Stryker Corporation (SYK) Earnings Call Transcript & Summary

Good afternoon. I got you excited, right? Good afternoon. Hey, we're excited to have you here. Welcome to Stryker's 2025 Investor Day. Welcome to those on the webcast as well. I think what you'll find here is we have an absolutely action-packed agenda. We've got a number of speakers from across the business to hit for a variety of topics that we'll share with you here today. Couple of logistics items in here will be roughly 2.5 hours of presentation. We'll take a quick 15-minute break. We'll get people across the parking lot for the in-person attendees to go through a product fair, which will be great and a chance to engage with several of the leaders that you see here today. So looking forward to that. You can see great lineup of speakers here from various businesses across Stryker as well as various functions that you'll get to hear from as well. I think you'll get a sense of we're certainly built for growth, and you'll hear that throughout the day today. And then the much anticipated refresh of our long-range plans. So looking forward to that. Next slide here. I'm not going to read this, but certainly, we've got a number of forward-looking statements as well as references to non-GAAP measures that will go throughout the day. A couple of housekeeping things here, too. I've got some folks that are very anxious to know when the materials are going to be uploaded to the website. It will be out there at 6:00 p.m. Eastern. So just now look for that. The presentation as well as if you were here 2 years ago, you probably remember we have a market outlook that kind of list the various businesses that we have, the TAM, et cetera, we've updated that. That will be on the website at 6:00 p.m. Eastern as well. So with that, we'll get started. So I'd like to welcome to the stage, Mr. Kevin Lobo.

Thanks, Jason. I'm going to start my presentation the way I've done for the last 12 years with our mission and values. We haven't changed a single word on this document for 12 years. It's our unifying and rallying force which, frankly, is needed when you have as decentralized an operation as we do here to have one thing that's grounding and really centers all of our employees, this is our mission and values. And you can see we're very focused on delivering value and solving customer problems. You heard about this on the video. The most important metric on this slide is the 150 million patients that we impact each and every year. That is very exciting. That fills our employees with a great sense of purpose. Here's our company strategy. This is the most current version of our company strategy. You have seen this over the years. It's generally very consistent. But over every 3 years or so, we update elements of the strategy. I know I'm not going to -- it's a lot of words, so we're not going to read them all. But what I do want to show you are the latest changes that we've made to this document, and those are highlighted here in purple. So what we've added under the innovation bucket is digital solutions. And that's obvious with some of the acquisitions that Jessica is going to talk to you about a little bit later. But also all of our businesses are becoming smarter, launching tools with digital capabilities. So we wanted to make sure we included that under the innovation bucket. And then on the far right, you see we've renamed the top sort of pillar, the title for the pillar, which used to be called financial performance, we've relabeled that operational excellence. And that's a new term. You've not heard us talk about being a company that has operational excellence. But I would tell you, in the last few years, we have built some serious muscle around operational excellence. You've seen it in our numbers when we promised to deliver 200 basis points of margin expansion. And that was before the arrival of tariffs in 2025. In spite of those tariffs, we are on track to absolutely deliver that 200 basis points, and how we've been able to do that is really rebooting our lean program. We had lean activities in the past, but frankly, we've really magnified those. And this whole notion of margin expansion is now in the culture. It's in the DNA of our organization. It's taken time. We started talking about it, if you recall, in '16, '17, '18, before the pandemic happened. And then that sort of knocked us off our game, then we had the supply chain crisis of 2022. But now it's really fully embedded in our businesses, in our functions and in our regions. So you can see that. When we write things down on paper at Stryker, like we take this stuff very seriously, and we never want to have anybody rolling their eyes, so I was not ready to put operational excellence on this chart, frankly, until now because we really have this muscle. And you're going to hear a lot about that from Viju and other presenters over the course of the day. So here is the lineup of our business units. You can see the 22 business units all listed there. We have a new addition to this chart, which is called Smart Care, under Medical, and that is Vocera care.ai. So we have actually pulled that out of the acute care business unit to create a very focused, specialized business unit. And when you see the data book that Jason described earlier, you're going to see HIT in its own category, and you'll be able to see the TAM of that segment. Every one of our business units will have a TAM associated with it and an outlook in terms of growth that we see for the future. On the right-hand side, you can see elements of our operating model. At this notion of the business units being the center of gravity for our company, that's a big deal. And what does that mean? If you're in a center-led function or even the CEO of the company, I always joke that we're in the selling business, not the telling business. We don't tell the businesses what to do. We don't dictate policy and procedure, we have to convince them and sell them on why this is -- this change is important for them because ultimately, they run the railroad of our organization. They have high degrees of autonomy, but with that high degree of autonomy comes high degrees of accountability. And I noticed that I wrote down the word's performance edge. It's not a term I've used before, but it really describes this culture that we have of chasing down quotas that if you're a salesperson, if you're a business unit leader of achieving your numbers, we talk about having a culture of execution, not a culture of excuses. That's kind of our mantra here. And we have obstacles that we face, and we just find a way to persevere through those obstacles. That's really part of our culture. And speaking of culture, we actually decided to write down our culture at the beginning of last year. So this is subsequent to the last Investor Day. We had everybody talking about our culture and using different words, and we decided to align around a common set of words. If you look at the first column purpose and if you look at the last column growth, pretty self-explanatory, things that you know about our organization, you see those elements in our mission and values. Two, in the middle are really quite uniquely Stryker. The talent focus and the talent offense we have here is really amazing. You heard Katy Fink, who's sitting up here in the front. She was a presenter at the last Investor Day, and she gave you a taste of how sophisticated our talent approach is, whether it comes to how we screen our candidates, the engagement approach that we use globally, the use of strength finders at having people play to their strengths rather than trying to fix people's weaknesses, that's an element of our culture that's very unique, and we do it globally and we do it very consistently. And then under the relationships, we've always been a high-touch culture, a very relationship-based culture. But what's changed in the last 10 years is we now collaborate amazingly well across our businesses, between our businesses and functions and our businesses and regions. That was not always the case before. We were much more of a divide and conquer kind of organization if you go back a decade. We had silos between divisions. And this collaboration is really showing up as one example is the ASC. The way we win in the ASC is bringing the breadth of our businesses together to be able to drive tremendous growth. So this is kind of a new element. We were always a relationship-based company, but this collaboration muscle is something newer in the last 5 to 10 years. So really, really exciting. So this is -- the reason we chose to write this down was, frankly, when we would buy a company, they would ask us about our culture, and we needed to have some kind of way of actually making it crystal clear to people what do we mean when we talk about Stryker's culture. So these are the elements of our culture. Innovation, of course, you can't be a growth company if you're not innovative. You can see under MedSurg, Orthopedics and Neurotechnology, we have sort of a little bit of different focus areas around MedSurg, where it's really about empowering people with powerful outcomes. And this includes, as you can see the picture of the care.ai virtual nurse. You're going to see a demonstration of this. For those of you that are here in person across the street, super exciting, and we do this in the -- with smart hospital initiatives as well as in the emergency care settings, really changing the standard of care, and this requires services, this requires capital, this requires disposable. So we're really agnostic as to technology. We just want to help solve customer problems. In the middle, you can see in Orthopaedics, we are the clear leader in robotics and 3D-printed implants, and we intend to maintain that lead and extend that lead in the years ahead. And under Neurotechnology, there's a very new initiative that you're going to, again, be able to see across the street which is really creating less clutter in the operating room, having devices talk to each other so that a surgeon doesn't have 6-foot pedals when they're trying to do a neurosurgery tumor removal. It's really amazing. And this required collaboration across multiple business units of Stryker to create a great experience for surgeons. It's just being launched, you'll be able to see that across the street as well. So let's talk about the track record of performance. You can see very compelling numbers in each of these buckets here. 10% compound annual growth rate since 2020. That's a pretty impressive performance. Hitting the margin expansion, I already talked about that. And then you see the earnings per share growth, 12.8%. So very strong growth, and that includes, obviously, the supply chain crisis, which was a tough year in 2022, still 12.8%. In the first column at the bottom is a really, really interesting fact. So this is historical fact that we've actually grown 400 basis points faster than our weighted average market growth rate. So if you recall, our stated goal 5 years ago was to grow 200 to 300 basis points faster than the market. But as we've taken stock on our actual performance and gathered our market data, we've actually performed 400 basis points faster. Now that's not every single business unit. This is obviously on average, but this is a clear outperformance. If anything, we're actually extending our lead versus our competition across most of our businesses. So this chart shows the evolution of our organic growth. You can see here that even as we're getting larger, we're continuing to drive very, very high growth. Most companies across all industries, when they grow larger, their growth rate tends to slow down. And we've done the opposite. How, if you saw in the previous slide, we've gone from 14 business units to 22 business units. By continuing to break up and specialize into separate business units, you can continue to drive very, very high growth and making sure that corporate doesn't take over, that we maintain this autonomy and decentralized spirit and autonomy for these businesses to run their offense and then continue to buy companies. We bought over 60 companies in the last 10 years, continuing to fuel innovation through organic spending through R&D as well as through acquisitions. So truly an impressive track record, and we are really well positioned to continue to grow. So here you go. This is the list of the different business units. The weighted average market growth rate moved from 4% to 6%, that's pretty remarkable. Now that change -- how does that happen? Well, we've acquired a lot of companies to be able to move our business into higher-growing spaces. And so our -- even though our market growth rate went up to 6, our outperformance of 10 is the 400 basis points that I referenced on the previous slide. You can see hips and knees, which by the way, we love our Hip and Knee business. It's growing really, really fast, as you saw last quarter. But it's actually a much smaller percentage of our business than it was a decade ago, right? It was 27% of sales. Now it's 18% of sales. As we've added new businesses, whether it's Inari, whether it's Vocera, all these different businesses that we've added over time. The growth of the company from $10 billion to $25 billion, that's pretty significant. Yet it still feels like the same Stryker of 10 years ago in terms of our spirit and the way we operate and the business unit autonomy. It doesn't feel that different. There's just more business units than there was before. And we try to keep this sense of being a small feeling company. Capital allocation, of course, changed pretty dramatically. We've got busy on acquisitions. And so what should you expect for 2030 into the future, you should expect more of the same, continuing to grow very fast, continuing to increase our weighted average market growth rate by prioritizing acquisitions in fast-growing spaces, and there are many that we can pursue. And then making sure that we use our capital primarily for acquisitions, which again, Preston will talk a little later about capital allocation but that's going to continue to be a big priority for us. And just a couple of little examples. So now that we're in the health care IT, we're not going to stop with Vocera and care.ai. We're obviously going to continue to add to that, and that's fast-growing space. Inari is our first -- we dipped our toe in the water there. There's a lot of other technologies in that space that we're going to be able to add to in the future. So our weighted average market growth rate will automatically start to move up as we extend our presence in those two. So those are just a couple of examples. And Andy is going to talk more about that later on. So to conclude, we are in a position of tremendous strength. We've extended our lead over a lot of our competition. We have an operating model very focused on the customer, differentiated talent and culture, huge number of power brands across our businesses with very strong market shares. Many times, north of 50% market shares in these categories. We're well positioned because of the collaborative spirit to win in the ASC. We are clear innovators in many categories, robotics, 3D printing, fluorescence imaging, battery technology for power tools and workflow automation, those are just 5 quick examples for you where we're the clear innovation leader. The M&A track record, I think we've demonstrated over time, we know how to do this now. We actually are really good at integrating now. I wouldn't have said that 5 years ago, but we've really developed tremendous integration capabilities. And the more of these you do, the better you get at doing these kind of deals. And then operational excellence, kind of a new thing for us to talk about and to actually lean forward. In the past, I knew we needed to do it, but it wasn't so easy, and we always prioritize growth. But now we really -- it's taking hold in our organization. Margin expansion, the use of lean is really starting to become part of who we are as an organization. You're going to hear more about that over the course of the day. So with that, I will turn it over to Spencer Stiles. Thank you.

All right. Good afternoon. Welcome to beautiful Mahwah, New Jersey. For those that are tuning in online, we wish you are here with us. You're at the site and home of our Orthopedics businesses. So we lead both our Joint Replacement business and our Trauma and Extremities businesses out of this particular site. And actually right around the corner here, we're doing manufacturing right now. So we love this site, and we're really grateful you decide to spend the afternoon with us. So I have a unique opportunity to talk a little bit more about how we're built for growth and in particular, focus on customer-focused innovation. I'm joined today in my section by Dylan Crotty, our President of Stryker Instruments; and Kathy Truppi, our President of Joint Replacement. They're going to join me in a few minutes up here and share a few remarks about some of those specific innovations. But I want to click in a little deeper, where Kevin touched on our operating model and really thinking about this decentralized business that we intentionally use the word specialization. And go just a little deeper on what that means. So Kevin talked about our various divisions and all these different business units. Well, in those business units, and this has taken decades to build. And quite frankly, it's sort of hard to replicate as others have tried. But the focus from a general manager, a head of sales, a head of marketing, a head of R&D and yes, a head of M&A or BD, all sit on the leadership team of that specialized business unit. And they wake up every single day thinking about the customer needs, what problems can they solve? What innovations can be brought to that space to create value to take care of patients. And they're unbelievably passionate. They have an intensity about them, and they have great intimacy with those customers. And that's a really special part of our organization. And it served us very, very well. However, a few years ago, I want you to focus on this gold bar here. A few years ago, we came to the conclusion we need to bring the breadth of Stryker and the portfolio of our offering across the entire business to our customers. And that's where we kicked off customer solutions. And customer solutions is home for our contracting pricing, a program like our ASCs, which I'll touch a little more on, and I'll talk a lot today about customer solutions in one of our business units. But this gives you the example of thinking of specialization and bringing the breadth of Stryker. And how together, this creates tremendous value for our customers, preparing us for additional growth in the future and really a differentiated approach to the market. We also continue to invest in digital AI and data. And we've recently hired a new CDIO in Debra King, and she'll join us on stage here in a little bit. We're extremely excited to have her. You'll hear from Viju on Global Quality and Operations. And then all of our amazing functional partners that line up behind those businesses each and every day to make sure that we're serving our customers. It's really a model for success and again, one that's really hard to replicate. And it's quite frankly, taken decades to refine, and we'll continue to make sure it's meeting the needs of our strategy. In particular, though, I want you to think about upper extremities and then there's gold bar of customer solutions. So that upper extremities business once upon a time was a small little entity tucked inside joint replacement until we did the acquisition of Wright Medical. And part of our strategy is when we buy a business, does it allow us to further specialize and Wright Medical did that and did so in a meaningful way. We specialize in hips, we specialize in needs, we specialize in trauma, we specialize in foot and ankle. And we specialized and created a market-leading upper extremities business. And I thought I'd share a little bit of the use case, and I apologize for the one graphic image, but this is important stuff to us, we're going to show it, of really how this works in this specialization and sort of the intensity and the intimacy that's created with our technology, our sales professionals and ultimately, our customers. So I think many of you have heard about our upper extremities business, the great success, the growth. But behind that is a patient that shows up with shoulder pain, may not realize that they're a candidate for a total shoulder. They meet with a specialized clinician. That clinician says, yes, you are, there's a technology for this. Most of the time, it's just Stryker technology, and they're going out and getting an imaging modality, a CT, that's that first step. And that CT then gets loaded into the Blueprint preplanning system. Now Blueprint today is an amazing technology. You can plan the entire case where the implant is going to be. It ultimately helps you prepare the glenoid with Mako, which I'll touch on in a second. But I want you to imagine in the future that this particular preplanning will have even more technology. There'll be AI capabilities, collecting that data, bringing it back into the preplanning to make it even more accurate, give you more information about the patient and the outcome. You can imagine today that this continues to create significant value clinically for the patient as well as the surgeon and the facility. You can also imagine as the procedures themselves get more complex, such as revision. You can now plan for that revision procedure and do so with more accuracy and confidence. This allows this procedure to be brought to more surgeons and in a consistent and predictable and safe fashion, a better outcome for our patients. So as you think of this, the Blueprint gets loaded up and the sales rep gets involved. The sales rep now are amazing world-class sales reps, who are very well trained. They're trained in Blueprint. They're trained in this procedure. They show up, and they work and say, physician, how do you exactly want this? What's the data of the case, let's make sure you have all the product, and now it's time to do the intervention. You walk in that operating room. Again, that same sales professional, extremely well trained, understands the enabling technology, the preplan and they're ready to do a Mako shoulder case. And that's kicked off. We're having incredible results, extremely happy customers like this picture here in the corner. But this is a little bit of the story of Blueprint today, and tomorrow in the power of technology with an amazing implant, our perform technology and how that specialized business lines up behind this set of technology each and every day to make sure we can repeat it and scale it and get it to more patients. However, this surgeon right here, they used to do all their surgery in the hospital. Well, that's changed. In the last couple of years, they've become more interested to bring those procedures to the outpatient surgery center, the ASCs. And about 6 years ago, we kicked off this journey of looking at customer solutions. We are hearing this opportunity in the marketplace of a shift in hips and knees, now significantly in shoulders. And we're actually saying, how do we build to meet these customer needs over time of bringing that breadth of the portfolio with the specialization. And that's where we created our ASC business inside of customer solutions. And these are some pretty remarkable stats to show the progress that we've had over the years and really the very strong position of meeting those customer needs and partnering with that happy orthopedic surgeon, which at many times their owners that we want to make sure we're meeting their needs. And you can see now over 460 sites since we've kicked this off, and that means these are facilities that have bought multiple different parts of our specialized businesses, not just one, but more than 3, a lot of times 4, 5, 6, 7. And the lion's share of these are new builds. That's really where our portfolio and the breadth of our portfolio comes to life. Our leading technologies, as you might imagine, in this space is Mako. You can see big numbers there with over 200 systems now in the ASC marketplace. But again, this is combining that specialized business in upper extremities, for example, I just showed you with the power of the breadth of our portfolio. And really, there's nothing else like it in the marketplace today to meet the customers' demands about this growing segment and something we're very excited about, and we'll continue to invest in for days to come. So the final thing I want to share again is around our sales and service support. And really spotlight at this organization, all these people in the front row, Kevin mentioned this, we serve our organizations. We serve our selling organizations. We want to make sure we line up behind them, and they have the right products at the right time, the right training, and they can build the trust of that customer day in and day out. And that's part of the great differentiator of this company. If you mean a Stryker person, you sort of know it. If you need a Stryker sales rep, you get it. And you can feel their energy, their expertise and their knowledge. You couple that with the breadth of the portfolio and something like customer solutions, the last thing we need to add to that equation for success is the products. And you're going to hear about some amazing innovations in two of our businesses here in just a second. But we're really excited about the journey we're on we're built for growth. We're looking forward to our continued growth and success. And with that, let's hear about one of these great products from our President of Instruments, Dylan Crotty. Dylan, if you can come on up.

All right. Well, thank you, Spence. Great job. My name is Dylan Crotty. I lead our Instruments division here at Stryker. And I'm thrilled to talk to you about innovation specifically as it relates to our power brands. So I want to kick it off with our founder, Dr. Homer Stryker, Innovation is in our DNA. As you know, Dr. Homer Stryker was a gifted surgeon, and he decided to create products because he wanted to serve his patients better. He wanted to simply take care of his patients better. And then his friends and colleagues around the country started asking for these products. And before you know it, he thought it was best to start a company so he could serve more patients around the world. He was also, as you guys know, a great inventor, an incredible engineer. And when I talk to our R&D teams at Stryker, I make sure to remind them, Dr. Homer Stryker was one of you. So that spirit of innovation and intensely serving our customers is a live and well at Stryker. You've heard a lot about our decentralized model, and you'll continue to hear a lot about it. It is the foundation of our success. And I believe it's very hard to replicate. It's a culture. It's an ethos. And as it relates to innovation, every business unit has that specialized sales, marketing, R&D and BD. And if you're an engineer at Stryker, you don't spend your time behind a computer or tinkering in a lab. You are out every week with customers, asking them questions, learning from them, observing surgery, going to society meetings and listening to talks really developing that deep intimacy with the customers. And what that allows us to do is have great mastery over technical and clinical aspects of what they're doing. It also allows us to make quick decisions to make very quick and informed decisions and that's what our general managers do. We expect and we trust and empower those closest to the customer to make decisions in Stryker. I was a GM for 8 years in the business units. It's a great job. You have the company lined up behind you, as Kevin mentioned. It's a job with very high expectations and very high demands, but a company of people lined up behind you to support you in the customer. This specialization also allows us to develop a continuous and constant feedback loop to make our power brands consistently and continuously better. Our power brands at Stryker are many brands that you think about today embedded in our business units. Spence just talked about Blueprint, Mako, the 1788 Camera at Endo, Life Packet Medical. We have dozens of power brands across the company. And our power brands build trust with our customers, they build loyalty. They are differentiated. They build long-term value with our customers and with our shareholders. And a lot of the markets where we compete with our power brands, we actually created these markets. So as you can imagine, we drive these power brands. We protect them, and we do that through relentlessly innovating in these power brands. I want to focus on two of our power brands in our Instruments division that I'm very familiar with, our heavy-duty power tools, battery power tools and our Steri-Shield personal protection. So our heavy-duty power tools, Dr. Stryker invented the oscillating cast saw in 1946, and we have been in the heavy-duty and general power tools business ever since. In 1983, we introduced a product called OP90, which was the first cordless battery power tool. It was big -- the battery didn't last long, but the customers, it was almost game-changing for them to not have that cord and they stuck with us. They knew we would keep innovating on that, and we did. We innovated again and again over the years. And today, we're on System 9, our ninth generation of battery power tools. And with this comes 40 years of experience, 40 years of learning and also some amazing technology we've integrated. We've got our first -- the first wireless battery charging in power tools, which allows and really solves for a major issue, charging batteries that are already sterile. We've got smart equipment management, which is predictive analytics around power tools. We've got a digital depth gauge with System 9. So in trauma surgery, you don't have to pull out a manual depth gauge, you can see how deeply you've drilled. And as you should expect, they're more on the way. We have something called the train stop model at Stryker that we've developed, which is this continuous innovation around our power tools. So every 4, 5 years, we're going to be launching a new version of these products. Now it varies by power brand, but every 4 to 5 years for these two, we'll be launching a new version. And in between these versions we get this consistent, continuous feedback on how we can improve. And we implement that and think about that in the next generation. We also think about how do we disrupt ourselves if we were competing with Stryker, what would we do? We go to other industries. So for power tools, they're everywhere, right? So we go to other industry trade shows and see what they're doing in power tools. And we implement these in the next version. Now we call the train stop because if a technology that R&D team isn't working on, if it doesn't make it for that launch, and we will launch that on time, we shift that R&D team to start working on that next-generation right away, and they launched that technology on the next train stop. So what this builds is just great iterative innovation over time and some disruptive innovation that our customers have deep trust with. Moving to the right here to our Steri-Shield product line. This is actually an acquisition that we did in 1993, and a lot of our power brands are former acquisitions. We take these products, we plug them into the innovation machine, and we take them to the next level. And our R&D teams don't mind if it wasn't invented here. They're ready to plug that in and make it better, and they've seen it happen and us get rewarded for it so many times. As you think about a helmet, it seems like a simple thing. It's a surgical helmet. Think about this, though, surgeons and his or her staff, the scrub techs and nurses wear these all day in surgery. So the weight, the balance, the field of view, the airflow, these things are incredibly important and small incremental improvements can make a very, very big difference. And we've recently this year launched Steri-Shield 8. This is our newest and by far, our best version of the helmet. It is the most comfortable. It incorporates a very strong battery-powered headlight. And we're thrilled with Steri-Shield 8. So as you think about these two, and you think about this train stop, you can put some cadence to when these are coming out. That's just not you as analysts, that's our customers. They will budget for these products. They will understand that in 2 years, Stryker is going to have its new version of power tools, so they're setting money aside for that. And that's the beauty to these power brands. There's trust built. There's confidence and there's alignment on future purchasing. And we usually get better price because we're bringing so much value with those additional versions. I talked briefly about the future of our heavy-duty power tools just to go back to that quickly. And to build on a comment that Kevin made, we are working very closely across divisions now. So our power tools team is working closely with our Mako team. If you think about that Mako robot, it's a power tool on the end of the robot. And Kathy Truppi, who's going to come up here shortly. 10 years ago, the person in my role didn't speak with the Orthopedics Division President very often. Kathy and I speak every week. And stay tuned. There's exciting things on the way as we bring these together and collaborate together. All right. I highlighted two products. There are dozens of these power brands across Stryker, as I mentioned, and assume there are also dozens of these focused R&D teams who are out there with customers today working on that next generation. These are just some across the top. Across the bottom, we have future power brands. So we're always acquiring companies, we're always launching new generations, and we are always working to build that next power brand. And back to the previous slide, we catch a little heat about our less than creative naming conventions. So we've got System 9, Steri-Shield 8. But you know what, it works. It works. Our customers know that they can depend on us. They know that we're on our eighth and ninth version. We have competitors that are on their first, second or third. And they stick with us because of that deep trust that we build. So with that, I would like to hand it off and have our President of Orthopedics talk a little bit more about our best power brand, and that's Mako. Kathy Truppi?

Thanks, Dylan. Whether he likes it or not, he is in my speed dial now. We do talk very frequently. So I'm going to dive a little bit deeper into some of the power brands on the joint replacement side as we look to our business and the collaboration that Dylan referred to. Here in joint replacement, we have an intense focus on our customers. We keep them in the center of everything that we do. And our innovation is driven through listening to our customers, creating and delivering solutions that solve their unmet needs as we go forward, and that fuels our growth. And that gets our technology in the hands of more surgeons and into more patients as we look to the goals that we have. So if we look at Triathlon, which is our knee -- our biggest knee power brand, Triathlon has been around now for 20 years. And there's a lot of legacy that comes with this brand. But what you can see on the screen is a whole lot of innovation that has come over the years from listening to our customers. Right about the middle there in 2013, you see our Triathlon cement-less knee, which was launched, like I said, back in 2013. And what you see with that is this marrying of the Triathlon design and brand with our incredible 3D printing capabilities to deliver solutions for surgeons and patients. And what we are seeing now is the 10-year outcomes results are being shared is 99% survivorship of that construct in patients. So this is part of the trust that is built into Triathlon. And when you think about what's coming next, as we listen to our customers, they started to ask about what our options were going to be for patients concerned that they might have a metal sensitivity. And as we went to answer that question and bring a solution forward starting just -- at the end of this year, we'll start to be available our first metal sensitive option within the Triathlon portfolio. So this is a 3D printed -- fully 3D-printed titanium offering with a titanium nitride coating on the outside. So we'll start those cases at the end of the year. And that really brings together all of those different capabilities we have as an organization with a whole lot of experience and trust from our customers so that they can trust beyond the surface of this as a solution for their metal sensitive patients with that concern. Turning to Mako for a moment. We've been on another journey with an incredible power brand in Mako. If you think about over the 19 years that this technology has been around, we really started as an enablement platform for partial knees. We very quickly rotated, right, as we did the acquisition into total hips and total knees and have continued to invest in this technology, in this innovation as we go forward. So we're now at a point of over 2 million procedures over 45 countries that this technology exists, that we work with orthopedic surgeons all over the world. And it has become so much more than a robotic arm-assisted surgery. We have our preplanning that Spencer talked about before as part of the system. And we are committed when we're seeing the outcomes data that is coming off of this to continue to launch some really groundbreaking excuse me, clinical applications as we look to deliver across various sites of care around the world and to also deal with and have solutions for various economic situations with our customers. So back in March of this year, we actually launched Mako 4. It's our newest Mako platform. It has new applications on it, new clinical applications, and we are expanding this platform technology outside of hips and knees with this particular case to include our spine program alongside of that. So it is more than just the applications, though. There is a new camera. There is a new guidance system, our Q guidance system that is built on 20 years of experience across Stryker, again, showing the collaboration across various divisions that we have. So we have launched the Mako Spine application this year. We've continued our Mako shoulder LMR and look forward to bringing that to market in a full release in the first half of next year. One of the applications that we launched from Mako 4 was around our hip space, and this is a new generation of our Mako hip application. So we are getting not only advancing in the primary space, but we're coming into a revision. This is the first time that anyone's coming in with robotics into the revision space on the hip side of the platform. Take back to 2010, we launched our Mako -- our original Mako hip application. We were bringing a whole lot of preparedness, more information about the patient to the surgeon, making a more predictable operation and what we've seen is better outcomes for the patient from that. And we're now bringing that into the revision space, which is really, really exciting. And it's another example of how we are continuing to stay ahead of our competitors in this space, and again, continuing to listen to customers about how we solve the problems that they have. Just a quick mention. When we were at AAHKS just a few weeks ago, the team did receive the Industry Innovation Award, which I think typically doesn't go to the larger companies, but it really speaks to what this technology brings to our customers and to their patients. So if you're asking about what's next for Mako, we will do a little bit of an early glimpse we wouldn't normally bring this to this group at this time, but there were so many questions coming out of the earnings call with the 510(k) clearance that I think everyone is aware of around this technology that we wanted to bring a little bit of it here today. So this is an introduction very, very briefly to Mako RPS. So this will be our entrance into the handheld robotics segment of the market. And it really is marrying and bringing together, as Dylan mentioned, our unbelievable talent and innovation in our orthopedic instruments business in that business unit and our Mako technology, bringing those two things together. So we are looking forward to a release, a limited market release early next year. Well, you'll hear more about this at AAOS, and we're very excited as we go forward to bring this into the Mako family. With that, to talk a little bit about things outside of our organic development, I'll welcome up Andy, talk about our M&A offense.

All right. Thank you so much, Kathy, and thank you all so much for spending your afternoon with us. One of our greatest strengths, and we've talked about a number of those strengths already today. One of our greatest strengths really always has been our M&A offense and our value creation, both for our shareholders, but also the value that we create for our customers and the patients that they serve through M&A. In fact, you are sitting in a building today that the genesis of our orthopedics business was the acquisition of Osteonics in 1979. And of course, there's been acquisitions ever since you saw Kathy's presentation on Mako. We know that we acquired Osteo in the trauma business in 1996. And then in 1998, a big catalyst for growth for our Orthopaedics business, the acquisition of Howmedica, which brought an amazing portfolio in hips and knees and in trauma. So M&A has always been part of our offense. And it will continue to be. You heard from Kevin, and you'll also hear from Preston later on that our #1 use of capital will continue to be M&A. And that makes, I know all of our commercial colleagues, our general managers and our presidents, very happy. It also makes our sales professionals happy, our customers, and of course, we know that we create a lot of value when we do M&A here at Stryker for our shareholders. Our focus has been, and I'll talk a little bit more about this, building out our core. So if you think about all the tuck-ins, these are -- the primary use of capital that we have in M&A are the tuck-ins that strengthen our existing businesses. As Kevin mentioned, we have 22 today. But we also, occasionally, and we think smartly move into adjacencies. And I'll talk a little bit about a couple of those, and I'll actually have following me one of our division presidents talk about an exciting opportunity that we have in peripheral vascular. So a little bit about our process, how we set up to execute our M&A offense. Importantly, we embed -- Spencer mentioned this, we embed dedicated resources. So M&A teams alongside our division presidents, our general managers, our marketing leads and our R&D leads. Each of our 22 businesses has one or more business development professionals that work side-by-side with them, embedded across the company. What does this do for us? It allows for our transactions to show up in a couple of ways. One, is we know that with that specialized set of resources that we have working in our commercial businesses, that our deals will be on strategy. That our deals will align to customer needs and that, that intimacy that we drive through specialization will be represented in choosing the best asset in the category that we're going for. And we also know that when we have these specialized resources, and we run the Stryker offense that we're going to have the opportunity to build deep and long-lasting relationships with targets. And we've done that. In fact, we just closed a deal late last year with NICO, NICO Surgical. You might be familiar with that. Our relationship with NICO Surgical goes back a dozen years, doing business reviews, getting to know management, tracking milestones in their technology before we decided to transact. That's the type of offense that we run. It's very intimate with the majority of targets that we pursue. You can imagine because we have these specialized resources in 22 business units that we do maintain, and we currently have robust pipelines of opportunities. Kevin mentioned that as well that we're currently vetting today, and we're excited to have further transactions in the future. Because we're so prolific Kevin mentioned 60 acquisitions in the last 10 years in doing deals. We built muscle that allows us to move these transactions effectively into integration into the company. And in the last few years, we've built dedicated integration resources that move from deal to deal to deal and allow that integration to happen even faster and smoother. So a little bit about our strategy. I think you'll be pleased to know that our M&A strategy will remain unchanged. And that means that we're focused in 2 areas. As I mentioned, strengthening our core and moving into attractive adjacencies for the company, strengthening our core and moving into adjacencies that allow us to expand that addressable market, like Kevin talked about, and that weighted average market growth rate that Kevin mentioned as well. That's an important input to the deals that we pursue both of those, expanding our TAM and expanding our end market growth rates. When we think about our core, we look to technologies that can tuck into our existing 22 businesses that we have today, technologies that bolster that business's offense, their ability to be commercially successful, drives innovation that allows for better care for patients and, of course, allows greater growth for the corporation. When we move into adjacencies, we look for attractive adjacencies that allow us to leverage our strengths, our strength at Stryker, which include our global scale, our commercial infrastructure that we have and our clinical expertise that we have in the company. And on this slide, you see an example of those 60s, and I'll talk a little bit deeper about a few just in a moment. But I will say, one of the key elements of those relationships that we build is not just understanding, does this company have the right technology or set of technologies to make Stryker better to allow us to be more living into our mission to make health care better, but we also look for the best partners that are culturally aligned to our company. And at the same time, because we build those deep relationships over such a long period of time and we invest in that, it allows those potential partners to get to no Stryker. And I'll tell you that, that relationship that we build oftentimes gives us an advantage when we're working with those customers that they get to know us and they want their technology to be taken care of by the right partner. And most of the time, they see that as Stryker. I said I'd mention a few other deeper -- a little deeper dive into a few of the assets that we've acquired. And I'm doing this in the context of what both Spencer and Dylan and Kevin talked about, which is our offense around focus and specialization in the business. M&A has been and will continue to be a primary catalyst for allowing us continue that specialization journey that we've been on. An example of that, first, is Molli Surgical. This is in the breast care space. We had 2 acquisitions Novadaq, many of you might remember that. And Invuity, we had those businesses inside of our Endoscopy sales force. We acquired Molli Surgical in the breast space and it allowed us and gave us the scale to spin off a dedicated sales force in breast care. Care.ai, you've heard about that already from Kevin, and you're going to hear a lot more from Jessica Mathieson and here in just a moment. But care.ai along with Vocera has allowed us to catalyze a dedicated business unit, as Kevin mentioned, in SmartCare around our smart hospital platform. Vertos, an acquisition that we made last year, strengthened our position in interventional solutions, particularly in Interventional Spine, but this also was a catalyst that allowed us to split our Interventional Spine sales force into fracture oncology and interventional pain. And Artelon, an acquisition that we did, which is unique at Stryker between two divisions: our sports medicine business, and our foot and ankle business, which allowed them to not only have an amazing portfolio that they acquired with Artelon, but to bring technologies together across our sports medicine platform and foot and ankle platform to create more value for our customers. And as I mentioned, we're very, very excited about the acquisition that we did earlier this year of Inari, moving us into the peripheral vascular space. We have an incredible Division President, and experienced division president, both at Stryker, formerly leading our high-performance trauma and extremities business and experience in the peripheral vascular space before Stryker, and it is my great pleasure to welcome this gentleman up next, Mr. Tim Lanier to talk more about Inari. Tim?

Thank you very much, Andy. Well, good afternoon, and welcome. It's so exciting to see all of you here, and I'm excited to share a little information with you about Inari obviously. And I want all of you and all the employees we have that are listening in today from Inari to know that we are really excited to have them as a part of the Stryker family. So across the world, there are roughly 2 million patients. They're affected each and every year by venous thromboembolism, or VTE, and other vascular-related diseases. That includes pulmonary embolism, deep vein thrombosis, chronic venous disease as it relates specifically to challenging venous occlusions and venous stent thrombosis and as well as some of these emerging technologies that are really exciting as well, like dialysis access management, arterial thrombectomy and chronic limb ischemia. Everyone of these areas represent a person's life could be affected by earlier diagnosis, faster intervention and better treatment options. And for us here at Stryker Inari, that's exactly what our goal is to do is to affect all three of these areas, and we're doing that and we'll continue to do that with evidence and also innovation. What's important for you to know is that we -- when it comes to innovation and products, we build purpose-built technology. In the past, in a lot of these areas and other vascular businesses, they're not purpose-built technology specific to treating the unmet need. And our goal is to change the standard of care. Here is the market that we get to play in. It's over $6 billion in the United States. This is our TAM. It's amazing. It's split between pulmonary embolism, and DVT, deep vein thrombosis. There's also $1 billion in chronic venous disease. As you can see here, mechanical thrombectomy only represents 14% to 19% in PE and DVT, that's unheard of. We enjoy category leadership in both of these areas. And our opportunity, in fact, our competitor is actually conservative therapy. And that's where we're trying to attack with clinical evidence and innovation. What an enormous opportunity that we have. These areas are growing double digits, amazing market opportunity for us. And here is our market-leading vascular portfolio. So we'll start and talk a little bit about those two at the top. These are the products that launched Inari, FlowTriever and ClotTriever for pulmonary embolism and deep vein thrombosis. These are the flagship products, and we continue to evolve these products, enhance them. They are power brands at Inari. As we think about the things that we're doing today to evolve and make those products better. There are 3 things that we're focused on. Number one is expanding to new markets globally. What an opportunity we have at Stryker to leverage the power, the strength and the reach of the footprint outside the United States. And these patients outside the United States, they deserve to have these technologies and have these same treatment options for these disease states, that we do in the United States. This is an amazing opportunity for us. Number two, advance the ease of use and consistency by making our products easier, faster and more predictable for our customers to treat these patients. Lots of opportunity for us to continue to enhance our products and make them faster and easier and safer. Strengthening our competitive edge is #3. We need to make sure our products can more effectively and efficiently remove clot, making sure that we're reducing blood loss, also making sure that we can reduce hospital stay and then also save cost. All those we're working on today, if you ask our physicians today about Stryker products, they will tell you they love using Stryker Inari products because they're reliable. They're also -- they have strong data, so they're well supported with data. And we also have the absolute best sales force clinically focused sales force to support them than any other business inside of VTE, but probably even vascular. So if you look at the products down below, talking about these emerging therapies, these are also equally important for us. What we're really excited about two that I want to share with you today, you'll notice our Artix system for arterial thrombectomy. So ClotTriever and FlowTriever, they're used to remove clot from the venous system. There is also a clot or thrombus in the arterial system. Just recently, about 4 months ago, we launched our Artix system for retrieving arterial thrombus, and it is going extremely well. These are also purpose-built technologies. The reason why that's important is in the past, it wasn't uncommon for them to pull supplies off of the shelf and kind of construct their own retrieval system. It wasn't always effective. It wasn't always as safe. We have attacked another unmet need with arterial thrombectomy by making sure that we have a purpose-built system that's safe and effective or removing arterial thrombus. Number two, chronic limb-threatening ischemia, what are a really important area for us to work in. This is peripheral arterial disease, so it's also on the arterial side. For these patients that have critical limb-threatening ischemia, in the past, the continuum of care for these patients could be exhausted to the point that the only other option for them was amputation. Today, with our LimFlow system, we can now remap the vein and the artery to restore blood flow to the feet, thus saving that limb and ultimately saving the life of that patient, amazing technology, and another great example of the innovation machine at Inari. So all these products are built on the foundation of evidence, education and rapid innovation. And the important thing is that they're all focused on making sure that we change the standard of care in all of these areas. And then lastly, sticking with the theme of built for growth. This is the growth strategy for Inari. These are our three strategic pillars that will help us continue to grow and grow fast in the future. First and foremost is best-in-class clinical evidence. Look, we have to have clinical evidence in these new modalities of treatment, and we have to lead the charge. Today, we have over 10 clinical research studies that are currently being funded none that are more important in the four that you see on the screen here today. PEERLESS II will be our opportunity for PE to expand our entry into that conservative therapy, that some 85% that's getting conservative therapy, this will open up that area for us to change the standard of care. This will be a randomized trial of FlowTriever, stand-alone against anti-coagulation. There's not another study like that, and it will be over 1,200 patients, and that will be important as well. These data sets are large. So they will give us a chance to move the needle in changing the standard of care. I also want to call out defiance. DEFIANCE will be our DVT strategy, similar, be a large patient population and it will be a stand-alone ClotTriever to the current standard of care today. Number two, we will leave with innovation. Inari has been built on innovation. We don't want to lose that, and that's who Stryker is. So we have an amazing robust pipeline; one, to take care of our current power brands to make them, as I mentioned earlier, faster, easier and more predictable, but also we have a number of projects in early discovery. These will be innovative technologies that will continue to expand the platform for us to continue to treat these patients with new technology and again, open up that market. And then lastly, advancing the quality of care, we're really excited about the opportunity we have right now to support and help the American Heart Association. They currently have a PE quality initiative. This initiative is an opportunity to drive education and awareness and also guideline changes potentially as we think about changing the standard of care for these patients. They have this terrible disease and are looking for other options besides conservative therapy. So in closing, these are our pillars. These are the strategic opportunities we have to continue to lead and grow this business into the future, and we're excited about all these opportunities. And with that, I'll turn the time over to Viju Menon.

Thanks, Tim. Good afternoon. We at Stryker love the momentum we have on operational excellence. And I'm super excited to take you through and share with you some of our highlights. You heard from Kevin earlier this afternoon that at Stryker, our strategy is to drive market-leading growth. So from an operations perspective, for my team and I, our strategy is to enable the market-leading growth through a world-class supply chain. So our job; one, is super clear, delight our health care customers with high-quality supply. Supply of amazingly innovative products that you heard this afternoon from all of our leaders that our commercial R&D teams design that the global operations team then takes it and brings to life at scale to impact the lives of more than 150 million patients globally every year. That's our job one. And I would say that evidenced by the fact that our sales teams, our commercial teams consistently drive market-leading growth for Stryker, we have a supply engine that's built for growth. Our second job right after the first one is to deliver and drive operating margin accretion and cash flow positivity. So for us, in operations that accounts for two things, drive product costs down, optimize our inventory. I will say that until and through the supply chain crisis, these two vectors really remain within the operational organizations kind of scope. But crisis, you always never waste a crisis, you've always come out of it stronger. About a couple of years ago, we elevated both product cost reduction and inventory optimization, up-level them to be enterprise priorities. So what does that mean? So today, between Andy, Spence, Preston and I and our teams, we collectively steward our initiatives on cost reduction and inventory optimization. What I'll say that says that with the combined and collaborative efforts across the entire enterprise, this year, we delivered a product cost reduction that's better than the historical 10-year average at Stryker. If I look at cost reduction. This is the best cost reduction momentum that we have. If I look at inventory, the richness of our inventory mix has never been better. Because of the collaborative way in which we are accomplishing this collectively end-to-end, I'm super confident that these results are super durable. So that's on the op margin and cash flow perspective. What gives me the most energy is on the talent and culture piece. Our emphasis on lean is amazing. To Kevin's point earlier, until a few years ago, we kind of sort of dabbled in lean and lean will certainly present in some of our manufacturing sites with some limited benefit. What we learned through the pandemic is, lean is not something that you dabble in, either you are all in or not even started. So what we did was coming out of the pandemic, we took our time to kind of do a reboot. We have some amazing leaders that we were able to hire in with a tremendous amount of experience in lean with a deep conviction in lean. So we approach lean as we should, as any company should, as a mindset shift and a cultural shift. And I will tell you the benefits of lean that we are experiencing just in the couple of years we have been at it with all seriousness is across safety, quality, delivery, cost and people engagement. Lean really powered a good chunk of the product cost reductions that we delivered this year, and if I look at the pipeline for the next 2, 3, 4 years of very cross-functional collaborative initiatives have all the confidence in the world that we can accomplish the cost reduction goals that we have set out for years to come. Kathy talked about Triathlon gold. From an innovation perspective, we continue to strengthen our core competencies and added to manufacturing. And now I'd like to take you through some of the specific areas in which we are driving supply chain excellence. I love this graphic. On the left, you see kind of a flywheel with lean at the center. Our focus continues on product cost reduction, delivering operating leverage. But what are the other mechanics behind it? The first is the product transfer piece. So in the Stryker context, a product transfer refers to our ability to transfer a product from one supplier to another or from one Stryker plant to another or from a supplier plant insource that to your Stryker plant. In the highly regulated industry for all the right reasons that we operate in, these product transfers, which can be pretty complex used to take us about 3 years or so on average to the degree that it wasn't really very viable. Well, the pandemic and the supply chain crisis changed all that. This became a necessity, and we really built and honed the muscle. And through lean, we now have product transfer cycle times that are about half -- takes us half the time as what we used to take. So anywhere from 6 months for a simple product to about 18 months to a very complex product. What this has unlocked for us is amazing abilities on multiple fronts. So take plant network strategy and the plant network optimization. And this is all public information about 5, 7 years ago, we used to have about 44 manufacturing plants. With all the amazing M&A deals, and we have a very healthy engine humming, as you saw from Andy and team, we brought in the last 5 years through the Wright Medical to Inari and many others in between, but 22 manufacturing plants. So you do the math, you'll think we have 60-plus manufacturing sites. Well, we have 42 manufacturing plants today and that's because through product transfer, to the muscle we built, we've been able to rationalize our manufacturing sites, consolidate into bigger global footprint manufacturing plants and still have amazing effectiveness in product supply. And I will say that through all of this, we have an amazing people and employee engagement scores with a high energy workforce. We have consistently ranked in the last 7 years, one of the best workplaces in manufacturing and production in the United States. And speaking on that front, 70% of the product we sell in the United States are made in the United States. So while our footprint is global, we are truly strategic about where we manufacture and the competencies we build. I could not be more proud of my team. From a procurement perspective, and this fact is kind of sort of common in med tech, we tend to have a lot of small suppliers single sourced. And where we used to be is without the ability of product transfer, our negotiating leverage, our ability to quickly absorb an acquisition and scale rapidly is pretty limited. But today, we do this through product transfer at scale, dual sourcing, rapid amplification of sales capability through supply enablement. And very often these days, we do in-source from our suppliers into our manufacturing facilities, facilities where we have built the competencies at scale. So across these dimensions, again, you get super confident about the strength and the momentum of the flywheel that's generating product cost reductions. We do reinvest a good chunk of that savings back for automation of our facilities and also invest in packaging transformation and other innovative aspects of keeping our manufacturing facilities current and state-of-the-art in many cases. The fifth dimension is technology. And I would say from an AI perspective, we are in our early days, but I could not be more excited about having Debra King as my partner. There's amazing opportunities we can unlock together. And I think you'd want to hear that directly from Debra. So Debra is our Chief Digital and Information Officer. Come on up, Debra.

Thank you, Viju. Okay. Good afternoon. So I am about 6 months into this job, and I'm loving it. And what we talked about earlier and heard about the talent and the culture of the company. I could tell you that it is truly special, and it is different. So I am so excited to be here today to talk to you about how we are going to leverage digital, AI, data and technology to really enable and support the type of operational excellence that Viju was just talking about, and in general, productivity and growth across Stryker. So the IT organization had really done a tremendous job of building a strong foundation around operations, business platforms such as ERP and cybersecurity. And we're going to continue building on top that foundation, but our strategy is now focused on three pillars. The first is about unlocking enterprise productivity. So this is about using AI, driving a technology-first mindset with our employees to use AI every day to make it easier for them to get their work done and to create efficiency. It's also about driving AI at scale for automation, and for opportunities for productivity across the Stryker business. We're also building a foundation that's simpler where we're harmonizing processes to create more end-to-end efficiency. This is also where we're going to future-proof our technology and ensure that we have the agility that we need in the future to support our organic and our inorganic growth. The second pillar is about building customer experiences that set us apart. We want to make it easy and delightful for our customers to do business with us. We need to help connect for them, the specialization that we have in our decentralized model and create that unified customer experience where they could transact with us easier and get services more easily from us. It's also about empowering our sales force with differentiated digital capabilities and customer insights to help them serve our customers better. The third pillar is around fueling our digital innovation and our enterprise digital transformation, our digital product development by building foundational capabilities that help all of our software engineers and our digital product teams across Stryker innovate faster and more consistently to better serve our customers. It's about continuing to build upon our data backbone, connecting data across Stryker, where we could really unlock the power of Stryker to build new business models and services for our customers and help them achieve their outcomes. So I'm very excited about all the opportunities ahead, and with that, I'm going to call up Jessica Mathieson, who is going to talk about how our digital products are going to be helping shape the future of health care.

Hi, there. So today, you heard about our approach to innovation, our approach to focus and specialization. I'm going to talk to you about a new emerging category and our approach to the smart hospital platform. Health care systems are facing significant challenges across the world. And the way in which health care has been traditionally delivered is no longer sustainable financially, operationally, from a quality of care standpoint, disparate systems and technologies create confusion, inefficient workflows, cognitive burden leading to medical errors and adverse events. The nursing shortage is at an all-time high. That will be our reality for years to come. All the while, people are living longer, and they require care. Quality of care is declining, cost of care is rising. Health cares must transform the way they deliver care, and they need to do that through technology and platforms. We have been innovating around those solutions for years. We launched the first wireless bed, the industry's first wireless bed in 2012. We followed that up with ProCuity in 2020. And in the last 5 years, together with our customers, we have achieved sustained outcomes around bed-related falls and hospital-acquired pressure injuries. And a result of that is our bed share has significantly increased. But we knew we needed to think bigger. We needed to think about building a platform, which led us to the acquisition of Vocera in '22, care.ai in 2024. And we've continued to innovate. This year, we launched our new hands-free sync badge because nurses hands are always full, and they need a communication device that's hands free. And since the acquisition of these solutions, we've seen significant pull-through of our capital equipment. We're very excited about the creation of Stryker's first digital business unit, Smart Care, and that will include our Vocera and care.ai teams and solutions. And those teams will continue to call on clinical end users and nursing leaders, but they will also focus on health care leaders making IT decisions, operational decisions and technology decisions. But we're thinking bigger. We're thinking about our 80-plus connected devices across our Stryker portfolio and how those devices integrate into Vocera and care.ai. And Vocera and care.ai is our foundation of the smart hospital platform. The smart hospital category, it's an emerging category, $2 billion annually, fast-growing with vast greenfield space to earn share. The way we define the category is an integrated intelligent platform, connecting clinical services, medical devices, extracting important data insights, alarms and alerts and delivering it to the right caregiver at the right time, helping health systems transform the way care is delivered. We also think it's important for you to hear from our customers and how they define the smart hospital platform. So I recently met with Dr. Neal Patel. He is the CIO of Vanderbilt University Medical Center, and we're going to share his thoughts on the smart hospital platform.

When we talk about a SmartHospital beyond being a buzzword of how we leverage technology in a hospital, a truly SmartHospital should be an environment in which all aspects of the health care delivery system, the rooms, the devices within the rooms, the equipment coming in and out, the therapeutic aspects of care delivery, all interact seamlessly together to enhance the patient experience and the staff experience. When that happens, SmartHospital. The equipment works the way it's supposed to, not because you had to be trained on it, but because it just makes sense, the data from one place to other, just flows and almost sometimes surprises you, like, oh, it's where it needs to be. Just like sometimes how in our consumer world, all of a sudden, the data just shows up, it's kind of wild because it also helps you. How can we do that within a health care environment? And SmartHospital, I think, is an umbrella term to get to that next level of a care delivery environment in which people aren't fighting against the system. The system is actually enabling care delivery.

So the solutions you see on this slide will sit within our Smart Care business unit. And I'll quickly touch on each of these solutions. It's important to note, they're interoperable, they work together, and we sell all of these as a reoccurring software subscription. Our clinical communication platform connects caregivers across facilities and health systems, helping streamline communication. Our workflow engine extracts meaningful data, insights, alerts, alarms and get it to the right caregiver at the right time. Care.ai is our virtual care platform, enabling virtual care reducing the burden of floor nurses, prolonging nurses careers and creating an overall better experience for patients and families and nurses. And what's incredible about our virtual nursing platform is we're able to offload tasks from the floor nurses to the virtual nurse. And then the ambient intelligence, it fits on the care.ai sensor, and it recognizes key actions and movement in the room, in the OR, and it writes those into the EHR. And when those actions do not happen, it also recognizes it and sends a helpful reminder to the care team member to one of our Stryker communication endpoints. So I'm going to give you some examples of how these work together. Let's start with the MedSurg floor. We've admitted a high fall-risk patient. Their fall scores entered into the EHR. We know the safe bed configuration. Physical therapy comes in to administer therapy. And when they leave, they forget to raise two of the siderails. Immediately, an alert is sent to our virtual nurse simultaneously sent to the floor nurse, the virtual nurse can enter the room, monitor the patient while the unit care team member comes in to put that bed in the safe bed configuration. Same patient, when they were admitted, the virtual nurse is doing the emitting, again, taking the workload off the floor nurse. And the virtual nurse reminds the patient, if you need to use the restroom, please let me know, and we will have a care team member come and help you. Patient takes the nap, they wake up, they forget the instructions, which they often do and go to get out of the bed. The bed alarm goes off, alert is sent to the virtual nurse simultaneously, sent to the right care team member, virtual nurse comes in the room, tells the patient please stay in bed, a care team member is on their way to support you to the restroom. When that patient is being discharged, their adult children cannot make it to hear the discharge instructions. So through our virtual nursing platform, we bring in the adult children, they see their parent and they hear the instructions. Let's move into the OR, where throughput and efficiency is so incredibly important. A patient is wheeled in on a Stryker prime stretcher. Our care.ai sensor recognizes the patient is in, sends a message to the surgeon on one of our communication end points, letting them know the patient is prepped and ready for surgery. As that same surgeon closes the case, a message is sent to the PACU, post-anesthesia care unit, letting them know the patient will arrive in the PACU in 10 minutes. I could go on and on with the workflows, you get the point. Those are a few of 100 workflows that this portfolio enables. So we want to talk about how our hospitals view the smart hospital category. And it's really made up of three platforms: The EHR and the revenue cycle management platforms have been used for many, many years. The new part of the platform is the command center, and it's all of the solutions I just spoke about in the previous slide. And there's something really important. These platforms must be complementary to one another, which means our platform needs to provide open architecture, which it does. Again, our hospitals are at the very early stages of their smart hospital journey. So right now, they're starting in the MedSurg and ICU typically with the virtual nursing platform, but they're thinking about how this scales and grows across every service line across the continuum of care and they understand they need a handful of strategic partners to go on this journey with them. And we believe Stryker is uniquely positioned to be that strategic partner. All of the devices, the capital equipment, the software you see on this slide plays a big role in a SmartHospital platform. Starting at the bottom, with our connected solutions across the continuum of care, the middle layer is our software layer. That's our processing layer. That's where the alerts, the data, the insight are delivered, the software processes it and then it gets it to the correct Stryker communication endpoint at the top. Our hospitals understand that they've got to remove technical debt in single point solutions. So they must have a strategic partner that they can scale and grow with. They must think about this, their journey, enterprise-wide. Every unit can't have a different platform. That will just create additional confusion and inefficient workflows. They understand they need a core vendor strategy. And now we're going to play another clip from Dr. Patel when he talks about partnership with Stryker.

The labor shortages we face moving forward, are going to require that the environment be as seamless as possible.

So can you talk to us about current decisions and priorities that you and your team are making to further your journey in the SmartHospital space?

So one of the things that we started with Stryker was really investing heavily in virtual nursing, but really truly virtual care. We started with the platforms, and it has been a huge success. Our institution has seen the benefit from patient satisfaction, nursing satisfaction go through the roof. But more importantly, it's given our bedside nurse is a sense of confidence that there's a safety net under them. We have our virtual nurse being able to check on things that oftentimes go by the wayside because the frontline nurses are so busy running from room to room, and that's elevated the level of care. And the process whereby the entire care team can leverage the virtual nurse and the bedside nurse optimally. Our staff have taken the platform and then develop workflows that we wouldn't have even thought about to improve care for the patient. So now not only do we have nurses supporting nurses, we have pharmacists talking directly to the patient to educate them on their meds. We had the access center talking directly to the family via the platform to coordinate discharge appointment and take the nurse out of the middle, playing concierge. And that allows a greater concept of all the team members interacting more directly with the patient instead of having a bottleneck through an individual who's already overwhelmed with their frontline responsibilities.

Tell me how you see Stryker playing a part in that?

As we went into the care.ai platform for virtual care, I've got to know the Stryker ethos and the company as a whole. And wow, you're in everything, all across the medical landscape, you've carried that ethos forward of being health care delivery first. I think that's important. And that makes us excited to partner because when we say this is important, it's not looked upon as, oh, that's just a clinician talking. You understand that a clinician saying something may have some work. And so I'm looking forward to Stryker beginning to create horizontal connectedness through your organization and create a relationship with our medical center in a way that we optimize each aspect of patient care delivery and wherever Stryker fits in, it makes sense, and it's not just a one-off.

How do you see Stryker as being uniquely positioned when it comes to the smart hospital category?

Well, I think Stryker obviously because of the depth of the products that you're already providing to major hospitals and I think the transition that you're trying to make to understand that now you're actually selling solutions. And that's a huge difference. Solutions imply that you're actually solving a problem and leaning into that with the concept of information flowing in and out of devices and interacting and/or adapting that to me is where we need to go. But also, it was important to make sure that aspects of that platform intersected with our electronic health record. And eventually, as we move forward, I wanted to interact with our physiologic monitoring system because even though that may be three different vendors occupy in that space, what the clinician needs is the information aggregated in a way that makes sense independent of the vendor, all of those working in a way that helps move information and enable the workflow of every user that interacts with it. That can be the patient, that can be the patient's family. It can also be your environmental care provider who has to know what is the just in time to get in there and clean the room so that we can get the next procedure started. All aspects of those things working seamlessly and choreographed in a way that is elegant is what our purpose is.

Dr. Patel, thank you so much for spending some time with us and sharing your insights and feedback.

Well, thank you for having me. I look forward to continuing this conversation as we try to do good things.

At Stryker, we put our customers at the center of all we do. And our customers want and desire to put the patients at the center of everything they do. And our SmartHospital platform enables human-centered care. We are inspired to go on this journey with our customers, and we are confident in our ability to continue to gain share in this fast-growing category. So with that, it is my privilege to introduce our Chief Financial Officer, Preston Wells.

Thank you, Jess. So now the time you guys have all been waiting for, but we have a few things to talk about before then. Listen, I would like to extend my warm welcome to everybody that's here in person and those that are attending virtually. It's my honor to be back with you this time as CFO. And a couple of years ago, if we think about where we were talking about, Glenn was on stage, and he was reiterating all of our discussions around our ability to go and drive M&A, to delivering on the top line growth that's above our markets. And they also talked about a pretty wide margin expansion during that time frame as well. And ultimately, all of that culminating into double-digit EPS growth. And I think if you listen to some of the presentations that you heard today, I think we not only have shown the ability that we are well positioned then to go do it, but also well positioned to continue that as we go forward. And so I think with that, we'd like to think about our financial strategy on how we support the overall enterprise strategy. And the good news is that with our strategy and the goals that we've set for ourselves, we remain pretty agile. And our ability to meet the needs of both the customers and the needs of our business to drive the results and the expectations that they have. So maybe quickly just to go back to those commitments that we had previously. And you can see on the slide here, in 2023, we committed to growing at the high end of med tech, which, as Kevin demonstrated and showed before, that was a expected to be a couple of hundred basis points above our competitors, and we've shown that we are actually able to exceed that. We look at some of the other areas around our margin expansion. I think when that number of 200 basis points of improvement over 2 years got shown, there was a lot of lapse. I see some lapse right now, remembering about that. But that was a big number for us. And I'm happy to say, if you look at 2024, and if you look at what we're expecting in 2025, we are well positioned to deliver that. And that comes from a lot of the information that you heard earlier of what Viju was talking about in our supply chain. And I think with Debra and what we've talked about in some of these other areas, there's more to unlock in this space. Our adjusted EPS growth of double digits. You can see what we delivered in 2024 and with our latest guide are on pace to do that again despite some pretty big headwinds that we've had in 2025 around tariffs. And then, of course, with free cash flow, we still anticipate and we see here we're in the 70% to 80% range, and we've been able to deliver that in '24 and expect to also do that again in 2025. I think as you look at what we've done here and what we've laid out, I think it aligns with our mission and our values, we committed to these numbers, and we're doing what we said we were going to do. And that's something that you can expect from us is what we're up here talking about we say we're going to do, we're actually going to go out and achieve and deliver that. So maybe just diving a little bit deeper into some of the numbers, and Kevin talked about these at a higher level, but driving a little deeper. If you look at our organic sales growth, and you can really see what's happened over the last few years. So if we look at that 10-year horizon, 2016 to 2019, obviously beating our markets and growing at a fast rate. But then seeing that acceleration happen over the last 5 years, really by a lot of what was talked about today, a focus around acceleration through innovation, acceleration through getting into strategic acquisitions that are expanding the categories that we're playing in. And obviously, just lining up behind our differentiated model and those power brands that Dylan talked about. Those are extremely important parts of our offense that have allowed us to accelerate that growth that we've seen and obviously continuing to outpace the market by a pretty significant amount. I think for me, in particular, one of the things that I'm really pleased with is the middle column and looking at the expanded operating margin. As Kevin talked about before, that's not something that was in our DNA several years ago, but it's clearly something that's permeated now throughout the organization in a lot of what we do. And it goes beyond even what Viju was talking about in our manufacturing and supply chain areas, it's in all aspects of our business and that mindset of driving profitable growth is really, really important for everyone. And then if you look, that ultimately led to the far right where we've been able to really continue to exceed and grow our earnings power and really driving earnings through all these different elements of a faster-growing markets, increasing sales and organic sales growth, obviously driving better profitability and dropping that down through our earnings per share. And so it's really with all of this consistent approach and the consistent and sustainable performance that gives me in particular confidence as I think about what we're going to do into the future. And certainly, you heard from a lot of our presenters this afternoon talking about some of the different areas of what gets us excited as we think about the next few years. And so this trajectory of growth and performance, we definitely expect will continue into the future. But before I get to the page, you guys are all waiting on. I just want to talk a little bit more about our overall financial strategy. That's called the teaser. But again, as we've talked about earlier, we are certainly -- we're built for growth. And there's a few reasons when we think about how our financial strategy lines up behind that is why. We've talked about the capital allocation and our capital allocation is certainly skewed towards more M&A in finding those categories that are going to allow us to accelerate, as Andy talked about before. Just looking a little bit at what that M&A has done for us. In 2024, we had 7 deals, and those 7 deals are contributing about $300 million of sales for us in 2025. And of course, as Tim got up and talked about Inari, you can see the opportunity that gets. That acquisition has certainly allowed us to get into a very exciting double-digit growing category that we feel really, really good about where we're going to go into the future with that. And in addition, all of those power brands and all of that innovation doesn't happen that Dylan talked about and Kathy talked about without a really powerful R&D engine and that R&D engine, we continue to invest in as part of the overall allocation of where we're spending our money. And then if you look at unlocking that earnings potential, certainly, we've talked about that with Viju talking about our optimization on supply chain. I think another muscle that we're really starting to unlock is what Debra talked about as we look at digital and how can digital help really allow us to become more efficient and more productive in the work that we do and doing things better and smarter as we go forward. We highlighted a little bit earlier in Spence's section around customer solutions, and that organization really allowing us to show up as one Stryker and really focus on driving and earning price for the innovations and the products that we deliver as we go forward. And that muscle has been really important in delivering our earnings power as well. And so then lastly, we focus on cash flow. Obviously, cash flow is super important as we think about all the things that we want to try to do, all the things that we want to invest in. And that certainly has become another area of focus for us beyond just our earnings and our operating margin -- operating profits that we're driving, there's an intense focus on our working capital. Viju talked about it a little bit in terms of what we're doing around inventory. We're also looking at other areas of working capital and how do we get the most efficient elements out of those so that we can drive money back into the business in terms of reinvestment as we go forward. And so speaking of that cash, and we talked about the capital allocation, but we thought we'd like to just show it to you, and you can see here, certainly M&A is by far the #1 area of our focus in terms of what our capital allocation is, and we'll continue to do so. It is certainly something that is proven. It's something that we believe in and something that we know we'll be able to utilize as we drive growth as we go forward. When we think about our capital allocation in total, it really is around two different elements. Number one, it's about fueling growth. And number two, it's about driving value. And so we'll continue to follow the same model, like I said before, to do that. You can see the M&A spend over the last 5 years -- or last 9 years has been about 69% of that skewed towards M&A. That doesn't even include the right -- the Inari acquisition. If we add that in, that obviously is going to continue to skew plus 70%. In terms of the dividend, the dividend growth has maintained a pretty steady cadence over that same time frame. As we think about going forward, though, we expect that dividend growth to moderate a bit as we look at our overall capital allocation with really a focus again back to that M&A and driving growth through M&A and obviously, value through M&A. And then the last thing I would just mention here is around share buybacks. It shows up as 3%, but the reality is we have not done share buybacks since 2019. And at this point in time, we do not have plans to do any additional share buybacks into the future. Overall, we're really, really pleased with our balance sheet. We're really pleased with our credit rating. It allows us the opportunity to execute on strategic acquisitions and strategic deals when the timing is right. It's one of the things that gives us a lot of confidence in those teams that we talked about being located at all of our different businesses, and it gives us the opportunity to allow them all to go out and find opportunities and then execute on those opportunities when the timing makes sense. And so it's with that capital allocation strategy with the overall financial priorities, why we're really confident in our ability to continue to progress forward with the goals that we've set for ourselves. So as we think about going forward and looking at '26 through '28, these are the commitments that we're making to you. They're not too differentiated from what we said before in terms of what the areas of focus are. We believe those are the right areas of focus, and the ones that will continue to drive value as we go forward. Number one, we are going to maintain that high end of med tech growth, really fueled by our differentiated models, fueled by moving into higher-growth areas as we go forward and really just outpacing the end markets. From an operating margin standpoint, this is probably the one that has the biggest differentiation from 2023. We're expecting to grow 150 basis points over the next 3 years. And that different a little bit from what we said before. If you look back to 2023, after the 200 basis points, the expectation was that we were going to grow 30 basis points annually. So the $150 million is accelerating that, and it's certainly accelerating a lot of that based on what you've heard today. Ultimately, that will lead to double-digit EPS growth. And then we believe that 70% to 80% of a conversion rate is right for us because we will continue to invest in our business because after all, we are a growth company, and that's our expectation as we go forward. So how are we going to do this? Certainly, what you heard earlier today should give you some degree of confidence. And in fact should give you a lot of confidence in our ability to go out and execute. The track record of success certainly around our growth speaks for itself. You heard about how we do that with our differentiated model. You certainly heard how we're going to continue to expand how we think about M&A and not only supporting our core businesses, but getting into adjacent spaces that are going to increase our WAMGR and allow us to grow faster and really just continue to unlock future growth as we go forward. And when you look at our operating margin, and so that operating margin expansion of 150 basis points, there's obviously going to be some headwinds from tariffs in '26, but certainly, with the inherent nature of how we've built that mindset into the organization around operating margin improvement with a lean focus in our supply chain, focused on optimization, the digital solutions that we're going to be bringing to the organization to help unlock additional efficiencies, obviously, the pricing muscle that we've built and just delivering on the overall growth and scale of our organization gives us a lot of confidence in that number and being able to continue to deliver profitability as we go forward. If you think about that high level of growth, the profitability expansion and all of that we expect to drop down to double-digit EPS growth and then ultimately continuing to focus on efficient working capital management as well as just delivery of those bigger, larger numbers gives us confidence in the 70% to 80% free cash flow conversion as we go forward. So ultimately, we feel extremely confident in what we're delivering as an organization. You certainly see what we've done in the past that should give you a lot of comfort that we're going to be able to drive forward into the future. We have innovative products and solutions that are built around a really excellent operating model that is differentiated from our competition so that we will ultimately remain committed to driving organic sales at the high end of med tech, the continued focus on our operating margins will allow us to continue to drive profitability as we go forward and ultimately leading to larger shareholder value. And then our capital allocation model will continue to strategically prioritize acquisitions and drive growth and expand our markets that we're in as we go forward. And so clearly, you can see by all you've heard here today that we are truly built for growth. And so with that, I'd like to bring up Kevin, Spence, Viju, Debra and Andy, to join me on stage. We will have about a 30-minute Q&A. We'll allow you guys to ask us some questions. My only ask is that if you have a question, raise your hand, when you're called on, please wait for a microphone so that those folks that are on the phone or with us virtually can hear the question that you have, and we will get started here in just a second.

So maybe we'll start with Robbie. Yes, they're coming to you right now. Dan, in the front.

Robbie Marcus, JPMorgan. Thanks a lot for putting this on. Really helpful. Maybe we could start with the financial slide, and top end of med tech is a little bit vague because there are some really fast-growing companies right now. Maybe I'll ask it this way. Kevin, you've put up 10% organic sales growth for 4 years in a row now, assuming your guidance for this year. Is that an unreasonable level to assume that strike going to grow at over the long run, high single digits, it's double digits out of range, now that the company is larger?

Yes. The way I'd like to think about it is we're going to consistently outperform our markets. And if the market growth -- if procedures stay kind of where they are, if the market conditions stay kind of where they are, that's a reasonable expectation. The reason we don't like to give a number is we don't know what the procedure growth is going to be over the next 3 years. The capital environment. I mean everything is very healthy right now, everything is very positive right now. It's been that way for quite some time. And you've seen we've actually accelerated our separation from our competition to move into that double-digit growth range. But there's no reason why we shouldn't be able to continue that, assuming these conditions stay similar. If the market conditions change, we're not going to defy gravity. This is why we don't like to give a binary number. But I think that's a totally realistic assumption, Robbie.

Maybe just one quick follow-up. Stryker is very acquisitive. You go in, you get bigger, you try and do the best in the categories you're in. It's pretty notable that you're moving into cardiology through the Inari deal. How should we think about where you see yourself in 3 to 5 years in cardiology. Can we think of you as a major competitor, cardiology in the not-too-distant future?

Robbie, I'd like you to think about that the same way you think about all of our businesses. We're never a one-and-done kind of company, right? When we did the target acquisition for Neurovascular, we followed on with Surpass and Concentric to build out a full portfolio. This is our first toe in the water in the cardiovascular space. It's a great space. It's an exciting space. We're not going to be done just with Inari. We're going to continue to build upon that. But M&A is unpredictable inherently, right? I talked about peripheral vascular for a while before we pull the trigger on Inari. I can't predict exactly when these deals will happen. But safe to say that's now -- that's a killing field we're going to be wanting to play in and look to build upon the Inari foothold with additional technologies just as we are in the area of health care IT. That SmartHospital platform will require additional acquisitions as well. But yes, the cardiovascular world is now a world that we're going to be looking at much more intently.

Go, Matt.

Matt Miksic, Barclays and echo my thanks for a really great program. There's a lot of really exciting things to talk about in the next 12 months. I'm sure we get a bunch of questions on margins and growth. But I had one on sort of some of the organizational changes you laid out in terms of customer solutions, adding that across pricing, contracting, those kinds of things. And wanted to get your sense of how much -- maybe give us some perspective on how much the field organizations, regional area managers are price and portfolio kind of management from a pricing perspective is now part of their workflow. And I had just one quick follow-up.

Yes. Maybe I'll take that one. First of all, it's a partnership between our businesses and customer solutions. So they work together on pricing, including our field representatives for customer solutions, working closely with our sales professionals on the street to negotiate price. So it is a partnership. I think importantly, and we may have mentioned this before, the businesses today, our commission rates are set based on pricing or discount level. So our sales professionals are inspired based on their commission rate to be part of the solution and driving better pricing. So that's been part of our journey. That's why you've seen us improve pricing over time. It will continue to be that way. And maybe just the last thing I'll add is the muscle that we're building from a contracting and price negotiation perspective over just a few years in Customer Solutions is just doing that building. Over time, that will continue to get stronger. Our customers are tough to negotiate with, as you might imagine, but we're also getting tougher and tougher to negotiate with as well.

The only thing I'd add, once upon a time, maybe 5 years ago plus, we might show up at a customer talking implants on Tuesday and capital on Wednesday and not share stories, now we show unified every single time. And we talk about the entire portfolio, the Stryker book of business and really understand their needs and what's best for our organization. We work through that a collaborative sort of partnership way with the customer. That's made us obviously, a lot better to work with, and we have much higher success when we think about our contracting and pricing from that stent as well.

Great. And then just one follow-up for Debra, if I could. On -- you mentioned, I think, in the discussion of some of the AI-driven or Smart Care systems that are going to hospitals that one of the outcomes was more pull-through of capital sales and sort of like more engagement, I guess, with that account. If you could talk a little bit about how much do you see that, or when do you see that evolving to be kind of a real profit center and business model on its own, or how much of it is a kind of an attachment for other parts of the Stryker portfolio?

I think it was for you, but I'll take it if that's okay.

Yes, because I think it was about the SmartCare platform.

Right. So as you saw with Jessica's presentation, we have those capabilities today in our Medical division in the portfolios of care.ai and Vocera. Those are strong, generating -- revenue-generating businesses for us today. You also saw in Jessica's 2026 column on her slide, where she was talking about the progression that in 2026, we'll be doing substantial work to tie in the additional products. She mentioned 85. Of course, we won't get all 85 connected in 1 year. But our power brands or power brands like Mako, which we talked about, they will be connected starting next year. Will that revenue pull through in 1 year, 2 years' time, not exactly sure about that, but the reality is that connectivity will drive greater value for our customers, which will make our portfolio stickier and more attractive.

You might imagine too, the process commercially, you'll have the CIO of the hospital pushing the system down, and we come up through the clinical environment with something like Mako as this great differentiator. As those come together, it's a really powerful approach for the hospital market.

And I'd just add one last thing is so Debra is going to build the backbone infrastructure and the cloud infrastructure, but then all the programming and the connecting of devices and everything is going to be led by Jessica's team. So even the communications business, that's part of endoscopy with the booms and the lights and they're going to be connecting into Jessica's Smart Care platform, which is backed by Debra's infrastructure. So it's a team sport, what we're doing. But the lines -- we've drawn the lines very clear who's accountable for what and how are you going to get this work done. And the more this is connected, the more sticky it is with our customers and looking at just at Vocera. So we already sell Vocera today. We sell Care.ai today. The stickiness rate on Vocera is like 98%. So once you get it in, and they start using those badges and their life is made more simple. They ain't coming out. And so we just need to continue to have more and more technologies connected to the SmartHospital platform. It becomes an annuity over time. And it just makes that other capital even more attractive if it can be then fed into the same ecosystem.

And Larry.

Larry Biegelsen, Wells Fargo. A quick one for Preston. The 150 bps, it implies about 50 basis points per year on the margin. Can you do that in 2026 with the tariffs. And I'll just ask my second question. I think it's for Spencer, but maybe Kevin, on Mako RPS, very exciting. How are you going to position it versus the current Mako? How is it differentiated from other handhelds devices on the market. And any financials like ASP or ramp that you could share? It is a financial...

[indiscernible] you all my answers to that, but we'll let Preston got out margin first, and then I'll just jump in.

So just clear. So it's 150 basis points minimum over the next 3 years. And obviously, as we think about '26, we do have the headwind of tariffs that we have to overcome. So we are going to be focused on all the things that Viju talked about. We're certainly going to be continued focus on how do we leverage scale from the organization through digital and other elements. And so we'll give you full guidance in January, but certainly think about it as it's a full ramp of a minimum of 150 basis points, but we do have the annualization of tariffs that we're going to have to deal with as well in '26, but ultimately, our goal is to try to drive and deliver that operating margin over that time period.

The only thing I'd add, Larry, is we are committing to double-digit EPS annually. So in your model, you can crunch the numbers. And it's not going to be a lousy year of operating margin expansion even with tariffs, we're going to be offsetting a lot of that to be able to get to double-digit growth in 2026. But obviously, once tariffs are -- that extra level of tariffs that come next year on top of this year's level of tariffs will then level out and that will be obviously a lot easier than the 2 years after that.

And I'll jump in on Mako RPS, and this is likely the only thing I'll say about it here in this forum, and I really ask you to refrain from additional questions, but we are really excited to share more as we turn the corner to '26 and likely at Academy. We really show that as a sneak peak because we do have the 510(k) on that product now. And I'll first remind us that our premium products, Mako and the continued record-breaking success we have quarter after quarter has not slowed down. And with the introduction of Mako 4, it's really been fulfilling to see the impact it's having in care and in the environment. Really, I'd like to talk about it moving to standard of care. I mean, this is a discussion that's happening in all the teaching institutions, how do I get my hands out of Mako. With that being said, we still think there's a segment of the market that might have different needs. And you might imagine the amazing know-how we have in hard tissue robotics out of Mako and the amazing know-how we have in power tools in bringing those technologies together and leveraging that capability, the mindset, and you can imagine some of the technology platforms behind it allow us to position a product that can meet a need of the market that's different than Mako today. And so we'll talk more about that commercialization strategy and the segmentation and how we've positioned that. But I'll leave you with -- you might imagine, we wouldn't have called a Mako RPS unless we had absolute confidence in the capability clinically of that technology and the impact it's going to have in arthroplasty in the applications over time. So no additional comments will be made on it. We really struggled if we're going to show anything. Kevin said we had to. I want to blur it out like the one slide that Tim showed, but I think appropriate to share, and we'll obviously share a lot more.

Yes. We have been showing surgeons. So surgeons have been seeing it. The feedback is tremendous from the surgeons. It just fits a middle ground between Mako, which is -- requires a lot of change management but also comes with loads of applications and a standard power tool to be able to do your procedure. And you saw -- you did see a saw blade in that picture, right? So there is a sawblade attached to this which differentiates it already from other handhelds. And believe me, it works very well.

Travis.

Travis Steed, Bank of America. I'll ask both of mine upfront as well. One, on margins. Is there -- with acquisitions and M&A if you do a bigger deal, is there like a minimum level of commitment you would do in a year, or is it just better to think about it as double-digit EPS growth even with acquisitions?

I think the way to think about it is if we do the tuck-in type deals, those -- that dilution from tuck-ins will certainly be included in that double digit. If we were going to go do a big Inari-type deal that obviously has a bit of an impact on what that double digit could look like. But again, it's really going to depend on what that deal profile looks like over time as we go.

Okay. And then a couple of your competitors have talked about softness in the revision market. And you guys are talking about taking share with Mako revisions. And so just wanted to see what you're seeing in revisions.

Yes, we've been really fortunate. We launched Triathlon Hinge, which is a revision technology for knee arthroplasty and builds on the Triathlon family of products and have seen really strong success with it. And I guess timing is great with the entry of our hip platform on Mako for revisions. We have people say, this is a game changer for the ability to think about and preplan that revision case and then actually do it robotically I think it's going to be a step change in our ability to provide care revisions. So we haven't seen a shift in the market at all, and we continue to see strong demand for our technology in this space.

Ryan Zimmerman, BTIG. A couple of questions for me. So first, I don't know if it's for Andy or for Tim, on Inari. It grew high single digits, I would say, in the last quarter. Your closest competitor, not [indiscernible], but your closest competitor in mechanical thrombectomy grew 30-plus percent last 3 quarters, 40-plus percent. Markets by your own admission are growing double digits. So talk to us about what gets you back to market growth and then what gets you above market growth in the years to come.

Sure. Yes. So actually, last quarter, we grew double digits and as you know, we talked about some destocking that's happening with our customers. And if you take out that destocking, I think Kevin may have mentioned this, we were in the mid-teens growth for Inari. So we feel great about where we are. We feel really good about this quarter as well and where we're going. We'll get the destocking out of our way after Q1 of next year, and we'll be on our way to -- certainly, we expect above-market growth over time.

And then the follow-up for Viju. You've spoken at the Analyst Day through the years about operational improvements you've done to the organization. You've done a strong job moving margins higher thus far. I guess if you could just talk about kind of the ability to execute and improve margins ahead, it almost feels as if some of the low-hanging fruit, the sprint back to 200 basis points that was maybe the easier initiatives. And so can -- is it harder now to get that 150 basis points over 2028 and maybe specify specifically some of the things or quantify, if you will, what you're going to be doing there?

Finally, the ops guy gets a question. Thank you. Thanks, Ryan. Love it. The 200 basis points is perhaps super hard to get. On one hand, you might think about that as a low-hanging fruit. But we had to tilt the momentum, really pivot from playing defense to the pandemic, the supply chain crisis and the high inflationary period, pivot to playing offense, right? And that takes a lot of effort. So I would say the best days are ahead for us because the last couple of years with a lot of that went into that mindset and culture shift. So if you think about the setup time and the run time, the difficult time is that set up change, if you will, to a very different mindset. And now if you look at perhaps a leading indicator of the results is the quality of the Kaizen events that are happening. And these Kaizen events are problem-solving opportunities that -- it's not just manufacturing or operations. We have commercial R&D engineers along with our advanced operations teams or sourcing people together, unlocking value, and that's the best way to do it, right? So that momentum is just picking up. And so the best days are ahead. I'm super confident we can meet the objectives question laid out.

Yes, Ryan, if I can just build on that. I mean, so obviously, you have the supply chain component that's a big piece. And that's a piece that as we get that moving on a more consistent basis as Viju's team has done, it just creates an incredible glide path from a leverage standpoint. In addition to that, we also have a lot of focus that's going on in that what I'll call the G&A areas that are supporting the sales organization as well. And so that differentiated model with all those different folks that are focused on the customer, we're focused in the G&A spaces with Debra's help through enablement of those digital tools that you talked about as well as shared services and some of those other elements around going out and trying to drive scale and leverage across the portfolio and the business that way. And then the last element I would just lay out for you again is this pricing component Spencer talked about the customer solutions team, and how we've been able to really go out and build that muscle and drive that muscle. So all three of those areas continue to be really big opportunities for us as we think about the future, developed really over the last few years and now really in execution over the next few.

Peter Chickering, Deutsche Bank. I guess, actually, the first one is actually on international. So in 2023, there's a lot of talk about international expansion, growth opportunities there. There's less focus on it sort of in this Analyst Day. Just sort of curious how you guys see the international opportunity? And are you guys as excited about it as you were 2 years ago?

Maybe I'll chime in here. I don't think it's a defocus at all, just the opposite, where we remain really excited about the growth potential internationally. A couple of products I'll share in particular, Mako. We're in the early journeys internationally compared to some of the establishment we have in the U.S. and that standard of care mindset. There are a lot of countries that appreciate amazing technology and the clinical impact it can have that are just growing today and building. And so I think the opportunity for continued growth in Mako is a significant internationally. Another one is Pangea. So just a world-class power brand in the making here in the U.S. in just early days internationally. Maybe there's one market or set of countries in the EU due to some regulation. It's not that we're not fully supportive and growing there, but the innovation is a little harder to get cleared right now. But generally speaking, we remain very confident in our international strategies and the growth opportunities there.

Sure. Maybe one add that I'll have here in addition to Spence from a product perspective or a portfolio perspective. And if you think about Inari, when we acquired Inari, Inari's revenue was roughly 7% -- total revenue outside the U.S. So you can imagine, yes, Tim and his team have been very focused on the U.S. and the results are following, but they have also been very focused on how we expand, leverage that global commercial strength that we have at Stryker to drive accelerated growth in Inari. So yes, we are, like Spencer said, very excited about our international opportunities.

Yes, I think just to wrap it up, Spencer alluded to the Europe problems. This [ UMDR ] has been a real challenge. And Europe's growth, which was high single low double digit for many years has slipped into kind of the 6%-ish percent range because insignia, which is an amazing hip stem, it's not on the market yet. Pangea is not on the market yet. You've got LIFEPAK 35 just got approved, so we really haven't sold anything yet. And I can go down the list of all these amazing innovations that are driving outsized growth in the U.S. haven't yet arrived in Europe because, of course, a giant region internationally, in fact, we're launching products in Japan prior to Europe, which was unimaginable 5 years ago, that's currently happening. So there is a delayed reaction for Europe. But believe me, we have the commercial offense in place, and we had that high growth that once those products arrive on their stores, that's going to pick up pretty significantly.

Chris.

Chris Pasquale, Nephron. A couple of questions for Andy on Inari. So our checks indicate that what Inari used to call emerging therapies has actually done really well this year, better than the Street was thinking prior to you acquiring the company, powered by things like LimFlow. You talk about what you're seeing there versus the core ClotTriever and FlowTriever business? And then Tim highlighted PEERLESS II very exciting trial. We did just get some data from a competitor, a much smaller study, but looking at a similar randomized set up. Can you talk about how you think the pulmonary embolism market develops? And when can we see your data? Is that something we get next fall?

Timing for PEERLESS II data, okay. That was the last part of your question. So the first part on Tim highlighted Artix and LimFlow specifically, those are like -- they're called emerging therapies. They're also emerging in terms of scale and growth for us. Growth is strong. They are smaller businesses, but growing fast. And we would -- yes, they are, of course, accretive to our overall growth, but we would expect that, that will have an ever larger impact as we move forward. Very exciting spaces, and I'm glad that your checks are reflecting that as well. On PEERLESS II and our competitors' recent release of their RCT, we look at anything that has a benefit or a tailwind to mechanical thrombectomy as good. So we're excited about that data. We're very excited about what PEERLESS II will do for us. And we expect that, hopefully, in the next 18 to 24 months that we'll see the data from that study.

Yes, the pulmonologists need large-scale data. So while that study was a good study, it was not nearly powered to the same degree that PEERLESS II is powered. They're just -- they're a skeptical group of clinicians, so while the first study helps, PEERLESS II will really take it over the line.

Joanne.

Joanne Wuensch from Citibank. I have a question about the hospital care business. And essentially, I appreciate that everybody -- not everybody, but it feels like everybody is going to have a product in that circle of life. But I'm curious how you monetize it outside of selling more of x products. Is there an SAS component? Is there a high-tech piece to it. And if the answer to that is yes, where will I see it in your revenue components?

Joanne, you'll see all of the revenue as we move forward on a SmartHospital platform show up in medical. That's where we'll see it. And today, we have a substantial amount of revenue, that is recurring revenue, Jessica mentioned that. In a SaaS-like business or you could imagine in the future, everything as a service type business that will show up in medical. And of course, the more we're connected across the company and the more value we can drive, the more attractive we are to customers. But look for that, you can look for now and look for that in the future in our Medical division.

It maybe in an SEC document somewhere that I'm not aware of, but is -- can you share what that SAS revenue is today? And is there a goal of what that might grow to?

Yes. We don't share today beyond that segment of medical what's in that number.

Shagun Singh from RBC. Really excited to hear all the focus on operational excellence. Can you maybe talk about how we should think about peak margins for Stryker? Can you get to 30%. And then just on M&A. Maybe can you specifically talk to us about the adjacencies. I think previously, you had mentioned 5 specific areas. I think today, I'm hearing you talk a whole lot about HCIT and vascular. And there is a big focus on SmartHospital. So how does that factor into your previous focus on surgical robotics.

Yes. So I'll start with the margin question. So certainly, we haven't talked about where we could ultimately get to. I mean our focus certainly over the next 3 years is just continued expansion around those areas that we talked about with a minimum of 150 basis points. And so that's really going to be our focus. We're always going to balance where our margin is with the necessary reinvestment back into the business in terms of driving growth. So it's going to constantly be that value. We believe right now that, that 150 is a good target for us. It allows us to do both of those things. So maybe I'll ask Kevin to answer your other question.

Yes, sure. So as it relates to M&A, I did speak about HIT and cardiovascular because those are businesses we've already put our foot in the water. That doesn't mean we're not going to stop looking at new spaces as well. So the other adjacencies we've talked about before, urology, is a really exciting adjacency that we still are actively looking at neuromodulation. And I don't just mean spinal cord stim, I'm talking deep brain stimulation, hyperbola stim, peripheral nerve stim, still an area that we like. We haven't yet found the right company. We've looked at many, just haven't sort of found the one that we think will be a terrific addition to our portfolio, but that's an area. And then soft-tissue robotics is still an area. I'm not so sure we're going to get in or when we're going to get in, but we like that space, and we believe that there is room for another company, probably with a different kind of form factor. There's -- I don't know how many start-ups, Andy? 50, 60 startups. And this is in Andy's world and his team is scouring the market and evaluating all of those. And if we find one that we think will be really exciting value creating and complementary to our Endoscopy division, then we'll pull the trigger. So those -- nothing's changed. Those are still areas that we continue to look at. I just mentioned the other two because we're already in them. And once you're in something you're definitely going to be continuing. When you -- the first step in is less certain. I just don't know. I'm not sure when valuations. There's lots of other considerations to put your first foot in.

Matt O'Brien, Piper Sandler. A question for Spencer. And then I do have a follow-up for Kevin. But 17% of your organic growth in '24 came from your Trauma and Extremities business, and it's a big business now, and about 20% this year is going to come from there. So as we start to lap Pangea's impact here, can you still generate that kind of growth out of the T&E business for '26, '27?

We won't give specifics for T&E. We remain confident in the orthopedics outlook. Strong demand from a patient standpoint, coupled with the innovations that we have on the horizon in our, what we call, our core trauma, so the trauma business -- but if you look at all those different businesses, lots of new product introductions across the UE that I mentioned, you can see behind you, the Incompass Total Ankle systems recently launched and the software system that powers that will come out called Prophecy here in Q1. So there's a variety of new innovations, let alone the strong progress we've seen in hips and knees and the continued pathway there. We remain confident in our Orthopedics segment.

Okay. Fair enough. And then, Kevin?

I was just going to add to what Spencer said is. So Yes, we're going to lap Pangea in the United States. Pangea still isn't launched in many other international markets. Mako shoulder has really contributed virtually nothing to our fantastic shoulder growth. We've just been in a few test pilot sites. That's going to have much more of an impact in the -- starting in the second half of next year and into '27, you'll see the Mako shoulder have a tremendous impact. And then in addition to having the newest best-in-class total ankle system, there's extra reimbursement in the United States, significant more than 50% reimbursement starting Jan 1, both in the ASC as well as in the hospital. So yes, there's going to be a lapping effect, but you have these other three forces that are going to be pushing in the other direction. So it will stay high growth. Again, we won't be specific on the number, but it's going to continue to be a high-growth business for us.

Okay. And then -- sorry, just as a follow-up, I think the takeaway or one of the takeaways today is really the M&A push that I think you're saying we're going to see for next year. First of all, is that fair? And then secondly, when I think back to '23, you mentioned, hey, after this elevator ride of some of these some small caps is over with, we're going to be ready to pounce when they come back in. I mean we're at 11-year lows on small cap valuations. Are you ready to pounce on some of these public companies because it shouldn't be as hard to go out and acquire those guys just given that there's a public market for...

Yes. We've done public deals. So we don't have any fear of doing any public transaction. And we now have a balance sheet that's very healthy. Wright Medical and Vocera and Inari sort of increased our leverage. Our leverage is coming down to a level that frankly, I don't enjoy. Even Preston doesn't fully enjoy it. So we want to put our money to work, but -- it takes two to tango, you have to find the right deal at the right price. We are absolutely ready to pull the trigger financially. It's just making sure we have deals that are value creating. And that was a great deal we looked at in the digital world, but the valuation expectation was just beyond what we felt was responsible financially. And as we've seen with some of our competitors in the marketplace. When you weigh overpay for a deal, you pay the price for years. And so we're going to be very thoughtful about that. But small deals we like, tuck-ins we like, whether they're public or private, is irrelevant to me. So yes, we are ready, but we have to find the right assets that we feel we can really enhance our growth profile fit with our existing strengths. There's a lot of damaged assets, very cheap. They're damaged for a reason. And just because something is cheap doesn't mean we're going to buy it. We're not the kind of company that does fixer-uppers, yet, right? But building that operational excellence, maybe one day, we'll be a company that buys a fixer-upper because we know we can do it. Today, we're all about buying really good technologies that we can scale and grow. We are scalers using our great commercial offense. That is kind of a lens that we really focus on at this time versus buying damaged assets just because they're cheap.

Josh Jennings from TD Cowen. Two questions for the total joint business -- on the total joint business. First, we have been trying to track just ASC penetration for knees and hips. And maybe you could help us just think about assumptions for ASC penetration of '28, and if that pace is faster. Is that a bigger tailwind for Stryker? I mean basically, is Stryker gaining disproportionate share in ASC versus the hospital channel? Just one follow-up.

Did you give a year? Is that what you're asking...

Just this medium-range plan you guys have for 2028.

Yes, we won't share the specifics of what that outlook looks like. But we are in mid-teens right now of our joint business that goes through ASCs. We have continued to see that grow. Interestingly, there's a bit of capacity reality right now in total joints for space in the ASC. So we need additional builds to be taking place. We need that space to open so you can gain the more capacity out of the hospitals. We expect the trend to continue. This will be a trend that we'll build upon in the years to come. But I'd also not to think about it just as hips and knees. We'll continue to see more and more of our foot and ankle business. We talked about shoulders even accelerating more business in the outpatient surgery center. But this will continue to be an important part of the orthopedic story, and how we differentiate in the future and an important part of our business that we think will continue to have a strong position.

And the way to think about Stryker, we win disproportionately on new builds and big renovations, which is a sliver of the ASC...

The broader market.

Right? That's where our ASC offense is really singing. But if you have an existing ASC, let's say, with a competitive doctor, we can convert them, but it's -- that's like hand-to-hand warfare like it is in hospitals, right? If we don't -- we aren't able to use that breadth of portfolio leverage to the same degree. That's the sort of traditional battle. And frankly, if you think about something like Mako RPS, that's going to be another tool in the gun to be able to really sing in existing ASCs because it's obviously a lot easier of a transition than going to a full-scale Mako robot. So I think that will also help us in the ASCs. But the ASCs are going to -- there's no going back. The trend is absolutely going to continue. Hard to predict, honestly, how fast it's going to go to Spencer's point, it's this capacity issue that's the gating factor. But everybody other than the hospital loves it. The patient loves it, the surgeon loves it, the nurse loves it. And that's why hospitals are participating.

Hospitals love it.

They're participating because actually, you can do more procedures in a day. The EBITDA of these ASCs is 20% plus, and it's better than -- better margins than you see in a hospital. So there's no going back. It's just going to keep going, and we like them. It plays well to our strengths, and that's -- we can't really give you a specific because we just don't know how fast it's going to go.

Understood. And I just noticed Triathlon Gold is 3D printed. I think femoral component, it looks like I think that's the first 3D printed femoral component on Stryker's portfolio. But really just wanted to ask I mean with your 3D printing price or additive manufacturing prowess, is that more cost effective in terms of printing joint components today? And what does that say about the future of your joint portfolio? And then lastly, I mean, are personalized implants in the future for Stryker combining them with the Mako robot.

Sure. I'll comment on the 3D printing and Viju wants to add on, but it has been a great platform technology for us and one we're really proud of in the investment and thinking and the continued innovation. And so you might imagine, we're looking at all different implants across the implant portfolio and obviously, heavily in orthopedics. And can they be -- should they be -- one of the questions we're wrestling with is how do we do this at scale, too. Printer right now comes out with just a handful of the implants done, are there technologies that we can do this at scale? When that happens, it further drives down the cost. And we think there's some avenues and some innovation that viju has been helping look at and lead, and I think we've got some interesting things on the horizon there. So that's a big one. On the personal -- and Viju can comment, but on the personal to answer your question there, personalized implant, we do this now. We do this now with shoulder ID, and this is a patient-specific implant that we make. And we continue to look at this across our portfolio. We also do this in our craniomaxillofacial business for a customized personalized implant for the face as well. And so that remains a really interesting part of our portfolio and an area that we see a lot of growth. We just have to make sure we do it the right way. And probably a critical element is the logistics -- the time from when a scan has taken place to the manufacturing to ship it to get it cleared and then into the operating room, can it meet the needs of that patient or that surgeon's care pathway. And right now, that's one of the biggest challenges still that we're working to solve to accelerate. You might imagine someday if you can Amazon it, if you will, where you get the scan and 1.5 days later, it's there for surgery, that's really powerful. So those are the ambitions that are out in front of us and things we're working on today.

Spence, you really nailed it. Maybe a couple of ancillary points are -- one is on the scale platform, going from a couple of heads to other platforms that are much more throughput. So we're actively investigating that and the future looks pretty bright. We're also looking at converting more opportunities to convert more orthopedic implants to a 3D printing. So those are some of the things we have in the works, but the future is really bright.

Yes. Today, we only have one replacement product that's 3D printed, which is the Trident II acetabular cup. All the other 3D printed products so far have been innovations, just like you're seeing with the metal sensitive Triathlon Gold. It's an innovative new product. But Viju's team is -- does have active projects to work on these larger scale manufacturing. So we don't get a cost savings really much right now. But as we get these higher scale manufacturing of additive, which is in development right now. As that comes to the market, we'll look to replace more of the products. And one of the prime ones, which we'd love to replace would be Pangea. That would be awesome if we could 3D print that. We do not do that today, just the scale of that. And so we're actively working on it, and we hope to be able to share more. We have some development projects that it's still too early. So right now, there's not much of a margin pickup, but we're bringing a solution to the market. And nothing more frustrating than having a great surgeon that loves Triathlon switch their implant to somebody else's because it's a metal sensitivity. I mean that's -- I mean I could sell that tomorrow, right? You're already developed Triathlon. I'm going to give you now a Triathlon to your metal [indiscernible]. That's going to be the easiest sell that we've ever had in the implant world to at least to our Stryker loyal surgeons.

We're going to encourage them to go to surgeons that may not use Triathlon and hope that they quickly adopt as well.

Exactly. Put as a competitive selling to the test. David Roman from Goldman Sachs. Maybe you could talk a little bit more about Mako shoulder. I think you mentioned having a bigger impact in the second half of next year. Maybe just help us qualify where you rank kind of the sort of clinical need for shoulder robotics versus some of the other areas where you've seen adoption hips, knees, et cetera, and whether you see Mako shoulder not only helping drive conversion to robotics, but expand the overall market there?

It's still very early. We have the limited market release going on right now with Mako Shoulder. And you might imagine phenomenal success. The handful of facilities are utilizing this, we can't get it away from the surgeons right now. They want to do every case. And it goes back to the concept of the thinking process ahead in the plan and then building it into Mako and providing this outcome to the patient that they just -- it takes the burden out of that procedure. So as we turn it on next year to full launch, we do expect some pickup in our Mako units, and that will translate to some impact in volumes and implants as well. Our [ Upwork Series ] business is a unique one because we are a category leader in that space with a really strong share position that we expect to further expand. How quickly we do that, we have some expectations that we're not going to share in this type of audience, but we're very bullish about Mako shoulder. And again, this isn't a Stryker thing going, well, we want to add this application. This has been the clinicians asking us, can we please have that capability, the haptic cutting, the ability to prepare the glenoid and then put the implant in exactly as that cut sits face, we want that in our particular procedure. And so they've said, give it to us as quickly as you can. So that is building right now, and you'll see more of it out in the marketplace in '26.

David, I'd just like to give a little extra color. So today, the Mako shoulder -- it's on the Mako 3 robot. We have to then also make it compatible with Mako 4, which is now the new version of robots that are going out there. And that will happen towards the end of the first quarter. So that's why we're not sort of going full speed until we get that software compatible with Mako 4. And then we'll be able to go full speed on Mako shoulder. To your point about growing the market, I'm a big believer. Now I have no data, so this is anecdotal, but there are a lot of hip and knee surgeons that used to do shoulders and that are going to want to do shoulders again, just anecdotally. And they already know how to use Mako, they already know how to use the screens. It's a bur on the end of the robot just like they use for a partial knee -- when they do a partial knee. There -- it's going to be very seductive for those surgeons who want to -- instead of referring out their shoulder replacement to a shoulder specialist to start doing shoulders. And we're hearing that. And so I believe if that happens, that can actually grow the market because a lot of times they say, well, I go to shoulders. And they might prefer, they may not prefer. And there are a lot of people that are candidates for shoulder replacements that aren't getting them today. So I'm hopeful, we're not going to necessarily bank on it, but I'm hopeful that Mako can cause the market to go up because you're going to have hip and knee surgeons coming back to doing shoulders again, even sports med surgeons doing shoulder again because basically, this is like belts and suspenders. A very hard procedure is made much easier when you do Mako, which is what we saw with UNIS, which is what we're seeing with revision hip, even though it's in a limited launch. The surgeon I talked to at AAHKS said, this is a cheat code for revisions. And normally, I'm stressed out when I'm doing a revision, my stress is gone because Mako just takes away all of the stress. So let's see. It's going to take some time. These robotic things, as you've seen in the past, they take a little time and then they sort of really take off afterwards.

Kevin, maybe the one other comment to add, most of our sales interactions about Mako now, every administrator or buyer is talking about the multiple applications we offer. They want that flexibility. They want that capability. It's driving more conversations to Stryker and to Mako because we have the multiple applications to meet their needs over time. And that's been a really important part of our strategy.

Maybe just a quick follow-up. You talked a lot about performance culture earlier, which clearly Stryker has demonstrated consistently. As you kind of think forward here with this LRP, I think most of the companies probably measure on annual operating plans. You guys are measured on, obviously, lot of equity stake as part of LTI. So how do you keep the whole company motivated and accountable to hitting these targets versus the annual plan that a lot of them are measured on?

Well, the annual plan ties to these targets, right? So we've given you 3-year targets. The only way to get the 3-year targets is you have annual plans that connect to those 3-year targets. So look, this is a high ambition neighborhood. Our companies, when we give quotas out, let's just say nobody in the sales force thinks it's going to be easy, right? Every year, they get their number, they gas, then they get to work and they go achieve these high -- it starts with high ambitions. So we set high ambitions and we hire people that like high ambitions that aren't afraid of them and that get out there and go for it, and we provide the resources and support behind them. But this margin expansion, our division presidents, they didn't usually talk about that 7, 8 years ago. And that's partially because we didn't have the muscle and partially because that wasn't what was in their compensation plans. It's now in their compensation plans. So there isn't any disconnect here. So everything -- I mean, our division presidents are all here. You can talk to them when we walk across the street. None of this is shocking to them. None of this is surprising to them. They're bought in. We have a unified leadership team, and we have an annual global meeting that we bring all our leaders together, and we share the outlook that's multiyear, and they know the goalposts that are going to be needed to get there. So none of them are gasping when they see this. They know this is our reality. We like being winners. And the only way you stay winners is if you keep staying ahead and you keep your foot on the gas.

Just to build on that. So these plans, these LRPs are connected, as Kevin said. And I think they're also very well known. I mean it's something that we talk about not only in that meeting, but even in functional meetings, in all sorts of meetings throughout, we show how that connectivity of the operating plan back to the LRP and how it's driving the overall business. So I think it's something that we communicate regularly and everybody then is on board with how we're delivering both for the 1 year and then ultimately the 3 years as we go forward. Okay. I know not everybody got their question answered, but don't fret, we're all going to be walking across the street. We have an amazing product fair to demonstrate a lot of the different products that make up our incredible portfolio. You'll get a chance not only to interact with the leaders that are on stage, the leaders that are in the room, but there are members of our business that are across the street willing and ready to show you their products. So certainly a chance for you to interact with them as well. So with that, we thank you for coming to the prepared remarks and the Q&A section, and we'll see you across the street in 15 minutes.