Kevin Lobo: Yes. Great question. First of all, we have a history that we generally like to follow, and I would tell you that it’s early days. We’re here in January looking at 2024, we feel very confident about where we’re going to perform on sales and driving off margin expansion. At this point, I’m not going to comment on the potential to go beyond that, but we feel very good about the guidance that we put out.
Operator: Our next question will come from Pito Chickering with Deutsche Bank. Your line is now open. Please go ahead.
Pito Chickering: Hey, good afternoon and thanks for taking my questions and congrats on an amazing year. On the gross margins, can you help bridge the third quarter to fourth quarter gross margins? How much of the impact was mixed? And then you have the good guys and bad guys that can help us understand that sequential change?
Glenn Boehnlein: Yes. Sure, Pito. Without going into too much detail, I would say, the single biggest item was really mix in terms of what was growing much faster in Q4 versus Q3 relative to sort of some of the other items. We also had really solid price performance in Q4, which contributed to that. And then lastly, sort of in typical Stryker fashion, we hit a little bit of a hockey stick here in Q4, too. And so that actually benefits up the gross margin line.
Pito Chickering: Great. And then on pricing, back in third quarter, I think it was about 30 basis points favorable, it’s 70 basis points favorable this quarter. Guidance assumes flat pricing for 2024. I guess, shouldn’t there be some positive pricing in 2024 just as the fourth quarter comes out? And after you gotten accelerating pricing throughout the year, I guess, why should 2024 pricing flatten out? Thanks so much.
Glenn Boehnlein: Keep in mind, flat is the average for the whole company. And the way that that pricing guide is calculated, it’s legacy product over legacy product. So a lot of our pricing increases carry over into 2024. They’re just comparing to the new higher price. I would also say, too, flat is the average of some up and some down. And so we absolutely will see price increases across some of our businesses. And that will be balanced with some of the challenges we have in, say, Spine or some of our other orthopedic businesses. So I do think we haven’t backed off our pricing strategy one bit, and we fully expect to sort of maximize the benefit we’re going to get out of pricing.
Operator: Our next question will come from Travis Steed with Bank of America. Your line is now open. Please go ahead.
Travis Steed: Hey, thanks for taking the question, Glenn. Maybe just a finer point on some of the op margin guide. It looks like the 200 basis points, more than half of that’s in 2024. Can you just confirm that there’s a little bit of kind of math going around? Just want to make sure we got the math in 2024 correct. And with such a big ramp in 2024 on the guidance, just can you give a little more confidence on what you’re doing to kind of achieve that 100 basis points plus in 2024? What you’re seeing on the cost input side, just to kind of drive confidence that that’s achievable in 2024?
Kevin Lobo: Sure. Yes. I think you can do the math as well as I can, especially given all the areas that I’ve guided in the full year. So I definitely think you’re in the zip code for what we think will happen in 2024. And honestly, if we look at sort of what we’ve laid out and planned for the year, first of all, the natural leverage we get from growth versus fixed cost in operating expenses certainly will provide us some benefits. We also won’t stand still in a lot of the gross margin initiatives that I mentioned, and those will move forward and also provide some benefit that we’ll see in 2024. And so I would tell you that we haven’t walked lightly on this. I would say that across the globe, Stryker is very focused on these op margin expansion projects and sustainable op margin expansion for 2024 and 2025. And so we feel very confident that we’ll be able to deliver that.
Travis Steed: Great. Thanks. And then maybe one quick question on MAKO shoulder just to make sure that’s still expected to come in 2024 and anything else you want to say on that at this point. Thanks a lot.
Kevin Lobo: Yes. Listen, as we’ve said from the beginning, MAKO shoulder will launch at the end of 2024. So I don’t expect to have much at all of a revenue impact. That said, it’s not like our shoulder business needs MAKO shoulder to be growing at strong double digits. They have terrific products within upper extremities with shoulder ID with a number of really pyrocarbon humeral. We have a fracture stem for Perform, which is incredible, a Reverse Perform stemless. So they have four terrific launches with an upper extremity. So they’re going to do fine even before MAKO. But MAKO will be the end of the year. The feedback from searches have been terrific. But that’ll have much more of an impact in 2025, not so much in 2024.
Operator: Our next question will come from Matthew O’Brien with Piper Sandler. Your line is now open. Please go ahead.
Matthew O’Brien: Afternoon. Thanks for taking the questions. Just on MAKO, this question might be for Jason. Just the domestic number this quarter was a little bit soft, and we’re hearing about one of your competitors just giving their system away because it’s not all that great. Can you talk about the dynamics that you’re seeing in the market, especially domestically for MAKO in terms of placing systems, selling systems, and then just having to get really aggressive on the pricing side, just given the environment that you’re in? And then conversely, the OUS number looks phenomenal again. Just where are we at in terms of growing that business over the next several years? And I do have one follow-up.
Jason Beach: Yes, I’ll start this and Kevin, feel free obviously to weigh in. But as we think about the MAKO offense, and I think we’ve said this previously as well. When we think about the various options to bring MAKO to market, we’ve been flexible, right, whether it’s leasing, rentals, et cetera. So I think we’re very competitive from that standpoint. And to your comment on kind of where we are, I would still say whether it’s U.S. or internationally, early innings here, we’ve got a lot of runway relative to MAKO. But as we think about the financing options, it’s not going to be an impediment for us to expand the MAKO footprint.
