Welcome to the third quarter 2016 Stryker earnings call. My name is Crystal, and I will be your operator for today's call. Before we begin, I would like to remind you that the discussions during his 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.

Welcome to Stryker's third quarter earnings call. Joining me today are Glenn Boehnlein, Stryker's CFO; and Katherine Owen, VP of Strategy and Investor Relations. For today's call, I will provide opening comments followed by Katherine with an update on MAKO and our November analyst meeting. Glenn will then provide additional details regarding our quarterly results, before we open the call to Q&A. We achieved another quarter of solid organic sales growth, coming in at 6.2% and fueled by a strong showing for both MedSurg and Neurotechnology with both delivering roughly 7% increases. Orthopaedics growth was consistent at approximately 5% organically. On a geographic basis, Q3 sales were balanced with a 6% increase in the U.S. and a 6.7% gain in International, driven by strong momentum in Europe and a return to growth in emerging markets. We are pleased with the performance of our acquisitions, including both Sage and Physio-Control, which are well positioned to help us drive stronger organic sales growth for Stryker in the coming years. The strong top-line performance, coupled with our ongoing focus on G&A leverage, resulted in EPS of $1.39, up 11.2% and a penny above the high end of our targeted range. Based on our performance for the first nine months of 2016, we are confident in our ability to deliver our commitments with organic sales growth for the full year expected at 6% to 6.5%. We are narrowing our adjusted EPS range to the upper end, which now stands at $5.75 to $5.80 per share. Overall, we believe the strength of our people, diversified revenue model, and new product flow positions us well to continue to deliver sales at the high end of med tech with leveraged earnings gains. We look forward to providing our 2017 financial guidance on our Q4 earnings call in January. With that, I will now turn the call over to Katherine.

Thanks, Kevin. My comments on today's call will include an update on MAKO, as well as a preview of our upcoming analyst meeting. Starting with MAKO, results in the quarter were strong, with a total of 30 robots installed globally, representing a roughly 75% year-over-year increase with 23 in the U.S. Consistent with prior quarters, approximately 40% of the installations were in competitive accounts which Stryker has no or relatively low market share. Demand for the MAKO robot is being fueled by the expanded indications, including the Total Knee which began a limited launch in June. Since that time, we have had KOL surgeon surgeons trained on the robot for the Total Knee, including those with prior robot experience but with less exposure to our triathlon knee, as well as surgeons who had not previously used a robot for joint reconstruction. As we discussed previously, by observing both these groups we are optimizing the training protocol. Of note, since the start of the limited market release for the Total Knee over 200 cases have been performed and we've been pleased with the results to date. We are targeting the 2017 AAOF meeting to move into the full commercial launch. I will now shift to the analyst meeting which will be held on November 9 at our Orthopaedics headquarters in New Jersey. In order to optimize the utility of this meeting we will be focusing the formal part of the meeting on several key areas. This will include a MAKO Physician panel with two surgeons who have been part of the limited market release. We will also have a Stryker Performance Solutions panel, which will include an SPS customer and focus on how we've been able to deploy our expertise in the joint reconstruction episode of care to help reduce their procedural costs. Turning to cost transformation for growth, Lonny Carpenter, Group President of Global Quality and Operations will provide an update on the various initiatives within CTG, including the expected financial contribution over the next few years. Glenn Boehnlein will provide a financial update, including our longer term targets. We will conclude the formal part of the meeting with a Q&A session with the leadership team. We will then move to the product fair, which will include product highlights for MedSurg and Neurotechnology, and will forward the opportunity to interact informally with the broader Stryker leadership team. We hope you will be able to join us for the meeting. The event details and complete agenda, including the various guest speakers and their backgrounds are available on the event registration site. With that, I will now turn the call over to Glenn.

Thanks, Katherine. Today I will focus my comments on our third quarter financial results and performance drivers. Our detailed financial results have been provided in today's press release. Our organic sales grew 6.2% in the quarter, which was within our range of full year expectations of 6% to 6.5% with no difference in selling days. Pricing in the quarter was down 1.3% from the prior year, while foreign currency exchange had a nominal impact on sales. U.S. sales continued to demonstrate strong momentum with organic growth of 6% reflecting solid performances across our portfolio, especially in MedSurg and Neurotech. International sales grew 6.7% organically, highlighted by solid gains in Europe, Canada and Australia, somewhat offset by the continued impact of our previously discussed destocking issues in China. We expect that the fourth quarter will show some improvement in our China business as prior year comparables continue to ease. Our adjusted EPS of $1.39 increased 11.2% from the prior year, reflecting strong sales growth, accretive acquisitions and good operating expense control. Our third quarter EPS was negatively impacted by $0.03, related to transactional foreign currency exchange. Focusing on our segment highlights, Orthopaedics delivered constant currency growth of 5.3% and organic growth of 4.8%, led by the U.S. organic growth of 4.7%. These gains reflect solid performances in Trauma and Extremities at 6.9% and Knees at 5.1%. This growth reflects strong demand for our 3D printed products, our Foot and Ankle portfolio, and our MAKO platform, which had 30 units installed including seven outside the U.S. Orthopaedics International delivered constant currency growth of 6.3% and organic growth of 5.1%, led by our European business. MedSurg posted strong gains across all businesses in the quarter, with constant currency growth of 33% and organic gains of 7.3%, which included a 7.7% increase in the…

Thank you. We will now begin the question and answer session. And our first question comes from Bob Hopkins from Bank of America. Your line is open.

Hi, good afternoon. Can you hear me okay?

Hi, Bob.

Hi, Bob.

Hi, Bob.

Thanks for taking the question and congrats on a really solid quarter all around. So I have two questions. One, I'll start with you, Kevin. I was encouraged to hear your comments about emerging markets and turning back to the positive there. So maybe you could just kind of lay out specifically what improved and what you think the prospects are for your emerging growth now that you've kind the turned a corner can we get back to mid to high single digits in a reasonable timeframe for emerging markets? Just wanted to hear more color on EM.

Yeah, sure. So, outside of China, I would say I'm really encouraged by the progress in India, which is really a continuation of what we've been experiencing in the past few quarters. Brazil returned to growth, and as you know, Brazil has been a very challenging market for us over the past year to two. We also had good results in Russia, Turkey, so it's really across the board. Our other emerging market countries performed very well. China is still a bit of a laggard, but as Glenn mentioned in his prepared remarks, we expect China to return to growth in the fourth quarter. So we're starting to see an improvement. Part of this is really the comparables and we're sort of lapping the years of sort of poor performance. So, we would expect a bit of a turnaround, but it's really early. It's only one quarter, but I'm starting to see a trend that we will see growth. Now whether it will get back to double digit, as we experienced in prior years, is a little early for me to say, but certainly the outlook is much more positive than it has been over the past year.

Okay, thank you. And then for Katherine, as a follow-up, just on your comments on the Analyst Day and MAKO. On the Analyst Day, I know you're not giving guidance until the fourth quarter, but what will you be quantifying at the Analyst Day in some of these prepared commentary? Will there be any quantification of cost savings or long-term margin opportunities? Just want to make sure I have a good understanding of exactly what we're going to get at the Analyst Day? Thank you.

Yeah. In addition to the panels that focus on MAKO and SPS, Lonny will be giving a CTG update which will include a greater quantification and visibility around the long-term potential from the cost savings that we're targeting. And then, Glenn will be giving an update with some of our longer term financial targets. We'll go into the full detail of that at the Analyst Day but also to be clear we won't be giving 2017 guidance ranges, the formalization of our targets, until the January fourth quarter call.

Thank you. Our next question comes from Rick Wise from Stifel. Your line is open. Rick Wise - Stifel, Nicolaus & Co., Inc.: Good afternoon, everybody. Thank you. Maybe I'll also start with MAKO. You obviously had an exceptionally strong quarter. Maybe, Kevin, or Katherine, you could give us a little more color there. Maybe just sort of multi-part question on this. What kind of pull through are you seeing for Stryker products, particularly in competitive accounts? And maybe talk a little more, if you could, about some of the clinical data surrounding MAKO we might see. I know that's been a priority for this year. What might we see and when will we see it?

I think obviously the 30 robots placed we're very pleased with that number of installations. We're also pleased that they are going into roughly 40% into competitive accounts. It's also what is helping drive our knee growth, which we believe is above market. I mean, clearly it's a big focus for our sales force right now given their excitement around that. We do believe qualitatively we're going to get – continue to receive feedback around benefits including alignment, less tissue disruption, and ultimately patient satisfaction. Longer term clinical data on that is going to take time to collect. We will be garnering that but that's going to be one, two, three year data and obviously it will take that long. I think it will be a great opportunity at the panel at the Analyst Day where we're going to have a surgeon who had no experience with the robot to prior becoming part of the limited market release of the knee, as well as a longer term robot user to ask those questions and hear what their experience has been. But with the 200 cases to date we've been really pleased what we've seen so far and the ability to both get into competitive account and optimize the training protocol ahead of full commercial launch, which as we said will take place in March at the Academy Meeting. Rick Wise - Stifel, Nicolaus & Co., Inc.: Just to follow-up on Sage and Physio briefly. Maybe just highlight. I know we'll hear more soon, where are we in terms of integration and costs and sales? Kevin, do you feel like you're on plan? Sage grew a little faster than the second quarter, Physio a tad slower. I assume that's seasonal, but again, any more color there would be welcome.

Thanks, Rick. First of all, over the full six-month period we're really pleased with both companies performance. They're really in line with our expectations. The integrations are going very well. As you know, Sage is what I'll call a lighter integration, given that there's less of an overlap with the call point, but certainly we're sharing leads with the Sage organization. And Physio, we have a little bit more of call point overlap. It's really more of a planning phase this year. The sales forces are running independently this year and then over the course of the next year or two we'll start to integrate those sales forces. But I would say so far so good on integration, and we're pleased with the performance and really the outlook for the future.

Thank you. Our next question comes from Mike Weinstein from JPMorgan your line is open.

Thank you, and congratulations on getting back above that 6% bar. It's nice to see. Katherine, the September healthcare conferences proved a bit trickier this year, and there was a bunch of questions that seemed to have come out of them, where people were asking about comments that you guys had made. So maybe I thought this would be a good opportunity to clarify a couple of them. And Katherine, Kevin, chime in here, two sets of comments were, Kevin, just about your outlook for the Trauma business and the Hip businesses and some potential deceleration in growth. And then, naturally, people try to get you to comment on 2017 preliminarily and how to think about operating and financial leverage, excluding the impact of the acquisitions, and there seem to be some confusion around that. So, maybe just want to spend a minute on both the outlook for the Trauma and then the Hip business in light of all the focus on the Knee side and then just comment, if you would, about how we should think about operating leverage heading into 2017 without obviously giving guidance? Thanks.

Sure, Mike. I'll take the Trauma and Hip question and then I'll pass it over to Katherine to talk about I think some misperceptions around 2017. So what I've been saying for some time on the Trauma business is that sustaining 15% growth quarter-after-quarter is pretty unlikely. We've done that for over three years coming into this year. If you look at last year's third quarter, we grew 15.1% in the U.S. And so to put up a 7% growth against that comp is still pretty solid performance, but law of big numbers is we've been signaling that trauma will start to slow down a little bit in terms of its growth rate, but certainly performing above market. And I think still a solid strong performance this quarter. But the only signal there is that sustaining that level of above performance, three times the market, is not likely to do indefinitely. So no concerns. We have a very strong trauma leadership team, strong business, strong pipeline, and I'm still very bullish about that division. As it relates to Hips, we're longer in our product cycle, with Accolade II being one of the newer products that we launched a few years ago and a lot of excitement in Knee. And as you know, the same sales force that sells both Hips and Knees. We have a big launch upcoming with MAKO Total Knee. We have a lot of cementless products in the knee portfolio. So, I would say that there's been a bit of a tension focused on knees, and we've seen this in our industry for decades that it is very difficult to be able to focus on both products equally. So the fact that our Hip growth, which had been above market for above three or four years, is now moving let's say more in line with market is not also surprising.

And just going back to some of the misperceptions around some of the conferences, the healthcare conferences in September, I would tell you candidly we were surprised as anybody that there was any misperception. We've tried to be very consistent in terms of our goal of growing sales at the high end of med tech. We think the med tech markets are largely stable, at least the segment where our product portfolio competes. And as Kevin said in his prepared comments at the start of this call, we feel really good about our ability to continue to deliver that. The specific range around that, which may have been where some of the misperceptions came, we will talk about in January. As we do every year. So to the degree of unwillingness to give guidance ahead of when we normally do it caused some concern. I think that was incorrect. We feel great about the momentum and the product portfolio and we'll look to specify that in terms of financial ranges in January.

Perfect. Katherine, just one follow-up if I can. The growth in MAKO this quarter in the units sold or placed, was that to – just to characterize it. Was that to the beta sites that have been doing the early launch feedback for you guys? Or is that the centers anticipating the launch?

It's both. Some of those are part of the limited market release, but that's a small group. Some of those who are just, for a lack of a better way of putting it, getting in the queue because they want to be part of the upgrades and ready for the total launch. So it's a mix, but it is I would say that limited market release customers are the minority.

Thank you. Our next question comes from David Lewis from Morgan Stanley. Your line is open. David Ryan Lewis - Morgan Stanley & Co. LLC: Good afternoon. Just two quick questions, one for Kevin, one for Katherine. Kevin, you have got a wide range of businesses now, so you're back up of 6% organic this quarter, and I agree with Mike that was nice to see. I wonder if you could just comment, given the broader environment this particular quarter, a couple of things. One, just your capital business is very strong. There's some emerging concern that the election cycle is going to result in some capital freeze or did result in that in the months of September and October heading into election cycle. So just the broader capital environment heading into election are you seeing any change in sort of relative backlogs? And then utilization, sort of a similar question. A lot of talk about polarization in sort of July, August versus September. I mean did you see a change in how utilization trended in some of your Orthopaedics businesses across the quarter? And then I will have a quick one for Katherine.

Yeah, so thanks, David. What I would tell you is that we haven't seen really any change in the capital business. It's been extremely stable. The election to us is really a nonevent, in terms of the businesses that we participate in. As you know, there's a lot of attention being drawn to pharma. A lot of comments we made about pharma but med tech is a very small percent of the overall healthcare spend and we're not seeing really any impact whatsoever. And as it relates to procedural volume, again, we didn't see anything unusual within the months of the quarter. Very, very stable market and that's not new. The market has been stable for the past two years, three years and we continue to perform well in this market. David Ryan Lewis - Morgan Stanley & Co. LLC: Okay. Thanks, Kevin. I won't ask you who you're voting for. Katherine, in terms of back half 2017, you'd said MAKO, it's unlikely we see share movement until back half 2017 at the earliest. I just think about it's the biggest year-on-year system add you've had, I think, since you bought the company. You've got 40% competitive accounts and obviously you're going to have a bigger launch at AAOS. Is the back half of 2017 still the earliest that we could start to see share movement in the knee channel?

I think that's the way to be thinking about it right now. Remember, these robots have to get installed. That takes time and energy and people. We have to train, and so there's a cadence. This is not like an easy product that you launch overnight and it runs. So, we need to be thoughtful in that. We're very pleased that we can target Academy for the full commercial launch and we'll be well prepared to go and train from there, but I still think the back half of the year is the best time to be focused on in terms of starting to see indications that we're gaining meaningful new market share.

Thank you. Our next question comes from Kristen Stewart from Deutsche Bank. Your line is open.

Hey, everybody. Thanks for taking the question. Just to go back, I guess, to some of the comments on the acquisitions. I know you said that integration's going so far. Would you be willing to say, in terms of the 2017 accretion numbers that those still look to be intact, based upon how the businesses are performing? Better or worse than you had originally stated?

Yeah, hi, Kristen, it's Glenn. Yeah, we actually were on track in 2016 to hit the accretion numbers that we put out there. And then also for 2017, based on our preliminary planning, we think we'll be on track to hit the numbers that we put out for accretion as well.

Okay, great. And then has FX changed at all in terms of the bottom line impact? And with the change in stock option accounting, can you give us a sense in terms of how that may also impact or maybe what the impact might be in 2016 or 2015 or anything to that extent you could help frame? Thanks very much.

Yeah, yeah. It feels like two questions, and I'll take a stab at them both. So, first off on FX, as you can see, translational is easing, especially in Q3. And we expect it to be nominal in Q4. Transactional will still continue to impact us as it did this quarter, and it will next quarter. And part of that is related to our hedging program and the way we lock in hedges 18 months ahead of time and how that relates to the current exchange rates that are out there. And then secondly, as it relates to the change in stock options, I think if you take a look, we've disclosed what we think that will be, which is roughly maybe $30 million and we don't plan on adopting it until next year.

Thank you. Our next question comes from Chris Pasquale from Guggenheim. Your line is open.

Thanks, congrats on the quarter, guys. Kevin, it's been a little while since you guys hosted an analyst meeting, and I know you talked about not wanting to comment too much on forward guidance yet, but you're going to have the chance to talk about some of the progress you've made with some of the investments to get at cost in the middle of the income statement, in particular. I see Lonny is on the agenda. Can you talk a little bit about some of those programs? You've highlighted the ERP transition, some of the other things you're doing, and will this be an opportunity to sort of layout the next steps at how we get at some leverage, particularly in the middle of the income statement going forward?

Hey Chris. I think what you'll hear Lonny talk about is progress on multiple fronts, as we've gotten the CTG program underway, ERP is one of them, product lifecycle management, plant optimization, indirect spend. And as we try to articulate, giving greater quantification around the longer term targets and expected contribution from that. So that will be the focus of his comments while Glenn will focus on our longer term financial targets beyond 2017.

Okay. Thanks, that's helpful. And then, sorry if I missed this earlier, I've been jumping around, but can you talk a little bit about the trauma and extremities business? Good quarter there. A little bit of a pickup from what we saw last quarter. Anything in particular driving that?

No, I would say it's just continued strong performance. We've been performing very well in our trauma business over the last three years and it was just more of the same this quarter.

Thank you. Our next question comes from Kaila Krum from William Blair. Your line is open. Kaila P. Krum - William Blair & Co. LLC: Hi, guys. Thanks for taking my questions. Just a couple for me. So in terms of acquisition strategy, and I guess specific to Orthopaedics and Spine, are you guys more focused on scale or gross at this point? And granted, they do come hand-in-hand, but one tends to lead to the other, so just trying to better understand your M&A strategy there.

There's no change in M&A strategy, whether it's the company overall or Ortho versus MedSurg or Neurotech, it's focused on our core in key adjacent markets. If you look historically, the bulk of our deals have been in core markets with a few key adjacent acquisitions, and that will continue to be the strategy going forward across all the divisions. So no change from that. Kaila P. Krum - William Blair & Co. LLC: Okay. And then just a follow-up on the Extremities business. I mean, just looking specifically at foot and ankle, can you guys talk about how your foot and ankle performance has been recently? Is it still sort of trending at historical levels? And just any commentary on market trends there would be helpful.

Yeah, so we're really pleased with our foot and ankle performance in the U.S. this quarter. We grew 15%, very much in line with the performance we've had over the past year. It continues to be a very good market.

Thank you. Our next question comes from Glenn Novarro from RBC Capital. Your line is open.

Hi, thanks, guys. Two questions. First, pricing in Orthopaedics down 2.2%. That was similar to the second quarter. So, I'm wondering if the new trend line for Orthopaedics pricing is now going to be in that 2% to 2.5% range. And then I had another follow-up on pricing.

I think we feel comfortable from a total company perspective their pricing is going to be down in that 1.5%, 2% vicinity. It's been trending slightly less negative. Ortho, it seems relatively stable, but candidly, trying to predict that level of accuracy 50, 100 basis points moves in prices is really difficult. We have greater confidence and visibility when you look at the totality of the company because we have areas with less pricing pressure. And so we really try to focus on the total versus a specific line item where it can move around quarter-to-quarter.

Okay. And just as a follow-up to that. Pricing, again I look at it sequentially pretty stable, and now we're in the six months of CJR, so it seems like there's no impact to pricing. So, I'm curious as to what your thoughts are on the implementation of CJR and are you seeing any pricing pressures? Thank you.

Yeah, we would agree that we really haven't seen an impact, but in fairness too, it has only been six months. And in the first year there is no financial penalty, so we really believe you are going to see a greater focus by hospitals when there's more of a financial incentive as you go into 2017. I think you'll be able to get a lot better visibility, or hopefully well, at the Analyst Day because we will have a hospital customer who has experience under the bundled payment, but we continue to believe their focus is going to be in the post-acute setting on rehab costs, since there is tremendous value to be realized by shifting more patients to the home and out of some of the skilled nursing facilities and other rehab facilities.

Thank you. Our next question comes from Matt Miksic from UBS. Your line is open.

Hi, thanks for taking our questions. So I had one kind of topical question coming out of NASS and your demonstration of Tritanium and your 3D printed products. And I had one follow-up just on the Ortho side, if I could. So, one of the things you talked about in your presentation and the Q&A afterwards there was just the build out you put in place around 3D printed products, in general. Of course, that drives the Spine portfolio of really one key product at the moment, but also your press-fit knee, cementless knee tibia platform you've talked a lot about. So, I'm wondering, as you build that out, just given the proportion of your business, given the performance of your business, how are you prioritizing, I guess, are you getting leverage across those two platforms in the way you manufacture and how you're sort of thinking about which one of these sort of high-demand products gets the volume over time. And I have one more follow-up.

Sure, Matt. The short answer is they all do. But we have been capacity constrained. We are adding 3D printing capacity on a monthly basis. We broke ground on a dedicated 3D printing facility in Ireland last year. . As you know, this is extremely highly technical with a great deal of know-how around 3D printing these type of metals. We will be launching additional 3D printed products, but you should assume you'll see the benefit of that in Spine as well as on our revision and press-fit knee portfolio.

Okay and then the follow-up just on the trends in Orthopaedics. The Knee number, in the U.S. in particular, I thought was quite strong going up against a pretty significantly tougher comp. Hips kind of the same. So, just in terms of trends there, I think we talked about back in September, what should we expect in terms of recovery in Hips or annualizing some of the launches that you've had in hips? And then on Knees if you could, is it the press-fit that's really making up the difference in driving – are we getting a mixed benefit, penetration benefit on the Knee side that's driving that strength? I appreciate it.

Yeah. So keep in mind, it's the same sales force and the customer base on Hips and Knees. Accolade, which has been a terrific product launch for us, is several years into that now, whereas MAKO is getting enormous amount of focus and is a huge product launch, and as a result the sales force has focused on that. So there is a halo effect that's helping our Knee business. We also have additional new products on the Knee side, our 3D printed revision cones and sleeves and as we just mentioned our 3D printed cementless Knee, which is really driving us to now low double-digit penetration for cementless knees, which is well above the industry. So I think right now you're just in a period where there's a lot happening on the knee side, and a lot will continue to happen as we go into full commercial launch. We will be introducing more Hip products but sales force likes to focus on what is new and hot, and clearly a lot of that momentum right now is on the knee side. We think Hips probably more like overall market growth. Knees we believe we're going to continue to grow above the market.

But certainly when you look at the overall we're very pleased with our performance. Our sales teams are doing a really excellent job and we're excited about the future years.

Thank you. Our next question comes from Mike Matson from Needham & Co. Your line is open. Mike Matson - Needham & Co. LLC: Hi, thanks for taking my questions. We've seen a real pickup in the amount of M&A in the Spine space and, Kevin, last I heard I think you were saying that you were happy with the performance of the Spine business and the turnaround there, and you didn't really feel the need to do something from an acquisition standpoint in Spine. But I just wanted to check in and see if that was still how you felt?

Yes, as you look at our Spine business you see that we've had issues around product performances, supply chain disruptions, but we have a great leadership team and we had a number of quarters of very strong growth, and I believe in this leadership team and Tritanium is a great example of the 3D printed interbody device, which is performing very well. I'm confident our team can continue to perform well and grow the business. Relating to M&A, I will give you at same comment I gave for all of our divisions, we're always looking to strengthen our businesses, but we're not going to comment on whether we're going to do acquisitions big or small on any of our divisions. Mike Matson - Needham & Co. LLC: Okay. Understand. And then you do have a significant portion of your cash outside the U.S. I know there's some talk of a potential tax deal after the election. So if that were to occur, obviously it would depend on the terms of that, but would you repatriate any of that cash and if you did how would you prioritize the use of that cash?

You know, as we look at our cash, I'm sure we're in the same position as several other U.S. companies, and if something like that became available, as it did a few years back, we would definitely take advantage of it and repatriate our cash to the extent possible. In terms of how we might prioritize that cash, it's hard to say at this point. You know, we've said before about what our priorities are around capital allocation and that would mean M&A, that would mean dividends, and it may mean share buybacks. But commenting beyond that -- I don't think I can do that at this point of time.

Thank you. Our next question comes from Bruce Nudell from SunTrust. Your line is open.

Good afternoon. Thanks for taking my question. Kevin, I have a couple for you. Firstly, I'm fascinated by this 40% placement of MAKO at competitive accounts. One of the big issues with Orthopaedics is that there's tremendous brand standardization on the part of surgeons as well as institutions for Hips or Knees. So how do you accomplish that where you put a robot in and get people to go beyond unis and kind of standardized on knees with the Stryker brand that they may not use most of the time today?

The way we look at our MAKO adoption is really around behavioral segmentation – which surgeons like new technology and believe that they can become better in delivering value to their patients with technology. And so it's not about whether they like Stryker or whether they like Zimmer or whether they like J&J. it's about do they like robotics and do they believe in robotics. And that's why not surprising that many of the placements are in competitive shops. We're getting a little feedback. Can you hear me, Bruce?

Yes, I can.

I'm sorry, we're getting a little feedback in the room. So what I can tell you on this front is that's really all about the surgeon who wants to become better and who believes in technology. Less so about our specific relationships or whether the hospital is with Stryker or a different account. It's a different niche that we're serving. If you look at MAKO prior to our acquisition, they were able to obtain about 18% of the uni market over a four year period. They were not a proven entity. They weren't even an orthopaedic company. So we really believe this is about technology adoption, certainly in the first couple of years. It's really around behavior, which surgeons believe in technology, and we're going to go to the surgeons that believe in it. There are many skeptics, as you know, with all disruptive technology and some of those skeptics are Stryker loyal surgeons, and they won't be the first to adopt and that doesn't concern us because there are many surgeons who are interested and who will be willing to adopt.

And my second question – thank you for that – is as we were re-launching on Stryker, what really struck me was that, despite the acquisitive nature of the company, ROIC has been maintained and it seems to be like a core strength of the company. Could you talk about how that influences the profile of what you buy? How it fits in? And is that a formula you can maintain going forward?

It's long been our history to be very disciplined in our deployment of capital. So when we look at deals we want to strengthen every division that we have in the company, but we won't just pay whatever for companies. We're very disciplined, we walk away when the prices are above our ability to deliver value and sometimes there's assets that we like and the price point's just too high, and we have discipline to walk away from deals. And I think that's why you see the ROIC so consistent year-over-year-over-year in spite of the acquisition nature. Also the ability to have acquisitions that fit in our existing business, that plug into our sales force, which is the bulk of the deals we do. We have a proven model to deliver value with those types of acquisitions. So I think it's a combination of playing to our strengths, in terms of our commercial execution, and being financially disciplined with the deals that we do make.

Thank you. Our next question comes from Richard Newitter from Leerink Partners. Your line is open.

Hi, thanks for taking the questions. I want to maybe for you, Kevin, to start off where at NASS obviously, it's topical. We're seeing a lot of robotics take a bigger presence on the floor. Being that you were the first major company to kind of really validate the robotics category, I would love to hear what your view is of the robotics kind of push in Spine we're starting to see and how MAKO potentially fits in over the long run?

We love the fact that robotics is taking up a lot of the discussion, because as you know with MAKO we believe in robotics. Right now at Stryker, our focus is on Hips and Knees, and specifically the Total Knee launch, but we see over time that certainly robotics will extend into other procedural areas, including Spine. We do have a small R&D effort underway right now but it's too early for us to speculate on when we would come to the market in that specialty.

Okay, thanks. And then maybe just one more follow-up. Outpatient surgery and the trend to outpatient and ambulatory surgery care; it's clearly where hospitals are trying to go. I'd love to just hear how you feel Stryker is positioned, either through technology or other means, to capitalize on that trend? And specifically if you could talk to whether or not MAKO is lending a hand in that effort? Thanks.

We have a lot of experience with the ambulatory surgery center, with our sports medicine business, and as you know Spine – a number of procedures, the more simple procedures are starting to move into the ambulatory surgery center. At this stage, MAKO hasn't had a big impact, but we do see robotics is going to have a play in all of the different aspects of the care continuum. I think this trend will continue towards the shift of site of care, towards surgery centers will continue, but it's not something that we're unprepared for. We have plans across our divisions and as you saw if you were at NASS you saw the Spine division has actually created a program that's very specific for the surgery center.

Thank you. Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.

Hey good afternoon, guys. Thanks for taking the question. So I wanted to just (45:06)?

Larry, I apologize, we can't hear you.

Are you on the speaker. Could you pick up please?

Hello, guys. Sorry about that. Can you hear me okay?

Yeah, much better. Thank you.

Yeah.

Neurotech, that was a little slower in the U.S. this quarter. What drove the deceleration? And could you talk a little bit about how your ischemic stroke business is performing? I know you've talked about that as a key growth driver for you guys. Thanks.

Yeah. So we continue to see good momentum in the AIS market. As we talked about before, predicting the slope and the speed of that market adoption is tricky, so it'll move around quarter-to-quarter. And AIS was a bit slower sequentially, although still healthy growth in that segment. We did have a coil recall in the quarter, which impacted our hemorrhagic business. That's fully resolved and shouldn't impact going forward.

All right, guys. Thanks for taking the question.

Thank you. Our next question comes from Matthew O'Brien from Piper Jaffray. Your line is open. Matt O'Brien - Piper Jaffray & Co.: Good afternoon, thanks for taking the questions. Hopefully you can hear me okay. Just wanted to start with MAKO and continue to focus on this a little bit more. But first of all, did you fully sell all 13 additional systems in this quarter versus Q3 of last year? And the reason I ask that question is, if you back that out, assuming you sold it all, it would seem like your core knee business was a little bit softer than one of your competitors reported this quarter. And then on a two-year stack basis, it's a little bit soft, as well. So, is there a risk as your sales force focuses on MAKO that we could see kind of the traditional knee business soften a little bit along with the Hip business, as well?

Well, we continue to sell all of our robots, just to be clear. And we report our robot sales in the other Orthopaedic category, which you can see is up quite a bit. The other items that are shown in that other category includes bone cement, and bone cement was down in the quarter, both in the U.S. and internationally. We used to have a lot more stocking orders for bone cement and now our hospital customers are sort of buying it as they need it, and so bone cement does tend to be volatile from quarter-to-quarter. But when you look at our knee number, those are implants that you're seeing in the knee number and no robot sales. Matt O'Brien - Piper Jaffray & Co.: Go it. Thanks for that clarification. And I'm also going off in memory on this one too, which is obviously scary, given the first question I just had. But it looks like, I think Physio grew about 9% pro forma last quarter and it grew about 6% this quarter. Obviously, we don't have the comparables to look at, but is there anything that's going on that's maybe slowing a little bit as you integrate that asset, or is it just more, "hey, we had a tougher comp this time last year?"

I wouldn't read into that. Remember, it's a capital business. It tends to move around quarter-to-quarter. And so there wasn't anything unique relative Q2 to Q3. We're very pleased with that integration so far, recognizing as early as Kevin commented on. But you will see capital move around. And we tend to try and focus on multi-quarter rolling trends to really get a good sense with that business, but nothing to call out.

Thank you. Our next question comes from Matt Taylor from Barclays. Your line is open.

Hi. This is actually Ian Mahmud in for Matt. Can you hear me okay?

We can.

We can.

Okay, great. So there's been a lot of discussion on Spine during this call, but I wanted to sort of explore it a little bit more and just ask about what you're seeing in terms of competition. I mean, we've heard a lot about redoubled efforts to focus on that area from some of your competitors, so just wanted to see if you're seeing anything different there and any commentary to highlight?

There's nothing we would uniquely call out. It remains a highly competitive market with a lot of players across the board, both the larger, more established companies, and obviously the smaller ones. But there's nothing that we're seeing different with respect to any of the key competitors in the market at this time.

Got you. Okay. All right. Thank you.

Thank you.

Thank you. And our next question comes from Jeff Johnson from Baird. Your line is open. Jeff D. Johnson - Robert W. Baird & Co., Inc. (Broker): Thank you, good afternoon. Most of my questions have been answered. Glenn, maybe I missed it but could you talk about any of the drivers in gross margin between maybe price, currency or product or geographic mix? Just kind of big buckets, kind of what drove the change in gross margin this year – or this quarter? And then, as I think about some of the movements we've seen on the yen, on some emerging market currencies here recently, and given the 18-month hedging program. Just any very high-level comments you can make about how we think of just the currency hedge portion settling out in cost of goods, how that impacts over the next several quarters?

Sure. I think if you look quarter-to-quarter Q3 to Q4 our margin is fairly consistent. And I talked about this before, like you've mentioned there's lots of variables that impact our margin. Not only price, but FX, acquisitions, and certainly one of the biggest factors is mix. And the mix plays out in two ways. It plays out in sort of geographic mix, but also sort of business and product mix and so as I look year-over-year at third quarter, really probably the biggest impact that we had was related to business mix in terms of how much MedSurg versus Orthopaedics versus international we had last year versus this year. And then on the FX front, we entered the hedging program back when foreign currency was a lot more volatile and the whole idea was to lock in the predictability of foreign currency for us. So, like you had mentioned, currencies move up and down. Our hedging program provides stability and predictability to us. And so for the third quarter, I think as I said, there'll be sort of a nominal impact on sales related to translational, but that will have potentially a minor impact similar to this quarter related to transactional FX. And that's where I think we'll come out. Jeff D. Johnson - Robert W. Baird & Co., Inc. (Broker): And over the next three/four quarters just will the currency side alone, and we can make our own assumptions then on everything else, but with currency should we be thinking of that as a small drag still for the next several quarters for gross margins? Is that a fair comment?

Yeah. I don't know. I wish I had the currency crystal ball to figure out – how things were going to flow. But it's hard to say because it's not only impacted by, say, what we've done in hedging but what the underlying transactions are. So I don't think I can really comment that far out at this point.

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

Thank you all for joining our call. Our conference call for the fourth quarter 2016 results will be held on January 24, 2017. Thank you.

Thank you, ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.