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Stryker Corp (NYSE:SYK)
Q4 2020 Earnings Call
Jan 27, 2021, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Welcome to the Fourth Quarter 2020 Stryker Earnings Call. My name is David, 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 fourth 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'll provide opening comments followed by Preston, with an update on the current environment and our most recent acquisitions. Glenn will then provide additional details regarding our quarterly results before opening the call to Q&A.
I would like to start my comments by expressing my appreciation for the perseverance shown by our employees as they work through the many challenges that we've faced during 2020. Throughout the year, we maintained high employee engagement while continuing to support surgeons and caregivers around the world. Our fourth quarter organic sales declined to roughly 1%, reflecting the impact of a resurgence of COVID-19 infections offset by a continuation of emergent procedures and strong performance by our large capital products.
We are also excited about closing the Wright Medical deal during the quarter and the category leadership technique that we gain in the fastest-growing segment within the orthopaedics market. Preston will provide some additional updates on the integration shortly. Throughout the quarter, we maintained the financial discipline instituted at the beginning of a pandemic which combined with a favorable tax rate, led to an adjusted earnings per share of $2.81 in the quarter, up approximately 13% versus 2019. And we delivered impressive cash flow from operations which exceeded $3 billion for the full year.
In addition to closing the Wright Medical acquisition, we also made progress in many areas that will provide future growth opportunities. We have established a structure focused on digital, robotics, and enabling technology where we see a significant opportunity to create a companywide unified digital ecosystem, including Mako. We maintained our commitment to drive innovation across our various business units, including neurovascular where we gained new product approvals across aspiration, stent retrievers, and flow-diverting stents, and in our MedSurg segment, where we continued product introductions with a focus on safety and prevention.
Finally, we successfully launched our ASC sales model, which leverages the Stryker portfolio to provide end-to-end solutions to meet the growing demand and shifts to the outpatient setting. Our continued support for our customers and our commitment to innovation will position us well for growth as the pandemic eventually subsides.
Turning to 2021, our people and culture of execution remain strong which will allow us to deliver on our commitment to make healthcare better and to resume our customary strong organic sales growth and leverage earnings.
With that, I will now turn the call over to Preston.
Preston Wells -- Vice President of Investor Relations
Thanks, Kevin. My comments today will provide an update on the current environment, trends related to the latest COVID-19 impacts, and updates on our most recent acquisitions of Wright Medical and OrthoSensor. During the fourth quarter, elective procedures were negatively pressured in those regions globally as localized infection and hospitalization rates surged through the month of December. As a result, growth was uneven and correlated for the state of the pandemic in each region. The areas impacted the most include the U.S. and many of the countries in Western Europe, most notably, the United Kingdom, driven by a countrywide lockdown.
Even with the procedural variability, we saw growth in emerging markets, including China which grew double-digit over prior-year quarter. Looking forward, hospitals are better equipped to handle this resurgence and they are working to bring back the procedures, but have been delayed. But we expect that the variability of elective procedures will continue during the first quarter until infection rates begin to decline and the distribution of the vaccines become more prevalent.
This slowdown in elective procedures had a negative impact on our more deferrable businesses, which make up approximately 40% to 50% of our total sales. However, the slowdown this quarter was not as impactful as the decline in the second quarter as hospitals were better equipped to manage COVID patients while maintaining some level of elective surgeries. Despite the overall slowdown, we experienced continued growth in our Neurovascular, Medical, NATO, and upper extremities businesses, specifically, demand for medical's large-capital products continued in the fourth quarter, driven by the focus on expanding bed capacity, the need for our emergency care products like Power Cots and the LUCAS device, and the availability of some remaining CARES Act funding in the U.S.
In addition, the early trends on the launch of our new ProCuity bed are positive and expected to continue into 2021. During the year, our Mako install base grew by 33% and exceeded another milestone with over 100 robots sold and installed in the fourth quarter. This growth continues to highlight the demand for our differentiated Mako robotic technology, as well as our ongoing success selling and installing robots in major teaching institutions, ASCs, and competitive accounts. We are also excited about our recent approvals for Mako TKA in China, Russia, and Brazil which all provide opportunities for growth as these markets continue to embrace robotic, digital and enabling technologies.
Turning to U.S. knee procedures. In the fourth quarter, approximately 44% of our total knees will make their knee procedures, a trend that continues to increase. The shift toward cementless knees also continued and in the fourth quarter, cementless knees made up 42% of our U.S. knee procedures. During the pandemic, feedback from surgeons has pointed to limited trialing of competitive products in businesses like joint replacement as surgeons worked to performing procedures restricted by cancellations and deferrals.
However, as the pandemic subsides and we return to a more normal environment, we expect to continue to outpace the market driven by our Mako installations throughout the year and our strong order book heading into 2021. We are also enthusiastic about the Wright Medical acquisition and the category leadership we gain in both upper extremities and foot and ankle through Wright's diverse portfolio of implants, biologics, and enabling technology.
The combination of Stryker and Wright will continue to drive innovation that enhances our customers' ability to address patient needs across to more than $3 billion extremities market. The integration has been progressing well over the last few months. The long period from sign to close was used to ensure that the appropriate integration plans were in place, leveraging our years of deal experience. To date, the teams have been focused on moving quickly to align the new combined organization. Considerable progress has been made, including the creation of specialized business units and sales forces for trauma, upper extremities, and foot and ankle, which is a key part of our overall decentralized strategy that allows us to remain close to the customer.
The U.S. sales leadership organizational structure for these three specialized business units has been announced and the rollout and full alignment of territories will be finalized during the first quarter as planned. Outside the U.S., the leadership team is working to align the sales forces throughout the year. Our teams are executing the sales integration while continuing to drive day-to-day business, and during the quarter, there was minimal disruption caused by the closing in integration activities.
Finally, I want to restate our ongoing commitment to M&A, which was most recently demonstrated by our acquisition of OrthoSensor, a leader in the digital evolution of musculoskeletal care and sensor technology for joint replacement. Smart devices and implants will play an important role in the future of orthopaedics and the addition of OrthoSensor will allow us to continue to innovate and advance smart sensor technology, including intraoperative sensors, wearables, and ultimately, smart implant.
As a release to 2021 guidance, Glenn will provide an update on our full-year guidance for sale, operating margin, and EPS. Updates to this annual guidance will be made each quarter as necessary throughout the year.
With that, I'll 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 fourth quarter financial results and the related drivers. Our detailed financial results have been provided in today's press release. Our organic sales decline was 1.1% in the quarter. As a reminder, this quarter included the same number of selling days as Q4 2019.
Pricing in the quarter was unfavorable 0.8% from the prior year, while foreign currency had a favorable 1.2% impact on sales. Early in the quarter, there was continued momentum from Q3. However, during November, the impact of the resurgence of COVID-19 and the related cancellations of procedures, primarily in the U.S. and Europe, significantly impacted our sales momentum. However, we did see demand for certain capital products continue as we have strong results in our Mako, medical beds, and emergency care products.
For the quarter, U.S. organic sales declined 1.5%, reflecting the slowdown in elective procedures as a result of the pandemic, somewhat offset by strong demand for Mako, medical products, and neurovascular products. International organic sales were flat, impacted by the resurgence of the COVID-19 pandemic, primarily in Europe, which was mostly offset by growth in Canada, China, and Brazil. Organic sales decline for the year was 4.8%, with a U.S. decline of 5.8%, and an international decline of 2.1%. 2020 had one additional selling day compared to 2019 and for the year, price had an unfavorable 0.7% impact on sales.
Our adjusted quarterly EPS of $2.81 increased 12.9% from the prior year, reflecting strong financial discipline, good operating expense control, and a favorable operational tax rate. Our fourth quarter EPS was positively impacted by $0.03 from foreign currency. Our full-year EPS was $7.43, which is a decline of 10%, reflecting the impact of lower sales, especially in Q2, as well as the impact of idling certain manufacturing facilities during the year, offset by strong expense discipline throughout the year.
Now, I will provide some highlights around our segment performance. Orthopaedics had constant currency sales growth of 2.8% and an organic sales decline of 5.8%, including an organic decline of 5.7% in the U.S. This reflects a slowdown in elective procedures related to COVID-19 and a very strong prior-year comparable as Q4 2019 U.S. organic growth was 7.2%. Other ortho grew 12.3% in the U.S., primarily reflecting strong demand for our Mako robotic platform, partially offset by declines in bone cement.
The Trauma and Extremities business also delivered positive growth led by our core trauma and shoulder products. Internationally, orthopaedics declined 6% organically, which also reflects the COVID-19 related to procedural slowdown, especially in Europe. This was somewhat offset by stronger performances in Australia and Canada. During the quarter, the Wright Medical acquisition was successfully closed. For the quarter, Wright delivered flat growth on a comparable basis. This included a positive performances other than U.S. shoulder, double-digit growth in U.S. ankle, as well as strong international growth led by Australia. On a comparable basis for the full year, Wright had a 10.3% decline, mainly driven by the COVID-19 related slowdown in the second quarter.
In the quarter, MedSurg had constant currency growth of 1.5% and organic growth of 1.3%, which included 2.2% growth in the U.S. Instruments had U.S. organic sales growth of 4.5%. In the quarter, sales growth was driven by gains in its power tool, waste management, and smoke evacuation products and its service business. Endoscopy had a U.S. organic sales decline of 7% primarily impacted by the slowdown in the capital businesses offset by gains in the sports medicine business, which grew over 9% in the quarter.
The medical division had U.S. organic growth of 9.7% reflecting solid performances in patient care, emergency care, and its Sage businesses. Internationally, MedSurg had an organic sales decline of 2.4%, reflecting a general slowdown in instruments and endoscopy businesses and strong comparables across most geographies.
Neurotechnology and Spine had constant currency and organic growth of 2.1%. This growth reflects many strong performances within our neurotech product line including neuro-powered drills, SONOPET, and Neurovascular offset by the impact of procedural deferrals, especially in the U.S. Our U.S. neurotech business posted an organic decline of 1.2% as procedural deferrals impacted sales in the quarter. Internationally, Neurotechnology and Spine had organic growth of 13.5%. This performance was driven by strong demand in Australia, Japan, and China.
Now, I will focus on operating highlights in the fourth quarter. Our adjusted gross margin of 65.1% was unfavorable approximately 120 basis points from the prior-year quarter. Compared to the prior-year quarter, gross margin dilution was impacted by price, business mix, and unabsorbed fixed cost, as production was brought in line with reduced demand during the quarter. This was primarily offset by acquisitions and foreign exchange.
Adjusted R&D spending was 5.5% of sales. Our adjusted SG&A was 30.3% of sales, which was favorable to the prior-year quarter by 200 basis points. This reflects the continued focus on disciplined operating expense controls, which have been in place since the second quarter. These cover most of our discretionary spending including curtailments in hiring, travel, meetings, and consultants. In summary for the quarter, our adjusted operating margin was 29.2% of sales, which is a 90 basis points improvement over the prior-year quarter and reflects the impact of the spending discipline previously discussed.
Related to other income and expense as compared to the prior-year quarter, we saw a decline in investment income earned on deposits and interest expense increases, related to increases in our debt outstanding, related to the funding of the Wright Medical acquisition.
Our fourth quarter had an adjusted effective tax rate of 8%. Our full-year effective tax rate was 12.6%. These rates reflect one-time operational fluctuations that arose due to the pandemic with a mix of foreign losses related to lower foreign manufacturing activity, combined with reduced U.S.-sourced income that resulted from the sharp drop in sales at the end of the year. For 2021, we do not anticipate these circumstances arising as we expect to return to normalized operations during the year. And we expect our full-year effective tax rate to be in the range of 15.5% to 16.5%.
Focusing on the balance sheet, we ended the year with $3 billion of cash and marketable securities, and total debt of $14 billion. During the quarter, we executed the Wright Medical acquisition, which resulted in the disbursement of $5.6 billion, inclusive of the retirement of Wright's convertible debt. Turning to cash flow, our year-to-date cash from operations was approximately $3.3 billion. This historically strong performance resulted from the disciplined working capital management, somewhat offset by lower earnings.
Turning to cash flow for 2021. We will not be repurchasing any shares and we anticipate that capital expenditures will be approximately $650 million. Anticipating a more normalized year in 2021 and a ramping of investment in our businesses, we expect the free cash flow conversion rate as a percent of adjusted net earnings, including the one -- excluding the one-time impacts from the Wright Medical integration, about 70% to 80%.
And now, I will provide 2021 guidance on a stand-alone legacy basis and further guidance including Wright Medical. We are providing our guidance in comparison to 2019 as it is a more normal baseline given the variability throughout 2020. As Preston indicated, we will be providing annual guidance on our organic sales growth and earnings and we'll update this throughout the year as part of our regular earnings calls. As we assess the current operating environment, we believe that the recovery ramp of elective procedures will continue to be variable based on region and geography, and will continue into the second quarter of 2021.
Given this variability, we expect organic sales growth to be in the range of 8% to 10% for the full year 2021 when compared to 2019. As a reference, our organic sales growth excludes Wright Medical, there are the same number of selling days in 2021 compared to 2019 and one less when comparing to 2020. Consistent with the pricing environment experienced in both 2019 and 2020, we would expect continued unfavorable price reductions of approximately 1%.
Additionally, as we are comparing growth to 2019, our 2021 organic sales growth guidance includes two years of price reductions. The foreign exchange rates hold near current levels, we anticipate sales and EPS will be modestly favorably impacted as compared to 2020 and 2019. For the full year 2021, we do not expect to deliver operating margin expansion as a result of the op margin dilution of the Wright Medical acquisition. However, excluding the dilutive impact from Wright, we do anticipate expansion of 30 to 50 basis points of operating margin in 2021 for our legacy Stryker business compared to 2019. This includes anticipated increases in hiring, discretionary expenses, and other costs that support future growth and business expansion as our businesses continue to ramp back to more normalized levels.
Finally, for 2021, we expect adjusted net earnings per diluted share to be in the range of $8.80 to $9.20 for the full year. This includes the previously announced $0.10 dilution, driven by the addition of the Wright Medical business for the full year. While Wright Medical is dilutive in 2021, we expect it to be accretive starting in 2022. As it relates to other aspects of Wright Medical, we expect comparable growth for Trauma and Extremities, to be in the low to mid-single digits in 2021 when compared to 2019. This includes the integration of Stryker's legacy extremity business with Wright Medical, which will all be part of our Trauma and Extremities division.
This growth is impacted by the recovery from COVID-19, partially offset by the synergies from the integration activities in 2021. We also reiterate our previous guidance on cost-saving synergies from the deal of approximately $100 million to $125 million over the next three years.
And now, I will open up the call for Q&A.
Questions and Answers:
Operator
[Operator Instructions] Your first question comes from the line of Vijay Kumar with Evercore. You may proceed.
Vijay Kumar -- Evercore ISI -- Analyst
Hey, guys. Congrats on the Q here. And I guess maybe a high-level start off on the guidance question here. 8% to 9% organic for the base business, what are we assuming for Wright Medical here for growth for fiscal '21? Hello?
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Yes. Hi, Vijay. Sorry, I was mute. Yes, our organic guidance is 8% to 10%, and the guidance that we provided related to Wright Medical, you have to understand that it's been integrated into our Trauma Extremities businesses. So we will be combining in our legacy extremities business with Wright Medical and running that combined group as part of our Trauma Extremities division.
So when you mix all that of together and you really look at what will Trauma and Extremities growth be in 2021 as compared to 2019, we do think it will be low to mid-single digits but keep in mind that also takes into account sales, the synergies for Wright Medical that we fully expect will happen in 2021.
Vijay Kumar -- Evercore ISI -- Analyst
Understood. And then, Glenn, maybe if I could add just one quick one on margins for cash. I mean, Q4 was really impressive, the margin on the opex side. If I look at the guidance here, perhaps it seems a little conservative. And I look at the EPS guidance range, it's coming in a little bit wider versus the typical Stryker guidance range if you will, what would cause -- and that's almost 100 basis point swing between the low-end and the high-end, perhaps talk about what goes in at the low-end and the high-end?
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Yes. It's -- Vijay, I would tell you that based on what happened this year and the variability that we saw in our operations, we fully expect to continue to experience some variability on into Q2. And so, our guidance range really reflects how that ramp comes back. On the low-end, it could be all the way through Q2, on the better end, we start to see much more improvement toward the beginning in Q2. And really -- it really is going to be variable depending on that.
I mean, we have passed our legacy Stryker business on the op margin front with 30 to 50 basis points improvement but keep in mind, if you look at Q4, or if you have mean to go back and look at Q3, it really reflected a pretty draconian expense control all in terms of hiring, travel, meetings, consultants, you name it, discretionary expenses and we put the lid on that. So that's not sustainable, especially if you think about our aspirations to grow with the high-end of med device.
And so we will start seeing that spending pick-up as we continue to supplement and hire our sales forces, as we meet with customers, as we add to our prototypes and loaner pools, all those things will start to add to our expenses. And so that's really what's underlying the guidance.
Operator
Your next question comes from the line of Bob Hopkins with Bank of America. You may proceed.
Bob Hopkins -- Bank of America -- Analyst
Well, thanks, and very good afternoon. So just two quick things. Glenn, just to clarify that guidance on the revenue side, appreciate that you're guiding to organic growth but it sounds like Wright Medical was flat in the quarter, which is actually pretty impressive. So I come out a little bit over $17 billion for the year just based on kind of your guidance of 8% to 10% organic. And then, I'm just tacking on $900 million to $1 billion for Wright Medical and getting to a little over $17 billion. So I was wondering if you thought that was in the ballpark?
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Yes. Bob, again I just can't reiterate the variability that we're seeing. And so, maybe that sort of adding up the obvious set of numbers if you will. I think we picked the range of 8% to 10% because we do feel like there is going to be some variability that we can't exactly forecast at this point in time and where we're sitting in Q1 and what we're seeing.
As far as Wright Medical goes, we were pretty pleased with where their Q4 performance came out but there are also subject to a lot of the same variability, which is why we're looking that once we integrate it with trauma and extremities, we will have some sales, the synergies that just naturally occur, we felt that with K2M and Spine and we will fill that with Wright Medical. So taking into account that variability, you really looking at 8% to 10% for the -- for Stryker legacy and low to mid-single digits as we look at the combined rate in trauma and extremities.
Bob Hopkins -- Bank of America -- Analyst
Okay, fair enough. And then, Kevin, just quickly for you. Just curious to get your kind of macro perspective on what you're seeing out there as far as the current state of the business right now. Hospitals' willingness to buy capital, kind of where we are in terms of procedure growth, just would love an update given the environment still volatile on what you're seeing right now, I think that would be helpful. Thank you.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. Thanks, Bob. I would say, certainly at the end of the year, really did -- we got that second wave spiking and certainly, you saw that in the discretionary procedures, a pretty big slowdown after a clearly good month of October and it really start to tail off November, December. On the large capital front, we're actually very excited. So what we experienced through Q2, Q3, and Q4 from an order book standpoint is continuing to be very strong. So that is really good news, it's good news for Mako, it's good news for medical.
On the small capital side, we've always said that that tends to lag a little bit, the recovery in discretionary procedures. And you certainly saw that within certainly the endoscopy division and the instruments division where I would say that those orders are maybe going to take a little longer to really come back in the same way.
But overall, I mean, we have enough confidence now with hospitals just could be ready to do these procedures as soon as the pandemic starts to subside, as soon as the vaccines start to become more prevalent but don't turn it on pretty quickly and they'll be pretty agile. And that's why we feel pretty confident of being able to give I think a healthy guide certainly going back off of '19, 8% to 10% organic.
So we -- so it will spike throughout the year and starting with obviously a slower Q1 and the good news is we have the whole year. So even if -- about the discretionary procedures drag a little bit, we saw in Q3 a pretty big spike once they -- once things started getting healthy. So over the course of the year, we're hoping that and believe that the guidance will be, we'll be able to sustain even if it's maybe a little softer in Q2 and a little stronger maybe in Q3.
Operator
Your next question comes from the line of David Lewis with Morgan Stanley. You may proceed.
David Lewis -- Morgan Stanley -- Analyst
Good afternoon, and thanks for taking the question. Just two quick ones for me. Kevin, I was sort of comparing the revenue guide with the earnings guide and the earnings guide is kind of interesting to me and that it's basically 12% earnings growth which you guys are doing kind of last couple of years minus Wright Medical. But the revenue growth was higher, right, the 8% to 10% over '19 is a little better than the earnings growth guidance. So it's above your structural growth rate, but I think some would argue probably should be just given a lot of the recovery.
So how should we interpret that 8% to 10% number, Kevin, relative to the structural growth rate, and what are some of the key factors underpinning that, or how do you think about the structural growth rate of Stryker here as we come out of COVID-19 and then I have a quick follow-up.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Sure, David. I mean without getting into every single division, what I would just give you as a macro comment is we feel that we have the right offerings to continue to win in the market and to continue strong growth. You saw for seven straight years, we accelerated our organic growth and 2019 accommodated a bit over 8% organic growth. And I think that muscle that we developed, the structure that we have with our business units, the new product pipeline that we have has positioned us to be an above-market grower and we expect -- fully expect that that will continue into 2021.
There are obviously differences by divisions but we feel like we're in a very healthy position overall and that's what gives us confidence in the guide. Clearly, Wright Medical is a big acquisition, there are just synergies that we've assumed, there -- and it was highly dilutive to the normal operation of our business. We'll see how that unfolds over the course of the year. And early signs of the integration are very positive but what we have put in some prudence there just based on what we've experienced with our K2M acquisition and more frankly, of all other implant companies have experienced with their integration.
David Lewis -- Morgan Stanley -- Analyst
Okay, it's very helpful. And then just, lastly just from an ortho competitiveness, Kevin, I know the environment is very, very invisible, all we have is sort of one competitor results to go after here. You -- reasonably do you have momentum has changed at all? I mean your robotic system placements are very strong and you kind of went from 30% knees in cementless, robotic to 43 [Phonetic]% pretty down quickly during COVID. But any reason to believe that your relative positioning or relative share momentum versus other peers in '21 is going to look a lot different?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. No, we remain very bullish about our joint replacement business as well as Mako. And you saw just the increase in Mako is pretty remarkable to have almost one out of two knees being done on Mako and it's not been that many years since we launched the system. So unlike navigation in the past, which obviously never had this type of an uptick, we continue to have strong -- not only installations of robots but utilization and even hips, we're seeing that continue to increase as well. And new hip software was installed in about 400 accounts in Q4. So we had the approval obviously earlier in the year, but because of the pandemic, it's taken us time to actually be able to going into the upgrades. But that will pick up steam again into 2021.
So again, looking at one quarter, whether it's positive or negative, and pandemic world is -- it's not something I am too concerned about it. It's just based on where your regional strength is. If you happen to be in the state or locality that's doing procedures, then you got benefit and if you didn't, you got hurt. So it's a little branding during the pandemic but structurally, I think we're in great shape with that business.
Operator
Your next question comes from the line of Larry Biegelsen with Wells Fargo. You may proceed.
Shagun Singh -- Wells Fargo & Company -- Analyst
Thank you, so much. This is Shagun in for Larry. I wanted to touch on the acquisition of OrthoSensor. Kevin, the acquisition really marks our entry into the sensor technology, remote patient monitoring, and smart implant space in a much more meaningful way and I was wondering if you could comment on the timing here. Why now given that you've had a relationship with them for several years for soft tissue balancing? And then how are you thinking about timelines for the integration and launch with Mako and then also the launch of smart implants, any timing you could share? And also if I could squeeze in one more, how are you thinking about the application of sensor technology beyond these, into shoulders and hips, anything on timings would be great. Thank you.
Preston Wells -- Vice President of Investor Relations
Yes, Shagun. This is Preston. Just in terms of the timing of the deal itself. I mean, again, we are constantly looking at different opportunities and it was just the right time with the team to make this acquisition, in terms of what we thought we were able to do with it. So I think just the timing of it just happened to work out the way that it did and we typically do look at our targets for a long period of time.
In terms of other timelines, about when we're going to be bringing some of the different things to market, and at this point, we're not ready to disclose those timelines. Just know that the teams are getting to work to develop a pretty robust time -- excuse me, robust pipeline around that sensor technology and as we have more information, we'll certainly be bringing that to you guys.
Operator
Your next question comes from the line of Robbie Marcus with J.P. Morgan. You may proceed.
Robert Marcus -- J.P. Morgan -- Analyst
Hi, thanks for taking the question. Kevin, I was hoping you could comment on -- as you're thinking about later this year and into next year, there were a lot of patients that didn't end up getting procedures in 2020 and probably the first half of 2021, how should we think about the potential for a bolus of patients? I realize there is limitations to what the system can do, but there is still a lot of patients that need to be treated. So how are you thinking about that as an organization?
Preston Wells -- Vice President of Investor Relations
Hey, Robbie. It's Preston. I'll take that one. In terms of that patient backlog, certainly, we saw some of that being worked down in the third quarter as we saw the recovery starting to happen, and certainly, as then we saw more deferrals happening in fourth quarter, you saw more people being added back to that backlog. As Kevin and Glenn both articulated, as we see the recovery happening in 2021, we would expect to see some of that recovery include the backlog of patients that have been deferring now for anywhere from three to six months or so. And so, we would expect to see some of that flowing back into the numbers through 2021. I think the one caveat I would give you is, you won't necessarily see a dramatic spike in those numbers, just given certain aspects around capacity and things like that. So, you will still see surgeons in hospitals working to fit additional surgeries in and things that -- same thing that we saw in the third quarter, but you certainly won't see a significant dramatic spike at one -- at any one point in time as a result of backlog.
Robert Marcus -- J.P. Morgan -- Analyst
Great. And maybe just one more question on Neurovascular. I remember in 2019, back in the old days before COVID, you were hoping to at least accelerate that business in 2020. You had some new product launches. I was hoping you could just give us the update on where you're going to have new product launches in 2021? And how you're thinking about that business? Thanks.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. Thanks, Robbie. First of all, Neurovascular had a really terrific year. It had double-digit growth in the fourth quarter. They were obviously just like everybody else affected in the second quarter and into the third quarter, but double-digit growth in the fourth quarter, extremely exciting portfolio of products, new product introductions that obviously with aspiration, whether that's a 74 catheter out, you have the pump, they're doing very well. Then you have this flow diverting stents, the second generation of orthopaedic stents, approved in the United States, the Surpass Evolve. We have the first-generation flow diverting stents approved in China. Our Atlas Stent which is used in hemorrhagic segment, adjunctive sticking stent is doing extremely well in China.
So we really have a great portfolio, and we have the NXT, the next-generation stent retriever as well, recently launched. So a lot of new launches. This management team is it's truly outstanding and they've been in place since frankly we acquired the business. They have a very healthy pipeline of other products coming as well. So I'm very bullish on the Neurovascular business, the ending the year with great momentum and I expect we'll continue to be a very strong performer in the years to come.
Operator
Your next question comes from the line of Pito Chickering with Deutsche Bank. You may proceed.
Pito Chickering -- Deutsche Bank -- Analyst
Good afternoon, guys. Thanks for taking my questions. One quick guidance question for you, and I understand you're not providing quarterly guidance at this time, but normally you get about 23% of your annual EPS in the first quarter, and because you're still seeing pressures in deferral procedures in January. So any chances there is some part of it that the -- that they can give us on the cadence their first quarter earnings versus your run rate?
Preston Wells -- Vice President of Investor Relations
Yes, Pito. I would just tell you and this is -- we're not in a normal run rate period, right? I mean I think we're still coming out some pretty variable trend that we saw in the fourth quarter and continuing certainly into the first quarter. A lot of it's going to depend on the localized hospitalization and infection rates, and really how those decline over time and how the vaccine is out there and more prevalent. So I think that's what I would continue to look at as we think about what that recovery trend is going to be. At this point, it would be too hard, really, to give you too much guide on how that's going to exactly happen, and that's why you see the wider guidance that we provided.
Pito Chickering -- Deutsche Bank -- Analyst
Okay, fair enough. And also for follow-up. As more procedures are moving into the ASCs, do the COVID free-up O.R. space and the capacity in the systems, do you think hospital has changed their purchasing habits to buy the cheaper -- begin plans or push back on pricing or to the adaptable -- be lower, a repurchase in the ASCs?
Preston Wells -- Vice President of Investor Relations
No, not at this time, we have not seen any significant changes in that -- in those been those habits all.
Operator
Your next question comes from the line of Joanne Wuensch with Citi. You may proceed.
Matthew Hendricks -- Citibank -- Analyst
Yes. Hi, this is Matt Hendricks in for Joanne. First question we have is just around Mako and robotic new systems. You guys had a great quarter, a great momentum ending the year but J&J is coming out with their own robot, they received FDA approvals, and also Zimmer is kind of in full swing with there launch. So I'm just kind of putting the two together. Is there any change in your commercial plans as you now have more technology out in the market?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. So, this is Kevin. I'll take that. First thing I would tell you is the introduction of competitive systems has not slowed down our Mako momentum whatsoever and we don't expect that to change with one more system on the market. If anything, it just proves to further validate that robotics is here to stay in orthopaedics and we really believe we have the best solution on the market as evidenced by the uptake in the procedures and we disclose the fourth quarter almost one out of the two in the United States being used with Mako. So surgeons absolutely love our system and are using it at very, very high rates. There also is a synergy with the way that our system ensures an absolutely perfect cut and with haptics, which we're the only ones to have. And that is a very complementary with cementless, and you see both of those adoption rates moving in the same direction. So we love our chances of competing side by side with anybody. And we think this provides a further tailwind in the adoption of robotics and orthopaedics.
Matthew Hendricks -- Citibank -- Analyst
Some good color. Thanks for that and then for a follow-up. Just oing to the Wright Medical acquisition. Before they were acquired, they had always talked about their enabling technology, their preoperative planning software being kind of their main driver to capture share and to expand the market. Has that strategy changed at all now that you are beginning to integrate with them or are you going to continue, kind of with that strategy of focusing with enabling technology first and thank you...
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. What I would tell you is that certainly, we've always been believers of enabling technologies as been evidenced by some of the different businesses that we've acquired, some of the different products that we've launched and really with a focus on improving patient outcomes. And we believe that a lot of the technologies, including the BLUEPRINT technology that Wright has previously invested in are complementary really to some of the platforms that we have and as part of the integration with the right organization, the R&D portfolio, and technology teams, they are all working together really to build out what those long-term pipeline plans are going to be and really leveraging all of the different unique products and capabilities from both sides. So we will continue to see investments in those areas.
Operator
Your next question comes from the line of Kaila Krum with Truist. You may proceed.
Kaila Krum -- Truist Securities -- Analyst
Great. Hi, guys, thanks for taking our questions. So I appreciate the guidance that you gave for 2021. Can you just speak to how you think each segment of the business will grow relative to the total organic range you provided? And I guess I'm most curious just looking at MedSurg and orthopedics. Glenn, are you assuming some of medical -- the demand slows down in the coming quarters and the backlog ticks up in ortho. I'm just any more detail on that would be super helpful.
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Yes. So, kaila, we don't typically provide any of that segment breakdown in terms of our guide, but I think if you just take a look at what we are expecting to happen in the marketplace and that's really been happening through 2020 and as we go into 2021, certainly those businesses that we have that are affected are more affected by elective procedures should see the benefit of elective procedures returning throughout the year. The other thing I would just say as Kevin mentioned too our smaller capital products are really those products that are facilitating many of those elective procedures should also see some of that benefit. And then as it pertains to really the large capital segment, we've continued to see strong demand in those areas and would expect to continue to see some of that demand after our '21 as well.
Kaila Krum -- Truist Securities -- Analyst
Okay, thank you. And then just a follow-up I guess to Pito's question earlier. Is it fair to say that -- I mean Q1 will be sort of the softest of the year of Q2 will have the highest growth kind of off an easier comp in the second part of this year should feel a little bit more normal?
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
I think it's certainly fair to say that the variability that we experienced in the fourth quarter, we expect that to continue into the first quarter and then we should see benefits happening as we progress throughout the remainder of the year.
Operator
Your next question comes from the line of Steve Lichtman with Oppenheimer. You may proceed.
Steve Lichtman -- Oppenheimer & Co. -- Analyst
Thank you. Hi, guys. So at first, I was wondering if you could provide some additional color around the ASC sales model that you're rolling out, any details you can provide on what the model looks like and any early feedback from the field would be great.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. So I'm not going to get into too much detail just for competitive reasons, but I would say that I'm delighted with the ASC offerings that we put in place. It involves people from different parts of Stryker that basically cornerback the deal and bring in multiple divisions based on the unique needs of every ASC. Every ASC is unique, every deal is a customized deal but the way we've navigated this enables incredible collaboration across our divisions. We've put just absolutely fantastic people in charge and really we have the breadth of our portfolio with capital equipment, disposables, and implants and really for the first time as a company, we're really leveraging that in United States.
And we have had success with such model sometimes in other countries around the world but in the U.S. this ASC model has been truly fantastic, exceeded my expectations, and I'm bullish that they'll be able to continue to have great success in the ASCs and frankly, Mako is often part of that formula in the ASC but not always. We obviously had a presence performance points, but that business fortunately, has really started to grow as even heard in the fourth quarter in spite of the pandemic, it grew over 9%. And so having a strong sport business plus all of our other business vision and now that the Wright having extremities category-leading position, we just have a fantastic portfolio to serve the needs of the ASC, and now a commercial offense, again not getting too specific but let's just say we make it easy for the ASC and we provide customized solutions.
Steve Lichtman -- Oppenheimer & Co. -- Analyst
Got it. Thanks, Kevin. And then just a follow-up on the fourth quarter. How did your spine franchise specifically hold up during the recent spike in COVID cases and any thoughts on that business overall looking into 2021? Thanks.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, I would say that the spine business held up a little bit better. We saw spine procedures in general holding up a little better than some of the other elective procedures, particularly for our spine business outside the United States performed well and I think it's just a function of the successful integration that we've had with the K2M business and combining that with some of the enabling technologies like those that we acquired through Mobius. And again, we saw some continued performance in some of the markets outside the U.S. that had more stability in spine-related procedures like Japan and Canada as well. So I think all in all, it's held up a little bit better. We definitely expect that business to continue to perform well as we go into 2021 and really harnessing the power across K2M, our legacy spine business as well as the enabling technology.
Operator
Your next question comes from the line of Matt Taylor with UBS. You may proceed.
Matt Taylor -- UBS -- Analyst
Thank you for taking the question. So I thought disclosures on Mako were really interesting and bullish and just two follow-ups in there. One is where do you think you can push Mako penetration and cementless penetration in the U.S. over time? And we'd love to hear your thoughts OUS both on that question. And just on the opportunity that you just had all these approvals in new geographies.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, thanks. So certainly, I'm delighted with the progress, both with the Mako adoption as well as cementless. I don't think cementless will ever get to where it is, it's just because of the bond stability, it's a weight-bearing joint. But clearly, we now see it, it's going to be significantly higher than 50% which I think five years ago, nobody would have believed if we had said that. So that's pretty remarkable. In terms of the actual use of Mako, as you saw we had a lot -- or have of robot to install this year so I would expect that looking at the percentage of the install with Mako considering increase in new hips. Outside of United States, it's taking a little longer obviously with because of the approvals, but we're really excited about getting totally approved in China, Brazil, and Russia and certainly Japan and China are going to be very, very good markets for us.
Japan, we've made some progress already that maybe approvals took a little longer there as well. But the new hip software of course, is also very important as there's a lot more hip procedures done in that part of the world, it's almost not the same as news unlike the United States. So we love the fact that we have multiple applications all approved in those markets and we would expect you're going to see a similar kind of growth that you saw in the United States and may not be quite as quick and you've seen that frankly with Intuitive in soft tissue robotics. The update, that's a little slower outside the United States but we expect the same kind of runway, longer term and are very bullish about the prospects, especially in China, Japan, and Brazil for sure are going to be terrific markets for Mako.
Matt Taylor -- UBS -- Analyst
Okay, great. Great. Maybe just a quick follow-up on that. Right in femur, can you give us updated thoughts on the timing on a robotic solution for our shoulders and for spine?
Kevin A. Lobo -- Chairman and Chief Executive Officer
We're not really ready to give timelines yet. One, we have to get a lot closer to launch before we're going to be specific about timelines. I would say that I'm extremely bullish about shoulder, I think I've said that in the past. It's a very difficult procedure to do. There are enabling technologies within Wright that we're -- our teams are working on, like our Mako teams and we'd be very excited to be able to bring that to the market with their market-leading implants. But I'm not yet ready for timelines in femur-spine not yet ready for timelines and we have two options for spine. One is the robotic program that was being developed by Mobius prior to the acquisition as well as Mako. So we have work going on in those areas, but that's just not ready to give timelines. So robotics is complicated and we will keep you posted.
Operator
Your next question comes from the line of Ryan Zimmerman with BTIG. You may proceed.
Ryan Zimmerman -- BTIG -- Analyst
Great. Thanks for taking the questions. Just first for me. Kevin, around the capital equipment demand, I was just wondering if you can talk about kind of the dynamics in play in 2021, you've been very strong with that and we haven't seen done much about breath rooms and light rooms. And so, is this a story of kind of the first half-second half and how to think about that composition of capital equipment moving from the first half to the second half and what that may entail in terms of your portfolio?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. So breath and light certainly haven't been as positive as has Mako and the beds and structures and certainly the defibrillators because the medical capital really did start to -- happen to ride a bit of a pandemic tailwind if you will, and bring some like large construction sort of slow down a little bit, that should pick up starting next year and that's part of the drag that you see within the endoscopy division was the rooms and lights portion but certainly an ASCs particularly, that certainly of a large capital spend projects were delayed a little bit they're starting to pick back up again. So that's obviously a smaller business within the overall Stryker but Medical, we continue to feel bullish. So it's -- so we did get a bit of pandemic benefit. But this new bed that we launched is really a fantastic product, getting great customer feedback, Sage has also picked up. So that was really hit hard in the second quarter, third quarter had a nice pick-up and Q4 and that business will resume its high growth as the pandemic subsides. So the diversity of our portfolio is really that gives us the optimism that we're going to continue to see strong growth in medical. And it wasn't just sort of a pandemic pump and then it will suddenly drop because of the innovation in our portfolio and frankly, just really, really strong commercial execution.
Ryan Zimmerman -- BTIG -- Analyst
Okay, understood. And then, just a follow-up from me. Another business that doesn't get a lot of attention is sustainability. And I'm just wondering if there's been any change in practice due to COVID and demand for that business and kind of that the whole reprocessing market itself with hospitals and how to think about that over time as we potentially normalize and the strength of what that can or can't do? Again, I appreciate and that's it's small.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, sure. No, I would just say that it's -- those products are used in discretionary or elective procedures. So they were directly hit in the same way that you saw our other deferrable procedures being hit. And so, because of the nature of those products as the pandemic subsides, that will pick-up. So there is nothing more to read into it than that. Their hospital behaviors or didn't really change either positively or negatively. It's -- if you can do the procedures, they'll use the products. If those procedures were sort of shut-down, then those products weren't being used, and then they weren't being purchased. So I would expect it to follow a similar pattern just based on other elective procedures.
Operator
Your next question comes from the line of Matt O'Brien with Piper Sandler. You may proceed.
Andrew Stafford -- Piper Sandler & Co. -- Analyst
Hi, guys, this is Drew, on for Matt. Thanks for taking the questions. I just wanted to start off briefly on the Wright. Maybe you guys could help us by comparing and contrasting the Wright integration process to the one you went through with K2. What stage of the process have you already completed so far considering the longer deal close timelines? And then, I guess really what I'm trying to get at is about a year, and for the K2 process, you ran into a couple of additional challenges. Do you feel you have a good head start with that for Wright and what gives you confidence in the contribution you baked into guidance?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. So certainly, as I think about those two acquisitions, there are some similarities and then there are some pretty big differences. The similarities maybe by and the foot and ankle side, where there is more of a true integration that's happening between the Stryker business and the Wright business.
But for the upper extremity side, it's much more of a just bringing them into Stryker and continuing on with the growth that they've had. So it is a little bit different from that perspective as we think about bringing on the acquisition of Wright versus K2 just like with any -- in all of our previous acquisitions we learned. And we've learned along the way and we viewed those learning as we plan for additional or new acquisitions that are coming, the same was true with Wright.
And so, we utilized really that year-long period between sign and close to ensure that we're focused on getting the correct integration plans in place, so that we can hit the ground running, and to-date, that's what the team has done. They have executed to the plan. And as I mentioned in my prepared remarks, really done a lot of focus on ensuring that the sales organizations are being integrated in a timely fashion. And so, that's where we are at this point and certainly we'll continue to provide some updates as we continue with the integration throughout the year.
Andrew Stafford -- Piper Sandler & Co. -- Analyst
Okay, that's super helpful. And then, I appreciate the commentary on Mako and ASCs, it sounds like your placement mix continued to shift a little bit with ASC here in Q4. So I guess the question is, as we look out a year in a post-COVID environment, do you see the interest from ASCs tapering down any or do you think it continues to ramping over the long term? Thank you.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes. I think that trends to the ASC, it was already accelerating prior to the pandemic, it's going to continue without a doubt, especially for the knee procedures, foot and ankle procedures. Even some of the basic spine procedures. So I think this is a permanent trend that'll continue and obviously now we have reimbursement coverage for hips as well as knees through Medicare. So I think that this is a trend for the future. And I actually think it's not going to stop in the United States as already countries like the U.K. and even Canada are looking at moving to lower-cost sites of care. It's a good thing for healthcare overall.
And these two service centers make good money, they're very profitable. They don't have the burden of the cost of large in-patient hospital. So you can debate that the actual pace of the curve, but there is no doubt in my mind that this is a trend that's going to continue to accelerate.
Operator
Your next question comes from the line of Richard Newitter with SVB Leerink. You may proceed.
Richard Newitter -- SVB Leerink -- Analyst
Hi, thank you. A couple of quick ones on OrthoSensor and then a follow-up. On OrthoSensor, can you just remind us what you'd plan on doing with the intra-operative deversense capability? I know that that some of your competitors currently use that system. Are you going to continue to sell that as an open architecture?
And then, second on OrthoSensor is just -- excuse me. Should we think of when you do offer your first iteration of the product there, whether it's a wearable, external or whatever it looks like, is that going to be something that you'll charge separately for or do you think the packages end with the procedure?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, thanks for the question. So on OrthoSensor, obviously it's a new under the belt here a few weeks. And so, it's not something that we have fully developed all of the various plans in terms of how we're going to market for any other product at this point in time. And so, as that happens we'll certainly be able to come back and give you updates with regards to how we're going to market, and what the impacts might be in terms of what the legacy business was and what we expect it to be in the future.
And I think the same holds true as we think about in the future product launches as well. And as I mentioned before, we haven't defined all of those timelines yet and so, all of the items that you bring out in terms of how it will commercialize, how we sold, etc. will all be developed and done at that point.
Richard Newitter -- SVB Leerink -- Analyst
Right. And if I could just have one more on the M&A front. Congrats on getting Wright Medical finally over the finish line there. I guess, should we think of you as very much out in the market, size of deals, everything is fair game and back to your kind of normal Stryker M&A, not just small tuck-ins or maybe anything you would share -- if care to comment on their share would affect your view of the M&A outlook? Thanks.
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Sure. I think, obviously, we took on additional debt when we did the Wright Medical acquisition. We've also made commitments to reduce our debt over the next few years. And so, that will be something that's ongoing and you'll see that in our financial performance. But because M&A is so important to our growth strategy, and keep in mind that our normal M&A strategy is really just smaller tuck-in deals. It's what we do well, it's what we do best, and we can execute those quickly.
So I think just like with OrthoSensor, you will see us continuing with smaller tuck-in acquisitions like we normally do through the year. And I don't anticipate that you'll see sort of a big acquisition of the size of Wright Medical for a couple of years. And frankly, if you think back to even when we did Sage and when we did Physio, those were two very large acquisitions. We moved into a strategy for a year or two of just doing tuck-ins, which served us very well. And so I think it will play out very similar to that.
Operator
Your next question comes from the line of Mike Matson with Needham & Company. You may proceed.
Mike Matson -- Needham & Company -- Analyst
Hi. Thanks for taking my questions. I guess I wanted to ask about the ProCuity bed launch. Maybe you can give us an update on where things stand with that? And I was wondering if you could give us an overview of the kind of smart type capability that you're planning to that platform?
Preston Wells -- Vice President of Investor Relations
Sure. So that is out in the market in a limited way in the fourth quarter and really rolling out for a full launch as we think about the first quarter of 2021. In terms of the features and benefits, really it's a -- three things I would probably point out to you. I think one, just advanced fall prevention, really focusing on keeping patient safe, as well as we think about low high feature. I think the bed drops down to about 11 inches off the floor. And then also, it's quite the first bed that's really truly wireless. And so, really all of those items trying to meet some unmet needs in the marketplace to drive benefits in the market.
Mike Matson -- Needham & Company -- Analyst
Okay, thanks. And then, I know you're not giving specific guidance for the margins for 2021. But just given there's several moving parts, specific gross margin you've got Wright, which I think is coming in a higher gross margin but then, you have some fixed cost absorption issues in 2020 that could spill into 2021. Can you give us any kind of insight into where you expect the gross margin to end up and it kind of the sequence of that throughout the year?
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Yes. Actually, I think you did a pretty good job of summarizing it. Wright will definitely come in and be accretive to our gross margin as those products generally have a higher gross margin than sort of the average of our other business. I also think to as you look at business mix, that will normalize as the year goes forward and so we'll also see kind of those higher-margin orthopaedics products becoming a bigger share of the total. And I think, we'll largely come back to sort of what our view as sort of normalized margins as you look at 2019. Conversely though, just as a reminder, moving down to op-margin, you are going to see that discretionary spending look up as we support growth and so that will likely go the other way and we'll be on a ramp largely as sales ramp throughout the year.
Operator
Your next question comes from the line of Josh Jennings with Cowen. You may proceed.
Eric Anderson -- Cowen and Company -- Analyst
Hi, this is Eric for Josh. Thanks for taking the question. Looking at the 4Q performance in hip for a minute, this is a procedure category that we have been thinking, perhaps, would be a little more resilient through any pandemic headwinds in the quarter. I was just wondering if you could share your thoughts on that business, particularly the -- particularly in the U.S., excuse me, and just help us understand what's behind that result. Thank you.
Preston Wells -- Vice President of Investor Relations
Yes. So I think Kevin outlined it pretty well before, and I think overall, just looking at one quarter in the mix -- in the midst of a pandemic is tough to do because of the variability and really the localized impacts that we were seeing from elective procedure standpoint. So, certainly, you would expect that hips might be a little less deferrable than knees, just given the nature of the disease and degeneration, but at the same time, elective procedures depending on where you were in the world, will be in stock and so hips were not immune to that, like some of our other elective procedures. As we look forward, certainly with the rollout of all of the installations for Mako that we've done this year, as well as our new hip software we're really expecting continued above-market growth from our hips and knees as we move forward.
Eric Anderson -- Cowen and Company -- Analyst
Understood. Thank you. And then quickly, I was wondering if you're able to share what percent of the Wright business is levered to out-patient procedures?
Preston Wells -- Vice President of Investor Relations
No, that's not something that we're sharing.
Operator
Your next question comes from the line of Jef Johnson with Baird. You may proceed.
Jeffrey Johnson -- Robert W. Baird & Co. -- Analyst
Thanks, guys, good afternoon. Most of my questions have been answered, but I guess just one last one. Just it sounds like China and Latin America held in better in the fourth quarter. Have you seen any change in that trend or line over the last few weeks or as we've gone into 1Q here? Just are those continuing to hold in better than some of the European and U.S. markets or anything we should be thinking about even in those markets or early in the year? Thanks.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, I would tell you. We haven't seen any significant trend shifts heading -- making that transition from fourth quarter in the first quarter.
Operator
Your next question comes from the line of Kyle Rose with Canaccord. Your line is open.
Kyle Rose -- Canaccord Genuity -- Analyst
Great. Thank you for squeezing me in. I just had two questions. One, Kevin, you mentioned sports being a pocket of strength. I was wondering if you could flesh that out for us, really what's driving that as the new products that should be focused on. And secondarily, you talked a lot about building a connecting ecosystem of implant, enabling technology. I think we understand the opportunity with Mako pretty well. You clearly got OrthoSensor, that's going to flow in, but maybe just help us understand what that means for the company longer term. Does it bring you close to your customers and prevent share loss or competitive loss? Are there any revenue streams that come in, just want big picture perspective, how should we be thinking about that within the next couple of years?
Kevin A. Lobo -- Chairman and Chief Executive Officer
Okay. Sure. So I'll start with the second part, this -- the world is obviously going more and more digital. We have a Stryker Health Cloud, there's all types of data that we're collecting from Mako that we want to mine that data with thousands and thousands procedures already being done and really connect that with sensors. So we really see this as not just limited to joint replacement, it's going to be across all of our businesses whether it's Trauma, whether it's cranial maxillofacial, sports. And so this is something we're really excited about and we've -- me and Robert Cohen, the head of that business, on behalf of all of Stryker.
And so we already had initiatives going on in different parts of the company, we're sort of bringing it all together to really create more leverage and really be able to have centers of excellence around different types of technology blocks. and so, to us, it's extremely exciting, Robert company very, very well as I think many of you know, Robert, very well-positioned to lead this function for the company. And sorry, can you go repeat the first question again? I'm sorry that I didn't catch that.
Kyle Rose -- Canaccord Genuity -- Analyst
Yes, it's just about the strength that is on sports management...
Kevin A. Lobo -- Chairman and Chief Executive Officer
Sports, yes. So, sports has been just a fabulous story for Stryker. That -- I joined the company almost 10 years ago, our sports medicine implant business was really tiny, most people don't even know we had a sports medicine implant business and we have grown it pretty dramatically since then, primarily through internal innovation. But we've also done a series of very small acquisitions and one of them was Pivot, you may recall for hip arthroscopy. More recently, we launched a lateral roll anchor for shoulder which has been -- we call Omega, a product name, which is a fantastic product. We picked up -- throughout the year, we picked up another product as well which -- these are all key, fundamental products, whether it's in knee, whether it's in hip, or whether it's in shoulder. So now, we have all three of the joints very-well covered in sports and we are just growing at again very, very robust rate.
And the timing couldn't be better. With the shift to the surgery center and being able to do sports combined with our other divisions. Again, we really ported on in the last few years in sports. There's a lot of investment internally that we've done and we have had a fabulous year that business is run out of Denver and we're really excited about the progress we've made in sports.
Operator
Your next question comes from the line of Matt Miksic with Credit Suisse. You may proceed.
Matt Miksic -- Credit Suisse -- Analyst
Hey, thanks, so much for taking the questions. I think just one on shoulder and well, I think one on -- just to follow up on some of your comments on market share trends. So I'm wondering if you could talk a little bit about your thoughts on the overlap of Wright surgeon customers and shoulder with sort of your traditional end markets and whether if any opportunity there is -- there occur -- sort of cross-selling of those going through relationships that you're saying and then as I mentioned, just one quick follow-up.
Kevin A. Lobo -- Chairman and Chief Executive Officer
Yes, sure. So clearly, Wright Medical had a much bigger shoulder business than Stryker and a lot of the Stryker business frankly where you'd be hit the new surgeons that also did some volume of shoulder. And the teams are obviously working on that through the sales deployment, figuring out with surgeons are going to be allocated to which salespeople. They made great progress on that front. And cross-selling opportunities will exist but as Preston mentioned before, this integration, it's not going to be as tricky as the integration on foot and ankle just given that we tended to -- they tend to be strong with our -- I'll call it fully dedicated upper extremity surgeons and we tend to be stronger with those surgeons that did a smaller number, just as a general statement.
So I think this integration is going to be terrific. We are really thrilled to people have the leader from Wright Medical take over the combined business of upper extremities and their head of sales is also running the combined sales organization and they're both outstanding leaders and we are delighted, not only to bring the business and the products of Wright Medical but being able to bring over some of their key leadership, even the leader of our combined foot and ankle business came from Wright Medical. So not only are we bringing over great technologies, we're also bringing over great talent's pitfall with the acquisition.
Matt Miksic -- Credit Suisse -- Analyst
That's great. Thank you for that. And then just a follow-up on some market trends, I think you mentioned here just in Q&A that you expect to continue to grow above in the market and in joints, or in orthopaedics, or in knees. I heard correctly. I'm just wondering for clarity, looking back on Q4, understanding a lot going on in leasing of look at work, etc., but is it your expectation that your numbers there also represent sort of above end-market procedure growth or is it just too hard to talk about that given the variability?
Preston Wells -- Vice President of Investor Relations
Matt, I would just tell you, at this point, it's very difficult to really talk about it, just given the variability, and then it's not dissimilar to what we've seen really in second and third quarter as well in terms of how the surgeries are being deferred and where they're being deferred and how they're coming back. So I think that really it's difficult to use one quarter and certainly difficult in the mix this pandemic, it is one quarter. So I think as we look at it, we're looking at -- as we get to those normalized rates and knowing what we've done from a Mako implement -- a Mako placement and install standpoint that we have a lot of runway to go in terms of growing markets in these.
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
So thank you, all, for joining our call. Like you, I am very, very pleased to have 2020 behind us and looking forward to a strong year in 2021. We have to get through, obviously, the remainder of this pandemic but as you saw from our guide, we are feeling very confident about the future. And we look forward to sharing our Q1 results with you in April. Thank you.
Operator
[Operator Closing Remarks]
Duration: 73 minutes
Call participants:
Kevin A. Lobo -- Chairman and Chief Executive Officer
Preston Wells -- Vice President of Investor Relations
Glenn S. Boehnlein -- Vice President, Chief Financial Officer
Vijay Kumar -- Evercore ISI -- Analyst
Bob Hopkins -- Bank of America -- Analyst
David Lewis -- Morgan Stanley -- Analyst
Shagun Singh -- Wells Fargo & Company -- Analyst
Robert Marcus -- J.P. Morgan -- Analyst
Pito Chickering -- Deutsche Bank -- Analyst
Matthew Hendricks -- Citibank -- Analyst
Kaila Krum -- Truist Securities -- Analyst
Steve Lichtman -- Oppenheimer & Co. -- Analyst
Matt Taylor -- UBS -- Analyst
Ryan Zimmerman -- BTIG -- Analyst
Andrew Stafford -- Piper Sandler & Co. -- Analyst
Richard Newitter -- SVB Leerink -- Analyst
Mike Matson -- Needham & Company -- Analyst
Eric Anderson -- Cowen and Company -- Analyst
Jeffrey Johnson -- Robert W. Baird & Co. -- Analyst
Kyle Rose -- Canaccord Genuity -- Analyst
Matt Miksic -- Credit Suisse -- Analyst
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