Stryker Corporation (SYK) Management Presents at the Bank of America Merrill Lynch 2019 Health Care Conference (Transcript)

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About: Stryker Corporation (SYK)
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Stryker Corporation (NYSE:SYK) Bank of America Merrill Lynch 2019 Health Care Conference May 14, 2019 1:40 PM ET

Company Participants

Glenn Boehnlein - Vice President and Chief Financial Officer

Katherine Owen - Vice President of Strategy & Investor Relations

Andy Pierce - Group President, MedSurg

Conference Call Participants

Robert Hopkins - Bank of America Merrill Lynch

Question-and-Answer Session

Q - Robert Hopkins

Very happy to have Stryker here. I think everybody knows the folks on the podium, but just, Katherine Owen who runs Strategy; Andy Pierce who runs MedSurg, and of course, Glenn, the company's Chief Financial Officer. So we will just do all Q&A here if that's okay, unless you guys have something you want to start with, but I know you guys are under indexed in China, but I am starting every single session with the same exact question because it's so topical and given all the commentary this week. Glenn, if you wouldn't mind just giving us a quick thought on China tariffs this week and what you guys have said previously, and if there is any preliminary thoughts on some of the noise from this week? I am sure everybody would be interested.

Glenn Boehnlein

Yes, I think, first of all, it's kind of a good and a bad that we are a little undersized [technical difficulty]. Right, if you look at sort of the impact to us on tariffs, it's more outbound what we import, what we export from China. I think before we guided to you about $25 million, as we reassess the new round of tariffs, we think that it's maybe $3 million to $5 million more. So, we think that it will be covered within the existing guidance that we provided.

Robert Hopkins

Okay, that's great. Was there anything that stood out -- I mean I know it's very early. It's some of the stuff from this week that you saw from the MedTech perspective just broadly do you think we should be looking at?

Glenn Boehnlein

Yes. No, I don't think anything really sticks out. I think that MedTech has not been as big a target. I mean the flipside of this that we are probably still evaluating although I don't think it will be so big, would just be the inbound relative to what's imported into China and the new round of tariffs that China announced yesterday.

Robert Hopkins

Okay. So, I wanted to try to cover a couple of topics. One is the -- it's really the theme is sort of sustainability, wanted to talk about sustainability of growth in MedSurg, wanted to talk about sustainability of growth outside the United States. And then obviously want to talk about strategy in Mako. But before we do that, I am wondering if we could kind of reflect back a little bit on the last two quarters, because you guys gave some strong guidance at the start of the beginning of the year, took the stock up nicely and then had a very solid quarter and tweak the guidance up again. So, I'm just curious looking back, could you just talk about what drove those decisions to give the kind of guidance that you gave, sort of your philosophy around how you think about that and -- because it was a nice part of the surprise it has a big impact on the stock, so I think it's worthy of some discussion here before we get going on the business.

Katherine Owen

Yes, so maybe I will start because it really is a process we go through every quarter and certainly at year-end as we think about setting the targets for the year, because it's based on our budget, and we also want to make sure that it reflects what we truly think the organization can deliver, and you don’t want it so low that you're always blown by it, and then you lose credibility on that end, nor do you want to guide down. So, it's part based on analytics and part based on little bit of subjectivity around it. And clearly as we got towards the end of the fourth quarter, it was [technical difficulty] was a lot of tailwinds and in the quarter you say that product made the quarter for Stryker, but when you add up all those products, the totality of them are really what helps drive that organic growth towards our goal of being at the high-end of Med Tech. And so, as we look ahead to the 2019 calendar year, whether it was launching a new camera in endo, which is a big driver for them, neuro getting into new markets while having a backdrop of a market that continues to be very healthy, strong momentum with Mako, and I'm feeling really good about the momentum there, new hip cup offering and then you look across the other MedSurg businesses splitting the sales force in instruments, benefiting from a number of acquisitions we had done there, and really across the organization.

And so, the bread and butter of our deal activity tends to be these smaller deals, it's the NOVADAQ, it's the Pivot, it's the Entellus that are small in isolation, but when you layer those into our global sales and marketing infrastructure, and we are able to really put more resources behind it, they became a big driver of growth and so all of that layered along continued strong momentum in Europe seeing better results in emerging markets, we have put a lot of new talent in place over there, and it was all coming together. That said, we are in a really good position at the start of the year.

And then, as we saw in the first quarter, it came in better-than-expected, some of that was certain divisions like instruments that had a particularly robust quarter. And then we looked at it, now to be honest, Glenn, Kevin, there is no real appetite to raise guidance in the first quarter, and it's simply because you got three more quarters to go, you'd rather get to the mid-year mark and say, "Okay, well, at least we got half the year done," and it's those uncertainties, it's the year when you have three hurricanes come out of nowhere or a big recall. And so, you want to have a guidance that reflects what you think you can achieve, but we came out of the first quarter feeling really good, better-than-expected start to the year, and then the outlook was really favorable, and it does marry up to what we're seeing in projection. So, as projections come in, that really dictates how we end up thinking about guidance. So, it became kind of one of these we don't see a path where you're going to end up hitting the low-end and that's what prompted us to tighten it. So we feel good about where we're. There is always going to be challenges, we're working through a big integration with K2M. There is a lot of work that has been done, but still needs to be done, but overall there is just a lot of momentum within the organization.

Glenn Boehnlein

The only thing I would add to that is Q4 is typically the strongest quarter, so we knew that Q4 would come in fairly well. I just think that you combine sort of the diversity of our portfolio and where we are in a lot of product cycles, and that just came together in Q1, and really produced a very strong Q1. And then frankly, looking at the strongest Q1 isn't just doing the math on our guidance. We knew that we probably would have to narrow that to the upper-end of the ranges that we provided.

Robert Hopkins

Okay, great. That's helpful. Every company has their process little bit differently. It is always helpful to get a little bit of an education on how you guys do it. So, first topic, I want to hit, Andy, thank you very much for being here, you've owned Endo and it has been incredible last many, many years, now you own and responsible for the broader MedSurg business, it's one of the businesses that is a little bit harder for us as outsiders to dissect and get our arms around. You know, hips, knees, trauma spine is just a little easier. But MedSurg is continually surprised on the upside, I guess it's just a first place to start, as you look at the business, how sustainable is the growth that you guys have been driving?

Andy Pierce

Yes, MedSurg has been a growth driver for Stryker Corporation for the last few decades. If you look at where the business started as a much smaller, much smaller franchises, and you look at the percentage of Stryker Corporation today, that's MedSurg, the growth has really been phenomenal over time. These businesses are extremely innovative businesses. They're very aggressive in terms of investing in R&D and really solving clinical problems and investing in M&A. So if you look at our, our history as a serial acquiring and you look where most of those acquisitions have landed, they have now some of the higher profiles have landed outside the MedSurg, but the majority in terms of volume lands inside of our MedSurg businesses.

And that's how we really buffer our innovation engine or organic innovation engine with that inorganic pipeline to solve these clinical problems. When we're doing that, coupled with specialized, very talented sales organizations, we grow fast. And we do operate, as you noted in some complex segments that are very difficult to follow from an outside perspective, but they're also very attractive from a growth trajectory perspective. We have excellent growth opportunities outside of the U.S. as we have much lower share outside the U.S. generally speaking, so we feel very good about the future of our businesses. These are products that customers want. We have a long track record of above market growth and taking share and we fully expect to continue to do that.

Robert Hopkins

If you are -- because you're in so many different businesses, but could you estimate like, you want to grow above the markets, but what is the market growth rate of the different businesses that make up MedSurg, is that…?

Andy Pierce

Anywhere from 0 to 15. I would say on average our growth rate is - in our segments is probably in that four to six range. So, a little bit higher than some of the other segments that you'll see Stryker compete in, but on average in that range, and of course, we want to continue to grab share at a pretty healthy rate, beyond that market growth rate.

Robert Hopkins

Okay. So, the goal is to be above that level and so just like, what's your confidence, as you sit here today, looking at the business over the next 12 months versus what it was a year ago, and two years ago?

Andy Pierce

Well, we had a good run over the last few years, and as noted for a long time in the businesses, but if you look at our integration of acquisitions, and we've had some really terrific acquisitions in the business, including a couple that are getting a little more integrated being two big ones were Sage and Physio Control. And then, you look at NOVADAQ as noted, Entellus, Invuity, and several others that are in our business, they're really coming into their own from a growth trajectory perspective and ramping up and we're accelerating in those businesses. So you take that M&A aspect, and you couple it with a terrific pipeline of new products, as noted by Katherine, the 1688 launches, our latest generation of MIS cameras just rolling out today, and you look at our full portfolio of new products coming to market. We have a good, a very good look at the next 12, 18, 24 months for very nice growth coming out of MedSurg, we fully expect that.

Robert Hopkins

Where are you from a MedSurg perspective in terms of driving growth outside the United States? Have you made all the structural changes that you need to make and you are kind of on that autopilot, the wrong word for sure, but…

Andy Pierce

We're not on autopilot.

Robert Hopkins

Never, but are there any more big things that need to be done to make sure that you deliver good growth outside of the United States in MedSurg?

Andy Pierce

Yes. So, a few years ago, actually 2015 was the first year we implemented what we call the transatlantic operating model, TOM, for short. And our TOM model gives the U.S. product-based divisions full growth and sales control responsibility over Europe and Canada. And if you look at our growth trajectory in Europe and Canada, since we implemented that they are accretive to Stryker Corporation, prior to that they were not, so that's really starting to pay off. We've layered in over the last 2, 3 years now. What we call our priority markets, which are Japan, China, and what we call Stryker South Pacific or New Zealand, Australia. So if you are an operator, today, you're leading our endoscopy business, for example, you now have those sales targets in your budget numbers, so they're motivated to support those markets.

And now we're doing the same with what we call our priority emerging markets, which are the BRIC countries plus Turkey, and South Africa. And that's really kicking off right now this year. So you look at about 90%-95% of the global potential, you now have our traditional divisions motivated, focused, supportive, engaged in those markets all around the world. And we expect big things from that, as historically we have been under indexed in terms of our share positions in those markets outside the U.S.

Robert Hopkins

A couple of other questions on MedSurg, in sort of maybe big picture terms, there's a lot of pieces within MedSurg that people pay very little attention to, but are consistent growers for the company.

Andy Pierce

I pay attention to them.

Robert Hopkins

All right.

Andy Pierce

Don't worry.

Robert Hopkins

Investors, can you help us understand why businesses like your boom business, your power tool business, a business like Physio Control, why are those such consistent growers?

Andy Pierce

Well, they're consistent growers, first off, and as noted prior, we are the innovation leaders in each of our spaces. So if we think about our position in from a category leadership perspective well, we certainly have that. But that comes with strong innovation over many, many years in each of those categories. So if you're a hospital and you're choosing from 2 or 3 vendors, you're going to go with the product category that is most beneficial to what you're trying to achieve as a hospital, whether that's financial outcomes or clinical outcomes. And more often than not, that's going to be Stryker.

So, first off, thinking about being an innovation leader in each of our spaces. Beyond that, they're good growth markets. So we have good tailwinds in our hospital infrastructure market, whether that's beds and stretchers or operating room infrastructure like you noted, booms, lights, tables, as hospitals are competing fiercely with one another to gain more and more patients, of course, to gain share in their respective markets to attract top clinicians. And part of that equation is having cutting edge equipment. And that really has benefited us over time. The other nice thing for us is, if you look at the hospital consolidation, when hospitals consolidate, these are now bigger hospital systems competing against bigger hospital systems, so the purchases are getting larger as they look to standardize across their portfolio. When we have the share position and the innovation position that we have in those markets, more often than not, when those big purchases happen, they are going to select us.

Robert Hopkins

Okay. Let me sort of pop around a little bit if okay. On the K2 deal, either for Glenn or for Katherine, you guys were nice enough to give us sort of that pro forma growth in that 2% range. You could ask a lot of questions about K2 and how things are going but let me just ask sort of the cut to the chase question is, is 2 sort of the floor from here in your view?

Glenn Boehnlein

Yes, I think, what we've put out there is that we would see two at the bottom end and then the rest of the year is going to get progressively better. How do I know that? I know that the sales integration is ongoing. I know that Q2 will be the first quarter where both sales forces have a more combined sales bag to actually sell. And so, I do expect that, we'll see a mild improvement in Q2 and then market improvement in Q3 and Q4 to get to that mid-single digit number for the full-year.

Robert Hopkins

Okay. And then, Glenn, one of the sort of housekeeping for you, can you just help us understand over the course of the rest of the year the cadence from FX and sort of deal related headwinds, how those kinds of hit throughout the rest of this year. I mean, obviously, I think we all know what's embedded in your guidance, but just how they play out over the course of the rest of the year?

Glenn Boehnlein

I think at the beginning of the year we guided FX is being somewhere between $0.00 and $0.10 on an EPS basis, 2% of sales had an FX impact in Q1, which was a little heavier than we had necessarily anticipated. I do see that trailing off as the year progressive. So I do think we're probably narrowed now to say a $0.05 to $0.10 range in terms of impact.

Robert Hopkins

Okay.

Glenn Boehnlein

On the EPS level, and then in terms of dilution from deals, K2 obviously will be diluted to our margin expansion, primarily in Q1 and Q2, I think we'll see more of the same in Q2 as we did in Q1. And then, as we get further along in our integration, we start to see sort of those, the mid-sales coming out more of an impact from the margins related to Q2, I do think that we'll start to see the expansion that'll get us to the 30 to 50 basis points in Q3 and Q4.

Robert Hopkins

Okay. Is there ever a time from an operative margin perspective where that there could be upside to that 30 to 50? In other words, you are involved in lot of things right now. You are involved in deals. You have got currency. You have got integration programs going on from assistance perspective. Is there a point in time where you could see upside because if you keep -- I mean the top line is just phenomenal? I would think some of those things weren't going on, you could see more operating leverage. Or, is that we should just think about you kind of constantly doing deals from 30 to 50 is sort of just an ongoing way to think about margin expansion?

Glenn Boehnlein

Yes, I think that's why as part of the earnings call, we disclose the dilution we take from deals. So that you can see sort of in the underlying organic business what kind of op margin expansion are you getting to, I mean typically underneath it all, we are getting anywhere from 50 to 100 basis points expansion. I think right now that given the cadence of deals that we have, given the pipeline that we have, and given our assertion that this is an integral part of our strategy in our capital allocation, we will always have deals going on. And they typically will be dilutive to that op margin expansion.

Robert Hopkins

Yes. And Katherine, that's a nice segue on to the strategy part of things, how would you kind of describe the pipeline of things that you are looking at relative to I don't know the last 12-24 months? How full is the pipeline?

Katherine Owen

I think it's very similar. So we benefit from a really decentralized structure as it related to business development. So, all of the divisions have BD people embedded in the divisions. Corporate BD is very small. It's two people. So there is a lot of dotted line. And we really standardized around best practices around modeling, hurdles rates, integration, due diligence that is all standardized at corporate and every division follows that same format. But the actual hunting of targets is done in the division. And it's similar to having dedicated sales forces. It's their closeness to the customer that you are able to find the Pivots of the world. The Entellus of the world that are really attractive for that core customer that we are targeting. And, we go through every year and we are at the pipeline of targets of perceived actionability. And then map that against StrAP plan to determine how much revenue contribution can we see over the next few years from deals, and should be able to have the confidence that we can continue this offense that's been really successful for us in terms of helping to drive stronger organic sales growth. And we feel really comfortable about that over the next few years is the healthy pipeline.

We compete in so many markets that it really helps. And sometimes, it's not that obvious. And sometimes we do a deal. And it really opens up a new avenue for us and doing NOVADAQ allowed us to get into the breast reconstruction market. And then that in turn opens up new platforms. When we did neurovascular back in 2010, we never would have done Concentric that got us into the ischemic stroke market or Surpass if we didn't have that platform. So every time we do a deal, it really opens up a new avenue for us to look at what are disease stage, what are customers that we are already calling on. What else are they addressing that we can open up new avenues? So I think when you combine that with our structure, it gives us a lot of confidence that I think you will see something very similar. The majority of the deals we do, at least numerically tend to be these smaller deals. We did the occasional bigger bet. Mako was a bigger bet. Sage, Physio were bigger bets, but that I think you'll see a very similar complexation of deals.

Robert Hopkins

It looks like you have a lot going on right now when that suggests a quitter period over the next six to 12 months.

Katherine Owen

Well, we have a lot going on if you are Spine. And so yes, they are very busy. And that does pool in certain functions that are involved in every deal. But if you are in other area of the company, you aren't really distracted by what's going on with K2M. So, I think it's going to be a quite period from deal activity for the Spine group. But there is other areas that are continuing to look at targets. And we don't shut off BD engine. We just -- they are constantly vetting targets.

Robert Hopkins

You are doing quite a few deals in ENT, would it be safe that's another area where you need some digestion before you do anything further?

Katherine Owen

Yes, I think that's fair. I mean one of the other big strategy we have is having these dedicated sales forces. And then splitting a sales force when we think we can really optimize the portfolio. And that's just what happened with instruments starting in the first quarter, which contributed to their better than expected growth. ENT we love this space. We love this setting. But it wasn't big enough prior to Entellus to justify carving it out as a standalone sales force. And so, it was combined with other offerings. And so, when we did Entellus, it gave us scale. And we were able to break it off. They did a really nice job integrating that. And then we added on another recent acquisition here in the first quarter. And so, I think they are pretty set for right now. That doesn't mean they will never look at other offerings in the ENT space. But they are probably similar to Spine and more of a digestion mode.

Robert Hopkins

Okay. That's helpful. Thank you. So who will have a meeting without talking about Mako.

Katherine Owen

Could be a record.

Robert Hopkins

Yes. We are -- yes. No, I do -- but in all seriousness there are a couple of other topics on Mako that would love to hit on because you guys are -- we really appreciate all the detail that you give us in terms of how that business is going right now on the procedural levels by quarter. Kind of how would again describe the backlog on Mako from what you hear from a placement perspective? And are you hearing anything in the field about Rosa at all? Or, is it really just they target their customer base. You target the targets that you've already have pre-existing. And you kind of both go your own ways. So are you seeing them in the marketplace?

Katherine Owen

Yes. No, it's early. We have a really healthy order book of customers who want the Mako and that's where they are focused. Zimmer I have to imagine is focused on their highly loyal, high volumes Zimmer docs who never in the queue for Mako, which is probably why we are not seeing it. And keep in mind this is really underpenetrated market. And we are coming up a three-year anniversary of our limited launch. We are about 10% penetrated with single in-hospitals, about 90% of that in single robot hospitals. We are up to about 10% of our customers now have purchased one or more or more than one robot, but that means there is still just enormous opportunity here. So I think in the short term and this all speculation, but I think in the relatively short term Zimmer is going to be focused on those Zimmer accounts who wanted to be able to say they have a robot because clearly the whole market has shifted from nobody needs a robot. We don't know what Stryker is doing to everybody need a robot.

This is where Recon is going. And that's great for the market overall because you are not fighting the do robot make sense battle anymore. And I think over time, as you move to those more surgeons who maybe they use some Zimmer, maybe they use some Stryker, maybe they use some J&J, and they are going to probably take a more measured approach and they are going to do head-to-head trialing. We welcome it. We welcomed it with Bluebell. We think we have a truly unique set of features. We are the only robot with Haptics and we are seeing in the clinical data really favorable outcomes both clinical and economic. And that bar is going to continue to move. Hopefully, later this year we will have the first wave of two-year clinical data coming out. And so I think at some point, we will move to trialing and that will be fine I think in the near term though you mentioned they are probably focused on their customers.

I do believe what's got lost a little bit is there has been so much focus on what can Rosa do versus Mako and is Rosa good enough relative to Mako. Don't underestimate the selling process here. We have a long experience in selling implants and selling service and selling capital. We have separate sales forces for our capital products. There is a reason why we don't have a Recon rep selling a power tool which is going to the same customer. It's a different skill set to sell capital. And so, we have a separate Mako capital sales force. They are in every single surgery and they have been since we launched almost three years ago. The Recon rep doesn't want to deal with a piece of capital. He doesn't want to be responsible for making sure the workflow goes well. He wants to sell implants and manage that relationship. That's worked really well for us. It took a long time to train those Mako reps. These are not folks you just find and heir. And so I think the other differentiator will be how successful you are with your sales channel and the sales force that you put together to sell the respective components.

Robert Hopkins

Is the vast majority of your sales with Mako today still sort of outright sales versus operating leases and other kind of financing alternatives?

Katherine Owen

Certainly in the U.S., but…

Glenn Boehnlein

Yes, I think we are seeing a bigger mix. I think sort of the initial sales with those hospitals or customers or physician champions that were big on technology, a lot of those were just outright cash sales. I think now we are getting into situations where hospitals may want to know what are the alternatives, and that's where Flex Finance can offer a range of financing alternatives. We will see rentals. We will see leases. We will see fee per deals. All those type of deals have kind of come into play. And I would say that there's probably a 50/50 balance of that in the U.S I would say O.U.S. Those types of financing situations are more prevalent.

Robert Hopkins

Okay. So in U.S. roughly half or some sort of financing, what's the most common form?

Glenn Boehnlein

The most common form is just an outright operating links.

Robert Hopkins

Okay, okay. And then Katherine, you guys gave us this in every quarter about the numbers just in place in competitive accounts, could you just remind me how you define competitive accounts?

Katherine Owen

Yes, it's either we have no market share. So that's pretty cut and dry. It's competitive, or it's one where we're well below our normal. So maybe we have 10% share something like that. Typically, in a hospital, I mean, you do have your -- we're 100% ex-vendor hospitals, but normally they've got a couple of workhorse brands. So maybe they're a J&J and Zimmer, and that's what the lion share of their volume is. But for certain cases, they've got one on deck. And so, if we're that on deck that we're used periodically, but we're not their workhorse, we view that as a competitive account. So I think there sometimes, when we're converting competitive accounts, it's largely in that group. It is not the 100% Zimmer shop that we're switching over.

Robert Hopkins

Yes. I won't ask you names, but has there been one type of competitive shop that's been more susceptible to Mako than another over the last 18 months?

Katherine Owen

No, really because the folks that are using and adopting Mako are where you always need a surgeon champion and those are the ones who are really believers that they can improve the surgery. They tend to be early adopters or find new technologies like this appealing and that's not manufacturer specific that that's surgeon specific. And now we're increasingly seeing getting Mako's into teaching institutions because as you come out of school and you start to practice it, you want to have an understanding of robots, it's clear where the market is going, not just for orthopedics but other areas as robotic way this is changing how people think about doing this procedure, but I wouldn't say there's been one. I mean, it's been the bulk of it has been J&J and Zimmer, but they're the two biggest players next to us.

Robert Hopkins

Okay. Okay. So there isn't one that…

Katherine Owen

And they both had challenges.

Robert Hopkins

Yes, yes. Do you guys internally have a view at this point as to where do you think penetration might go, or is it more…

Katherine Owen

For me?

Robert Hopkins

May be if you're plus than 10% today?

Katherine Owen

I think there's years of runway here. If the clinical data continues to come out things like the Haddad study that we saw earlier this year were on every indication whether it was amputation, leg lift, avoiding rehab, discharged from the hospital, everything was superior to traditional knee surgery. And then, the economic benefit of getting a patient out of the hospital over a day earlier in the case of that study, if that continues to be the data we're seeing, I don't know how it doesn't just continue to climb now because you're getting superior outcomes. The patients feel better, they have less soft tissue damage, the hospital is seeing better outcomes. You're avoiding discharge to skilled nursing facilities and rehab and the associated cost. With that, it'll be increasingly difficult to see why you wouldn't want to have it done that way.

Robert Hopkins

Okay. Last question from me, and I wanted to talk a little bit about sports medicine and your opportunity in sports medicine? Can you just give us a little bit of a crash course on where you are today in terms of revenue based in market share and your thoughts on, where you think you can take that business and how that fits into the whole ambulatory surgery center strategy up?

Glenn Boehnlein

Sure. The first thing I would say is it's about a $5 billion global market and today we have about $400 million -- a little less than $400 million in global share in sports medicine, so, tremendous upside for our business. Of course, the majority of those procedures about 75% today and climbing take place in the ambulatory surgery center as you noted, so sports medicine from an orthopedics perspective is the cornerstone of the ambulatory surgery center. So, today we have lower share less than 10% share overall in sports medicine, but our portfolio due to investment in M&A, and very innovative R&D teams is getting stronger really by the day and we're launching some new products right now, that will strengthen them even further. Then you couple in the transition, the orthopedic total joint to the AFC, you tie those together and all the product categories that we serve around the total joint, it really strengthens our position in both in the AFC, so it just generally makes Stryker stronger in sports and in totals.

We do have a large emphasis, as noted, and you've seen over the years, whether it was with pivot or IV sports medicine and several other smaller acquisitions that we've done in M&A and sports and we're sort of always on the lookout. Many of those players are smaller niche players that are developing unique techniques to enhance outcomes for patients and we're on that, we have a highly competent team and a great leader and that business. Matt Mauro who leads our sports medicine business has been in the sports medicine business for about 20 years, and really is well-connected and understanding of the sports space from a clinical perspective is maybe anyone in the industry, I'm sure Ryan hold that sports, North Rex [ph] will probably take exception of that, but where we feel very good about sports, we feel very good about our investment in R&D, our focus in M&A, the transition to the ASC playing well into our hands, and it should be a great player of our future.

Robert Hopkins

Thank you very much for being here. It's always time for it. Thank you very much.

Katherine Owen

Thank you.

Glenn Boehnlein

Thank you.