Stryker Earnings Call Insights: U.S. Hip and Knee Market and Seasonal Shifts
U.S. Hip and Knee Market
Robert Hopkins – Bank of America Merrill Lynch: So two question, one on the guidance and one of the U.S. hip and knee market. So maybe I will start with the U.S. hip and knee market. You guys obviously had an extra selling day. You had slightly easier comps, and yet even excluding those, you still seem to produce a really good growth rate in U.S. hips and knees this quarter. I was wondering if I could get your just perspective on the U.S. market, and how much of that you think was share gains, is there something really going in the market, just provide a little more perspective on the U.S. hip and knee results that you put up this quarter?
Katherine A. Owen – VP, Strategy and IR: Bob, it’s Katherine. Maybe I will just take a stab at it. As you can understand, this is probably a little bit tough compare because we don’t have everybody else’s numbers in at this point. We are certainly pleased with the momentum we are seeing in the U.S. in both hips and knees and some of that is on the knee side from the GetAroundKnee campaign, on the hip side from good products like Accolade, which we launched in the second quarter last year. I think at this point, at the very least the market is stable, maybe modestly improved in the fourth quarter. How much share shifting we’ve seen is just too early to predict until all the numbers come in, but we feel pretty good about the stability of the market and certainly some of the momentum that we are seeing.
Robert Hopkins – Bank of America Merrill Lynch: Then on guidance for 2013. I am asking this within the context of a fourth quarter operating margin number that was one of your better quarters of operating leverage in quite some time here in fourth quarter as you stated in your prepared remarks. So, I’d just like to get a sense from you guys as to whether or not that can be sustainable throughout 2013. The way I’d ask the question is, you gave guidance of using midpoints roughly a little over 4% revenue growth and then 8% to 12% EPS growth excluding the MedTech tax. So, to get from that 4% to the 8% to 12%, is most of that continued underlying operating margin growth and if the answer is yes, what’s allowing you to final enter a sustained period of operating leverage at Stryker?
Dean H. Bergy – Interim CFO and VP, Corporate Secretary: Bob, this is Dean. I mean, obviously, we’ve had three quarters of pretty good gross margin numbers. We did have a very good quarter from an operating leverage standpoint. Obviously, this is a quarter where from a sales standpoint, it’s our biggest quarter in terms of the numbers that we put up there. But I think we do feel good about our ability to drive some operating margin in here. Obviously, that was implied and what we had told you relative to guidance. So, we feel good about where the business is positioned. We’ve done things with the Global Quality and Operations to start to get cost savings there and we are continuing to look at other places of the business where we can reach out for that. So, I think we feel generally pretty good about our ability to do that, but it’s going to be a steady drumbeat in terms of how we tackle it.
Michael Weinstein – JPMorgan: Just a couple of follow-ups on that. So, if we look at the numbers that we’ve all seen over the last, call it, few weeks for the Recon market, there was a question out there out there that that December in particular was very strong as patients getting their procedures in before at the end of the year with the (indiscernible) becoming more seasonally shifted towards the back of the year. is that something you’d or you have view on?
Katherine A. Owen – VP, Strategy and IR: I would say, at this point, Mike, we didn’t see any big end of the quarter push or anything to suggest a seasonality or push effect that was relatively different than anything we’ve seen in other quarters. Q4 tends to have more seasonality, but obviously that’s going to get reflected as it’s based in the prior year. So, it just felt like a solid quarter again. Don’t know what the market did, but I think we feel comfortable saying, at the very least, the market is stable to maybe modestly better, but it didn’t feel like there was any kind of one-timers in there.
Michael Weinstein – JPMorgan: Just as my follow-up, can you discuss a couple of other markets that you are in that are growing very well. You are obviously growing well above what market growth is, but I’d like to get your view of what underlying growth looks like right now in foot and ankle, where you’ve had an exceptional quarter and in neurovascular where you also had a very good quarter, both those markets. It look like they’ve accelerated, and obviously you are growing at some multiple of market growth?
Kevin A. Lobo – President and CEO: Hi Mike, it’s Kevin Lobo. I’m going to star with the foot and ankle. Our sense of the market is that it’s probably growing somewhere in the 12% to 15% range. Overall, obviously we had an exceptional quarter growing at 39%. If you recall, we created a new foot and ankle business unit in January of 2012 and after digesting the Memometal acquisition in the prior year combining our current products with those product took us about a quarter or two to get our stride. We had a very strong third quarter and even stronger fourth quarter. So, we’re clearly outpacing the market, but it is a good market. The market is growing double digit. We obviously grew even faster than that and still see tremendous opportunity for growth in the market where implants historically had not been used. So, this our market expansions story as well as a share store.
Katherine A. Owen – VP, Strategy and IR: On the neurovascular side, it’s certainly seeing very solid momentum in that business. It’s what helped contribute to the total Neurotechnology business that saw that double digit growth in the quarter. The neurovascular group since the time of the acquisition has continued to have a really nice flow of new products, most recently the Target coil and then in August of last there the earlier than anticipated launch of the Trevo device which we obtained through the Concentric acquisition. So that market is probably still growing somewhere in the upper single digit vicinity and part of that is procedure expansion, new patients get identified and we feel pretty good about the outlook for that type of sustained market growth.
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