Q: So those are the ones I’d point out too. But I – what I tell you is every business has launches planned and some of them, you accumulate a number of small launches and you end up driving pretty terrific growth. But I would say maybe we’re kind of midway through the large platforms. But I would tell you everyone’s reloading. So we launched 1788 and they’re reloading and already working on 1888.
M&A :
Jason Beach: Yes, Joanne, it’s Jason. Happy to follow-up after the call as well. But AAOS will be exciting. Some of the products that Kevin just referred to we will be demoing at AAOS starting with Blueprint, followed by Pangea, 1788 camera will also be demoed as well, so it’ll be action packed. So we’ll plan on seeing you out there.
Operator: Our next question will come from Vijay Kumar with Evercore ISI. Your line is now open. Please go ahead.
Vijay Kumar: Hey guys, congrats on a really strong print here. I had two questions, maybe first one on the guidance here. 7.5% to 9% for the fiscal 2024. What is being assumed for China VBP? Any backlog contribution? And I’m looking at Q1 that’s the toughest comp of the year. Should Q1 still be within that annual guidance range of 7.5% to 9%?
Kevin Lobo: Yes. Hi, Vijay. As we look at – I don’t want to guide quarterly, but I would tell you that the cadence of what we’re going to deliver from the mid-point will play out similar to 2023. But keep in mind, you got to back out one selling day in Q1 is what I would say and then on VBP, I’ll let Jason.
Jason Beach: Yes, Vijay. It’s Jason. On VBP, I think we don’t disclose in terms of the impact there. So we won’t. But in terms of a follow-up to your capital question, as we think about the capital environment, really the tone has not changed there. We feel really good. Orders are very healthy. I mentioned that we came into the year with an elevated level, so we feel good. And just as a reminder, right, if you think about our capital sales, so our smaller capital being, call it 15% of our sales needs to continue to be refreshed as you think about kind of the procedural volume and then large capital being 10% of our sales, again very healthy from both an order and backlog perspective. So we feel good about that in 2024.
Vijay Kumar: Understood. And Kevin, maybe one for you on that. I saw you mentioned direct-to-consumer campaign on MAKO is very successful. Could you just elaborate on that? And I’m curious, do you think, like, on the Spine side, we could perhaps see adoption rates similar to knee, where 50%, 60% of Spine procedures could be done in MAKO at some point in the future?
Kevin Lobo: Yes. Well, first, the direct-to-consumer has been terrific. I mean, obviously, we have such a lead in robotics as a surgery. We want to make sure that we’re differentiating our product among the rest of products and the searches and the impressions that we have exceeded our expectations. We’re really pleased we’re going to continue that program for a good portion of this year. And so that’s certainly helped create a tremendous interest among consumers as well as hospitals, who actually watch the same ads as consumers. So we’re very excited about that. Spine, we couldn’t be more happy, because certainly that’s been a gap in our portfolio relative to others. And this has got terrific workflow. And look, I think robotic adoption tends to really grow.
No matter what procedure you’re doing, if you have a good solution, it will over time become the majority and eventually standard of care. And we’ve obviously seen this in the general surgery world as it relates to prostate and starting to happen in other cases. And I think it’s going to happen in orthopedics. So Spine might take a little longer, but I absolutely do believe it’s going to be key for us in the future. We’re extremely excited. We’ve been showing surgeons the MAKO spine getting terrific feedback on the workflow and the speed and the efficiency. And again, that’s within the same ecosystem as the Q Guidance. So we’ve been selling a lot of Q Guidance software, which is used to navigate those procedures. And that same camera, which is the fastest camera on the market, will be compatible with MAKO when we launch it.
So I do believe it’ll become for pedicle screw placement, at least the vast majority of the procedures in the future.
Operator: Our next question will come from Shagun Singh with RBC. Your line is now open. Please go ahead.
Shagun Singh: Great, thank you so much. Kevin, I was hoping to get your thoughts on utilization, it’s been a key topic this last week across some healthcare sectors. What trends are you seeing in healthcare utilization across different care settings? What is driving it and how do you think about the sustainability of it? Is it being driven by the aging demographics? Is it innovation? Is it just low market penetration? And I think you did indicate that there is still a backlog and it is contributing, but is it a meaningful contributor to growth on a year-over-year basis? And then I have a follow-up.
Kevin Lobo: Okay. Well, I think if you look at the hospitals and what they’re saying, that’s kind of one of the indicators we look at. They’re busy, right? The hospitals are busy, patients, definitely aging demographics plays for Stryker’s portfolio that definitely plays to our advantage. And every day, 10,000 more people are turning 65. The activity levels are also increasing, right. The advent of Pickleball has been a terrific thing for our business. More active people who are elderly tend to want to stay active. And activity levels are kind of the biggest predictor of needing joint replacements and sports medicine procedures. So we’re seeing very good activity levels. And so I don’t really want to talk about backlog.
I just think what we’re seeing is patients presenting, frankly, some patients who are just wanting to be more active, losing weight and then wanting to be more active and then being eligible for surgery. So we do see really good waiting lists for surgeries for surgeons in the orthopedic space, hospitals ordering capital, whether it’s small capital or large capital, building more ASCs. The ASC trend has actually really helped, because patients love it. They go, they get home the same day, they have a terrific experience, and they tell all their friends, and that word of mouth is spreading for hip and knees, absolutely, for hip and knee surgeries that is happening. And our percent of procedures in ASCs continues to climb. So I think those are the – there’s a number of factors I just outlined, all of them pointing to, at least for this year, continued good demand.
And I don’t know how temporary it is. This could be continuing, frankly, for a period of time, because I think demographics and activity levels are the two drivers that we’re seeing, at least for our portfolio of businesses.
Shagun Singh: That’s really helpful. And then just on guidance, you guys delivered or you put up a pretty strong initial guide out of the gates. Does it give you room for upside as you move through the year? And I guess, more specifically, what areas could we potentially look to drive that upside? Thank you for taking the question.
