Stryker Corporation (SYK) Earnings Call Transcript & Summary

All right. Welcome back. I'm Larry Biegelsen, the medical device analyst at Wells Fargo, and it's my pleasure to host this session with Stryker. With us, we have Spencer Stiles, Group President of Orthopaedics and Spine; and Jason Beach, Vice President of Investor Relations. The format is a fireside chat. If anyone has a question, please raise your hand, and I will call on you. Spencer and Jason, thanks so much for being here.

Larry, thanks for having us. We're privileged to be here and share a little bit what's going on at Stryker.

Look forward to it. All right. So Spencer, Stryker's orthopaedic business had a really impressive first half of 2024, growing, by our math, 8.5%, 9% adjusting for selling days. What drove the growth? And how are you thinking about the second half of the year and into 2025 for Orthopaedics and Spine?

Larry, we're really pleased with our performance in the first half. We had strong demand for our products across our orthopaedics businesses and really on the backs of Mako. That continues to be such a transformative technology in the orthopedic space, really helping drive our knee growth. We've seen this in our hip growth as well with some strong new product introductions that we saw with our Insignia Hip Stem last year. And our Trauma and Extremities business continues to really outperform, there are certain days, even our own expectations. It's great to see core trauma, our upper extremities business, foot and ankle, all put together a really good first half. And so as we think about the rest of the year, we remain committed to our expectations for growth. It's been a solid start to the third quarter, I'd call it, we saw that in July, another solid August, really positioning us for the continued trend of taking share and outperforming some of the markets that we play in.

And so you touched upon it, that's helpful. Procedure volumes, I think Kevin said on the Q2 call, July was off to a good start. How are you thinking about just volumes in general going forward?

It's been great to see in orthopedics in general this sort of tick up. Pre-pandemic, we called the hip and knee market low single digit. Today, we're calling that mid-single digit. And there's a few things contributing to that growth. We're seeing an improved demographic, at least for hip and knee procedures. More people turning 65, roughly 12,000 Americans a day going over 65, that demand for hips and knees. But we're also seeing the other side of the demographic arena, where we see younger patients now willing to have their hip and knee replaced, more active, they can have it done in an outpatient setting in a surgery center. There's the robotic technology, faster recovery times, all these things are expanding this. And I would also tell you, post-pandemic we've seen an improvement in price. So there's some price in that number as well. So that mid-single digits is something that we're confident in that's here to stay for hips and knees for sure. Maybe the last thing, Larry, I'd talk about is the demand that was built up in the pandemic. We made great progress on that. We sort of talked about that 6 quarters or so. We're at the tail end, is how I'd describe it, of working through that backlog, especially in the United States. So these are more normalized environment that we're in right now, and we'll call it mid-single digit. And our performance there is outpacing that by, as we've committed, 200 to 300 basis points, and we feel really good about that for the future.

And when you're talking about the mid-single digits and outpacing by 200 to 300 basis points, I think you're specifically talked about recon?

The proxy there is recon for sure, hips and knees, and we see really strong performance in our core trauma business. We saw great performance in our upper extremities business, all share-taking strategies. Foot and ankle, we've taken share. However, the first half was one of the areas where we saw some softness, some unpredictability in a few of the different parts of that portfolio. Starting more on the bunion side, more cosmetic. We saw some trend of consistency in total ankle. And then just recently, in August, we saw some of those volumes come back to more of a normalized rate, that mid-single-digit realm, which gives us some encouragement going into the rest of the year.

That's helpful. And price, you touched upon it. Orthopaedics pricing was low single digit -- or it was low, like not even less than 1%, close to flat.

Less negative, Larry. We like to say less negative.

Less negative, but a lot less negative. I mean it was...

It has been.

Yes. negative 0.3%, negative 0.4% in Q1 and Q2. Well, first half was negative 0.3%. Historically, it was like negative 2% to 3%. How sustainable is that?

Yes. So we're really pleased and proud of our progress on price. We've been very intentional about building the competency in the organization. Some of you've heard us talk about our customer solutions organization, where we brought together strategic sales, contracting, pricing, put that under a centralized entity in the U.S., and that's built to serve the divisions to ensure that we're showing up a little bit more informed about our customers' expectations. We're showing up with the breadth of the portfolio and we're able to think about our contracting longer term, really helping us on price. I sort of describe our price journey, I'd say since the pandemic, thinking about fruit in the trees. We started with the fruit on the ground. This was things where we might have had a contract with a customer and it said you owe us X if you don't do Y. We weren't even collecting on that. We took that fruit. We are obviously collecting on that. That was step one. Now we're going after sort of the low-hanging fruit. This is where we show up, we know more about our pricing, our strategy, leveraging the portfolio, and that competency is being built in the organization. We're going to have to go up further up the tree to maintain this type of pricing. We can. And what we've done is in that customer solutions are building competency back to the marketing departments, the R&D departments. So as we think about new product introductions, a portfolio strategy for a platform, we're actually building in a pricing strategy to go with it, a much more thoughtful plan. On the MedSurg side of the house, we're actually seeing price increases. They're increasing price. We're less negative. We think that's here to stay, those trends are here. And I'm really proud of the competency we're building in those marketing and R&D departments that drive a lot of thinking around the pricing strategy.

That's helpful. On Q2, you talked about it being the best second quarter ever for Mako installations. Jason probably did.

Yes. Jason loves to say we broke some records. I will say we're expecting to break records at Stryker all the time. So yes, we did have a really strong Q2 with Mako. We're really pleased with the continued trajectory there. I would tell you in July and August we saw continued great demand for Mako. And part of that, if you think back even about 13, 14 months ago, Stryker invested in a direct-to-patient campaign, and some of you hopefully have seen this: Scan. Plan. Mako Can. We went out on the market. It was a multimedia campaign, including television, including digital, some streaming services, and we ran it for about a year. And so we're just wrapping up. That has agitated the market for sure. And we've had more inbound requests. It's likely driven some more utilization and some more sales for Mako. But we're really pleased with how the year started. And to be sort of where we are going into the back half of the year, we remain really confident. And I think, Larry, you and I have chatted about this in the past, we have some math. And when we sell a Mako, we can do a quick calculation of what that knee growth will look like in that account sort of for the short and medium term. And so we're really confident that as we continue to get those Makos in facilities and drive that utilization, which is a super important part of our strategy, that we can expect that growth to come over time.

And the capital, so the capital environment remains healthy in your view?

Yes. Across the orthopedic businesses, for sure, we've seen it remain constant, which has been strong. Across our MedSurg businesses the same. We still have a large backlog in place, orders. The demand continues to increase, which is great to see. So hospitals are willing to invest in technology. Technology to drive efficiency, to take care of their patients, to drive throughput, all that we're seeing in the marketplace. Another area that we've seen great spending is in the ASCs, which I'm sure we'll talk a little bit about, but there's been great capital flow in those areas. So no concerns there in the short and medium term, and we expect hopefully over the long term that will continue as well.

Spencer, so we had Zimmer here today. Before we move on and talk about some of your businesses, I'm just curious, they talked about an ERP issue negatively impacting their sales in the second half of this year, August on, by 1% for the full year. I think we looked at it, maybe that's $75 million. Are you seeing anything in the market?

So I just heard about this this morning, but maybe I'll step back first and say ERPs are hard. And so I'm empathetic to any organization that's implementing an ERP. And any of us in medtech, our first priority is to make sure we have the products for our customers and that patient for every single case. That's priority #1. And anything we can do to help there, and just in general, that's the priority for any of these organizations. Related to the specific environment and the disruption, there's nothing I can point to that says, hey, this happened and therefore we saw this. I haven't heard that yet. We've been on a share-taking strategy across our orthopedic businesses and have had some success in that realm, humbly. So I can't point to any disruption from one of our competitors, but we've seen our continued strategy, and we'll push that through the end of the year, and we will have some confidence behind it.

Okay. And then turning to hips and knees, starting with Mako for knee. What's next for Mako from a technology standpoint? People ask, do you need a smaller version for ASCs, or do you need a non-CT version? What's like the next major step?

So Mako has been an absolutely transformative product to the orthopedics space and obviously, in Stryker's orthopedic business. And we're really proud of the progression, the thoughtfulness, the leveraging of the hardware and the applications. And so to think about what's next, we get excited thinking about the continued innovation and investment in the platform. I'm sure we'll talk about the additional applications outside hip and knee, getting into shoulder, getting into spine. But even within arthroplasty, adult hip and knee, we're continuing to invest in those applications and have more on its way. We upgraded some of the applications already. More around the corner, I'd call it, in the short term. Maybe one that I can highlight that I'm really excited about is in hips. We're working on an application where we can do the planning for revision hips and complex primary hips. What's exciting about this is as that enters the market, more and more people will engage in this and it'll drive even greater utilization of our hips on Mako. About 1/3 of our hips in the U.S. are done on Mako, over 60% of our knees, as we shared some of those stats before. And we really think we're just warming up. We think there's a lot more that we can do there. And part of that, again, Larry, is that investment in innovation. You can't let these sleep. You have to stay committed to the platform, both the hardware side, and you'll see more from us on the hardware side, but then on the applications as well over time and just thinking about that. So we believe there's still more share to take. We think there's more growth out in front of us, and we're committed to that investment and making sure we have that in the marketplace.

The version for ASCs?

So on the ASC front we've had significant success, especially when Mako is involved. So 100% of the new builds that we get involved in, where they're going to do hips and knees, there is an active discussion about Mako. It's a very, very high percentage then that we flip to actually acquiring that. It's been a Trojan horse, and it actually changes behaviors of the surgeons willing to give up maybe a preference item if their partner can have an orthopedic robotic Mako to do their hips and knee cases. So it's been a pretty powerful force. The footprint works really well. And as a matter of fact, as we add more applications -- hip, knee, uni, shoulder -- these are things that are done in the outpatient setting. So having a Mako in there creates a lot of value, and they believe in that investment versus having multiple hardware systems, different robots in there. They don't have the space. So right now, this is the right solution. We think it's going to continue to drive value in the ambulatory surgery centers. It's been a great successful product for us in that space. I think over time, if I was to look at a decade horizon, space is a premium in an ambulatory surgery center. So being thoughtful about that and having some different ways to address that, I think, will be important. But Stryker will be in that realm and make sure we have those solutions.

Right. So Mako's the new application, spine and shoulder. So congratulations on the clearance for spine.

Thank you. Yes, that was last Tuesday night for everyone. We received a 510(k) clearance for Mako Spine. As you recall, we have it for the Q, the guidance, the navigation portion of it, the camera system, and then we also have it for CoPilot, rounding out that ecosystem. So we're ready to go from a clearance standpoint, which was a gating item, if you will. Now it's all about building up the inventory and getting ready to thoughtfully introduce that into the market, which we'll do in Q4.

And what's differentiated about your offering?

So spine in particular, what we're really excited about is the addition of the entire ecosystem, including CoPilot and the planning capability and workflow. So we believe the workflow, the setup, the capability set is differentiated. If you add CoPilot into that, which has boundary constraints, the haptics gives you signals and feedback if you're getting close to a structure you don't want to, especially in the bone cutting, which is very sensitive, that's differentiated to Stryker and a really unique opportunity. So when you combine the power of those technologies together, we think we're going to have a solution here that surgeons are going to want to utilize. And spine's sort of unique. You have a lot of physicians in the marketplace that have experience. There's spine robots in the market, so they'll know how to do this. So the ability for them to utilize and understand it, the learning curve is much easier than I would compare it to shoulder. That being said, we're still going to be really thoughtful about that ramp and launch. We want to make sure that we're putting them in the right accounts, that there's the training education and we'll slow and steady build that up to support our business. I do want to mention, Larry, you can't just launch a robot, you need the hardware to go with it. So in any of these businesses, we're making sure that we're continuing to invest in the hardware capabilities. Spine has a pedicle screw system in development that will come into the market short term, an interbody technology and some other exciting things in the future. And that really marries the enabling technology robotic with a world-class implant.

So the implants are proprietary to the robot? Or is it an open system?

So we design any of our robotic solutions mainly closed so that the actual implants are aligned to having value for whatever that enabling tech is. Really, the clinical efficacy, the outcome, the preplanning that all needs to hold together and provide a better patient outcome. That being said in the world of spine like a pedicle screw system, you could still use it in an open procedure or an MIS procedure, much like you can a hip or knee. So it can do more than just utilize the robot. However, the spine Mako application won't be able to use with competitive implant systems, but will be used with multiple Stryker systems.

And are you ready to start doing implants, procedures?

We will be in the fourth quarter, yes. Yes. So we're lined up as we've committed to, to say we will start clinical procedures in the fourth quarter. We'll start that very thoughtfully. Again, as I mentioned in some of our earlier sessions, we won't enter the market with 100 of these, we'll be really thoughtful and build this. Much like for many of you that were around when we did total knees, you want to be really thoughtful about how you train, educate, you build that adoption, and it's really important to build that utilization. Maybe just a difference in our strategy in general, and we've proven it on hips and knees, is finding these super users to utilize our robots. Our utilization rates in adult arthroplasty are really strong. Over 60%, as I mentioned, on knees. That comes with great discipline about how we do this. We find that super user, we think about a program in the institution where competitive surgeons that might be there will get access or exposure, how do we bring them in, what's the ramp look like for this. So one of the things you want to do, if you have a customer investing that type of capital with you on a technology, you have to build an ongoing utilization strategy. So that same mindset will apply to spine, will apply to shoulder as well. So it will be a slow and steady ramp with these.

So what does this mean for your spine business going forward from a growth standpoint?

So we're really excited to introduce Mako Spine in the fourth quarter. We'll begin that slow ramp in 2025. We will continue to see spine perform sort of that market, and we'll start to build that growth over time. I want to manage expectations. You don't launch a new robot app and then just expect to go boom. Instead, it's a more thoughtful ramp over time. As we build up that utilization, we'll continue to be competitive and grow. I think in the spine market, one of the things that's held us back is not having this. And really, I think the companies that have a comprehensive enabling technology sort of stand in a different realm than those that don't. And so we're excited to be able to get into that, be competitive, win our fair share of that business and then some and start taking share.

So if I heard you correctly, '25, maybe in line with -- still in line with the market for at least for another year, it won't be until maybe '26 when you can accelerate?

I think in '25, that's a fair expectation to sort of be in line and then that will continue to build as we get more systems out and more of that ramp that gets fulfilled, yes.

Let's go to the shoulder then, okay?

I love it.

All right. So shoulder is still on track?

Shoulder is still on track. That one, Larry, we're actually in the regulatory process, meaning that it's active with the FDA right now. Maybe encouraging, the spine clearance came a few weeks earlier than what we had planned. That's a good sign hoping that we might see an early clearance also with shoulder. That one will fall after spine, likely first cases very end of this year, and that one is a little different is the market is less conditioned as it is in spine. We're continuing to educate and train. It will take a little longer. There's just not as much of it right now. But everything is on track. We're really excited about it. The access, the predictability, the planning aspect of this is really powerful. Remember, when we acquired Wright Medical and brought that technology set in, our upper extremities business has really been a force. It starts with the preplanning. That blueprint preplanning capability is very powerful. That will marry into how we're doing things into robotics, starting with the reverse shoulder to begin with. That will be the beginning application. We'll work on anatomic over time. It's in development and in work, but that's the larger market to go after. But the ability now is to go to customers and physicians that may not do -- they may not be as specialized in shoulders is somebody that only does shoulders. This will give that physician additional confidence, it will give that physician additional predictability in the planning, and really make that a world-class outcome for the patients, which is ultimately we're trying to do.

Which is bigger now, reverse or anatomical?

Reverse.

And why will the robot only be able to do reverse initially?

Technically you address and capture that larger market, and this is the area that we want to go in to do the bone cutting, and then over time we'll go add the anatomic capability as well.

And how will your robot be differentiated from the Zimmer one that's approved for both anatomical and reverse?

A couple of things. Remember that even in our portfolio today, we have Mixed Reality guidance where we can do both sides of the shoulder, anatomic and reverse. We're the only company out there in the space. So we have enabling tech solutions. If we step back and look at that portfolio, you have world-class implants with Perform and the launch of Perform. You actually have a world-class personalized shoulder implant with Shoulder iD. So another really unique differentiator. No one else has anything like this. Then we have the world-leading preplanning capability with Blueprint. Then we have the Mixed Reality. These are all active in the market today. So it's a very strong competitive portfolio, share-taking strategy, outperforming the market 2x, sometimes 3x depending on the period. Now we're adding Mako. And one might ask, well, what's this going to do? Well, this will allow us to continue to take share for a few reasons. One, we're going to leverage the physical install and footprint that exists with Mako throughout the United States and world. This gives more access to surgeons. This allows us in the communities, what I call Main Street, where somebody does hips, knees and occasional shoulders. That might be like the perfect customer for Mako. How do we get them now to have this preplanning capability [ in ] a really great intervention with the cutting. You compare this to what might be in the market today, we actually have the cutting capabilities integrated into our system. The haptics that we use, the boundary constraints, these are all things that are differentiated that have really allowed Mako to shine in other disease states in the hip and knee in particular. So we expect a similar approach in shoulder as well.

Do you expect physicians -- for shoulder and spine, do you expect the majority of doctors who use it to buy a new Mako system, or will it be -- it sounds like you're talking about the...

Expect, hope, want. There are a lot of...

I mean, you just talked about shoulder [ being ] just an upgrade for doctors who primarily do hip and knees and some shoulders. What about new capital?

Yes. So I think we'll actually see more new capital in places that will switch their system from a Tuesday to a Wednesday to meet these other applications. It's all possible. There is no doubt about it. We will create some internal dynamic that will likely create a little controversy, where the hip and knee surgeon says: I don't want to share my Mako with my shoulder partner on Wednesdays. That's going to force some additional discussions. We hope that we have a solution there of an investment in a Mako hardware device that we can put the applications on. And the beauty of that and really one of the differentiation in our strategy is that same hardware then can serve these other applications over time. So it's a really smart investment. It totally changes the conversation with hospital administration. So our hope is that there will be additional hardware that we sell. It will increase the amount of Mako systems in the marketplace. However, we do have places now that have 5 units, 6 units, 7 units. So it's not that we don't have some really strong utilization in hardware footprints already. But to your point, Larry, that's going to agitate some more demand for sure.

I mean even if we think about upgrades, like just adding the application, there's probably a pretty significant financial benefit to Stryker depending on what you charge for spine and shoulder upgrade. Is it a hardware upgrade as well as a software upgrade?

There's 2 things going on. There's for sure a software upgrade and then there's some hardware, and probably the most significant, it's a different end effector. So remember, Mako's unique, and we have the end effectors that do the cutting and give the power of the cutting to the surgeon. And so that looks slightly different for spine. It's a holding device for pedicle screw trajectory and then for some of the cutting capabilities with CoPilot. And then obviously, for shoulder, it's an actually burning technology that does bone removal, and so that's a big differentiation. So that's a different end effector. Now Larry, you can technically change that out, but you're likely not going to schedule a knee at 10:00 and a shoulder at noon. That doesn't seem really efficient. You might schedule it by day, you might do half day, something like this. But we're going to push for more demand for the actual platforms themselves.

So I did back of the envelope math. I know you probably saw my numbers, 2,500 Makos in the field, my guess. It's $200,000 ASP for the upgrade for spine and shoulder. By my math, that's a $1 billion opportunity just for upgrades alone. How should we think about this...

It's always scary when Larry is doing back of the envelope math. On the fly, here we go.

It wasn't exactly on the fly. But how should we think about the financial opportunity for you?

Yes, I think there's a great financial opportunity. We're not going to get into the specifics of how we have this planned and modeled. I will tell you that we're really pleased with our physical footprint, and it's thousands of robots across the world. And they have strong utilization, there's strong demand that's growing every single month. And so the opportunity for us here with both the application set and improvements to the hardware give us a road map for some more revenue and growth that we expect to keep really our share-taking strategy in place that we've been doing.

And the other line, we book ROSA?

So we don't have ROSA. So remember [indiscernible].

Yes. Mako, sorry. All right. That's probably my biggest faux pas [indiscernible].

That's all right. It's only with me, Larry. Or should I call him something else? It was great. No, no. So we're -- it's a great question. We're still having some of those internal discussions of where that will show up. Obviously, Mako shows up there now. We're working through that. We know it's a deliverable out in the market. We just want to be really thoughtful about it, but we'll come to everyone and explain how we'll show -- where that revenue will show up.

If that's my worst faux pas in the 3 days...

It's been a good day.

Okay. And let's move on. Sorry about that. All right. Trauma and Extremities. Pangea, you guys have talked about that being a pretty -- a very significant launch for you guys. What are you seeing so far and how should we think about trauma growth?

Yes. We're really pleased. If I go back to maybe a little bit of the strategy at Stryker that's been really successful for us is that specialization strategy -- you might be, "Where am I going with this?" Well, once upon a time, the Trauma and Extremities business was sort of connected with JR, almost call it a younger sibling, if you will, to the hip and knee business. And it didn't get all the focus and attention, really, on the portfolio, the investment, getting new products to market. After the Wright Medical acquisition, we were really intentional to say we want to build dedicated business units with sales, marketing, R&D, M&A expertise and leadership over each one of those businesses. We did that with trauma. We've done that with upper extremities, foot and ankle. But back on trauma in particular, that's allowed that leader who's excellent to put an offense in place to get new products to market. I sometimes say I'm not sure Pangea would be in the market where it is today, when it is today, if we hadn't done the specialization strategy. So I think that's a really important point. The other important point is Pangea is very early days for us. We aren't seeing any material impact in the performance of that business now, and that business is performing very well. It does have some tailwind from a few new products, Gamma4, our leadership in nailing, a few of the other things we brought to the market. However, I also have to credit the sort of the mindset and the selling strategy, the culture and the program of what we are doing in our trauma business, and are taking share today without a lot of Pangea in the market. Now to Pangea, Pangea was one of the fastest developed comprehensive plating systems, obviously, that we've ever done. I think the market has seen it's had phenomenal feedback in the marketplace, built on our SOMA database, all these different designs ready to go. The locking screw mechanism is differentiated for us and bringing a lot of benefit, and we're just getting started. Now we're going to be thoughtful. It's capital intensive to build lots of sets and it takes our machines and factories. So we're building that up. But we're going to see some additional tailwinds in our trauma business over the coming quarters and years as we roll that product out. But really excited about Pangea and all that it has in store for us.

So it's a pretty consolidated market. You're #2 behind J&J [ 2Q ]. What would it take for you to become #1? Is there a pathway in trauma?

So internally, there are some discussions about what the share positions look like and some strategies that we feel pretty good about our ability to continue to take share. We won't comment exactly what that all is. However, we remain confident that we can continue to take share. In an annualized time, we should be able to at least 100 basis points, if not more. And hopefully, that will continue to accelerate as we roll more of Pangea out in the market. As a reminder, when we launched these implants, be it in Insignia on hips, Pangea in trauma, it will take 6, sometimes to 8, quarters to fully launch these products just knowing the sets. So we're talking, we'll get Pangea out in the market. We'll hear excitement and we'll see some of it. It will really start to have an impact on us in 2025.

And just going back to shoulder, the subscapularis sparing.

Yes, we won't go into some of our clinical capabilities of how we're doing it, but we're very sensitive in any of our interventions -- hips, knees, thinking about procedural solutions, including shoulder, as we think about the cutting and the burning capabilities on both sides, both for the glenoid and the humerus, and how to do that most effectively with the least amount of soft tissue manipulation. So any time we're doing this, and we have some really exciting things in all those joints that I mentioned, thinking about procedural solutions that you can do with Mako that you can't do otherwise that allow you to spare some of the manipulation that takes place when you think about access into the joint space.

So I know I jumped around from trauma back to shoulders. It's a little bit complicated, because the reverse shoulder you don't have the rotator cuff, and that's the bulk of the market, you said. Anatomical is where you would do the subscap sparing, I believe, but that's like the smaller and declining part of the market. Why is it important then to do subscapularis sparing?

So there's pathology for a patient that you might be selecting an anatomic shoulder just based off what that pathology looks like. We want to make sure that we have a comprehensive solution for the surgeon's preferences. That being said, Larry, there's so much innovation happening even as I think about our Shoulder iD, a personalized implant that we can make for the shoulder, depending on that shoulder's need, making it faster, more predictable, a preplan that's done on Blueprint. That's a real differentiator. So more to come over time as we continue to build out all the different ways we'll treat the shoulder, but we're in a really strong position there. We've continued to take share. We will -- we expect great share gains in our future in our upper extremities business and remain pretty confident in our strategy.

All right. Sorry to jump around here.

No, no.

So you get -- everybody gets asked about 2025. It's like just the price of the entry here. So how are you thinking about Stryker orthopedic spine -- orthopedic and spine growth in '25? Could Mako shoulder and spine plus Pangea accelerate the growth or just continue the strong momentum we've seen so far?

Yes, maybe the best way for me to describe it, and we won't go into specifics on any 2025 expectations for us, but halfway through the year, we are in a really good position. And the numbers are solid right now going through the rest of 2024. With that, knowing the portfolio and some of the introductions, we expect another great year in 2025 in terms of our share-taking strategy, outperforming our markets and getting those new products into the hands of our customers. So we remain humbly optimistic that we'll continue to take share and win the right way. We'll remain committed to sort of the market growth rates that we've given out in the past and expect '25 to be more of our share-taking strategy that we have in place.

Okay. A couple more questions in the few minutes we have left here. ASCs, I've always wondered how you guys coordinate between MedSurg and orthopedic on the ASC side. How do you ensure alignment?

Yes. Maybe I'll start with some of the cultural things that are really special at Stryker. So somebody like me has been at Stryker for 25 years. My partner in growth, Andy Pierce, who runs the MedSurg businesses -- and we call each other this, partners in growth. I mean we smile and giggle when we say it a little bit. But we are trying to drive growth together in a collaborative fashion. Andy's been here for 27 years. So we have long, trusting relationships. And Andy and I's goal is what is best for this company and how do we make sure that whatever the customers' needs are and expectations that we have the right solutions. When we went on the journey, Larry, to build that customer solutions organization -- and as a reminder, this is a entity and sort of a division inside the United States that's built to serve our operating divisions on contracting price, outpatient surgery, ambulatory surgery centers. That program is inside our customer solutions business. That's all built on collaboration. That's all built on what is best for Stryker and that customer. We'll figure out if there is differences in the selling realities, commissions, where there might be, hey, I'm worried about my price in this account versus that. That customer solutions and ASC strategy has been really impactful. It's great to see very, very strong growth in our ASC business, tons of demand -- and maybe just a few comments on it. When there's a newbuild ASC, Stryker's involved 100% of the time. When they're doing hips and knees at that facility, 100% of the time they're talking about Mako with us. And as I mentioned earlier, a high percentage, they're buying Mako, especially in the newbuilds. We're working to have more access, might be at a surgery center that has been a long-time customer of a competitor. They might have entrenched relationships for some reason, and then we figure out how can we crack into that with part of our portfolio and then bring those other aspects. When we think about power tools, they're in the majority of all customers' accounts. When we think about waste management, they're in the majority of all customer accounts. So when you think of the orthopedic procedure, so much of the orthopedic procedure is tied to Stryker in that way to our advantage. So when we have these discussions with our customers in the ambulatory surgery center environment, they're very favorable to us, and they're really good for the two of us in terms of building a sustainable environment for them to grow and for us to continue to win in that marketplace.

And your -- one of your responsibilities is also business development?

It is, and real estate and facilities. Don't forget that. That's a crowd favorite as well out there.

Gaps in the portfolio, maybe explain to people also Vertos acquisition is actually Interventional...

Interventional Spine. Earlier in the treatment care -- so that one we just announced signing of it a couple of weeks ago, the mild® procedure. It's a really unique, minimally invasive way to do some soft tissue resection that removes some of the strain on the spinal cord that's causing this pain and some of the nerves. What's great about that, that's much earlier in the care environment and treatment for somebody versus a fusion. And what's wonderful there's great clinical results behind that procedure. There's great growth. There's a significant patient population that qualifies for those particular procedures. And for whatever reason, if it doesn't work the way that it's planned -- it's not perfect -- but if it doesn't, you still have these other interventions later on in the care environment, something like a fusion, for example. So we're really excited about it. It's off to -- it's been a really good M&A season for us. So I'd leave us with that. We've been active again. Our expectations remain high there. Focused on tuck-ins, but we have some other things that we're looking at as well, and we expect more deals in our horizon.

But just to be -- just so people know, Interventional Spine is not -- actually, your -- maybe Jason, you could explain. It's not -- I didn't ask about it early on because it's not under your...

It's not under core spine in my direct. However, in our long history of all these things, I ran our flagship instruments business. It's actually where I hired Jason is our CFO of that business once upon a time from outside the organization in IDS, as we call it, was in our world and reported to me. So I know it very well. We did some of the deals in there to build up the trajectory and some of the specialization. But we look at this internally as sort of agnostic to wherever and making sure we're providing the right solution for the customer and that patient over time.

Great. Spencer, Jason, thanks so much for being here.

Larry, thanks for having us.

Thanks, Larry.