Welcome to the Fourth Quarter 2024 Stryker Earnings Call. My name is Luke, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. The following conference will include a question-and-answer session. This conference call will be recorded for replay purposes. For your planning, and given the amount of content we have to cover, in case the call runs long, we plan to conclude no later than 6 p.m. EST. Before we begin, I want to remind you that discussions during this call will involve forward-looking statements. Factors that could lead to actual results differing significantly are outlined in the most recent filings with the SEC. Additionally, the discussions will include certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures can be found in today's press release, which is included in Stryker's current report on Form 8-K filed today with the SEC. I would now like to turn over the call to Mr. Kevin Lobo, Chair and Chief Executive Officer. You may proceed, sir.

Welcome to Stryker's fourth quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO; Andy Pierce, Group President, MedSurg on Neurotechnology; and Jason Beach, Vice President of Finance and Investor Relations. For today's call, I'll provide open comments followed by Andy, who will expand on our strategic rationale for the pending Inari acquisition. Jason will then follow with the trends we saw during the quarter and some product updates. Finally, Glenn will offer further details on our 2024 results and 2025 guidance, as well as financial elements of Inari Medical and Spine before we open the call to Q&A. First, as you saw in our press release, Glenn Fogel has decided to retire from Stryker effective April 1, after a very successful nine-year tenure as our CFO. He will be replaced by Preston Wells, who most of you know from his time in the Investor Relations role. I would like to thank Glenn for his outstanding leadership and great partnership with me and Stryker leaders as we grew the company significantly, delivered consistent strong financial results, and have positioned it very well for the future. Now let's move to our 2024 results, which were excellent, both for Q4 and the full year. Against double-digit comparatives from a year ago, organic sales growth exceeded 10% for both Q4 and the full year. Globally, for the full year, our instruments, endoscopy, medical, neuro cranial, and trauma and extremities businesses all delivered double-digit organic sales growth. Full year U.S. organic sales growth was an impressive 10.6% and international organic sales growth was 8.8%. International results were led by strong performances in Canada and emerging markets in Europe. International continues to represent a significant opportunity for both our legacy businesses and recent acquisitions. We also had excellent earnings performance, including the dilutive impacts from the seven acquisitions that we completed in 2024. We exceeded our adjusted operating margin goals, delivering an improvement of 200 basis points in Q4 and 110 basis points for the full year versus 2023. Our quarterly and full year adjusted EPS of $4.01 and $12.19 represents 16% growth for Q4 and 15% growth compared to the full year of 2023. This comprehensive performance demonstrates the durability of our high-growth offense, driven by organic innovation, focused M&A, terrific commercial execution, and strong earnings power. We have momentum entering 2025 and expect to continue delivering sales growth at the high end of med tech, which is reflected in our full year 2025 guidance of organic sales growth of 8% to 9%. This growth, combined with continuing operating margin expansion, translates to an adjusted EPS of $13.45 to $13.70 per share before considering the impact of Inari Medical, which Glenn will cover. We also announced an agreement to sell our Spinal Implants business, which has faced challenges in achieving our performance expectations. This sale will place the Spinal Implants business in the hands of new owners that have extensive experience in the spine market, allowing us to better align our resources. We continue to be excited about Interventional Spine, which is one of our fastest-growing businesses, bolstered by the recent acquisition of Vertos Medical. Additionally, we remain committed to enabling technologies for the spine market, including our Q Guidance System, Copilot, and Mako Spine. These portfolio decisions reflect a continuation of our strategy to drive category leadership in attractive, high-growth end markets. I will now turn the call over to Andy.

Thanks, Kevin. Our entry into the peripheral vascular market is a logical adjacency to our Neurovascular division, given their complementary product portfolios and parallel sites of service. With the acquisition of Inari, Stryker will be a leading player in the fast-growing area of chemical thrombectomy treatment for venous thromboembolism or VTE. Mechanical thrombectomy represents a $15 billion addressable opportunity, with the U.S. comprising $6 billion of that potential. Today, less than one-fifth of treatments for VTE are with mechanical thrombectomy, and we therefore believe this opportunity will expand over time as hospitals and clinicians look to elevate the standard of care for VTE. We believe Inari Solutions, which are supported by clinical research demonstrating their effectiveness, represent significant opportunities for our portfolio. Since bringing its ClotTriever and flow treater products to market in 2017, Inari has seen tremendous revenue growth in excess of 20% annually, with a gross margin profile of approximately 85%. In addition to its treatments for VTE, Inari has invested in four exciting therapies to address unmet needs in other patient populations. These emerging therapies include chronic venous disease, dialysis access management, acute limb ischemia, and chronic limb-threatening ischemia. Together, they represent over $5 billion of incremental market segment opportunity globally. We believe Stryker's international presence can help Inari more rapidly enter global markets. In recent years, Inari has made strides globally and is currently helping improve patient outcomes in over 30 markets, primarily in Europe and certain parts of Asia. Its international business is approximately 7% of sales. Stryker has long been a global leader in interventional neurovascular procedures, and with the addition of Inari, we will be equipped with a more comprehensive interventional endovascular portfolio. By launching the R&D and clinical capabilities of both organizations, we will have a greater opportunity to accelerate innovation and meet customer needs. From a commercial perspective, we are excited about the great synergies that exist between our teams. Inari brings significant operational infrastructure, which includes a commercial organization with attractive call points, including interventional radiologists, vascular surgeons, and interventional cardiologists. Inari's strong commercial model and patient-focused mission align well with Stryker's culture and our go-to-market strategy in Neurovascular. Finally, I would like to thank and recognize Drew Hikes and the entire Inari leadership team for building a strong mission-driven company that is improving patient lives. Inari has done an incredible job establishing this segment and driving adoption through extensive clinical studies and commercial excellence over the last 10-plus years. I'd also like to thank the Stryker team for their tremendous efforts in bringing together our two companies. With our track record in M&A, we have conviction in our ability to drive a successful integration, deliver innovative solutions to our customers, and create significant shareholder value. With our long history of investing in customer-focused technologies, we look forward to achieving best-in-class performance through a world-class sales force, a highly complementary and clinically compelling product portfolio, and an exciting pipeline to ensure we continue in this segment. And with that, I will now turn the call over to Jason.

Thanks, Andy. My comments today will focus on providing an update on the current environment as well as Mako, an update on product launches, and an adjustment to our external reporting. Procedural volumes remained healthy in the fourth quarter, and we continue to expect the markets will remain strong in 2025, underscored by the continued adoption in robotic-assisted surgery, favorable demographics, and healthy levels of patient activity. Additionally, demand for our capital products remained robust with strong organic growth in medical, instruments, and endoscopy in the quarter and double-digit growth for the full year across all three businesses. Hospital CapEx budgets are healthy, and our capital order book remains elevated as we enter 2025. Next, specific to Mako, we had another record quarter and year of installations in the U.S. and worldwide. The progress of our Mako offense, including our direct-to-consumer campaign, has resulted in strong growth of our installed base alongside continued increases in utilization. In the U.S., we are approaching two-thirds of knees and one-third of hips performed using Mako as we exited the year. Globally, we exited the year with just over 45% of knees and approximately 20% of hips performed using Mako. We have momentum, and significant opportunities remain as Mako adoption increases. Mako Spine completed its first cases in October, and we received excellent surgeons' feedback. We will continue to progress through our limited market release and remain on track for a full U.S. commercial launch in the second half of the year. Next, we received approval from the FDA for our Mako shoulder application, and we're able to perform our first cases in December. We are excited to now offer a complete ecosystem for shoulders, which includes Blueprint, our preplanning software, Mako Shoulder, and a leading portfolio of shoulder implants. As a reminder, 2025 will also be a limited launch year for Mako Shoulder as we carefully gain clinical experience. We expect a full launch in the U.S. by Q1 of 2026. We have continued to see positive momentum driven by our recent product launches. Our Pangia plating system has seen robust customer interest since its launch, driving strong sales growth. Additionally, our LIFEPAK 35 defibrillator and monitor continues to draw interest, driving meaningful sales performance in the quarter, along with a robust order book. Lastly, we have adjusted our external reporting to better align with how we are organized internally and to reflect the pending divestiture of the spinal implants business. Effective in the fourth quarter, our Spine enabling technology's results are reported as part of other orthopedics and Interventional Spine results are reported as part of neurocranial. As a result, spinal implants are now reported separately within orthopedics. With that, I will now turn the call over to Glenn.

Thanks, Jason. Today, I will focus my comments on our fourth-quarter financial results and the related drivers. Our detailed financial results have been provided in today's press release. Our organic sales growth was 10.2% in the quarter compared to 11.4% in the fourth quarter of 2023. This quarter had one more selling day than 2023. We had a 1.1% favorable impact from pricing, with both MedSurg and Neurotechnology and Orthopaedic segments contributing positive pricing for the quarter. Foreign currency had a 0.5% unfavorable impact on sales. In the quarter, U.S. organic sales growth was 10.9%. International organic sales growth was 7.9% and was led by positive sales momentum in Canada, Europe, and our emerging markets. For the year, our organic sales growth was also 10.2% against a very strong comparable of 11.5% last year. U.S. full-year organic growth was 10.6% and international growth was 8.8%. For the full year, the impact from price was favorable 1.1%. Foreign currency had a 0.5% unfavorable impact and 2024 had one more selling day than 2023. Our fourth-quarter adjusted EPS was $4.01, up 15.9% from 2023, driven by higher gross margins and the continued expansion of operating margins. Foreign currency translation had an unfavorable impact of $0.05. Our full-year adjusted EPS of $12.19 was up 15% from 2023, reflecting the favorable impact of sales growth and operating margin expansion, partially offset by the unfavorable impact of foreign currency exchange translation of $0.13. Now I will provide some more highlights around our quarterly segment performance. In the quarter, MedSurg and Neurotechnology had constant currency sales growth of 11.1% and organic sales growth of 10.1%, which included 11.5% of U.S. organic growth and 5.8% of international organic growth. Instruments had U.S. organic sales growth of 8.8%, with healthy growth in both the Surgical Technologies and orthopedic implants businesses. From a product perspective, sales growth was led by smoke evacuation, waste management, power tools, and SteriShield. Endoscopy had U.S. organic sales growth of 12.9%, led by strong growth across all businesses. Growth in the quarter was fueled by robust demand for our OR infrastructure and renovations and the continued success of our 1788 video platform and sports medicine shoulder products. Medical had U.S. organic sales growth of 11.1%, driven by double-digit performances in the emergency care and Sage businesses. From a product perspective, the medical business was led by strong sales growth in beds, Sage products, transport capital, and defibrillators. LIFEPAK 35 continues to drive excitement in the market with a strong and accelerating order pipeline. Neurovascular had U.S. organic sales growth of 12%, reflecting a strong performance in our hemorrhagic business and improvement against competitive pressures in our ischemic business. And finally, neurocranial had U.S. organic sales growth of 13.3%, led by strong growth in our bone mill, high-speed drills, bipolar forceps, craniomaxillofacial, and interventional spine products. As a reminder, our growth numbers now reflect the changes that Jason discussed earlier, with interventional spine now reported as part of our neurocranial division. Internationally, MedSurg & Neurotechnology had organic sales growth of 5.8%, led by growth in our Instruments and Endoscopy businesses. Geographically, this included strong performances in Canada and the United Kingdom. Orthopaedics had constant currency sales growth of 11.3% and organic sales growth of 10.2%, which included organic growth of 10% in the U.S. and 10.5% internationally. Our knee business grew 8.5% organically, reflecting our market-leading position in robotic-assisted knee procedures and momentum from the continued strength of our new Mako installations. Our U.S. hips business grew 7.1% organically, fueled by the continued success of our Cigna hip stem and momentum of our Mako robotic hip platform. Our U.S. Trauma and Extremities business grew 16.2% organically with very strong double-digit sales growth in our core trauma and upper extremities businesses. The performance of Pangea continues to ramp amid robust interest and adoption of this differentiated plating portfolio. Our U.S. spinal implants business grew 2.3% organically in the quarter. Our U.S. other ortho business, which now includes Enabling Technologies, grew 1.3% organically, primarily driven by Mako deal mix and a decline in bone cement. Internationally, Orthopaedics grew 10.5% organically, including strong performances in our emerging markets, Australia, New Zealand, Europe, and Canada. Now I will focus on operating highlights in the fourth quarter. Our adjusted gross margin of 65.3% was favorable by 140 basis points compared to the fourth quarter of 2023. This improvement was primarily driven by positive pricing, manufacturing cost improvements, and mix. Adjusted R&D spending was 5.3% of sales, which was 30 basis points lower than the fourth quarter of 2023. Our adjusted SG&A was 30.8% of sales, which was 20 basis points lower than the fourth quarter of 2023. In summary, for the quarter, our adjusted operating margin was 29.2% of sales, which was 200 basis points favorable to the fourth quarter of 2023. For the full year, our adjusted operating margin was 25.3%, which was a 110 basis point increase over 2023. Adjusted other income expense of $51 million for the quarter was $20 million higher than 2023, driven by a full quarter of higher interest expense related to our September 2024 debt issuance. For 2025, excluding the impact from the pending acquisition of Inari, we expect our full-year other income and expense to be approximately $260 million, driven primarily by the full-year impact of additional interest expense from our September 2024 debt issuance. Our fourth-quarter and full-year had an adjusted effective tax rate of 15.4% and 14.8%, respectively, reflecting the impact of geographic mix and certain discrete tax items. For 2025, we expect our full-year effective tax rate to be in the range of 15% to 16%. Focusing on the balance sheet, we ended the year with $4.5 billion of cash, marketable securities, and short-term investments. Total debt was approximately $13.6 billion and includes approximately $3 billion from our bond offerings in September 2024, of which a portion of the proceeds were used to pay down debt of $1.5 billion during the fourth quarter. Turning to cash flow, our full-year 2024 cash from operations was $4.2 billion, an increase of $531 million from 2023, driven mainly by higher earnings and improvements in inventory and accounts payable. For 2025, we anticipate that capital spending will be in the range of $800 million to $850 million. We do not anticipate any share buybacks. And now I will provide full-year 2025 guidance. Based on our momentum exiting 2024, a sustained level of procedural volumes, strong demand for our capital products, and our presence in healthy end markets, we expect organic net sales growth to be in the range of 8% to 9% for 2025, and expect adjusted net earnings per share to be in the range of $13.45 to $13.70, before considering the impact of Inari. This guidance assumes a full-year adjusted operating margin of 26.3%, which is in line with our previous assertion to improve operating margin to pre-COVID levels. Our sales guidance reflects our expectation that the full-year impact of price is modestly favorable. Additionally, if foreign exchange rates hold near current levels, we anticipate that sales will be unfavorably impacted approximately 1% for the full year and that adjusted earnings per share will be negatively impacted in the range of $0.10 to $0.15, both of which are reflected in our guidance. Compared to 2024, we will have one fewer selling day in the first quarter of 2025. The remaining quarters of this year will have the same number of selling days as 2024. Finally, while we did provide quarterly guidance, we do expect the seasonality of our sales, operating margin expansion, and related earnings to be similar to 2024. As it relates to the pending close of the Inari acquisition, we expect to fund the $4.9 billion purchase price through a mix of cash on hand and new debt, and anticipate closing this transaction towards the end of February. For the approximately 10-month period ending in December 2025, we expect Inari to deliver approximately $590 million of sales on a constant currency basis and have a dilutive impact on adjusted operating margin of 0 to 20 basis points and $0.20 to $0.30 on adjusted EPS. As it relates to the divestiture of our spine implants business, we expect that the impact of this transaction will be absorbed into the above guidance for net sales growth, adjusted operating margin, and adjusted EPS.

At this time, we will open the floor for questions. Our first question will come from Larry Biegelsen with Wells Fargo. Your line is now open. Please go ahead.

Good afternoon. Thank you for taking my question and congratulations on finishing the year strong. Kevin, I want to start with the Spine sale. Additionally, congratulations to both Glenn and Preston. Kevin, can you discuss why this was the right time for the Spine sale? How much of the $700 million will be allocated to VB, and what are the economics of the deal, including the sale price and how you plan to offset any dilution resulting from the transaction? I have one follow-up question. Thank you.

Yes, thanks, Larry. We have been analyzing this market for quite some time and seeking ways to enhance our Spine business. We are enthusiastic about the technology with Copilot and Mako Spine, but ultimately, we see better investment opportunities in other areas. The VB Brothers have substantial experience in spine and will drive the necessary innovation for our implant business. As mentioned in our press release, we will collaborate, providing the enabling technology while they supply the implants. We expect to divest the entire $700 million to them. The portions we retain have been reassigned, with the IVS moving to Neuro Cranial and the Enabling Technology being placed in Other Orthopedics. We've transitioned into various faster-growing sectors, and this is where we prefer to focus our efforts. The implant market is highly competitive, and we haven't seen the same level of innovation there as in other segments of our portfolio. This seemed like the appropriate moment, and we believe we have found an excellent partner. The business will be well-managed, and our employees and customers will be well taken care of.

Thanks. And then just a follow-up on Inari, maybe for Andy or for Glenn. Just talk about maybe some of the deal assumptions. By our math, the return on invested capital seems relatively low in year five. How do you see ROIC in five years? And when does this deal turn accretive? Thanks for taking the question.

Yes, Larry, thanks. We don't really guide on ROIC or talk about it too much, but we generally target to get back to WACC sometime between five and seven years. I would say Inari fits squarely in that sort of model as we looked at our modeling on this. We're super excited about their sales growth and the accretion of that to our sales growth, especially once we hit the one-year comparable mark on it. From an operating income standpoint, we feel there are a lot of opportunities for us to partner with them. Obviously, we have the normal public company synergies that will be in our favor. And then when you work your way down to EPS, most of the impact will result from additional borrowings and the interest expense related to that in terms of the dilution we'll feel at the EPS level.

Our next question will come from Robbie Marcus with JPMorgan. Your line is now open. Please go ahead.

Congratulations on a strong quarter. Glenn, we wish you the best in your retirement; it was a pleasure working with you. To follow up on Larry's questions from a profit and loss perspective, it's impressive that you managed to sell one of your lower growth businesses while still maintaining the expected range for guidance on operating margins. Considering the insights we gained about your margin structure during the Analyst Day over a year ago, what factors will enable you to achieve over 100 basis points of expansion this year before accounting for Inari dilution? Additionally, what remains to be addressed afterwards? Any details on the building blocks would be appreciated.

Yes, absolutely. Thank you, Robbie. There are ample opportunities as I consider our structure, our P&L, and our manufacturing footprint. Our GQO group is very enthusiastic about purchasing opportunities and expanding our low-cost manufacturing footprint. We have recently opened facilities in Poland and have our Tijuana facility. There remain many robust opportunities as we contemplate ways to streamline operations. Looking at operating expenses, we have closely examined the shared services component of our back office and transactional services. I believe there is definitely more to achieve. Our facilities in Asia, Poland, and Costa Rica are among our fastest-growing. There are significant opportunities to further push more transactional activities there. Additionally, by leveraging our R&D and utilizing our India tech center more frequently, we can drive further cost savings from a financial perspective. Finally, one of my preferred strategies for enhancing margins is our continued success in raising prices. This is not just in the U.S.; it applies globally. Our model benefits from natural leverage as we achieve 8% to 9% sales growth, ensuring we meet our targets for 2025.

Great. Maybe a follow-up. If I had to sum my takeaways coming out of our healthcare conference as it relates to your business from your competitors, it was that the ortho markets remain healthy and stable. Volumes are robust. Less negative pricing, and capital equipment markets remain healthy around the world. I wanted to see if you agree with that outlook. You always have great insights and any other color if there's a difference in geography that you want to add. Thanks a lot.

Hey, Robbie, it's Jason. I'll take this one. I would say well said across the board on the commentary there. I think we're very well aligned with that and feel really good as we enter 2025 really across all three of those.

Our next question will come from the line of Travis Steed with Bank of America. Your line is now open. Please go ahead.

Hey, thanks for taking the questions, and congrats, Preston. I look forward to working with you again. I wanted to ask about kind of the M&A. You guys used to have kind of five things on the list and kind of checked one of those off of Inari. So maybe kind of talk about, Kevin, some of your new prioritized list of focus areas for M&A. Is this going to be a period of digestion? Or is this going to be a period of continued M&A? I assume that some of the proceeds from the Spine business will help pay down debt. So you can kind of get back on the offense on M&A sooner, if that's the right read.

Yes. I would say that even with the debt from purchasing Inari, and before any proceeds from Spine, our debt equity is around three times. This means we have the capacity to pursue additional tuck-in deals. Over the last 12 years, most of our acquisitions have been tuck-ins, which are typically small to medium-sized, though occasionally we make a larger acquisition. We are still actively pursuing acquisitions. I don't expect we'll make another acquisition as large as Inari in the near future, but we continue to focus on adjacencies like peripheral vascular, which I've mentioned before, and we are eager to finalize that deal. Other areas of interest include urology, neuromodulation, soft tissue robotics, and health care IT, alongside our ongoing tuck-in acquisitions. Each business is actively seeking deals, and the seven deals we completed last year were all within our existing operations, which will continue to make up the majority of our acquisitions. These deals provide significant returns on invested capital because we already have established sales teams and contacts. After integrating Inari into Stryker, we will continue to look for follow-on acquisitions in the peripheral space, just as we do across all our businesses.

Great. Thank you. I wanted to ask on the revenue guidance of 7% to 9% there. Another year of above-normal growth. It's probably kind of a new normal of higher growth. So I wanted to think about the sustainability of this kind of higher revenue. You've gotten LIFEPAK going and several pipeline products. So just kind of talk about the sustainability of this growth rate that you've gotten and the confidence in the revenue guidance for 2025. Thank you.

Yes. Thanks. Just to clarify, the guidance was 8% to 9% organic. At the low end, it's a little bit higher than it was last year. We feel even less risk on the bottom end of the range. We're feeling very bullish. If you look at all our businesses, they all have robust pipelines and are constantly following on with innovations. Our commercial offenses are extremely strong. I just spent time with our sales forces in January at our kickoff meetings, and I can tell you the morale and the spirit have never been better. There are big impacts such as Pangea and LIFEPAK 35, those big launches, but there's a series of smaller product launches occurring across our portfolio. By now, I would hope everyone thinks and knows that it's durable. We're doing it year after year after year, and I don't see that slowing down anytime soon.

Our next question comes from the line of David Roman with Goldman Sachs. Your line is now open. Please go ahead.

Thank you. Good afternoon, everybody. I wanted to just follow up maybe on a couple of strategic questions here. I think on the last call, you had cited that the acquisitions you had completed in 2024 were expected to contribute about $300 million this year. Can you maybe just give us an update on how that's progressing, how you're thinking about the commercial strategy there? Any updates that you have observed since you've been able to close these deals?

Yes, sure. First of all, I'd tell you, I'm extremely excited about the deals. All of the acquisitions are actually at or above the deal model. It's kind of unusual for us. Normally, you'd have one or two that are a little bit below the model, but they've all taken off really, really well. So that $300 million, we feel very confident about achieving or surpassing. The integrations are, frankly, very simple on these deals because they tuck into existing call points in existing business units of the company. In some cases, we've actually added some specialized sales forces. In the case of Vertos, we've added some additional sales feet on the street. Some of them came with the company, and we've decided to add some. But adding sales feet on the street is something we do every year. All our businesses are constantly looking to split territories, to split sales forces or parts of sales forces. We've created a number of small new sales forces across the company and continue to add salespeople. It's quite an easy integration when you tuck it into an existing business with existing call points.

And then maybe just a follow-up on the Mako Shoulder rollout. I think your competitor is also coming out with the robotic shoulder solution that is described similarly as a measured and gradual rollout. Maybe you could just help us understand some dynamics in the shoulder market, how we should think about the addressable market here, the pace of adoption, if knees or hips was a good proxy, and how the robotic shoulder market should kind of evolve in your view over the next maybe one to three years.

I am very enthusiastic about Mako Shoulder. It is a challenging procedure, and the complexity of the procedure increases the value offered by the robot. The early feedback from surgeons is very promising, comparable to or even surpassing the excitement around knees. This year is focused on finalizing and establishing our training protocols, with expected acceleration in 2026 and beyond. However, our shoulder business is already experiencing strong double-digit growth, a trend that has continued since we acquired Wright Medical, leading to an exceptional year in 2024. We anticipate another excellent year in 2025, regardless of Mako's influence. Mako will elevate our performance significantly. As demonstrated with knees, our robotic solution is highly compelling and will be a key differentiator.

Our next question comes from the line of Pito Chickering with Deutsche Bank. Your line is now open. Please go ahead.

Hey, good afternoon. Glenn, thanks for all the years, and Preston, looking forward to working with you again. On Spine divestitures, I know there's no color here on the economics around this transaction. But from a modeling perspective, with the deal closing in the first half of the year, how should we think about EPS seasonality this year? Does the transaction change the normal EPS seasonality of Stryker?

Yes, Pito. Honestly, when we pull Spine out, it's not really material to the overall numbers that we're delivering. So I would say the seasonality that you saw in 2024 will generally carry forward to 2025 in terms of the cadence of sales, operating margin expansion, and EPS.

All right. Great. And then in 2024, Medical had a huge year. This never gets the same air time as the other divisions. How should we think about growth there for 2025? And what are the big growth drivers in Medical for this year? Thank you.

I've said this many times. I think it's the most underappreciated division within our company. You should expect another year of double-digit growth in Medical. They have tremendous momentum across, whether it's Sage, emergency care, acute care, beds, or wireless stretchers. There's a series of tremendous opportunities across the portfolio. They're posting double digits on top of double-digit growth years, and I expect another year of double-digit growth in 2025.

Our next question will come from the line of Vijay Kumar with Evercore ISI. Your line is now open. Please go ahead.

Hey, guys. Thanks for taking my question. Glenn, wishing you the best. And Preston, congratulations. Well deserved. I guess my first question, just a guidance clarification. Inari, is the maximum dilution impact here 20 basis points, Glenn? Is that what you're saying? And Spine, I think the comment you made was Spine will be absorbed in the current guidance. Does that mean the EPS of $13.45 to $13.70 is intact even without Spine?

You heard it right. Inari will be a maximum of 20 basis points dilutive to our operating margin expansion. Spine will be absorbed in the EPS guidance that we gave of $13.45 to $13.70.

Understood. I have a related question about Spine being below the corporate margin. Is that positively impacting our margins? Inari, Kevin, this is a relatively quick deal closure. We sometimes experience sales force disruptions when deals are announced, but given the fast turnaround, I'm assuming the impact should be minimal. Is that a reasonable assumption? How did you all feel confident? I know there were concerns regarding a DOJ investigation. Could you clarify how you eased those concerns? That would be helpful.

Yes. Hi, Vijay. I'm going to ask Andy to answer that since he's here in the room with us. Go ahead, Andy.

Sure, Vijay. The timing of the deal close, we anticipate, as noted, to be by the end of February. We got pretty comfortable around that based on regulatory filings and other customary closing conditions. We feel like we're going to be in pretty good shape there. As for the CID, of course, that was an area where we did go deep into in gaining our understanding of what the risk was with the CID. As you see, of course, we went through with the transaction.

Our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open. Please go ahead.

Maybe this one is for Andy specifically. But just based on my math of the $560 million, thinking about the annual contribution from Inari, it looks like it's about $670 million. So roughly about $40 million, $50 million of lost sales, I think, that you're factoring in versus what the Street had been modeling. So that's about 11% growth, so kind of well below market. Andy, do you think you can get this business back to market growth? Or do you need to fold in other technologies to achieve that type of growth in the future, be it Aspiration, etc.

Let me be really clear. This is only for 10 months' worth of sales. We are assuming high double-digit growth in this business. So not very far off from the growth rate they have. We're not assuming any falloff. You can follow up with Jason afterwards. It was $590 million, not $560 million, for 10 months of the year. We are not assuming a falloff. We think the sales force is going to stay very engaged. There isn't overlap with our business. So we're not going to have the sales force integration challenges that we have had with overlapped deals. This plugs right alongside our existing business, and we plan to continue to make this business sing just the way they have as an independent company.

Yes. Got it. Thanks. I'll figure out how to do math one of these days. And then, Kevin, for you specifically, I know it's early in the year, but just the top line guide of 8% to 9%, and you're trying to be, I'm sure, somewhat conservative. But just getting even to the low end of that range just given the momentum in Trauma and Extremities looks unbelievably good. Medical, you just talked about double digits, well above average on the hip and knee side of things. I just guess what would get you down to the 8%-ish range versus midpoint or even higher just given, again, all the momentum that we see in the business?

Yes. Listen, I feel really good about the business. It's early in the year. The activity levels, procedure levels, capital, we have good visibility for the first six, seven, eight months. But that's not a full year, and things can change. Obviously, every quarter, we're going to continue to update our guidance. Last year, we moved up our guidance steadily. I'm not going to predict what will happen this year. But assume that we're going to continue to be playing offense, and we're going to continue to launch products. Those have to continue to go smoothly as they have in the past. If everything goes to plan, we could expect another very strong year towards the upper end of our guidance or potentially moving it up. But I certainly don't feel risk on the downside. I'm hopeful that if we continue the momentum that we'll be able to deliver above where we're currently guiding. But remains to be seen.

Our next question comes from the line of Shagun Singh with RBC. Your line is now open. Please go ahead.

Great. Thank you so much, and congratulations to both Glenn and Preston. I was wondering if we should expect any shift in priorities due to this transition. Kevin, I have a question for you regarding the LRP. Your growth algorithm has been based on a 5% weighted average market growth, but an additional 200 to 300 basis points of outperformance brings it to 7% to 8%. You've exceeded those levels in recent years, including in 2024. How should we consider that weighted average market growth moving forward? Also, regarding margins, you previously mentioned at least 30 basis points annually beyond 2025. What are your thoughts on peak levels? Thank you for taking my questions.

Yes. Thanks, Shagun. We'll have an Analyst Day later this year. We'll update at that time kind of the growth algorithm for future years beyond 2025. Clearly, we're moving into faster-growing markets. So that weighted average market growth rate is moving up as we increase our exposure to faster-growing end markets. As for operating margin expansion, you saw we had a terrific year in 2024. We're planning on another strong year. We believe we have this operating margin power in the company, which is why we're absorbing Spine, which is why even for the Inari acquisition, we're not planning to give up much in the way of dilution at the operating margin level. But committing beyond that, I think we'll do that later in the year at the Analyst Day. As it relates to priorities, I would say with me as CEO and Preston having been in investor relations and as the Head of Finance for Orthopaedics and Spine, you shouldn't expect any change in our priorities.

Our next question will come from Matt Miksic with Barclays. Your line is now open. Please go ahead.

Thank you for taking my question and congratulations to everyone transitioning in their roles. Preston, I look forward to collaborating with you again, as mentioned by others. I know the focus has been on Spine and there are many questions surrounding it. I think this development caught everyone off guard, but it makes sense in the larger context. I wanted to ask about some of the other businesses that have been performing well with the numerous product launches we've discussed over the past year, such as cameras, defibrillators, powered instruments, and waste management. Given that these areas are all exceeding double-digit growth, could you indicate if any of them are approaching the end of their refresh and product cycles by the end of the year? Or will they continue into 2026? Any insights on sustainability would be greatly appreciated. I have a brief follow-up as well.

Yes. Yes. Thanks. As you rightly say, we have a lot of businesses that are really firing on all cylinders. Thanks for mentioning the camera, because I think a year ago at this time, there was a lot of speculation that we would be impacted by the DR5, and that's clearly not the case, looking at our tremendous performance in cameras. There's plenty of room for both companies to grow. The way we do our launches is just before you start to see the business start to peter out; the new product comes on the scene. We have that all locked and loaded. The pipelines are still being invested in healthy rates in R&D. You shouldn't expect really any material slowdown in any of those businesses in 2025, and we will restock the funnel to be able to launch products before you start to see that. In the old days, if you go back 10 years, you'd have a gap sometimes. In that gap year, you would have lower growth. But as you've noticed in the last five, six, or seven years, before the product starts to flag in terms of growth, another system eight goes to system nine and then to system 10. We have the R&D products teed up to insulate against that. So I'm feeling very good about 2025, and we'll have an Analyst Day later in the year to talk about the outlook.

Great. And then just a quick follow-up on the shoulder. I know the focus is on the robot as being an important catalyst here. One of your competitors is out there with the robot. Could you give us a sense that it's not just the implants and the robot, right? I mean there's a fair amount of other enabling technology. If you could give us a sense of maybe how that's contributing to growth, what the uptake or adoption has been like there, and what other enabling technology solutions, besides the robot, you see as contributing to growth for the shoulder in the next, say, I don't know, 12, 18 months.

Yes. We have an incredible ecosystem with our Blueprint software and market-leading implants. Mako provides AI guidance to the surgeon, presenting a surgical plan, which type of implant should be implemented. That Blueprint software is integrated with the robot, so the same software that the surgeon is used to, they will use on Mako. This has been the formula for the Tornier system under Wright Medical and now under Stryker to have market-leading growth for years, and we continue that progress forward. Mako is just an added benefit. Our robot is going to start off with the reverse shoulder, which is about two-thirds of the procedure. The initial feedback has been fantastic. You'll be seeing it at AAOS, and it's compelling. We think it will be very powerful.

Our final question comes from the line of Michael Matson with Needham & Company, Inc. Your line is now open. Please go ahead.

Yes. Just one final follow-up on the guidance, the organic revenue growth guidance as it relates to the Spine. I just want to be very clear. The full year for the full company has guided 8% to 9%. You're saying that includes Spine, which if I'm doing math, assuming the 1H close, it's kind of 150 to 250 basis points of impact. So am I to look at the 8.5%, say, plus two is 10.5% as real kind of RemainCo organic revenue growth guidance for 2025? Thank you.

Yes, Michael, I think you can follow up with Jason privately about this. The Spine segment’s organic growth of 8% to 9% will experience some benefit after it is divested because it is growing at a slower pace. However, this impact on the overall Stryker business is quite minimal. Jason can provide more details to you privately on this, but it will offer a slight benefit, not comparable to the drawback we will face next year with one less day than this year. These two factors will balance each other. Therefore, the 8% to 9% growth is a solid and healthy guideline. The Spine does not provide a significant advantage despite its size. But again, Jason will follow up with you on this.

There are no further questions. I'll now turn the call over to Kevin Lobo for closing remarks.

Thank you all for joining our call. I want to thank Glenn once again for nine great years and for building a strong talent pipeline in finance. We appreciate Preston and the entire finance organization. We have excellent people throughout the company, just as we do in our commercial organization. Over time, we've developed very strong functions at Stryker that support our businesses. We look forward to sharing our Q1 results with you in early May. Thank you.