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Stryker Corp (NYSE:SYK)
Q2 2021 Earnings Call
Jul 27, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Second Quarter 2021 Stryker earnings call. My name is May, and I will be your operator for today's call. [Operator Instructions] Before we begin, I would like to remind you that the discussions during this conference call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to Stryker's current report on Form 8-K filed today with the SEC.

I will now turn the call over to Mr. Kevin Lobo, Chairman and Chief Executive Officer. You may proceed, sir.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Welcome to Stryker's second quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO; and Preston Wells, Vice President of Investor Relations. For today's call, I will provide opening comments, followed by Preston with an update on the Wright Medical integration. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A. Please note that our press release contains our results versus both 2020 and 2019. For this call, our commentary will be based on our performance versus 2019, which we believe provides a more relevant point of comparison. For the quarter, we posted organic sales growth of 9.3%, reflecting growth versus 2019 for all our major businesses.

This strong result was driven by standout performances from Neurovascular, Mako, emergency care, sports medicine and our U.S. shoulder and total ankle products. Each of these posted very strong double-digit growth. International organic growth outpaced the U.S. at 14.2% despite COVID challenges in some countries. We posted double-digit growth in most regions, including excellent results in South Pacific, China, Canada, South Korea and many countries in Western Europe. We were also pleased to see the continued rebound in elective procedures as both hips and knees saw quarter-over-quarter sequential improvement and both returned to growth.

Also, now that we have a fuller appreciation of Wright Medical, we are delighted to have it within the Stryker family. With our first half organic growth of 7.1%, combined with continued recovery of electric procedures, a strong order book across our capital businesses and new product innovations, we have increased confidence in the full year outlook. This is reflected in our upward narrowing of organic sales guidance to 9% to 10% compared to 2019. Our sales performance carried through the rest of our results with strong margin performance and adjusted EPS growth and cash flow conversion of over 100% in the quarter.

Through the remainder of the year, we do expect a disciplined increase in spending to support our future growth expectations. Our bullish sales outlook, combined with ongoing execution on margins and continued progress on Wright Medical integration has resulted in a raised full year adjusted earnings per share guidance of $9.25 to $9.40 a share. I continue to be impressed with the resiliency of our people and culture, which positions us well for a successful 2021 and beyond.

I will now turn the call over to Preston.

Preston Wells -- Investor Relations

Thanks, Kevin. My comments today will focus on the second quarter performance of our combined Trauma and Extremities business, including an update on the ongoing integration of Wright Medical. During the quarter, our combined worldwide Trauma and Extremities business, including Wright Medical had a strong performance, growing 7% compared to 2019. The performance in the quarter was driven by double-digit growth in our U.S. Trauma and Upper Extremities businesses. U.S. businesses were benefited by the recovery from COVID-related restrictions, which continues to outpace the rest of the world as well as the ongoing execution of the U.S. selling integration.

The Trauma business unit was positively impacted by the reopening of economies and the continued strong performance of key products, including T2 Alpha, and the mini-frag plating system. Our U.S. upper extremities business, which remains number one in shoulder arthroplasty, grew strong double digits in the quarter behind continued strength within reverse ARPA plastic portfolio with Perform reverse and revision driving the growth. The upper extremities performance in the quarter was enhanced by the continued adoption of our BLUEPRINT planning software with approximately 50% of total shoulder cases completed using BLUEPRINT. As a result of the strong performance of our Trauma and Extremities business, which grew approximately 5% in the first half of the year, we are confident in the combined business to grow at least 6% for the full year when compared to 2019.

We are now about nine months into the integration of Wright Medical and we remain very pleased with the progress and efficiency at which the team is moving through the integration. The U.S. integration is pacing ahead of our expectations and cross-selling has begun in a limited capacity. We expect to continue to execute on our cross-selling priorities during the second half of the year as we work to fortify the supply chain and processes to support cross-selling activities.

Outside the U.S., the teams have successfully executed integration plans in several key markets, including the U.K., Germany, France, Japan and China with further countries to follow into 2022. In addition to the commercial activities, we are also executing on the integration of other operational areas, including the consolidation of distribution and sales offices, harmonization of key operational processes and executing on our manufacturing site strategy. Within R&D, the team also continues to make progress on aligning the long-term portfolio, pipeline strategies and harmonized design processes. While the team has moved through the integration, they have also remained focused on executing the critical existing projects in the pipeline. This includes the recent launch of the new Tornier Perform humeral system, which offers clinical solutions for the simplest and most complex arthroplasty procedures and delivers on our mission to make healthcare better for surgeons and the patients they serve.

With that, I will now turn the call over to Glenn.

Glenn S. Boehnlein -- Vice President, Chief Financial Officer

Thanks, Preston. Today, I will focus my comments on our second quarter financial results and the related drivers. Our detailed financial results have been provided in today's press release. As a reminder, we are providing our comments in comparison to 2019 as it is a more normal baseline given the variability throughout 2020. Our organic sales growth was 9.3% in the quarter. The second quarter included the same number of selling days as Q2 2019 and Q2 2020. Compared to 2019, pricing in the quarter was unfavorable, 0.6% versus Q2 2020, pricing was 5% unfavorable. Foreign currency had a favorable 1.5% impact on sales. During the quarter, we saw a recovery ramp of elective procedures and accelerated sales momentum as the impact of the COVID-19 pandemic has eased in most geographies.

However, the recovery ramp of elective procedures continues to be variable by region and geography and has a more pronounced impact on our orthopedic and spine implant businesses. For the quarter, U.S. organic sales increased by 7.5%, reflecting the recovery of our procedural business and continued strong demand for Mako, medical products and neurovascular products. During the quarter, we had strong sequential improvement in all our U.S. businesses. International organic sales showed strong growth of 14.2%. Our adjusted quarterly EPS of $2.25 increased 13.6% from 2019, reflecting sales growth and operating margin expansion, partially offset by higher interest charges resulting from the Wright Medical acquisition and a somewhat higher quarterly effective tax rate. Our second quarter EPS was positively impacted from foreign currency by $0.04. Now I will provide some highlights around our segment performance. Orthopaedics had constant currency sales growth of 26% and an organic sales growth of 6.7%, including an organic growth of 8% in the U.S. This reflects a ramp-up in elective procedures, especially in knees and trauma and extremities.

Our knees business grew 7.5% in the U.S., reflecting the strong bounce back as the COVID-related restrictions were lifted. Other Orthopaedics grew 26.5% in the U.S., primarily reflecting strong demand for our Mako robotic platform, partially offset by declines in bone cement. Internationally, Orthopaedics grew 4% organically, which reflects sequential improvement as the COVID-19 impacts have started to ease in Europe, strong momentum in Mako internationally and strong performances in Australia. For the quarter, our Trauma and Extremities business, which includes Wright Medical, delivered 7% growth on a comparable basis. In the U.S., comparable growth was 12.5%, and which included double-digit growth in our Upper Extremities and Trauma businesses. In the quarter, MedSurg had constant currency and organic sales growth of 8.3%, which included 6.4% growth in the U.S. Instruments had a U.S. organic sales growth of 0.9%, primarily related to growth in smoke evacuation, lighted instruments and skin closure products partially offset by slower growth in power tools.

As a reminder, during the second quarter of 2019, Instruments had a very strong growth of approximately 19%. Endoscopy had U.S. organic sales growth of 6%, reflecting strong performances in our Sports Medicine, general surgery and video products. The Medical division had U.S. organic growth of 13.4%, reflecting continued double-digit performance in our emergency care business. Internationally, MedSurg had organic sales growth of 15.9% and reflecting strong growth in the Endoscopy, Instruments and Medical businesses across Europe, Canada and Australia. Neurotechnology and Spine had organic growth of 15.5%. This growth reflects double-digit performances in all four of our Neurotech businesses: CMF, Neurovascular, Neurosurgical and ENT. It also reflects very strong growth in our neurovascular business of approximately 30%.

Our U.S. Neurotech business posted an organic growth of 17.3% and highlighted by strong product growth in Sonopet IQ, bipolar forceps, max space, cryotherapy and nasal implants. Additionally, our U.S. Neurovascular business had significant growth in all categories of our products, including hemorrhagic, flow diversion and ischemic. Internationally, Neurotechnology and Spine had organic growth of 28.8%. This performance was driven by strong demand in China and other emerging markets as well as Europe and Australia. Now I will focus on operating highlights in the second quarter. Our adjusted gross margin of 66% was a favorable approximately 15 basis points from second quarter 2019 compared to the second quarter in 2019, gross margin was primarily impacted by business mix and acquisitions, primarily offset by price.

Adjusted R&D spending was 6.6% of sales, reflecting our continued focus on innovation. Our adjusted SG&A was 33.4% of sales, which was slightly better than the second quarter of 2019. The reflects our continued cost discipline and fixed cost leverage, offset by the impact of the Wright Medical acquisition. In summary, for the quarter, our adjusted operating margin was 25.9% of sales, which is five basis points improvement over the second quarter of 2019. This performance primarily resulted from our positive sales momentum combined with the disciplined ramp-up in costs offset by the dilutive impact of acquisitions. Based on our positive momentum, we continue to reiterate our op margin guidance for the year of 30 to 50 basis points improvement over 2019, excluding the impact of Wright Medical. Related to other income and expense, as compared to the second quarter in 2019, we saw a decline in investment income earned on deposits and an increase in interest expense resulting from the additional debt outstanding for the funding of the Wright Medical acquisition. Our second quarter had an adjusted effective tax rate of 17% and was impacted by our mix of U.S. non-U.S. income and some adverse discrete tax items included in our provision to return adjustments.

Our year-to-date effective tax rate is 15.2%. For the full year, we expect an adjusted effective tax rate of 15% to 15.5% with some variability in the remaining quarters, including a slightly lower rate in the third quarter and a more normalized rate in the fourth quarter. Focusing on the balance sheet, we ended the first quarter with $2.3 billion of cash and marketable securities and total debt of $12.7 billion. During the quarter, we fully repaid the $400 million of term loan debt related to the borrowings incurred for the acquisition of Wright Medical. Year-to-date, we have paid down $1.15 billion of debt. Turning to cash flow. Our year-to-date cash from operations was approximately $1.3 billion. This performance reflects the results of earnings and continued focus on working capital management. And now I will provide a summary of our revised guidance. Based on our performance in sales ramp in the second quarter as well as our capital orders pipeline, we expect 2021 organic net sales growth to be in the range of 9% to 10%.

As it relates to sales expectations for Wright Medical, we now expect comparable growth for Trauma and Extremities to be at least 6% for the full year when compared to the combined results for 2019. If foreign currency exchange rates hold near current levels, we expect net sales in the full year will be positively impacted by approximately 1%. Consistent with the upper range of our previous guidance, net earnings per diluted share will be positively impacted by foreign exchange by approximately $0.10 in the full year, and this is included in our revised guidance range. Based on our performance in the first six months and including consideration of our improved full year Wright Medical performance impact, controlled spend ramp to facilitate growth and continued positive recovery outlook, we now expect adjusted net earnings per diluted share to be in the range of $9.25 to $9.40.

And now we will open up the call up for Q&A.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Bob Hopkins of Bank of America. Your line is open.

Robert Adam Hopkins -- BofA Securities -- Analyst

Well thanks and good afternoon.Congrats on such strong performance across the entire business. I think you've beat on essentially every metric. So I just have two questions and I'll state them upfront in the interest of time. The first question, Kevin, is for you. I'm just wondering how you kind of frame your thoughts on the outlook for your Hip and Knee business in the back half, given the rise in COVID cases that we're seeing? That's question number one. And then I would love you to comment also as question number two, on the acceleration in neurovascular. Maybe just give a little more color. I mean, was that market share you think? Was that -- was the strength in ischemic and hemorrhagic? Just kind of looking for a little more color on the acceleration there.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Sure. Thank you, Bob. First, on the hip and knee, what we're seeing is really a gradual increase. We've seen it throughout the year of a return of elective procedures. These are deferrable procedures that need to be done at some point. And yes, with the Delta variant, you're starting to see pockets of disruption. But overall, the hospitals are very capable of being able to deal with this. And we're seeing in markets like Latin America and other markets, the situation is actually improving. So overall, we know there's going to be some disruption. That is baked into our guidance, but we believe, with the momentum that we have across not only our implant business, but as well as our capital businesses, we feel pretty confident enough to raise the bottom end of our full year sales guidance.

As it relates to Neurovascular, if you look at that business, we had an outstanding first quarter, it was around 27%. So this is 30%. So it's not really a huge acceleration. I would say we really have a great product cycle going on right now across flow-diverting stents, ischemic stroke, our hemorrhagic coils, our aspiration catheters. So we really have the bases covered, and we're having fantastic growth really globally, including terrific performances in Asia Pacific. So I do expect that we'll continue to have very strong performance throughout the rest of this year.

Robert Adam Hopkins -- BofA Securities -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Robbie Marcus of JPMorgan. Your line is open.

Robert Justin Marcus -- JPMorgan Chase -- Analyst

And I'll also have my congrats on a really impressive quarter here. Maybe two questions for me. One to start off, we saw nice performance down the MedSurg business and throughout Medical. There's a lot of new product launches going on here. So I'd just love to get a sense of what the key drivers are, how the ProCuity bed launch is going. And what you're seeing in terms of the capital equipment health of the market out there?

Preston Wells -- Investor Relations

Hey, Rob, it's Preston. Just in terms of capital overall, I mean, we continue to see a pretty stable capital environment. I think we've seen that really through the first couple of quarters and really evidenced by the continued strong sales in Medical, as you said, and also, of course, with our Mako technology. As it pertains specifically to Medical, so obviously, we have the ProCuity Bed, which I'll talk about in just a second, but we also have really strong performances out of our emergency care business. We've seen that in the last couple of quarters as well. And so that continues to be very strong. And there's just been an uptick there really in the U.S. and outside the U.S. With regards to ProCuity itself, the team is very pleased with how that launch has gone and started. We've really gotten a lot of awareness out there. We certainly have a lot of engagement from our customers. And we're starting to see a building momentum in orders and sales in the U.S. and then starting to kick off that launch outside the U.S. as well. So we really expect that ProCuity is going to continue to be a driver for medical really for the remainder of this year and as we go into next.

Robert Justin Marcus -- JPMorgan Chase -- Analyst

Great. And maybe for Glenn or Kevin, whoever wants to take it. I know you guys don't guide quarterly, but one of the concerns we've heard from investors over the quarter is that we're still in an environment without normal seasonality and concerns around maybe excessive weakness in third quarter from people coming out of lockdowns, vacations with doctors, etc. So I was wondering how you're thinking about the progression from second to third and third to fourth quarter? And if we're already back to normal seasonality or when we might be able to expect that?

Glenn S. Boehnlein -- Vice President, Chief Financial Officer

Yes. Thanks for the question. Rob, as you know, Q3 tends to be seasonally our softest quarter. But I would assume that this year's seasonality will be very similar to what you've seen in prior years. And the talk about vacation. I've heard some of those comments. I really think that's the noise and that really -- that could delay maybe a procedure from one month to another month, but likely within the same quarter. So I expect normal seasonality as you've seen in prior years.

Robert Justin Marcus -- JPMorgan Chase -- Analyst

Great. Appreciate it Kevin. Thank you.

Operator

Your next question comes from the line of Chris Pasquale of Guggenheim. Your line is open.

Christopher Thomas Pasquale -- Guggenheim Securities -- Analyst

The update on Wright was encouraging. It certainly sounds like the upper extremities piece continues to do very well. Can you talk a little bit about what you're seeing in lower extremities. That was probably the more challenging piece to integrate. Curious how that business did versus 2019?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Thank you, Robbie. So first of all -- sorry, Chris. Thank you, Chris. First of all, I would say that the total ankle business did very well in the second quarter. As you know, the rest of foot and ankle is much more discretionary. The podiatric volumes are coming back. So it was certainly a better quarter in Q2 than Q1, but it is lagging a little bit just like we're seeing with spine and with hips and knees. It is a bit more elective, those foot and ankle procedures. But I'm very pleased with the stability of our sales force, the leadership that we put in place. And as elective procedures comes back, we do expect that will continue to grow. It was a marked improvement. We're not seeing the kind of disruption we saw early on with K2M through that integration. So very bullish on Wright overall. And as I mentioned in my opening remarks, delighted to have this company within our portfolio. I think I have a deeper appreciation. We knew it was a good company when we acquired it. And frankly, I think it's even better than we thought.

Christopher Thomas Pasquale -- Guggenheim Securities -- Analyst

That's helpful. And then the color on Mako continues to sound very bullish. But the other ortho business probably didn't improve sequentially as much as the other pieces of the business. Can you help us sort of size the bone cement headwinds there? And then maybe give us a sense for what the Mako capital contribution look like?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. So I mean, as you mentioned, Mako continues to be very strong. And so we -- that was one of the businesses for sure over the last 12 months, really, we've seen continued strength. So that's why you won't see necessarily that same sequential improvement that we're seeing on some of the other businesses. With regards to bone cement, of course, that's an area that has been declining. It was certainly impacted by the pandemic and so will be a detractor as we think about that overall category. We don't really provide a breakout of those. But just thinking about it in terms of Mako continuing to grow and offset by some declines from a bone cement standpoint.

Christopher Thomas Pasquale -- Guggenheim Securities -- Analyst

Thanks.

Operator

Your next question comes from the line of Anthony Petrone of Jefferies. Your line is open.

Anthony Charles Petrone -- Jefferies LLC -- Analyst

Thanks. I'll also add another great congratulations on a great quarter. The first one for me would be on deferred backlog procedures. Some of your competitors as recently, even as this quarter -- are sort of putting numbers against that. And I'm sort of wondering if there's a number internally at Stryker that you could share on specific to the hip and knee business, what amount of deferred backlog is still out there? And how long do you think that will be a driver for the business? And the second one, I'll put up there as well on Wright. You mentioned, Kevin, second half cross-synergy selling potential into the second half and would assume that extends into next year? Just sort of trying to quantify that. Is that a couple of hundred basis points and is that net of dissynergies?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. So first, with regards to your question on the deferred backlog, we don't have a specific number. I mean there's a lot of variables that are going into trying to figure out what that is. What we do know is certainly over the last year that we haven't had the same level of procedures that we would have expected to as a result of the pandemic. And so super hard to predict exactly which percentages of patients that are back are from that deferred backlog or that are new patients.

What we do know is that surgeons are continuing to try to work through as many patients as possible, finding different opportunities to add capacity into the scheduling or into their opportunity to perform those procedures. And so we don't expect that we're going to see any sort of outsized growth figures that happen in any one particular quarter or month. But that's something that we expect that we're going to be working through this backlog over the next several quarters. So we expect it to be a tailwind for us really over the next several quarters and into 2022 for sure. When you think about -- thinking about your other question with regards to Wright Medical, the cross-selling component is something that as I mentioned, is -- we're pleased with the start of that. It's early in the process. We're expecting that, as you mentioned, to continue for the rest of this year and into next year. We haven't provided a specific size of that opportunity, but it's baked within the overall guidance that we've provided for the overall combined Trauma and Extremities business, which, as I mentioned, we expect to grow at least 6% compared to 2019. That also does include the dyssynergy component as well.

Anthony Charles Petrone -- Jefferies LLC -- Analyst

Okay. Thanks.

Operator

Your next question comes from the line of Vijay Kumar of Evercore ISI. Your line is open.

Vijay Muniyappa Kumar -- Evercore ISI Institutional -- Analyst

Two from my side. Kevin, maybe on Mako, is there a thesis to be made around utilization on robotic systems as having changed? How's that environmental ground utilization and how these systems are being used post pandemic? Has that changed at all? And have you seen an increase in that utilization?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Thanks, Vijay. No, we have not seen really any change in utilization post pandemic. The gating factor really is being able to do the procedures and having the flow of the patients related to just the overall hospital operations. But so far, we haven't seen any change. We are seeing a lot more demand for Mako in the ambulatory surgery centers. As you know, a lot of volume is starting to shift toward surgery centers. And for us, it's been a real tailwind. Our ASC offense is performing extremely well. And so there are a larger percentage of our Makos that are going into surgery centers. But that's been the only dynamic we've seen change. No real change to the procedure utilization.

Vijay Muniyappa Kumar -- Evercore ISI Institutional -- Analyst

That's helpful, Kevin. And maybe one for Glenn. On gross margins here, I know you have price here in 2Q. But even adjusted for mix here, I mean, it looks like your gross margins have held up much better versus your peers who have been calling out shipping cost, manufacturing variances. And it's also kind of reflected in this guidance here, margins for back half where the annual operating margins were above 2019 levels, which doesn't seem to be the case with your peers. Is there anything that's different about Stryker? Have you guys managed the P&L better? Or I'm curious on what's driving the better margin performance versus your peers?

Glenn S. Boehnlein -- Vice President, Chief Financial Officer

Yes, I can't necessarily speak to our peers per se, but I will say your question is maybe music to the ears of our GQO group, and they have put a lot of focus in driving improved margins and also driving really good fixed cost leverage. And we will start to see that show up in our gross margins. We're still not guiding on gross margins. So I will say we'll see that benefit, but we will also see the benefit of mix come through, which right now Wright Medical is a little bit of that influence that we're seeing on the margins. Offsetting those will be price, which typically is going to be the biggest thing. We'll still see that in the minus 1% range for the full year. And we fully expect that, that pricing impact will be roughly offset by a lot of that positivity that we are seeing and also the mix factor related to Wright Medical.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, I'd just like to add one comment. I'd just like to add one comment. So as you probably are hearing across not just med tech industry, but broadly, there is pressure on raw material input costs. And I'm delighted with the way that our organization has been able to offset those with a lot of other savings initiatives, efficiency initiatives and purchasing initiatives, which has been kind of in the works for the last couple of years, but we've really built tremendous capabilities now, something I haven't been able to speak about, frankly, in prior years. But we really have the organization humming right now. And so we are able to offset some of the challenges that others are experiencing, and we're also experiencing in the electronics and some certain components and feel really good about our supply chain resiliency.

Vijay Muniyappa Kumar -- Evercore ISI Institutional -- Analyst

Yes, that's clearly showing up in the numbers here, Kevin versus your peers. Congrats.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Matt Miksic of Credit Suisse. Your line is open.

Matthew Stephan Miksic -- Credit Suisse -- Analyst

Great. So one follow-up on robots, and I just had one question on just the sort of trends and mix that you're seeing in the U.S. news in particular. On Mako, obviously, congrats on all the great results and momentum, up sequentially off a very strong Q1. But I was wondering if you could talk a little bit maybe about the color on any change in mix of placements versus sales? Or in particular, if you're starting to see any sort of cross effects between Upper Extremities and the robot as these two business lines kind of move toward convergence in that new application, whenever that comes 12, 24 months from now? And I have one quick follow-up.

Preston Wells -- Investor Relations

Matt, it's Preston. Just in terms of robots and mix, I mean, one of the things that we identified approximately a year ago was that we were starting to see a bit of a trend toward financing. We haven't seen any significant changes in that approach or in that mix for the last year. So no big changes from a mix standpoint as we think about Mako and how we're selling Mako in the market. With regards to convergence, again, we're still not seeing anything there. We've talked a lot about our excitement of a potential with Mako and shoulder, but nothing new to report in that area at this point.

Matthew Stephan Miksic -- Credit Suisse -- Analyst

Okay. And then just on the Knee business, one of the things one of your competitors talked about was sort of a heavier mix in primaries versus revisions, I guess, given that revisions were a bit more of an acute emergent -- they are a more emergent procedure. So more of those during the pandemic maybe than primaries in some areas. Wondering if you're seeing something like that or any demographic mix shifts just because of what we've been through and the types of patients maybe that were going to need it six to nine months ago versus those that are coming through now? Any color would be great.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, Matt, nothing specific to report in that area. I mean the one thing that we have seen throughout the pandemic is variability. And so certainly, by geography, by area, you're getting a lot of variability. So again, nothing that I would specifically point you to in terms of our mix.

Matthew Stephan Miksic -- Credit Suisse -- Analyst

Great. Thanks so much.

Operator

Your next question comes from the line of Joanne Wuensch of Citi. Your line is open.

Joanne Karen Wuensch -- Citigroup Inc -- Analyst

I have two, really. We've talked for years about the movement toward the ASC. Are you seeing that accelerate or the same? Or is there any color that you can put around that?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Joanne, I mean, we've talked about this before. We certainly -- the pandemic did create an acceleration of a trend that was already starting with regard to the shift to the ASC. And we would expect that to continue. We feel very strong about our offense and very good about our offense that we have with regard to the ASC and really being able to bring and leverage the full power of our product portfolio in that setting. So we're very comfortable with that shift and certainly believe that we have the products to satisfy that shift and really be able to take advantage of that trend.

Joanne Karen Wuensch -- Citigroup Inc -- Analyst

But when you say you have the product for that ship, it's not just a robot, but it's -- I would assume that you're building out the whole ASC suite. Is that the right way to think about it?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, Joanne. The right way to think about it is we have virtually everything they need for an orthopedic surgery center, from building out the suites with the booms and the lights and the room design, to the operating table, to the beds and stretchers that are required, to the power tools and the flight helmets that they wear, all the implants, from foot and ankle procedures all the way to shoulder, including hips and knees, sports medicine procedures. Just think about our portfolio, it absolutely covers the gamut of what they need in those surgery centers. So that really makes life easy for an operator in ASC to be able to contract with one company to cover such a huge portion of the procedures that are being done. So our portfolio really lines up beautifully for that. We also -- you may have read recently that we have this deal with Conformis that we worked on a couple of years ago. We have started and launched our first few cases of a very, very simplified streamlined offering that provides less sterilization. We call it kind of a knee in a box. The official name of it is Triathlon AS-i with personalized cutting guides for the procedure. And so that was designed specifically for the ASC, and that's now launched. But frankly, a few years ago, we didn't realize that Mako would be this popular in the surgery center as it's proving to be. So we now have both that we can offer because some surgery centers won't have a robot. But yes, it involves a huge portion of our portfolio across some of our MedSurg products as well as our implant businesses.

Joanne Karen Wuensch -- Citigroup Inc -- Analyst

That's helpful. And then my second question has to do with M&A. In October, you're rounding the two year mark of the announcement of Wright Medical. Does that change your thinking and timing or tempo?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, Joanne, you're right. It is rounding the two year mark on Wright Medical. However, we're only nine months into sort of the cash flow impact of buying Wright Medical. And so, as we announced at the time of the acquisition, we were going to focus on debt reduction and sort of tuck-in kind of M&A -- And so that really is what we've been doing, and you've seen it over the last nine months, we've paid down just a little over $1 billion of debt this year. We'll continue to look for opportunities to do that as we move forward, but we're ahead of the schedule that we thought we'd be on for debt pay down. So that's good. And then honestly, our BD teams are working and looking at smaller tuck-in M&A deals which we think actually provide the most sort of shorter-term growth upside. And so we're excited as they bring us new deals to look at sort of in that kind of size and category.

Joanne Karen Wuensch -- Citigroup Inc -- Analyst

Thank you.

Operator

Your next question comes from the line of Larry Biegelsen of Wells Fargo. Your line is open.

Lawrence H. Biegelsen -- Wells Fargo Securities -- Analyst

Two robotic questions for me. First on Mako. I'd love to hear about the OUS rollout, new geographies, how that's going, places like Japan, I think you're waiting for China. Hopefully, I don't have those two backwards. And just color on the mix, U.S., OUS of Mako placements and I had one follow-up.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Thanks, Larry. We -- our OUS business has picked up. As you saw in the pandemic, the U.S. business continued very strong on Mako, but our OUS business did slow down. That's ramping back up again. We are fully operational with both Japan and China on all three applications, same with Brazil as well as Russia. And so Japan is really starting to accelerate, which we're quite excited about. China has started. We still have -- it's a little bit behind Japan. Brazil, we now have our first few sales in Brazil. So that's probably one of the later ones and Russia as well. So we're in the early stages in those four markets. The demand is very high from surgeons, which is exciting. Brazil was a delayed a little bit by COVID, but we are starting to build momentum there as well. So it's very exciting. The surgeons, it's kind of taking us back to when we launched Mako Total Knee here in the United States. There's high demand for it, and you should expect strong performances in the quarters ahead.

Lawrence H. Biegelsen -- Wells Fargo Securities -- Analyst

That's helpful. And for my related robotic question, Kevin, you guys have started talking more publicly about evaluating -- having people at Stryker evaluating surgical robotics. So my question is, how important is it for Stryker to participate in this market at some point? And how do you want investors to think about the kind of investment that it might take to be competitive in that market?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Okay. Thanks, Lawrence. I assume by that question, you're talking about general surgery robotics.

Lawrence H. Biegelsen -- Wells Fargo Securities -- Analyst

Yes. Sorry about that.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, no problem. I just want to make sure that was clear. I would say there's really no need for us to be in general surgery robotics. As you can see, we're running a very good business at Stryker. It is a big market that has big growth potential. -- but it's something that, like other adjacencies that are attractive to us, be it areas I've spoken about in the past, like neuromodulation or peripheral vascular. This is an attractive adjacency. The pathway forward is not obvious and not clear at this time, but something we'll continue to look at. But it's not something we have to be in -- But if the right opportunity presents itself, and we think we can build a strong business, we'll certainly make a move, but not obvious at this point.

Lawrence H. Biegelsen -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Your next question comes from the line of Pito Chickering of Deutsche Bank. Your line is open.

Philip Chickering -- Deutsche Bank AG -- Analyst

The first one, as I look at the guidance you provided, can you give us color on where gross margins and SG&A should be exiting the year as we compare it versus the fourth quarter 2019?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Sure. I won't speak specifically the guidance on gross margin and necessarily SG&A. I guess what I can tell you is that as we look at gross margin, we probably would plan on more orthopedic business, maybe impacting that gross margin, but that will be dependent on continued ramp in those businesses. On SG&A, we aren't fully ramped in terms of what I would call a normalized spend. And so as we look to continue sort of fueling the growth as we ramp back up, we'll probably see increases in SG&A over the course of this year.

Philip Chickering -- Deutsche Bank AG -- Analyst

Okay. Great. And then I was talking to a lot of hospital systems sort of during the quarter. They talked about a pretty significant move of orthopedics and inpatient to outpatient but not necessarily into the ASC, which obviously get a lot of investor attention. As procedures moved into the outpatient department of hospitals, does that impact certain selections of products at all? Or is there no impact from that move?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. No, we're not seeing any impact on implant choice. If they're moving to the hospital outpatient or even, frankly, to the surgery center, thus far, we're seeing surgeons continue to operate with the same implants -- so regardless of which facility they're operating in.

Philip Chickering -- Deutsche Bank AG -- Analyst

Great. Thanks so much.

Operator

Your next question comes from the line of Kaila Krum of Truist Securities. Your line is open.

Kaila Paige Krum -- Truist Securities, Inc -- Analyst

Great. Hi. Thanks for taking our questions. Just for Wright Medical, you're saying -- you're confident that the combined business will grow at least 6% this year. Can you just speak to any more detail around sort of the recent drivers in this business? Are you guys seeing any benefit from dislocation associated with the recent Integra spin-off? And then I guess is there any reason why that 6% couldn't be an 8% to 10% growth next year?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Thanks, Kaila. What I'd tell you is we're really excited about the upper extremities business. It was growing very, very fast before the acquisition, that's continuing to really sing especially in the United States, and we've just launched a new product, which will provide extra fuel to the fire. And then on the lower extremity side, we knew that the foot and ankle is going to be a tougher integration, but it's going well. They're a little bit more elective of those procedures, but the total ankle is doing extremely well. So overall, the product portfolio is performing well. Our sales forces are integrating well. The U.S. integration is ahead of schedule. OUS is going to take a little longer, and we knew that. These countries take a little longer with the distributor arrangements that we have in place before they fully hit their stride. But if you recall, when we started the year, we said low to mid-single-digit growth on a combined basis. And we sort of moved it up to mid-single, and now we're kind of thinking it's really going to be 6-plus percent for this year. And you should assume if this continues and the elective procedures on the lower extremities ramps up, that we should have a very good year next year. And also, our core Trauma business is actually having a very good year as well. So overall, feeling very good about it. We're not going to give guidance to next year, but I think you can tell by our tone that we're feeling very optimistic about the future of our Trauma and Extremities business.

Kaila Paige Krum -- Truist Securities, Inc -- Analyst

Great. And then I guess just on the spine market, can you just compare or contrast sort of what you've seen in terms of how the recovery has progressed in this category? Maybe compared with some of the other areas of orthopedics?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Kaila, just as we think about spine in comparison to other ortho areas, we haven't seen a significant difference in that recovery. I think I mentioned before, variability really being the key word. And so again, there's just been different pockets of disruption and opportunity as well. And so nothing significant that I would say that we've seen in terms of the recovery for spine that's been different than what we've seen in our other elective areas.

Kaila Paige Krum -- Truist Securities, Inc -- Analyst

Great, thanks.

Operator

Your next question comes from the line of Steven Lichtman of Oppenheimer & Company. Your line is open.

Steven Michael Lichtman -- Oppenheimer & Co -- Analyst

Just wondering, first, how if you talk about your Spine business and how you are feeling about the state of that business. So what's your outlook for the underlying growth? And what are your latest thoughts on timing on robotics into spine?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. So in terms of underlying growth, I mean, we don't break out guidance in terms of as we think about spine. But we do expect that market and that business to continue to accelerate as the recovery happens in the back half of the year. With regards to robotics, I mean we've talked about this before is -- of our key areas of focus for robotics and applications that are next, Spine is one of those. And so we continue to move down that path with a couple of different options, looking at Mako, but also through our Mobius acquisition and the Cardan robots, some opportunities there. We don't have a time line that we are sharing at this point. And so something that we'll continue to update you on as we make progress in that area.

Steven Michael Lichtman -- Oppenheimer & Co -- Analyst

And then just secondly, with OrthoSensor in the full year, when I think about six months. Any updated thoughts on a smart implant coming from that acquisition?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Nothing new to report at this point. I mean, obviously, it's still fairly new in terms of the acquisition into the organization. We still do believe in smart implants and smart devices and that they will have a role to play in orthopedics. And so as we -- as similar as with robotics, as we get further down that pathway, it's something that we will certainly keep you updated on.

Steven Michael Lichtman -- Oppenheimer & Co -- Analyst

Got it. Thanks

Operator

Your next question comes from the line of Mike Matson of Needham. Your line is open.

David -- Needham -- Analyst

This is David on for Mike. The first one just on ASC, just given the different dynamics there, maybe there's more to know about windshield time. Does that ASC market need a separate sales force and strategy? Or do you think you can leverage the current sales network?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. We have a very custom designed approach to selling to the ASCs. It's not something were to elaborate on this call. But I would say it has required a different approach, and we're really excited about the way our offense is working in the market.

David -- Needham -- Analyst

Okay. Great. And then I guess on Mako, I mean, J&J talked about their Velys launch in the U.S. So just expectations over the next, call it, 12 to 18 months?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Well, expectations for us, I would say we expect Mako to continue to do very, very well. As you've seen with other competitive entrants into the market, it only validates that robotics is here to stay in orthopedics. And so we like our chances. We know we have an outstanding solution that delivers great results, which is why hospitals are buying their second and third and fourth Makos. And so we welcome the comparison. It's early days for them. And we just like the fact that robotics is going to continue to grow within orthopedics.

David -- Needham -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Travis Steed of Barclays. Your line is open.

Travis Lee Steed -- Barclays Bank PLC -- Analyst

I realize China is a small part of your business, but just curious what you're seeing on the ground there with the China tenders and the volume-based procurement there. I think that was supposed to happen at some point here in the next few months. I don't know if there was an update on that front.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Travis, thanks for the question. In terms of the VBP in China, it is something that's ongoing. We don't have any major updates at this point as we're waiting on feedback on the process. I think one thing to note and you mentioned this, certainly, China is a smaller part of our business. And then as we focus on the products that are actually potentially under the tenders, it's an even smaller component of our business. So just something to keep in mind as we think about the overall impact that could be coming from VBP on our business. So we expect to hear back something later in the third quarter. And at that point in time, we'll take a look at it. The one thing that we know is just based on the timing, we don't expect it to have any significant impacts on our 2021 numbers. And so we'll continue to monitor and it will be something that we will contemplate as we go into 2022.

Travis Lee Steed -- Barclays Bank PLC -- Analyst

Right. That's helpful. And just wanted to get an update on the Sports Medicine business specifically. I know you had been growing double digits. Just curious if there's any additional color you can add there, both in the U.S. and OUS.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. So certainly, OUS, it's a much smaller business. I would say, within the U.S., the tailwind of the shift to the ASC and our ASC offense is in addition to great cadence of new products has really fueled very strong growth, and we had a 20% growth in the first quarter in the U.S. in our Sports Medicine business.

Travis Lee Steed -- Barclays Bank PLC -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Matthew O'Brien of Piper Sandler.

Matthew Oliver O'Brien -- Piper Sandler -- Analyst

Kevin, you mentioned this at least 6% growth in trauma and extremities, is that the growth of the overall market? Because I know the key part of that has grown faster than the key part. Is that the overall growth in that overall category combined? And then as you think about going forward, typically, that nine to 18-month period is when you start to see the most dislocation from a product in a rep perspective is Trauma and Extremities different than what we see across traditional orthopedic acquisitions just because there's fewer places for some of these reps to go? So maybe the dislocation that you see, could be little less than we typically see?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, I think the way things are playing out right now, the dislocation is less than spine, certainly. That's been our experience. It's been a pleasant surprise so far, especially on the foot and ankle side, where we had anticipated a bit more dislocation. And frankly, we have terrific products, and we've provided really quick stability for our salespeople to know who their boss is, to know what their territory is. And so we moved with more speed this time, learned some lessons from prior integrations. I would tell you that we think we're growing at least at the market if not above the market because you have to remember that at least 6% is for the full year, including a pretty depressed first quarter, right? So the first quarter of this year was not kind of a normal year as it relates to the Extremities business at all. So to have that over the full year, at least 6% on a combined basis, I think that's probably growing above the market. And we'll see as the year progresses, feeling very good about both our core Trauma business and our Extremities business.

Matthew Oliver O'Brien -- Piper Sandler -- Analyst

Got it. And then over to Neurovascular. I know you don't want to call out this acceleration in Q2 versus Q1. And but you're doing much better than the overall market by our calculations anyway. So are there specific areas that are accelerating? I don't know if it's ischemic specifically within that category and that you're really well positioned there. And then just is your ability to bundle just much better than elsewhere? And I guess the real question is, can this business grow upper teens, low 20s for the next couple of years?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Well, it's been growing at that kind of rate for the last few years. And this year, you are seeing an acceleration of growth. And what I would attribute it to is we already have fabulous coils, stent retrievers were already very, very good. but we've strengthened our portfolio with the flow diverting stent, with the Surpass Evolve stent and with the 0.074 Vecta catheter -- aspiration catheter. So that, for us, was a product gap. We didn't have an easy to deploy empty catheter approach for flow diverting stent, and we didn't have a large bore aspiration catheter. So we plugged those, let's call them, product gaps. And we've had fantastic expansion around the world. And really, the Atlas stent in China as an adjunctive stent for hemorrhagic is performing exceptionally well. And this global business is really, really well run. We have an exceptional leadership team over there that have been executing very well. But I would say the acceleration, let's call it, this year's acceleration versus prior years is really driven by this product cycle that really has us covering all of the bases with excellent products that are meeting the needs of our customers.

Matthew Oliver O'Brien -- Piper Sandler -- Analyst

Understood. Thank you.

Operator

Your next question comes from the line of Richard Newitter of SVB Leerink. Your line is open.

Richard S. Newitter -- SVB Leerink LLC -- Analyst

Kevin, you mentioned several times just how impressed you are with Wright Medical now that you've kind of had it under your operating belt for a few quarters now. I'm just curious if the -- other than just the integration going better than planned, is there anything specifically either in the pipeline or embedded in that comment, it just really is surprising you to the upside or making you more excited about the future? You mentioned BLUEPRINT a few times, it's something with BLUEPRINT. Just I'm curious if there's something that you're foreshadowing there? Or is it just a general execution comment?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. So listen, we knew they had a good business, and we knew that their culture was similar to Stryker's, but there's been some pleasant surprises along the way. Their talent,is really excellent. And a lot of times, when we buy companies, we buy them for their products, but then we have to infuse a lot of our management. They're a leader for upper extremities, they're leader for lower extremities, they're leading our businesses, our Head of Knees came from Wright Medical. And so we have an infusion of talent that for me has been a positive surprise. I mean, really outstanding leaders. Their sales leader for upper extremities is outstanding. And so that's been one positive. The second I would say is their key opinion leaders. They absolutely work with fabulous key opinion leaders on both upper and lower extremities. And I would say that they are better key opinion leaders than we had within Stryker. And so those are two really, to me, pleasant surprises. And just the pipelines, we thought they were good. They've turned out to be a little better than we thought, and that really applies across the board. So there are certain things that you know. When you do a public deal, you don't get to do the same amount of due diligence as you do with a private acquisition. And so those instincts -- we had instincts that things were going to be good. They're proving to be even better than we first thought.

Richard S. Newitter -- SVB Leerink LLC -- Analyst

That's helpful color. And maybe just a second question. Conformis and the initiatives that you have there, I appreciate the ASC help that product can potentially offer the solution and the benefits there. Just wondering where else the Conformis solution could go? I'm thinking kind of with an eye toward robotics and digital surgery as well. Should we be thinking about that being more meaningful going forward in other capacities outside of just ASC adoption?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Our primary focus was on the ASC, but there are a lot of hospitals that are concerned about sterilization and sterilization being sort of a constraint and they like less trays, they'd like less instrumentation. They like less space taken up in their stock rooms. So I wouldn't say it's limited to ASCs, but that it really is out of the gates, let's say, for the first six to nine months. That's -- our prime focus is going to be on the ASC because of their constraints on sterilization are the most acute. But I would say that there probably will be interest beyond that. But let's see, that will be more of a next year kind of commentary that I'd be able to give you.

Richard S. Newitter -- SVB Leerink LLC -- Analyst

Thank you.

Operator

Your next call comes from the line of Josh Jennings of Cowen. Your line is open.

Joshua Thomas Jennings -- Cowen and Company -- Analyst

Was hoping to just a follow-up on some of the commentary on the Spine business. And can you maybe just review your outlook on the value proposition, the current robots out in the market? And maybe help us better understand the enabling technologies under Stryker's roof, that don't get a lot of airtime and how you believe Stryker's Spine franchise can be competitive in front of the Mako Spine launch?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Thanks. Listen, we're big believers in enabling technologies. We obviously have that with Mako. We did the Mobius acquisition, and we're very excited about the imaging aspect of that. We do have a gap in spine robotics, and we do believe that the first foray -- the two competitive systems on the market today are really good guidance systems for the placement of pedicle screws. And -- but it's providing value to surgeons, and we definitely want to have something like that on the market, which was what Mobius was working on. And then beyond that, we think with Mako, we could get into other procedures and other applications, but robotics is difficult. So it's going to take time for us to develop those applications, and we'll keep you posted. But we do -- we are big believers in enabling technology, and we're going to continue to invest in that space.

Joshua Thomas Jennings -- Cowen and Company -- Analyst

Maybe one follow-up for you and Glenn. Just as you're moving toward the anniversary of the Wright acquisition and hopefully, we're all moving toward more normalcy in 2022. You've had an LRP operating margin expansion, kind of range of 30 to 50 basis points. And how should investors be thinking about these cost savings programs that have been playing for the last couple of years and the amount of P&L leverage that Stryker can experience in the future?

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Yes, sure. I think first of all, as a baseline, if you think about the normal operating margin that was acquired through Wright Medical, it was significantly less than, say, Stryker's normal operating margin. So if you think what have we worked on during this integration period, it was really pulling Wright Medical up and trying to look for all the synergies that we had built into our model so that we could drive better operating margins at Wright Medical. I think fast forwarding into next year and looking at where that might look on a combined basis, I think we'll get back to our normalized op margin expansion of 30 to 50 basis points. But at this point, that's a little ways away, and we're not really necessarily guiding for 2022.

Operator

Your next call comes from the line of Kyle Rose of Canaccord. Your line is open.

Kyle William Rose -- Canaccord Genuity -- Analyst

So a lot has been asked, but we do have AAOS coming up in a few months here. And I wonder if you could just touch on maybe what some of the focuses that investors will see at the conference. I mean, when I think about what's happened over the course of the last 12 months, you have acquired OrthoSensor, you did touch on a little bit on the knee in a box, an ASP knee opportunity there. And obviously, robotics is getting a lot of attention in the ASPs in the outpatient setting. So maybe just level set us on expectations into the conference.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Listen, we don't have a big reveal at this conference. As you say, we'll talk -- we'll have the Conformis product that we can talk about, Triathlon AS-i we have Mako, which is still going to be talked about quite a bit, especially with the new hip application that's starting to gain some steam but still takes time to get that socialized more broadly. In addition to that, we have a recent approval the InSpace balloon for large rotator cuff repair within our Sports Medicine business, which is a very exciting product and a product used by sports medicine surgeons as well as the surgeons that do shoulder arthroplasty that come from Wright Medical. So that's also an exciting product. So -- and as well as the Perform humoral product that Glenn mentioned earlier on with Wright Medical. So a number of new products, but it's really, frankly, an exciting time to get back with our customers at scale. Not having that conference last year was certainly a gap and really look forward to engaging with our customers once again. And so that's really what we're going to be showing. It's not something brand new that we're going to be unveiling but really more of just continuing the momentum that we already have.

Kyle William Rose -- Canaccord Genuity -- Analyst

Great. And then second question is, I think earlier, you noted that when physicians do move procedures to the outpatient or the ASPs are typically using their standard instrumentation sets or the same implant systems they use in the hospital. Are you seeing any changes in pricing or types of contracting that you're seeing when your ASC team does go out to engage on driving the initiatives there?

Kevin A. Lobo -- Chairman and Chief Executive Officer

No. Thus far, we're not seeing really any change in implant pricing. What we are seeing is -- because of the capital requirement, we are seeing deals that involve multiple businesses of Stryker. We're seeing much more of that than we see in the hospitals. So the deals that we do typically involve four or five different businesses at Stryker, whereas hospitals tend to buy product category by product category, but no real change on pricing.

Operator

Your next call comes from the line of Matt Taylor of UBS. Your line is open.

Matt Taylor -- UBS Investment Bank -- Analyst

All right. Great. This is actually Xuyang Li for Matt. Maybe just one question just on smoke evacuation. You mentioned it for several quarters now. It would be great if you can talk a little bit about the drivers for growth in recent quarters and the sustainability of growth going forward, especially on the other side of hold it.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes, absolutely. So we're very pleased with smoke evacuation and what that business does for us in terms of our ability to grow. As we look at it, we really look at ourselves as market leaders behind our broad portfolio. And it's one of those businesses that actually sits across a couple of different divisions, both within instruments and also within endo -- our endo businesses. In terms of what our expectations are, I mean we're really going to continue to expand as that market continues to expand, both in the U.S. and outside the U.S. really driven by legislation and really the desire around a safer operating room behind smoke-free operating rooms.

Matt Taylor -- UBS Investment Bank -- Analyst

Thank you.

Operator

Your next call comes from the line of Jeff Johnson of Baird. Your line is open.

Jeffrey D. Johnson -- Robert W. Baird -- Analyst

I'll be quick. Just one, Kevin, I'd be interested. It's always tough. An early reporter for you guys to know market share shifts and things like that and the volatile numbers we're getting from everybody. These next couple of quarters will be even tougher. Just wondering kind of momentum wise that you're seeing with surgeons in your core ortho business. Can you talk to hips, knees, trauma spine any of those four areas where you've seen maybe a change at all, good or bad in momentum you think of pulling surgeons. Is it on a competitive front? That would be helpful.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Yes. Listen, it feels good to be sort of getting back to normal. It isn't totally normal. There are these pockets of disruption, but I would say that surgeons are starting to fill up their schedules. They're taking meetings with us. They're coming to trainings. And so we feel like we're sort of almost getting back to the kind of rhythm we had before. You can see it in our guidance. I mean it's a pretty bullish guide to say we're going to do 9% to 10% organic plus strong performance out of Wright Medical, which was an integration that's pretty complex involving the trauma extremities as well as our joint replacement business because those businesses used to be under common sales management, and we've pulled those out. And so to be able to do all that and have this kind of wind in our back is pretty exciting in -- I would say customers are ready to engage AAOS. I think, will be a pretty big conference. And based on what I'm hearing, it will be fairly well attended. And I think those are great opportunities for us to be able to show the power of Stryker and what we can offer to our customers.

Jeffrey D. Johnson -- Robert W. Baird -- Analyst

Anything in those four core areas of orthopedics, though, where you're seeing kind of a change in your competitive positioning where just over the last three to six months or so, you may be feeling a little bit better or worse about your positioning in bringing in competitive accounts?

Kevin A. Lobo -- Chairman and Chief Executive Officer

I would say more of the same. You look at that knee number, that's a pretty good knee number, and that has been the killer application with Mako. And Mako is very, very strong, as you saw through the pandemic -- And I think that will continue to be probably the one business that stands out. I mean, obviously, upper extremities is going to continue to be a very, very strong performer. But I would say that's the one that probably we're feeling continued bullishness, if you will. But there's not been really any other new dynamics just in the last quarter.

Jeffrey D. Johnson -- Robert W. Baird -- Analyst

Yeah. Thanks. Thank you.

Operator

There are no further questions at this time. I will now turn the conference over to Mr. Kevin Lobo for any closing remarks.

Kevin A. Lobo -- Chairman and Chief Executive Officer

Well, thank you all for joining our call. We look forward to sharing our Q3 results with you in October. Thank you.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Kevin A. Lobo -- Chairman and Chief Executive Officer

Preston Wells -- Investor Relations

Glenn S. Boehnlein -- Vice President, Chief Financial Officer

Robert Adam Hopkins -- BofA Securities -- Analyst

Robert Justin Marcus -- JPMorgan Chase -- Analyst

Christopher Thomas Pasquale -- Guggenheim Securities -- Analyst

Anthony Charles Petrone -- Jefferies LLC -- Analyst

Vijay Muniyappa Kumar -- Evercore ISI Institutional -- Analyst

Matthew Stephan Miksic -- Credit Suisse -- Analyst

Joanne Karen Wuensch -- Citigroup Inc -- Analyst

Lawrence H. Biegelsen -- Wells Fargo Securities -- Analyst

Philip Chickering -- Deutsche Bank AG -- Analyst

Kaila Paige Krum -- Truist Securities, Inc -- Analyst

Steven Michael Lichtman -- Oppenheimer & Co -- Analyst

David -- Needham -- Analyst

Travis Lee Steed -- Barclays Bank PLC -- Analyst

Matthew Oliver O'Brien -- Piper Sandler -- Analyst

Richard S. Newitter -- SVB Leerink LLC -- Analyst

Joshua Thomas Jennings -- Cowen and Company -- Analyst

Kyle William Rose -- Canaccord Genuity -- Analyst

Matt Taylor -- UBS Investment Bank -- Analyst

Jeffrey D. Johnson -- Robert W. Baird -- Analyst

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