Stryker Corporation · NYSE:SYK
Stryker — JPMorgan Healthcare Conference 2015
21 slides from Stryker's conference presentation, Jan 14, 2015
Slide 1: Stryker
STRYKER Kevin A. Lobo, Chairman and Chief Executive Officer January14, 2015
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT Certain statements made in the presentation may contain 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 mat
Slide 3: Mission
MISSION TOGETHER WITH OUR CUSTOMERS, WE ARE DRIVEN MISSION TO MAKE HEALTHCARE BETTER. VALUES INTEGRITY ACCOUNTABILITY PEOPLE PERFORMANCE 3
Slide 4: Global Medtech Leader
GLOBAL MEDTECH LEADER Neuro Powered Instruments • Pursuing global market 3% CMF Knees 2% 14% leadership in three Neurovascular 5% segments Spine 8% Hips 13% Sustainability Solutions 2% 2014 Sales • Growing through Medical 8% ~$9.7B business unit Trauma & Extremities 13% specialization Endoscopy 14%
Slide 5: History of Performance
HISTORY OF PERFORMANCE ~9.7B 10 Sales ($B) 9 8 7 6 5 4 3 2 1 0 79 14 Adjusted Diluted Net EPS* ($) Dividends Paid Per Share ($) 6.00 1.50 4.49 4.72 – 4.74 1.22 5.00 3.94 4.30 1.06 4.00 1.00 0.85 0.72 3.00 0.60 2.00 0.50 1.00 0.00 0.00 11 12 13 14 10 11 12 13 14 * Non-GAAP financial measure. See the
Slide 6: Growth at the High End of Medtech
GROWTH AT THE HIGH END OF MEDTECH 7.0% Organic Revenue Growth* 6.0% 5.8% 5.1% 5.0% 4.2% 4.0% 3.0% 2.6% ~ 2.6% - 2.8% 2.4% 2.0% 1.0% 0.0% 2012 2013 2014 MedTech Market** Stryker * Organic revenue growth removes the impact of changes in foreign currency exchange rates, divestitures and the first twelv
Slide 7: Orthopaedics Key Growth Drivers
ORTHOPAEDICS KEY GROWTH DRIVERS • Drive market adoption of robotic arm assisted surgery • Expand portfolio and specialty selling teams in high growth segments • Drive Power Brands • Geographic expansion with the Trans-Atlantic operating model 7
Slide 8: Driving Differentiation
DRIVING DIFFERENTIATION RIO SYSTEM PLACEMENTS 4Q13 1Q14 2Q14 3Q14 4Q14 13* 2 6 8 20 * 5 sold after acquisition closed on December 17th 2015 PORTFOLIO EXPANSION • Cementless uni knee limited release • Total Knee 510(k) submitted and pending • Hip Power Brands • X3 poly bearings IMPROVED OUTCOMES • Pr
Slide 9: MedSurg Key Growth Drivers
MEDSURG KEY GROWTH DRIVERS • Ramping of key acquisitions (Berchtold, Pivot, SurgiCount, and CHG Hospital Beds) • Execution of Trans-Atlantic operating model • Continue momentum of our reprocessing business • Continue market expansion of Neptune Waste Management System 9
Slide 10: Neurotech & Spine Key Growth Drivers
NEUROTECH & SPINE KEY GROWTH DRIVERS • Ischemic market expansion aided by recent positive clinicals • Leverage cross-divisional strength to gain share • Expand sales force in key business units & geographies • Spine portfolio development focused on growth segments and premium products 10
Slide 11: Accelerating Global Growth
ACCELERATING GLOBAL GROWTH • Strong U.S. performance • Build on European International (Developed) 2014 Sales United States 68% momentum with the 24% ~$9.7B Trans-Atlantic operating model Emerging Markets 8% • Trauson expanding outside of China 11
Slide 12: Focused on Innovation
FOCUSED ON INNOVATION • Demonstrating commitment to internal innovation +11% 3 Year CAGR • Driving innovation with R&D* products and services • Focused on improved outcomes & delivering greater cost savings/efficiencies * 3 year CAGR is for periods 2011 - 2013 12
Slide 13: Operating Leverage Initiatives
OPERATING LEVERAGE INITIATIVES • Amplify the GQ&O cost reduction program • Reduce inventories through product rationalization • Drive SG&A savings via Shared Services • Simplify and rationalize our Information Technology footprint 13
Slide 14: Continued Strength Through M&A
CONTINUED STRENGTH THROUGH M&A Ascent Patient Safety Technologies Porex Concentric OtisMed Trauson Pivot Medical CHG Hospital Beds Orthovita 2009 2010 2011 2012 2013 2014 2015 Memometal MAKO Gaymar Small Bone Surpass Innovations Sonopet Berchtold Holding Neurovascular • Targeting core and key adjace
Slide 15: Balance Sheet Strength
BALANCE SHEET STRENGTH • Approximately 2/3 of cash held ($ MILLIONS) 9/30/2014 outside the United States at Cash & Short-Term Investments 4,677 9/30/2014 • Planned cash repatriation of Net Cash* 715 ~$2B USD, most of which will Shareholders’ Equity 8,624 occur in the back half of 2015 Net Cash / Sha
Slide 16: Capital Deployment
CAPITAL DEPLOYMENT • M&A to drive sales growth and innovation Focused on driving sales growth in core and adjacent markets Guidelines: - generally to exceed cost of capital by year - target 12.5% + IRR • Dividend growth Dividend CAGR of 20% since 2010 Committed to increasing the dividend at or above
Slide 17: 2014 Preliminary Results / FY2015 FX Outlook
2014 Preliminary Results FY2014 + 5.8% Organic sales growth $4.72 – 4.74 Adjusted diluted net earnings per share FY2015 FX Outlook ~$0.20 Negative impact to 2015 Adjusted EPS, if rates stay at current levels This has nearly doubled since the $0.10 to $0.12 estimate at the end of Q3, 2014 17
Slide 18: Stryker Advantage
STRYKER ADVANTAGE • Strength in key hospital segments • Focused on innovation • Accelerating global growth • Opportunities to drive meaningful operational leverage • Balance sheet strength 18
Slide 19: Appendix
STRYKER Appendix 19
Slide 20: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES We supplement the reporting of our financial information determined under accounting Adjustments may include, but are not limited to, the following: principles generally accepted in the United States (GAAP) with certain non-GAAP financial • Acquisition and integration rel
Slide 21: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS 2014 (Per Share Amounts) 2011 2012 2013 Range Diluted Net Earnings per Share $3.45 $3.39 $2.63 $1.28 $1.37 Acquisition and integration related charges 0.37 0.09 0.19 0.17 0.17 Amortization of intangible assets 0.22 0.23 0.26 0.35 0.35 Restructuring and rela