Stryker Corporation (NYSE:SYK) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 04:30 pm ET

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Stryker Corporation (NYSE:SYK) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Welcome to the First Quarter 2018 Stryker Earnings Call. My name is Brian, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following the conference, we will conduct a question-and-answer session. (Operator Instructions) This conference call is being recorded for replay purposes.

Before we begin, I would like to remind you that the discussions during this conference call will include the forward-looking statements.

Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC.

Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to Stryker's current report on Form 8-K filed today with the SEC.

I will now turn the call over to Mr. Kevin Lobo, Chairman and Chief Executive Officer. You may proceed, sir.

Executive
Kevin A. Lobo

Welcome to Stryker's first quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO, and Katherine Owen, Vice President, Strategy and Investor Relations. For today's call, I'll provide opening comments, followed by Katherine, with an update on Mako. Glenn will then provide additional details regarding our quarterly results before we open the call to Q&A.

Our Q1 performance exceeded our expectations and positions us well for another strong year in 2018.

Organic sales growth was an impressive 7% despite one less selling day in the quarter versus 2017 and was well balanced across businesses and geographies. There were a number of standout performances in the quarter as we innovate through internal investments, effectively running our sales and marketing offense and execute on acquisitions.

Neurotechnology and Spine led the way, delivering 10% increase in organic sales, powered by Neurovascular growth of 20%, reflecting strength in both hemorrhagic and ischemic stroke.

MedSurg had strong organic growth of roughly 8% as Endoscopy continued to post strong double-digit growth in its core business and also had good performance from NOVADAQ.

We are pleased with the speed of integration since we closed last November, and our unified sales force is driving share gains across the portfolio. Entellus, which closed in March, is also off to a strong start and is reported within Neurotechnology. The early success of these deals underscores the benefit of prioritizing M&A, which has become a core strength for Stryker in both identifying attractive targets and executing post closing.

Turning to Ortho, sales were up nearly 5% organically, led once again by strong growth in trauma and knees. And Mako had another strong quarter with a significant increase in new robot installations year-over-year.

Geographically, we had strong performances in Japan, South Pacific and Canada while Europe was a bit softer than the recent trends owing to the bed blockages in the UK. And emerging markets had a solid quarter, posting double-digit growth. The robots top line coupled with the benefits tied to our cost transformation for growth, which we call CTG, drove a meaningful year-over-year increase in our