culture keep us growing 2021 Analyst Day 8
Slide 9: Leadership team
Leadership team Special thank you! Special Thanks to Timothy J. Scannell President and Chief Operating Officer Kevin A. Lobo Glenn S. Boehnlein Robert S. Fletcher Viju S. Menon Yin C. Becker J. Andrew (Andy) Pierce Spencer S. Stiles M. Kathryn (Katy) Fink Chair and CEO Vice President, Chief Vice Pre
Slide 10: Creating a better, healthier world
Corporate Responsibility objective Creating a better, healthier world Stronger people Healthier planet Good business We are committed to serving our We are committed to reducing our We are committed to helping customers communities and creating a healthy, diverse, environmental impact on the world t
Slide 11: Diversified MedTech leader
Diversified MedTech leader $72B* Diverse customer Category Current addressable base leadership market growing mid- across multiple sites across all businesses single digits of care * Based on 2019 market data 2021 Analyst Day 11
Slide 12: Our company strategy
Our company strategy Drive market leading growth and achieve category leadership in MedSurg Equipment, Orthopaedics, and Neurotechnology/Spine Customer focus Innovation Globalization Financial performance • Intense customer • Make healthcare better • Focus resources and talent • Continuously reduce
Slide 13: Intense customer focus
Intense customer focus Selling • Business unit specialization • Sales and marketing excellence Business Marketing Development • World-class customer service • Focused innovation R&D Expertise and customer specialization across 22 distinct commercial business units 2021 Analyst Day 13
Slide 14: Intense customer commitment through business unit specialization
Intense customer commitment through business unit specialization MedSurg Orthopaedics Spine & Neurotechnology Medical Joint Replacement Spine Acute Care Hips Spine Emergency Care Knees Interventional Spine Sage Other Ortho (Mako) Enabling Technologies Endoscopy Trauma & Extremities Neurotechnology E
Slide 15: Intense customer commitment through business unit specialization
Intense customer commitment through business unit specialization MedSurg and Neurotechnology Orthopaedics and Spine Medical Neuro Cranial Joint Replacement Acute Care CMF Hips Emergency Care Neurosurgical Knees Sage Ear, Nose & Throat Other Ortho (Mako) Endoscopy Neurovascular Spine Endoscopy Spine
Slide 16: Innovating and partnering with caregivers to improve patient outcomes
Innovating and partnering with caregivers to improve patient outcomes Pioneer and leader Advanced Leader in stroke Advancing safety in robotics, data imaging expertise care and outcomes and enabling technologies 2021 Analyst Day 16
Slide 17: Active acquirer of technologies
Active acquirer of technologies MSNT focused on product tuck-ins and near adjacencies MedSurg and NT Sage Vexim Invuity Zipline TMJ Concepts Bolster the core and Synergetics Novadaq Entellus SafeAir enter adjacent Gauss Physio- HyperBranch OrthoSpace Surgical categories Control 2016 2017 2018 2019 2
Slide 18: Commitment to globalization
Commitment to globalization Over indexed in the Europe continues to be an Accelerating growth in United States* accretive grower3 emerging markets3, 4 19.5% 17.7% OUS 10.5% 9.2% 9.4% 27% US 73% 1.8% 2017 2018 2019 2017 2018 2019 * Based on full year 2019 Revenue 2021 Analyst Day 18
Slide 19: In summary
In summary • Proven growth strategy • Customer focused and innovating • International remains a big opportunity • Delivering financial performance • Strong talent and culture 2021 Analyst Day 19
Slide 20: Financial outlook
Financial outlook Glenn Boehnlein Vice President, Chief Financial Officer 2021 Analyst Day 20
Slide 21: Long-term sustainable growth model
Long-term sustainable growth model • Category leadership through business unit and salesforce specialization • Superior salesforce and diversified product portfolio • Opportunistic M&A and focused R&D strategies • Manufacturing and operational excellence • Leveraged and scalable SG&A through expande
Slide 22: Committed to growth at the high end of MedTech
Committed to growth at the high end of MedTech Organic growth Growth drivers CAGR 2016 - 2019 • Enabling technology 7.4% • Innovation • Specialized sales forces 4.4% • International growth expansion • M&A Stryker Market 2021 Analyst Day 22
Slide 23: Committed to delivering leveraged earnings
Committed to delivering leveraged earnings (Performance 2016-2019) Leverage drivers • Manufacturing efficiency • Global business services • Indirect/direct procurement • Integration excellence • Debt and tax optimization 2021 Analyst Day 23
Slide 24: Committed to continued cash flow generation
Committed to continued cash flow generation Free Cash Flow free cash flow conversion Drivers $2.1B • Efficient working 87% capital usage $1.7B • Disciplined capital 66% expenditures • Integration efficiency • Incentive structures 2016-2019 Average 2021 Q3 YTD 2021 Analyst Day 24
Slide 25: Effective deployment of capital
Effective deployment of capital Dividends M&A to drive sales growth $6.2B and innovation 23% Focused on driving sales growth in core and adjacent markets 2011 – 2021YTD Capital Dividend growth Share Deployment Repurchases Dividend CAGR of 13% since 2011 $2.7B 10% $27.4B M&A Share repurchases $18.5B
Slide 26: Delivering 2021 (full year)
Delivering 2021 (full year) Compared to 2019 Worldwide Adjusted Sales Earnings Per Share +7.0 – +8.0% +9.9 – +10.8% Organic growth Adj EPS growth ~$17B $9.08 - $9.15 $15B $8.26 FY 2019 FY 2021 FY 2019 FY 2021 2021 Analyst Day 26
Slide 27: Long-term sustainable growth model post COVID
Long-term sustainable growth model post COVID Sales growth Sales growth at the high end of MedTech Operating efficiency Drive a minimum of 30 basis points of annual operating margin Long-term improvement excluding large deal financial dilution performance (post COVID) Leveraged earnings growth At le
Slide 28: Financial summary
Financial summary • 2021 on track but impacted by lingering Sales growth Covid variability • Fundamentals of industry-leading growth Operating efficiency and earnings still underpin our strategy • Confidence in our market opportunities and Leveraged earnings growth execution • Capital allocation sup
Slide 29: Cost Transformation for Growth update
Cost Transformation for Growth update Viju Menon Group President, Global Quality and Operations 2021 Analyst Day 29
Slide 30: Cost Transformation for Growth (CTG)
Cost Transformation for Growth (CTG) Product Life Cycle Shared Services Management (PLCM) • Reduce structural and non- value-added costs Global Operating Plant Network Model & Optimization • Reinvest in innovation and Cost Organizational Design Transformation expand growth platforms for Growth Suppl
Slide 31: Cost Transformation for Growth 2.0
Cost Transformation for Growth 2.0 Outcomes/benefits • Drive operating leverage over the next 5 years • Improve cash flow through working capital efficiency • Improve scalability, aligned with above market growth • Providing for future growth investments 2021 Analyst Day 31
Slide 32: CTG 2.0 commercial
CTG 2.0 commercial Indirect procurement Global business services Integration excellence • Professionalize the global • Expand existing footprint • Rapid and efficient indirect procurement • Develop one coordinated integration of M&A function approach and strategy on a • Unlock synergies earlier • Le
Slide 33: CTG 2.0 manufacturing and supply chain
CTG 2.0 manufacturing and supply chain Manufacturing Direct procurement Plant/distribution network excellence/inventory mgmt • Professionalize • Drive operational • Optimize global procurement function efficiency through manufacturing and • Develop product transfer continuous improvement distributio
Slide 34: Plant network Tijuana, Mexico
Plant network Tijuana, Mexico 2021 Analyst Day 34
Slide 35: Refreshing our CTG Initiatives
Refreshing our CTG Initiatives • CTG has successfully delivered earnings growth through improved operating leverage • CTG 2.0 expands and implements processes to drive sustainable financial performance, including cash flow • Supports our long-term financial goals 2021 Analyst Day 35
Slide 36: Orthopaedics and Spine
Orthopaedics and Spine Spencer Stiles Group President, Orthopaedics and Spine 2021 Analyst Day 36
Slide 37: Aligning our offerings to support our customers and their patients
Aligning our offerings to support our customers and their patients Our purpose Drive market-leading growth and category leadership in Orthopaedics and Spine (O&S) by focusing on specialization, cross divisional collaboration, and the further integration of digital, robotics, and enabling technologie
Slide 38: Orthopaedics & Spine commercial leaders
Orthopaedics & Spine commercial leaders Don Payerle Robert Cohen Mike Panos Robbie Robinson President, President, President, President, Joint Replacement Digital, Robotics, and Trauma & Extremities Spine Enabling Technologies 28 years 35 years 25 years 17 years Medical Robotics Neuro Cranial Endosco
Slide 39: Orthopaedics & Spine $36B addressable market
Orthopaedics & Spine TAM* Market ($B) CAGR**5 Joint Replacement $14 +3% • 9 specialized business units Hips $6 LSD • Category leadership across Knees $8 LSD $36B businesses * Robotics $1 HSD Trauma & $10 +5% • Attractive market outlook f addressable Extremities Trauma $5 MSD market Upper Extremities
Slide 40: O&S group specialization drives growth
O&S group specialization drives growth Joint Replacement +$3B Spine +$1B Implants Enabling Technology Knees Hips Mako Orthopaedic surgeon/neurosurgeon Trauma & Extremities +$2B Digital, Robotics, and Enabling Technologies health cloud Trauma Upper Extremities Foot & Ankle/ Biologics Digital Robotics
Slide 41: Pioneer and leader in robotics
Pioneer and leader in robotics • Mako drives growth in implants • Continued penetration in the U.S. • Expansion outside the U.S. • New applications and enhanced software 2021 Analyst Day 41
Slide 42: Digital, Robotics, and Enabling Technologies collaboration
Digital, Robotics, and Enabling Technologies collaboration Enterprise-wide capabilities to support divisional/business unit digital, robotics, and enabling technology strategies Joint Trauma & Sustainability Spine Endoscopy Instruments Neuro Cranial Neurovascular Medical Replacement Extremities Solu
Slide 43: Digital, Robotics, and Enabling Technologies landscape
Digital, Robotics, and Enabling Technologies landscape Platforms Clinical applications Innovation Digital Guidance and Cranial Augmented reality Agile methodology sensors Concept Artificial ENT development intelligence Platform JR Cloud and software Patient specific Connectivity solutions Robotics O
Slide 44: Spotlight: Trauma & Extremities
Spotlight: Trauma & Extremities Mike Panos President, Trauma & Extremities 2021 Analyst Day 44
Slide 45: Rebuilding lives, together.
Rebuilding lives, together. • The U.S. sales integration nears completion with focus on 2022 • Integration outside the U.S. continues to progress and is nearing completion • The power of the combined portfolios is starting to be realized 2021 Analyst Day 45
Slide 46: Coming together is what sets us apart
Coming together is what sets us apart 2021 U.S. facility branding Bloomington, MN Columbia City, IN Memphis, TN Arlington, TN 2021 Industry meetings ACFAS AAOS AOFAS 2021 Analyst Day 46
Slide 47: Trauma & Extremities specialization
Trauma & Extremities specialization U.S. Trauma U.S. Foot & Ankle U.S. Upper Extremities Hoffmann Blueprint LRF Hexapod Infinity Total 3D Planning Ankle Software Prophecy Resect-Through Gamma3 Guides Business Tornier Simpliciti Perform Nailing VariAx 2 Plating Development Shoulder Humeral
Slide 48: Product spotlight: Upper Extremities
Product spotlight: Upper Extremities Tornier perform Blueprint Humeral Stem Mixed Reality Visualization vs. 2021 Analyst Day 48
Slide 49: Driving market-leading growth
Driving market-leading growth Specialization to meet evolving customer needs Applications, platforms, and solutions to improve patient outcomes Commitment to organic innovations and M&A investments Market expertise and category leadership Clinical, operational, and innovative solutions 2021 Analyst
Slide 50: MedSurg and Neurotechnology
MedSurg and Neurotechnology Andy Pierce Group President, MedSurg and Neurotechnology 2021 Analyst Day 50
Slide 51: Supporting our customers across the continuum of care
Supporting our customers across the continuum of care Our purpose To drive market-leading growth and achieve category leadership in MedSurg and Neurotechnology (MSNT) by focusing on cross-divisional collaboration and specialized sales, service and innovative technology Surgeons and clinical staff C-
Slide 52: MedSurg & Neurotechnology commercial leaders
MedSurg & Neurotechnology commercial leaders Dylan Crotty Brad Saar Brent Ladd Mark Paul President, President, President, President, Instruments Medical Endoscopy Neurovascular 22 years 29 years 22 years 30 years Instruments Medical Endoscopy Neurovascular Trauma & Extremities Instruments Peripheral
Slide 53: MedSurg and Neurotechnology $36B addressable market
MedSurg and Neurotechnology TAM* Market ($B) CAGR**5 Instruments $4 +7% Orthopaedics $3 MSD Instruments • 13 specialized business units Surgical Technologies $1 DD Medical $10 +5% • Category leadership across Emergency Care $3 MSD businesses $36B * Acute Care $6 LSD • Healthy market growth f address
Slide 54: MSNT Group strong category leaders
MSNT Group strong category leaders Medical and Surgical equipment +$6B Neurotechnology $2B Emergency Care and Acute Care Surgical Technologies Neurovascular ENT Minimally invasive and open surgical solutions Sports Medicine Orthopaedic Infrastructure and Reprocessing and Craniomaxillofacial integrat
Slide 55: Purpose-driven innovation
Purpose-driven innovation Research and Mergers and Solutions and development acquisitions channels 2021 Analyst Day 55
Slide 56: Advanced resuscitation LUCAS 3, v3.1
Advanced resuscitation LUCAS 3, v3.1 Delivers high-performance, continuous chest compressions with less strain, micromanagement and risk for the caregiver Used in pre-hospital and hospital settings Available in over 70 countries 2021 Analyst Day 56
Slide 57: Driving market-leading growth
Driving market-leading growth Staying close to the customer and anticipating their needs Faster, more predictable innovation cycles Latest technologies to improve patient outcomes Market expertise and superior salesforces Clinical, operational, financial and environmental solutions 2021 Analyst Day
Slide 58: ASC panel
ASC panel Nate Miersma Senior Director, Ambulatory Surgery Center 2021 Analyst Day 58
Slide 59: Stryker's ASC business
Stryker’s ASC business Whatever the case, we’ve got you covered. Whether our customers are growing their ASC or building from scratch, we deliver tailored solutions for where they are today, and they want to be in the future. The expertise. The products. The financing. The implementation. Stryker’s
Slide 60: ASC panel
ASC panel Dr. Krupa Patel Dr. Michael Joyce Dr. Joseph Nessler – Foot and ankle surgeon, – Joint replacement and sports – Orthopedic Joint replacement owner, The Center for medicine surgeon; founder and specialist; owner/shareholder Ambulatory Surgery in CEO of Lighthouse Surgery St. Cloud Orthopedi
Slide 61: Q&A
Kevin Lobo Glenn Boehnlein Viju Menon Q&A Spencer Stiles Andy Pierce 2021 Analyst Day 61
Slide 62: Product Fair preview: Safety and outcomes
Product Fair preview: Safety and outcomes Dylan Crotty President, Instruments 2021 Analyst Day 62
Slide 63: Safer care. Better outcomes.
Safer care. Better outcomes. “ Daily surgical smoke inhalation in the operating room is equivalent to smoking 27 to 30 unfiltered cigarettes. 6 ” “ 12 patients each day leave surgery with a retained foreign object. 7 ” “ Every 4 minutes a mother dies from ” excessive bleeding during childbirth. 8 20
Slide 64: Safety and outcomes: focus areas
Safety and outcomes: focus areas Emergency Pre - Post - Intensive Labor and Medical/ Home Areas of care department operative Surgery operative care delivery surgical health Pressure injury prevention • • • • • • • Patient care Fall prevention • • • • • • • Colorectal surgery • Lap chole • Surgical s
Slide 65: Thank you!
Thank you! 2021 Analyst Day 65
Slide 66: Footnotes
Footnotes 1. Learn more at stryker.com/2020 2. Med Tech addressable competitive market has been compiled by Stryker from financial information and published reported by industry competitors. 3. To measure percentage sales growth in constant currency, we remove the impact of changes in foreign curren
Slide 67: Appendix: Reconciliation of GAAP to non-GAAP financial measures
Appendix SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including: percentage sal
Slide 68: Reconciliation of reported net sales growth to organic net sales growth
Reconciliation of reported net sales growth to organic net sales growth Years Ended December 31, 2019 2018 2017 2016 2015 Reported net sales growth 9.4% 9.3% 9.9% 13.9% 2.8% Less: foreign currency exchange (1.3) 0.4 0.1 (0.4) (4.2) Less: acquisitions 2.6 1.9 2.7 7.9 0.9 Less: ASC 606 adoption - (0.9
Slide 69: Reconciliation of operating margin, net earnings and EPS to adjusted
Reconciliation of operating margin, net earnings and net earnings per diluted share to adjusted operating margin, adjusted net earnings and adjusted net earnings per diluted share 2021 Analyst Day 69
Slide 70: Reconciliation of cash provided by operating activities to free cash flow
Reconciliation of cash provided by operating activities to free cash flow 2021 Analyst Day 70