Stryker Corporation · NYSE:SYK
Stryker — Investor Day (November 2018)
66 slides from Stryker's investor day presentation, Nov 8, 2018
Slide 1: Analyst Meeting November 2018
Analyst Meeting November 2018
Slide 2: Disclaimer
Disclaimer Forward-looking statement 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
Slide 3: Agenda
Agenda Kevin Lobo Overview Chairman and Chief Executive Officer Mark Paul Neurovascular Physician Panel President, Neurovascular Division Guest Speakers: Alex Coon, MD Adjunct Professor, Neurosurgery, Johns Hopkins Medical Center Brian Jankowitz, MD Assistant Professor, Neurosurgery, University of P
Slide 4: 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 4
Slide 5: Changes to Stryker Leadership Team
Changes to Stryker Leadership Team Timothy Scannell Andy Pierce Bijoy Sagar President and Chief Group President, Vice President, Chief Operating Officer MedSurg Digital Technology Officer Viju Menon Spencer Stiles Group President, Group President, Global Quality and Neurotechnology, Operations Instr
Slide 6: New division presidents
New division presidents Dylan Crotty Brent Ladd President, Instruments President, Endoscopy 6
Slide 7: 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 Cost transformation • Intense customer • Make healthcare better • Focus resources, investment • Drive operational eff
Slide 8: Diverse global Med Tech leader
Diverse global Med Tech leader… Committed to achieving category Neuro Powered Instruments leadership 4% Neurovascular CMF 5% 2% Knees 13% Spine 6% #1 or #2 market shares across majority Sustainability Trauma & Solutions 2% Extremities 2017 12% of divisions Endoscopy net sales 13% $12.4B Hips 10% Oth
Slide 9: Our history of growth
Our history of growth Net Sales ($B) ~12B+ $12.4 B $12 12 $10 10 $8 8 $6 6 $4 4 $2 2 00 1979 79 2017 2017 9
Slide 10: Strong top line momentum
Strong top line momentum… Organic sales growth at high end of Med Tech • Decentralized operating model – sales, marketing, R&D, and business development • Strong new product pipeline across our divisions • Significant investments in R&D driving industry leadership in many areas (e.g., Robotics, 3-D
Slide 11: Continued focus on driving margin expansion
… continued focus on driving margin expansion • Product lifecycle management well underway • Procurement progress continues • Progress on shared services • Modernization of our IT systems is progressing Combined CTG efforts driving 30-50 basis points of annual operating margin expansion, despite sig
Slide 12: Mergers and acquisitions
Mergers and acquisitions Color key: We continue to enhance our portfolio’s depth and Core business breadth with strategic mergers and acquisitions. Adjacency Pending Synergetics Ivy Sports Invuity, Inc. USA’s Neuro Medicine, Portfolio LLC Concentric Patient Safety Vertebral Compression NOVADAQ K2M G
Slide 13: Summary
Summary • 2018 will be another year of strong organic sales & earnings growth • Confident that we will grow organic sales at the high end of Med Tech in 2019 • Organizational changes position us to deliver continued robust growth • Healthy new product cadence and M&A execution • CTG translating into
Slide 14: Neurovascular Physician Panel
Neurovascular Physician Panel Mark Paul President, Neurovascular Division
Slide 15: Neurovascular physician panel
Neurovascular physician panel Alexander Coon, MD Brian Jankowitz, MD Ryan McTaggart, MD Adjunct Professor Assistant Professor Associate Professor Neurosurgery Neurosurgery Radiology, Neurology, & Neurosurgery Johns Hopkins University University of Pittsburgh Warren Alpert Medical School of Brown Med
Slide 16: In the United States, stroke occurs every 40 seconds
In the United States, stroke occurs every 40 seconds Every 4 minutes ~13% of all someone dies ischemic strokes were treated 800,000 strokes per year 2x more women die from stroke than breast cancer #5 cause of death Leading cause of disability National Stroke Association. www.stroke.org. Accessed Oc
Slide 17: Complete Stroke Care
Neurovascular strategy Be the worldwide leader in Complete Stroke Care 17
Slide 18: Neurovascular leadership
Neurovascular leadership 2019+ Looking forward Continued innovation 2011–2018 for growth Unprecedented growth Launched 22 Ongoing clinical investment new devices and market development Developed the AIS market 2011 around the world Acquired by Stryker 18
Slide 19: A complementary portfolio
A complementary portfolio of hemorrhagic products to treat all types of aneurysms Target Detachable Coils Neuroform Atlas Stent Target Hemorrhagic Solutions Guidewires Microcatheters Occlusion Distal access Long sheaths balloons catheters 19
Slide 20: New entry into the flow diversion market
New entry into the flow diversion market Surpass Streamline Flow Diverter Flow Diverter Hemorrhagic Solutions Guidewires Microcatheters Delivery assist Distal access Long sheaths catheters catheters 20
Slide 21: A comprehensive portfolio
A comprehensive portfolio of products to treat acute ischemic stroke Trevo XP ProVue Retriever Trevo Stroke Solutions Guidewires Microcatheters Distal access Long sheaths Balloon guide catheters catheters 21
Slide 22: New entry into the direct aspiration market
New entry into the direct aspiration market AXS Vecta Aspiration Catheter AXS Infinity LS Plus Long Sheath Aspiration Stroke Solutions Guidewires Microcatheters Aspiration pumps 22
Slide 23: Neurovascular clinical leadership
Neurovascular clinical leadership HEM AIS ICAD SCENT trial DAWN trial WEAVE trial ATLAS study Trevo Retriever registry 23
Slide 24: Stroke therapy awareness programs
Stroke therapy awareness programs every second is critical Primary Comprehensive Call 911 stroke center stroke center Stroke team Treatment The brain ages Market development programs for 3.6 years every hour each phase of patient care, aimed without treatment1 at decreasing time to treatment 1. Save
Slide 25: Neurovascular physician panel
Neurovascular physician panel Alexander Coon, MD Brian Jankowitz, MD Ryan McTaggart, MD Adjunct Professor Assistant Professor Associate Professor Neurosurgery Neurosurgery Radiology, Neurology, & Neurosurgery Johns Hopkins University University of Pittsburgh Warren Alpert Medical School of Brown Med
Slide 26: Knowing the signs of stroke can change a life (F.A.S.T.)
Knowing the signs of stroke can change a life (F.A.S.T.) Face: Arms: Speech: Time: Droop on one side, Weakness Slurred speech If one of these symptoms or uneven smile on one side or difficulty is present, get help. understanding Time is brain, and every second counts Know where to go for treatment.
Slide 27: Spotlight: Trauma & Extremities
Trauma & Extremities Spotlight Dr. Xavier Berling President, Trauma & Extremities
Slide 28: Trauma & Extremities strategic journey
Trauma & Extremities strategic journey Trauma & Extremities continues to capture meaningful market share Various market spaces Multiple product categories Different type of customers We help rebuild lives through our dedicated services that support our customers with comprehensive and advanced produ
Slide 29: Key insights
Key insights Ability to demonstrate financial value to the C-suite combined with dedicated selling capabilities Level 1 hospital market shares drive Trauma long term leadership Largest gap for Extremities category leadership is shoulder 29
Slide 30: Trauma & Extremities Extremities Update
Trauma & Extremities Extremities Update Gordon Van Ummersen Vice President & General Manager, Extremities
Slide 31: US Extremities market overview
US Extremities market overview US Extremities market growth Growth drivers • Specialized sales forces • Surgeon education programs • Next generation implants • Site of care shift to ASC/Outpatient setting 31
Slide 32: US Foot & Ankle sales and market
US Foot & Ankle sales and market SYK US Foot & Ankle sales performance 2017 Market share 23% CAGR • Dedicated and focused sales team • Portfolio filled through organic development and strategic M&A 5 yr Pro Forma CAGR through FY ‘17 32
Slide 33: US Shoulder sales and market
US Shoulder sales and market SYK US Shoulder sales performance 2017 Market share 44% CAGR • Solid foundational portfolio built and launched • Increased branding, commercial focus and educational effort 5 yr Pro Forma CAGR through FY ‘17 33
Slide 34: US Shoulder market by procedure
US Shoulder market by procedure $2,500 Resurfacing Revision Hemi-Arthroplasty $2,000 Total Shoulder Arthroplasty Reverse Shoulder Arthroplasty $1,500 $1,000 $500 $0 2014 2015 2016 2017 2018P 2019P 2020P 2021P 2022P 2023P 2024P 2025P 2026P 2027P $ millions 34
Slide 35: US Shoulder portfolio future pipeline
US Shoulder portfolio future pipeline Current platform 2019 launches Future additions ReUnion TSA Improved instruments ReUnion Stemless Revision Options ReUnion RFX ReUnion RSA ReUnion S Glenoid Solutions A growing foundation leading to the power of MAKO 35
Slide 36: Spotlight: Endoscopy
Endoscopy Spotlight Andy Pierce Group President, MedSurg
Slide 37: Performance over time
Performance over time Global Endoscopy Sales $ Millions 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 37
Slide 38: Key product and service offerings
Key product and service offerings Endoscopy Communications Sports Medicine Surgical visualization Infrastructure Sports arthroscopy MIS and open Booms, lights, Resection, RF, fluid tables management Fluorescence Integration Sports implants imaging agent Audio, video, data Shoulder, knee, hip, ICG an
Slide 39: Key growth drivers
Key growth drivers • MIS Visualization and Fluorescence Imaging leadership • Facility new build, remodeling and expansion drive OR upgrades • Focus on Sports Medicine portfolio expansion opportunities • Focus on geographic expansion opportunities 39
Slide 40: Martin I. Newman, MD, FACS
Martin I. Newman, MD, FACS Medical education: Positions: • Vanderbilt University School of Medicine • Department of Plastic and Reconstructive Surgery at Cleveland • Plastic surgery training at New York- Clinic Florida, Presbyterian Hospital, Columbia University, Cornell University, New York, (plast
Slide 41: Endoscopy: SPY Technology Evolution
Endoscopy SPY Technology Evolution Martin I. Newman, MD Plastic Surgeon, Cleveland Clinic Florida
Slide 42: Wiki medical school
Wiki medical school • Successful surgery removes a diseased tumor, tissue or organ while preserving healthy structures • Following removal - remaining structures will survive only if their blood supply is adequate • Surgeons must assess the viability (blood supply) of the remaining structures based
Slide 43: Understanding the market need
Understanding the market need About 1 in 8 women in the U.S. will get breast cancer in her lifetime. 43 1. Noone AM, Howlader N, Krapcho M, et al. (editors). SEER Cancer Statistics Review, 1975-2015. Table 4.17. National Cancer Institute. Bethesda, MD. Accessed on April 19, 2018. http://seer.cancer.
Slide 44: Understanding the market need
Understanding the market need 44
Slide 45: Understanding the market need
Understanding the market need 45
Slide 46: Understanding the market need
Understanding the market need 46
Slide 47: Mastectomy flap necrosis: a domino effect
Mastectomy flap necrosis: a domino effect • Skin dies • Patient Loses Breast - Second Time • Significant Pain and Suffering • Extra Operation • Unplanned Hospitalization • Loss of DermACELL • Loss of Silicone Implant • Costs Double and Triple 47
Slide 48: Cost of complications: breast reconstruction surgery
Cost of complications: breast reconstruction surgery *Cost-to-charge ratio applied to original data to arrive at cost. These costs were estimates based on reported charges for Cleveland Clinic, Florida 48
Slide 49: Understanding the market need
Understanding the market need About 25% of all breast reconstructions experience some degree of mastectomy flap necrosis 49
Slide 50: What is the solution?
What is the solution? SPY technology 30 seconds ICG Within 30 seconds, ICG can be visualized on the skin Indocyanine Green is • Blood flow can be evaluated injected thru the IV and disperses through the • Action can be taken circulatory system • Problems addressed https://www.smh.com.au/healthcare/n
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Slide 52: What is the solution?
What is the solution? SPY Elite • Current market leader in open fluorescence imaging • 10+ years of history SPY PHI (portable handheld imager) • Next generation product • Every surgeon, every patient 52
Slide 53: CTG Update
CTG Update Viju Menon Group President, Global Quality & Operations
Slide 54: Cost Transformation for Growth (CTG) program goals
Cost Transformation for Growth (CTG) program goals Above market top line growth …and sustainable margin expansion Year 3 of our CTG Program designed to Stryker operating margin % enable long-term leveraged growth Strategic plan 3 guiding principles: CTG Impact • Significantly reduce structural and n
Slide 55: Key initiatives to drive CTG
Key initiatives to drive CTG Product Life Cycle Shared Services Management (PLCM) Global Operating Plant Network Model & Optimization Organizational Design Cost Transformation for Growth (CTG) Supply Chain Indirect Optimization Procurement Direct Sourcing Global ERP Confident in achieving 30 – 50 bp
Slide 56: Financial Outlook
Financial Outlook Glenn Boehnlein Vice President, Chief Financial Officer
Slide 57: Long term sustainable growth model
Long term sustainable growth model • Focused market approach (developed and emerging) • Power products/brands Sales Growth • Diversified portfolio • Opportunistic M&A strategy EPS • COGS reduction Growth Operating • SG&A leverage Leverage • Balanced R&D investment • Tax Financial • Debt management E
Slide 58: Committed to growth at the high end of Med Tech
Committed to growth at the high end of Med Tech 8.0% 7.6% Organic Sales Growth (constant currency) 7.1% 7.0% 6.4% 6.1% 6.0% 5.8% ~5.5% 5.1% 5.0% 4.8% 4.6% 4.2% 4.0% 3.0% 2.8% 2.4% 2.0% 1.0% 0.0% 2013 2014 2015 2016 2017 2018 Q3 YTD Med Tech Market* Stryker *Med Tech market growth is based on Company
Slide 59: Committed to delivering leveraged earnings
Committed to delivering leveraged earnings 14.0% 13.3% 12.5% 11.9% 12.0% 11.7% 10.0% 8.2% 8.0% 7.5% 7.1% 6.1% 6.4% 5.8% 7.0% 6.0% 5.3% 5.1% 4.4% 4.0% 2.0% 0.0% 2013 2014 2015 2016 2017 2018 Guidance Organic Sales Growth (constant currency) Adj EPS Growth Note: 2018 adj EPS growth and organic sales g
Slide 60: Capital deployment strategy
Capital deployment strategy M&A to drive sales growth and innovation Focused on driving sales growth in core and adjacent markets Dividend growth Dividend CAGR of 15% since 2010 Share repurchases Baseline focus of repurchases to offset dilution 2018 Capital Deployment Significant M&A driving growth:
Slide 61: Long term sustainable growth targets
Long term sustainable growth targets Sales growth at the high end of Sales Growth Med Tech, which allows us to drive… EPS 30 to 50 basis points of annual Growth Operating operating margin improvement Leverage over 5 years Minimum EPS growth of 9% Financial annually Efficiency 61
Slide 62: Trademarks notice
Stryker Corporation or its divisions or other corporate affiliated entities own, use or have applied for the following trademarks or service marks: AXS Infinity LS, AXS Vecta, Berchtold, CHG Hospital Beds, Complete Stroke Care, Concentric, Entellus Medical, HyperBranch Medical Technology, Inc, Instr
Slide 63: Appendix A
Appendix A 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 organic sales growth and adjusted net earnings per diluted share (Diluted EPS). We
Slide 64: Reconciliation of reported sales growth to organic sales growth
Reconciliation of reported sales growth to organic sales growth Nine Months September 30, Years Ended December 31, 2018 2017 2016 2015 2014 2013 Reported Net Sales Growth 9.3% 9.9% 13.9% 2.8% 7.3% 4.2% Less: Foreign Currency Exchange 0.9 0.1 (0.4) (4.2) (1.0) (1.7) Less: Acquisitions 1.8 2.7 7.9 0.9
Slide 65: Reconciliation of net earnings per diluted share to adjusted
Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share Millions of Dollars, Except Per Share Amounts Years Ended December 31, 2017 2016 2015 Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Di
Slide 66: Reconciliation of net earnings per diluted share to adjusted
Reconciliation of net earnings per diluted share to adjusted net earnings per diluted share Millions of Dollars, Except Per Share Amounts Years Ended December 31, 2014 2013 2012 Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Diluted EPS Net Earnings Effective Tax Rate Di