Stryker Corporation · NYSE:SYK
Stryker — Investor Day (November 2023)
64 slides from Stryker's investor day presentation, Nov 8, 2023
Slide 1: Stryker Leading Growth Investor Day
stryker leading growth As Day
Slide 2: Jason Beach, Vice President, Investor Relations
stryker Jason Beach Vice President, Investor Relations
Slide 3: Agenda
Delivering Leading Growth Chair and Chief Executive Officer Structure, Talent, and Culture Vice President, Chief Human Resources Officer Driving Organic Growth Through Innovation Group President, MedSurg and Neurotechnology Market Leading M&A Growth Group President, Orthopaedics and Spine Digital, R
Slide 4: Forward-looking statements
This presentation contains information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such stateme
Slide 5: Kevin Lobo, Chair and Chief Executive Officer
stryker Kevin Lobo Chair and Chief Executive Officer
Slide 6: Mission and Values
stryker 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 & Investor & Day
Slide 7: Drive market leading growth and category leadership
Drive market leading growth and achieve category leadership in MedSurg, Neurotechnology, Orthopaedics and Spine 7
Slide 8: Organic sales growth
Organic sales growth 2011 2013 2014 2017 2018 2020 2021 2022 2023* & & & 2012 2015 & 2019 2016 *2023 revenue-related metrics are estimates and reflect the guidance range from Stryker’s 3Q23 earnings call. 2021 growth rate is compared to 2019. 8
Slide 9: 2023 net sales estimate
Note: 2023 sales is an estimate of net sales for the period, reflecting the midpoint forecast from Stryker's 3Q23 earnings call. * = estimate 9
Slide 10: Sales mix by category
Neuro Cranial 7% Neurotechnology 10% Neurovascular Medical 7% Hips 8% 8% Hips Medical Endoscopy 14% 16% Trauma & 13% Extremities 15% Trauma & Extremities Endoscopy Spine Instruments 14% Spine 12% 13% 6% Instruments 8% 12% *Other MSNT and Other Orthopaedics have been excluded from charts. 10
Slide 11: Value creation through top-tier growth and margin expansion
Value creation through top-tier growth and margin expansion 11
Slide 12: Presenters
Chair and Chief Executive Group President, Group President, Orthopaedics Group President, Global Vice President, Chief Human Vice President, Chief Vice President, Chief Officer MedSurg and Neurotechnology and Spine Quality and Operations Resources Officer Financial Officer Corporate Affairs Officer
Slide 13: Katy Fink, Chief Human Resources Officer
stryker Katy Fink Vice President, Chief Human Resources Officer
Slide 14: Impacting customers and patients around the world
. . stryker Impacting customers and patients around the world in served by we impact more than countries employees patients annually ERERERARRRERT 14
Slide 15: Business portfolio
• Hips • Trauma • Orthopaedic Instruments • Acute Care • Knees • Upper Extremities • Surgical Technologies • Emergency Care • Mako • Foot and Ankle • Sage • Communications • Core Spine • Endoscopy • Enabling Technologies • Sports Medicine • Interventional Spine • Sustainability Solutions • Craniomax
Slide 16: Talent approach
• Rigorous screening, at all levels • Deep commitment to employee engagement • High degrees of autonomy • Strengths-based approach • Personalized development planning • Extensive employee listening 16
Slide 17: Strong culture
stryker Strong culture 7 2 QO a Mission-driven Growth mindset Employees Culture of and intense and collaborate are performance customer focus to win driven and accountability We line up behind our Open to change and risk- Curious and humble Results matter businesses taking & Investor & Day 17
Slide 18: Global recognition as a great place to work
Workplaces” 2023 Best Place to Work for . Disability Inclusion Workplaces mmm DISABILITY~ Europe D=| estat 2023 | «TDVESLOL pe a Day * ‘Asi =e best Y Workplaces in Manufacturing and Production Great Place to Work 2023 Global recognition as a great place to work ..a few of our honors * World's Most A
Slide 19: Andy Pierce, Group President, MedSurg and Neurotechnology
stryker Andy Pierce Group President, MedSurg and Neurotechnology
Slide 20: Company history of innovation
Orthopedic Surgeon Cast Cutter 1946 Founder of Stryker Corp. Wedge Turning Frame 1937 20
Slide 21: Leading through innovation
Our belief Leading through innovation 2022 R&D spend’ ——© US patents 6.7% of reported net sales ——1" 50% growth since 2019 & Investor & Day “Adj. RED spend stryker 21
Slide 22: Innovation approach
Command of Differentiated High impact clinical needs core competencies resource allocation 22
Slide 23: Product fair pipeline products
+Products are either under development or pending regulatory will be featured at the product fair authority review. These products are not yet available for sale 23
Slide 24: 1788 Platform
v 1788 Platform 1st Advanced Imaging 4 Advanced Imaging Modality Modalities 24
Slide 25: Our culture and operating model drive innovation and growth
Our culture and operating model drive innovation and growth | Specialization and a superior salesforce across the continuum of care | Premium products supporting category leadership “| Our innovation is driving growth & Investor & Day stryker 25
Slide 26: Spencer Stiles, Group President, Orthopaedics & Spine
stryker qi Dp Spencer Stiles Group President, Orthopaedics & Spine 26
Slide 27: Our acquisition strategy remains unchanged
stryker Our acquisition strategy remains unchanged We bolster the core and enter adjacent categories Color key: Synergetics Ivy Sports r USA’s Neuro Medicine, (hei Lites Adjacency Portfolio LLC NOVADAQ Technologies, Inc. Mobius Imaging and Cardan Berchtold c Holding SafeWire Robotics Patient Safety
Slide 28: Clinical expansion in open and MIS surgery
Plastics and Reconstruction Clinical Expansion in Open Surgery - Breast Surgery. Lymphatic mapping Breast Surgery - Pediatrics Gyn Oncology Clinical Expansion in MIS Surgery Head and Neck - ENT - Neuro Trauma - Urology - Thoracic Podiatry 28
Slide 29: Mako evolution since acquisition
™ Stryker acquires Mako First Mako Third Mako Total Total Knee case Mako Total Mako Total Spine, Shoulder generation Hip 4.0 Hip 4.1, and other Mako System Mako Partial Knee 2.0 Insignia applications Knee 3.0 29
Slide 30: M&A driving growth
M&A driving Dedicated Business Units created post Wright Medical acquisition in Trauma & Extremities and Joint Replacement (Mako, Knees, Hips) Global category leaders in Blueprint ® Foot & Ankle and Shoulder Arthroplasty GammaTM Nailing System PROstep® MIS Lapidus 40+ product launches since acquisit
Slide 31: Differentiated M&A
Differentiated M&A stryker & Investor & Day Customerfocused with M&A resources embedded in every business while leveraging company-wide expertise M&A strategy based on business needs and balance of inorganic and organic opportunities Robust pipeline of potential deals and established relationships w
Slide 32: Robert Cohen, President, Digital, Robotics & Enabling Technologies
stryker Robert Cohen President, Digital, Robotics & Enabling Technologies
Slide 33: Global unified ecosystem across continuum of care
Provides a global unified ecosystem that drives improved outcomes and provides a seamless customer experience across the continuum of care. 33
Slide 34: AI and intelligent technologies
Investor Mm & Day Al 7} Radiomics Predictive intelligence Intelligent guidance Ambient intelligence Generative Al stryker 34
Slide 35: Our early steps in 3D planning software
Our early steps in Investor Day 3D Planning Software stryker 35
Slide 36: Jessica Mathieson, Vice President/GM, Acute Care
stryker Jessica Mathieson Vice President/GM, Acute Care
Slide 37: Nurse workload challenges
Source: Douglas, S., Cartmill, R., Brown, R., Hoonakker, P., Slagle, J., Schultz Van Roy, K., Walker, J. M., Weinger, M., Wetterneck, T., & Carayon, P. (2013). The work of adult and pediatric intensive care unit nurses. Nursing research, 62(1), 50–58. 37
Slide 38: Vocera clinical communication
driving efficiencies, reducing cognitive burden and enhancing outcomes. communication. partnering with customers to help drive sustained outcomes. providing notifications to the right caregiver at the right time. 38
Slide 39: Communication and workplace violence statistics
Serious workplace violence Studies have demonstrated incidents Connectivity increases in medsurg units1 Studies have demonstrated that 84% of U.S. healthcare than , and nurses perform that inefficient workers report in private industry. making it easier to care 2. communications is behind . for pati
Slide 40: Hands-free communication platform
Near-real time data Manage and A more human Conversational that drives clinical customize your connection for Hands-free voice to make decision making workflows with patients and their communication with interactions more easier integrations loved ones before, the flexibility and simple and powerful
Slide 41: Streamlined communication
Streamlined communication Disparate communication devices Legacy VoIP or wireless handhelds Pagers Workstations on wheels Bluetooth barcode scanners a7 w & Investor m@ 2 Day stryker Vocera enterprise platform 4l
Slide 42: NICU alarm fatigue results
• Alarm fatigue and • Engage* desensitization • Unnecessary noise disrupting infant care Reduced secondary Decreased ancillary, non- alarms by clinical alarm notification to NICU nurses by within 30 days in NICU Increased NICU nurse Decreased alarm satisfaction with alarm fatigue by management solut
Slide 43: Connected and Confident
= Prime Co Connected and Confide
Slide 44: Vocera market leadership and growth
and growing driving efficiencies, reducing cognitive burden Market leader with nearly and enhancing outcomes communication with our medical partnering with devices across the continuum of care, customers to help drive sustained outcomes comprehensive clinical communications and workflow platform and
Slide 45: Stuart Silk, President, Europe, Latin America, Canada, and EEMEA
stryker Stuart Silk President, Europe, Latin America, Canada, and EEMEA 45
Slide 46: International growth rates
✓ ✓ ✓ 46 Note: Growth rates are based on constant currency; 5-year CAGR represents ‘18 – ’22. AsiaPac includes select emerging markets within the region.
Slide 47: Our journey to the present
Our journey to the present Wy -_ ‘Tomier Perform Reversed Glenoid Mako Smart Robotics Best, Workplaces Europe. 2023 Best Workplaces Asia. 2023 Recognized as a stryker Driving to a leading share position globally great place to work LY {)} Ly) p> VU VV ad dl 4 2015 2018 2019 2022 2023 New Internation
Slide 48: Market leading growth through specialization
Market leading growth through specialization Customized market execution as we expand Driving leading technology across our portfolio 48
Slide 49: International expansion panel
Vice President, Chief Corporate President, Neurovascular President, Europe, Latin Affairs Officer America, Canada, and EEMEA President, Japan Vice President and General President, APAC Manager, EEMEA 49
Slide 50: Glenn Boehnlein, Vice President, Chief Financial Officer
stryker Glenn Boehnlein Vice President, Chief Financial Officer 50
Slide 51: Fast-growing organization at the high-end of Medtech
• We are a fast-growing • We are a fast-growing organization; growing at organization; growing at the high-end of Medtech the high-end of Medtech • Focused on delivering 30+ • Elevated focus on margin bps Op Margin expansion expansion and double- and double-digit EPS digit EPS growth annually growth
Slide 52: Organic growth CAGR 2016-2022 vs market
CAGR 2016 - 2022 9.09 8.26 7.31 7.43 6.49 5.8 2016 2017 2018 2019 2020 2021 2022 Stryker Market Note: Market represents SYK competitor peers-set 52
Slide 53: Growth, margin and cash flow expectations
High-end of 10.0% to 10.5% Medtech Growth Implied margin ~200 bps through expansion ’25; then 30+ bps Expansion [Guidance not provided] annually 10.8% to 11.9% Double digit+ [$10.35 – $10.45] growth Growth Target of 70 - 80% 70 - 80% [Guidance not provided] As % of Adj. Net Earnings 53
Slide 54: Value creation through top-tier growth and margin expansion
Value creation through top-tier growth and margin expansion • Commercial offense • ~200bps expansion • FCF Conversion of 70- • Track record and driving share gains through 2025 80% commitment to M&A • International growth • Margin expansion • Working capital • Prioritized investment in opportunity t
Slide 55: Return to pre-covid operating margins in 2025
Return to pre-covid adjusted operating margins on a full-year basis in 2025 • Margin expansion from both gross margin and operating expenses • Continued price realization • Normalizing operating environment Ongoing 30+ bps expansion annually • Drive global operating efficiencies • Volume leverage an
Slide 56: Margin expansion drivers
Continued price realization ✓ Cadence of innovation supports incremental price/mix ✓ Aligned compensation structures ✓ Contracting excellence Opportunities in Gross Margin ✓ Product transfers and capacity efficiencies ✓ Low-cost greenfield sites ✓ Selective in-sourcing ✓ Thoughtful site rationalizat
Slide 57: Capital deployment
Fund M&A to drive growth: • Nearly 40 deals from 2016-2022 • Mix of early-stage tuck-in and near adjacencies 2016 - 2022 • $17B in M&A since 2016 Capital deployment Strong dividend growth: $24B • 10.8% CAGR since 2016 🞁 75% Solid balance sheet: • Deleveraging commitments on track • Strong BBB+/Baa1
Slide 58: Financial expectations summary
High-end of • We remain committed to growing at the Medtech high-end of Medtech Growth ~200 bps through ’25; then 30+ bps Expansion annually • Elevated focus on margin expansion and double-digit EPS growth Double digit+ growth Growth • FCF to support our proven capital 70 - 80% allocation strategy A
Slide 59: Consultant note
Note: Dr. Mayman is a paid consultant of Stryker. The opinions expressed in this section are his and not necessarily those of Stryker. Individual experiences may vary. 59
Slide 60: Q&A panel
stryker oé6364356 Kevin Glenn Viju Andy Spencer Lobo Boehnlein Menon Pierce Stiles
Slide 61: Stryker
stryker
Slide 62: Reconciliation of net sales growth to organic sales growth
Supplemental information Reconciliation of GAAP to Non-GAAP financial measures RECONCILIATION OF REPORTED NET SALES GROWTH TO ORGANIC SALES GROWTH Year ended December 31, 2022 2021* 2021** 2020 2019 2018 2017 Reported net sales growth 78% 192 % 149 % (3.6) % 94 % 93 % 99 % Less: foreign currency exc
Slide 63: Reconciliation of R&D expenses to adjusted R&D expenses
. . stryker Supplemental information Reconciliation of GAAP to Non-GAAP financial measures (continued) RECONCILIATION OF RESEARCH, DEVELOPMENT & ENGINEERING EXPENSES TO ADJUSTED RESEARCH, DEVELOPMENT & ENGINEERING EXPENSES Dollar amounts in millions Year ended December 31, 2022 Research, Development
Slide 64: Reconciliation of operating margin and EPS to adjusted
. . stryker Supplemental information Reconciliation of GAAP to Non-GAAP financial measures (continued) [RECONCILIATION OF OPERATING MARGIN AND NET EARNINGS PER DILUTED SHARE TO ADJUSTED OPERATING MARGIN AND ADJUSTED NET EARNINGS PER DILUTED SHARE Dollar amounts in millions, except per share amounts