Caitlin Cronin: Got it. And then just a quick one on MAKO shoulder. You noted great feedback from docs. What’s kind of going to be the use case for the docs? Is it going to be outcomes, time saving, et cetera?
Kevin Lobo: Yes, just – look, there’s a whole series of outcomes, just to simplify it, it makes a very hard procedure very easy to do. That’s the way I would simplify it. Why was the partial knee so wildly successful? It was a hard procedure to do and the robot made it easy. And the shoulder is harder to do than a partial knee, and it’s going to make a very hard procedure very easy to do. Take stress off the surgeon, have very predictable results. That’s been the value profit. There are surgeons I talk to you now that due to high volume of knees that tell me at the end of the day, I’m not tired anymore. This robot is taking away my stress. It’s just making life easier for me, and you can multiply that by 10 for shoulder replacements.
Operator: Our next question will come from Steven Lichtman with Oppenheimer. Your line is now open. Please go ahead.
Steven Lichtman: Thank you. Good evening, guys. First on price, how are you thinking about the relative pricing outlook in 2024 as you look at the major segments of MedSurg, Neuro versus Ortho, Spine, anything meaningfully different than what we saw in 2023 directionally? And I know we touched on this at Investor Day, but what gives you the confidence in the sustainability of this firmer pricing environment? And then I have a quick follow-up.
Glenn Boehnlein: Yes. It’s Glenn. So as we look at price, first of all we’ve really honed in a strategy and a group that solely focuses on pricing for the whole company. If we think about sort of the segments, I don’t think you’ll see a lot of different performance in what we see out of our segments in general. MedSurg and Neurotech has more of an ability to gain pricing and we see price increases in those businesses. And honestly, even before the pandemic, we would see price increases coming out of the MedSurg businesses. I would say on the Ortho side, the trend has really been that it’s just been less negative. Also, if you think about those ortho contracts, they’re generally three-year contracts. So we haven’t really been cycled through all those contracts yet.
We have real discussions around inflation in our business with our customers. They know it, their experience it themselves. And so we’re just – I’m not expecting to see positive come out of the ortho side, but we’ll probably continue to see less negative.
Steven Lichtman: Got it. And then Glenn, just on Pillar 2, is there an impact in 2024 that you’re offsetting? And how are you thinking about sort of the potential impact in 2025 based on what you know today?
Glenn Boehnlein: Yes. No, good question. As we think about 2024, there is an impact for us. I think that through our tax planning and other strategies, we feel like we have fully offset that impact, and that’s included in our effective tax rate guidance. For 2025, it’s just – it’s too early to comment at this point, to be honest. It’s something we’re just starting to look at, and we’ll have more on that probably a year from now.
Operator: Our next question will come from Mike Matson with Needham & Company, Inc. Your line is now open. Please go ahead.
Mike Matson: Yes. Thanks. It sounds like you’re looking at doing some more M&A here. I was just curious if you could remind us where your leverage ratio is? And if you have a target at the – how high you’d be willing to go there?
Glenn Boehnlein: Yes. We generally tried to maintain a leverage ratio of 2.5 to 3. And I think we do the calc on 2023 where we’re sitting at year-end, we’re squarely on the lower end of that range. So we do feel like there is some room, if needed depending on sort of what we see in the acquisition landscape. But I fully expect that sort of given the normal cadence of acquisitions and that product tuck-ins are generally what we sort of normally go after. We likely won’t be out borrowing to do those types of acquisitions.
Kevin Lobo: Yes. And so keep in mind that 3 is not necessarily an upper limit, right? So that’s a normal landing zone for us, this 2.5 to 3 for the right deal at the right price. Could we go higher than 3? Sure, we would. And we have obviously have to commit to paying down the debt. But we don’t really look at us as sort of being constrained that way. So for the right asset, if it’s going to be value-creating for Stryker, we are not afraid to push beyond the 3, but that’s kind of the land we like to live in as a landing zone.
Mike Matson: Yes, I understand. And then just wanted to ask one about Sports Medicine, I didn’t really hear much there. Do you feel like that business is kind of where you want it in terms of the product offering and the scale?
Kevin Lobo: I am so glad you asked about sports. It’s absolutely a rocket ship of growth for us for the past five, six, seven years. They have a number of shoulder launches coming out this year, I believe, four different shoulder launches. They call it internally this shoulder [indiscernible], which is quite motivating. But we’ve done a terrific job with hip. We’ve had a terrific job with knee, but shoulder has been kind of the area that we’ve needed to have new products. But they’ve been just an amazing business. It was a startup 12 years ago, and it just become a big, fast-growing business. It’s really helped us win ASC deals. Frankly, having a really every ASC deal is orthopedic, ASC deal involves sports, and because we have such a strong portfolio we are able to win those deals.
But historically, we wouldn’t have been able to, and it’s an incredibly exciting year of new product launches, particularly in shoulder. And I think some of those hopefully might be shown in AAOS, I’ll have to get back to you on that. But I’m very bullish. We have a fabulous leader who’s been leading the sports medicine business since the start-up when we had just a camera and not really much in the way of implants. And we are now formidable in sport medicine. Certainly in the U.S., certainly in Europe, we still have work to do in the emerging markets in Asia Pacific, but really a fabulous business. And it’s been part of the growth engine within Endoscopy. And you’ve seen Endoscopy post pretty impressive results, certainly last year and this year.
Operator: Our next question will come from Drew Ranieri with Morgan Stanley. Your line is now open. Please go ahead.
Drew Ranieri: Hi. Thanks for taking the questions. I’ll put both of mine together. But Kevin, you were so early on in the orthopedic robotics landscape just with soft tissue robotics. What are your kind of your current thoughts on supporting that ecosystem today versus entering soft tissue robotics? Is it something that’s concerning you? Or just how are you thinking about that opportunity? And then second, just could you talk about the PROstep launch from earlier in the fourth quarter or late third quarter? Just any metrics you can kind of share there on the foot business? Thank you.
