Keri Mattox: Thanks, Larry. Katie, can we go to the next question in the queue?
Operator: Thank you. We’ll go next to Chris Pasquale with Nephron.
Chris Pasquale: Thanks. Just want to follow up real quickly on Larry’s ROSA question. Was the mix of sales versus placements different in 3Q than what we saw in the first half of the year? Just trying to figure out whether that played a role or the acceleration in other sales was really driven by system volume.
Ivan Tornos: Yes. Thank you Chris, for the follow-up. We did see more sales. We haven’t changed the strategy, so it’s reflective of the fact that there is capital in the hospital systems across the world. And we saw people wanting to buy them and we sold the units. It’s not a fundamental change, it’s not a change in the strategy. We settled along that we prefer placing, given the annuity factor and whatnot. But yes, capital is strong and we did do some deals in some ASCs and in some of the systems and that’s why you see the other category growing. Thank you, Chris.
Chris Pasquale: Thanks. That’s helpful. And then on SET, is the strategy there to lean into these focus categories that are already growing pretty well and then hope that the overall performance improves as they become a bigger part of the mix? Or do you see an opportunity to reinvigorate areas like lower extremities that maybe aren’t on that list today?
Ivan Tornos: Yes. Let me start with the second part. We really don’t do hope here. So we do have plans to drive better performance in the three areas that so far have not been that compelling, those being restorative therapies for an ankle and trauma. What I will tell you is that the restorative therapies, biologics, the issue, there was a reimbursement change a year ago that’s been resolved. So that’s not a concern moving forward. And then foot and ankle, lower extremities is something that we’re looking at. It may require it some organic inorganic place, but given the space we paying close attention to what is that we need to do. And then trauma for many markets continues to be very attractive. We done some smaller tuck-ins, so I would expect that the declines that we have seen in the past are going to disappear.
So again, not really doing hope there. We got plans to remediate and to get back to growth in those three categories. Now that said, the three most compelling priorities within set remain upper extremities shoulder, sports, medicine, and CMFT and those three are performing very nicely.
Chris Pasquale: Great. Thank you.
Ivan Tornos: Thank you.
Keri Mattox: Thanks, Chris. Katie, can we go to the next question in the queue?
Operator: We’ll go next to Travis Steed with Bank of America.
Travis Steed: Hey, thanks for taking the question. I guess, a quick follow-up on M&A, any way to frame how much margin or EPS solution you’re willing to take in yours one and two, realize you said neutral by year three. But curious kind of what the framework is on year one and two. And when you think about bid ask spreads, is a deal something you think you could get done this year or is it probably more something for 2024?
Suky Upadhyay: Hey, Travis. This is Suky? I’m not sure I completely got that second question. Can you repeat that?
Travis Steed: Yes. In terms of like, when you think about like bid ask spreads and the progress on your conversations, is a deal happening in 2023 a possibility or is it probably something that we need to like the 2024 to see M&A?
Suky Upadhyay: Yes. So first of all, on your first question around earnings per share dilution, that’s really going to depend on the type of asset that we acquire, the size of the transaction, what market’s in, where it is in its journey and its life cycle is a product that’s just launched or something that’s very mature in marketplace. So I’m not going to sort of give a guidepost on year one or year two, because I think that would be premature because it is going to be very situation dependent. But what we will commit to is that we’re going to look for break even by at least 20, 24 months, if not sooner than that, so that’s the profile that we look for in our M&A. Now relative to bid ask and timing of course for a variety of reasons mostly proprietary.
We’re not going to get into the timing of any specific deal as you know, those are often opportunistic situation based. So here’s what I would say is that we’ve got a lot of strategic flexibility to balance sheets in the strongest position, it’s been since the merger of Zimmer Biomet. We feel really good about the optionality we have going forward and we think we can deploy capital to continue to accelerate our growth profile and diversify the company. But I’m not going to get any specific timing. I’m sure you can appreciate that, but thank you for the question.
Travis Steed: Yes. That’s fair. Thank you. Thanks for the answer. And a couple housekeeping questions. The OUS, one time stuff in hips this quarter, does that get better in Q4? And when you think about tax rate next year, I heard your comments, but curious if that’d be like on a less than a 100 basis points or more than a 100 basis points on tax rate. And when you think about the interest line, you’ve got I think $850 million in debt coming due. So is interest a headwind or tell in next year?
Ivan Tornos: All right. I’ll briefly comment in on Q4. I’ll keep it simple. It does go away. So this is the one-timer and in Q4 we get back to growth. In terms of the tax and interest, Suky, do you want to comment on that?
Suky Upadhyay: Yes. So on the expense line, right now we’re not going to give full guidance on that. So we’ll unveil that. I think the one thing you want to keep in the backdrop is we do believe we can grow earnings, we will grow earnings faster than revenue. On the tax rate, right now our best estimate is that it’ll be about 150 basis point increase off of our full year 2023 tax rate.
Travis Steed: Thank you. Thanks a lot.
Keri Mattox: Thanks, Travis. I think we have time for maybe one last question. Katie, is there one in the queue?
Operator: We’ll go next to Vijay Kumar with Evercore ISI.
Vijay Kumar: Hey, guys, thanks for squeezing me in here. Maybe just one question from me. This OUS hips, I think you called up Russia headwinds. Is that done with in fiscal 2023? Should that continue in the fiscal 2024? And I think you did speak about M&A. Can you comment on your hurdle rates you given current interest rate in monument for deals?
Ivan Tornos: Yes. Sure. Hey Vijay, it’s good to hear from you. So on the OUS hip headwind, specifically due to Russia, if you go back the last quarter’s call – second quarter, I talked about Russia being about a 50 basis point headwind in the back half of 2023. That estimate is still largely true and most of that occurred in the third quarter. So we’re going to see a little bit of pressure in the fourth quarter, but it’s largely behind us. We don’t see that as being a headwind at this time into 2024. And I’m sorry, Vijay, could you repeat your question around.
