Glenn Boehnlein: Yes, Larry, I think, first of all, we’re not backing off of our sprint to 2019 op margin at all. And we have clearly had a plan to get there by the end of 2025. As I said at Analyst Day, we have good opportunities in operating expenses and in gross margin. I think if you look at our delivery in 2023, we got about 80 basis points out of gross margin and we invested in some operating expenses that we had indicated would get back to sort of normalized spend. So my thoughts on 2024 is that expansion will generally be led by operating expenses, but there continues to be really good opportunities in gross margins that we continue to work on. And if you think about some of these things, price isn’t going away from us.
We’re still going to continue to work on that. Viju elaborated on the benefit we have of low-cost manufacturing sites, and we’ll continue to see expansion there. We have opportunities in purchasing and procurement, supplier consolidation. On the OpEx side, we’ll continue to expand into shared services in some of these low-cost areas where we have those. And then honestly, from OpEx, we have a lot of natural leverage. It just comes when you’re growing at the rate that we’re growing.
Operator: Our next question will come from Ryan Zimmerman with BTIG. Your line is now open. Please go ahead.
Ryan Zimmerman: Yes, thanks for taking the question. So I want to ask about orthopedics. It’s just been stellar performance. And we’ve heard from you and one of your peers. And Kevin, I just would appreciate if you can kind of characterize the confidence that this continues to persist for 2024. And how are you improving or what are you doing to improve potentially productivity on the Mako unit to capture demand that’s continuing to be so strong?
Kevin Lobo: Yes. Thanks. We’re delighted with the progress that we’ve made. 60% of U.S. Knees being done on the robot is pretty remarkable given how long ago we launched the Total Knee application and SNFs starting to really climb since we launched the 4.0 software has been terrific. Cementless continues to climb as well. And that tends to index much higher with the use of Mako. And as you know, we are clearly the leader in not just in robotic-assisted surgery, but clearly the leader in Cementless as well. So a lot of good things going on with a market that is obviously a little better than it has been historically. But Mako continues to be the engine of growth, and that’s true in the hospital. That’s true in the ASPs as well.
And we’re seeing continued growth in the ASP, where our Stryker offense is really winning at a pretty spectacular rates as it relates to new builds and big renovations. So we have a lot of momentum across all of those dimensions, which translates to terrific performance as you saw with hips and knees. But the other part of our story is trauma extremities. So the right medical acquisition has been a complete home run of a deal. And you’re seeing that not only has it been great for our extremities business, but it enabled us to focus a lot more on our core trauma business. And we really had all of our businesses in trauma extremities humming as we exited the year. And some great product launches towards the end of the year and some more to come in 2024.
Ryan Zimmerman: Okay. And then maybe turning to medical because it is now, I think the biggest unit inside the company and the comps are increasingly tougher in the first half of this year. It’s been exemplary growth through late 2022, and then in the first half 2023, inside of that, you talked about Vocera continuing to be a double-digit grower, but if you can level set us on the entire portfolio, how you think about the ability of that business to continue to be accretive to overall growth and maybe what the appropriate expectations are around the medical segment given how much is in that segment.
Kevin Lobo: Yes. Look, we love our medical business. And frankly, it’s become a big and very fast growing business. We continue to expect it to grow above Stryker’s average growth rate. That is going to be true for the next five years. From quarter-to-quarter, it does bounce around a little bit because, of course, there’s capital, a lot of large capital within medical. But you also have increasingly more stable revenue with Sage, which is doing spectacularly well. Then you’ve got, obviously, the AED demand, which has exploded. And we have a terrific AED business, tremendous innovation, we launched the Xpedition stair chair in the early part of the year, the first powered stair chair, which the firehouses absolutely love.
And then you’ve got a lot of new demand for the wireless connection, wireless stretchers. So just tremendous innovation, tremendous leadership position, and now a much more diverse set of businesses than we had historically. So I think medical is the business. And Stryker that’s the most underestimated because AEDs are high growth, our powered cots are high growth, and now our bed business is doing really well behind ProCuity. And then you have Vocera in addition to that. So really, I would expect high growth from all of those different businesses. Sage, Vocera, beds, stretchers, AEDs because of innovation that we’re constantly innovating. And we have a couple of big launches in medical coming this year as well. So it’s an exciting time to be at medical.
And we also have an outstanding leadership team. They’ve really focused on talent for years and years and years. And so I’m very bullish on medical. And I think again, whatever people have in their models, we’ve tended to beat medical and people back for the last six years.
Operator: Our next question will come from Joanne Wuensch with Citi. Your line is now open. Please go ahead.
Joanne Wuensch: Good evening, and thank you for taking the questions and very nice end to the year. I’m curious about where you are in your super cycle, and not to use sports analogy, but are you halfway through halftime or you have a couple more innings to go? I know I’m mixing. My metaphors there and also sort of similarly AAOS, what should we be expecting for that? Thank you.
Kevin Lobo: Yes. I’ll take the first part and then Jason can talk about AAOS. Look, that, that I would say that our pipeline of innovation is incredibly strong. When I mentioned the term super cycle, that really was referring to, let’s call them big platform launches. But the reality is we’re driving tremendous growth even in some of the divisions that don’t have big platform growth launches, if you think about upper extremities, if you think about foot and ankle, but I would say the big ones coming up, we have this Pangea launch within our core trauma business, which is a big platform launch.
