Good morning, ladies and gentlemen, and welcome to the Zimmer Biomet Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded today, February 5, 2021. Following today’s presentation, there will be a question-and-answer session. At this time, all participants are in a listen-only mode. [Operator Instructions]. I would now like to turn the conference over to Keri Mattox, Senior Vice President, Investor Relations and Chief Communications Officer. Please go ahead.

Thank you, operator, and good morning, everyone. I hope you are all well and safe. Welcome to Zimmer Biomet's quarterly earnings conference call. Joining me virtually today are Bryan Hanson, our President and CEO; and CFO, Suky Upadhyay. Before we get started, I'd like to remind you that our comments during this call will include forward-looking statements. Actual results may differ materially from those indicated by the forward-looking statements due to a variety of risks and uncertainties. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties, in addition to the inherent limitations of such forward-looking statements. Additionally, the discussions on this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included within our earnings release. As a note to all call participants, we provided updates via 2 press releases issued this morning, and we have also posted an investor presentation to our website, zimmerbiomet.com. With that, I'll now turn the call over to Bryan. Bryan?

All right. Great. Thanks, Keri. And also I want to say just thanks to everyone for joining us on the call here this morning. As you saw from our announcements earlier today, we clearly have a few updates that we want to fill you in on and I'm looking forward to a very productive call this morning. Just given the backdrop of COVID, let me just start by saying that I certainly hope that all of you are doing well and staying safe. And continuing to, as much as it's frustrating, I'm sure by now, continuing to social distance and wear your masks. I think, at this point, we're all pretty good at it. So let's make sure that we continue to do it. And to all of the ZB team members joining the call this morning and who are listening at a later time, I just want to let you know I'm thinking about you as well. I just want to say thanks. Thanks for everything that you do and have done and will do actually to continue to follow our protocols, to keep yourself safe, obviously, but also our teammates safe. And as a result of that, continue to deliver for our customers and our patients and move our mission forward. And I just continue to be very proud of everything this team has accomplished against a significantly challenging backdrop in 2020. So, I'm proud of you, I'm glad to see what you've been able to do, and I'm looking forward to what you're going to do in 2021. And here we are, right? We're in 2021. And there's going to be challenges and we've seen already early on in 2021, but I'm confident that we're ready to deal with the challenges as we do, and I'm pretty…

Thanks, and good morning, everyone. Before jumping into the details, I'd like to summarize the quarter as one where we made significant progress across a number of strategic and operational fronts, all in the backdrop of heightened market pressure. While revenue and profitability were challenged due to the pandemic, we executed extremely well against the things we can control, positioning ourselves to win through eventual market recovery and beyond. Now for this morning's call, I'm going to focus on 2 topics. First, our Q4 results, including commentary on the COVID impact and what we're seeing so far in Q1; and second, how ZB is positioned for long-term growth, specifically, how we believe the spin-off transaction we announced this morning is expected to impact us post execution. Moving forward, unless otherwise noted, revenue and P&L commentary will be on a constant currency or adjusted basis. Net sales in the fourth quarter were $2.085 billion, a reported decrease of 1.9% and a constant currency decrease of 3.7% versus 2019. But we did not experience any material day rate differences in our year-over-year comparisons. Our consolidated regional results were in line with expectations despite deepening pandemic pressure on global elective procedures as we exited the year. While the market softened through the quarter, execution remained strong across all regions. Beginning with Asia Pacific, the region grew 2% versus Q4 2019 with growth across all 3 of our largest markets of Japan, China and Australia, New Zealand. While COVID pressure on elective procedures increased towards the end of the quarter, the impact is less pronounced than what we are seeing in EMEA and the Americas. We are excited about the uptake we're seeing in ROSA in the region and with the solid performance across our knee and hip businesses. As expected, the EMEA region…

Thanks, Suky. Before we start the Q&A session, a reminder to please limit yourselves to a single question and one follow-up, so that we can get through as many questions as possible during the call. With that, operator, may we have the first question please.

[Operator Instructions] Our first question comes from Steven Lichtman with Oppenheimer & Company.

Bryan, as you continue in phase 3, obviously accelerated with today's announcement, I was wondering if you could provide your latest thoughts on capital allocation. Are you still targeting tuck-ins, larger deals? Any color would be helpful. And I have a follow-up on COVID.

Okay. Yes. I'll just briefly answer your first question, and then I'll pass it over to Suky. But yes, our capital allocation strategy remains the same. We do want to look at tuck-in acquisitions that we think would have low dis-synergy risk and we have a right to win in the space. And that's what we're going to continue to do. This does not change that. And Suky, you want to give maybe a little more color just overall -- on the overall capital allocation strategy?

Yes, sure. So we made good progress even in the backdrop of the pandemic in 2020. We're going to continue to make progress in strengthening our balance sheet and creating firepower moving forward. As I said in my earlier remarks, we expect to pay down about $500 million of debt -- of maturing debt this year. And as cash flows improve, as the virus abates throughout 2021, that will increase and expand our opportunity, firepower opportunity for continued tuck-in M&A. So again, consistent with how we talked about previously, first priority is to maintain investment grade, pay down debt, delever. And our second priority from a capital allocation standpoint is to continue to grow that topline and bottom-line through accretive strategic tuck-in M&A, and this now gives us even greater focus through our spin transaction.

Great. And then just on COVID, where do you think the size of deferred procedures is? I know we've talked about in the past, I know it's a tough number to tee that, obviously. But any comments there would be great as we hopefully see end market conditions improve as the year goes on?

Yes. It's a fantastic question truthfully and one that we track quite a bit and try to estimate. I would just say that without being able to be a fine point to it, it's hundreds of millions of dollars is the way that we view it. And that's what gets us pretty excited about the fact that the end of the pandemic, and our view is on the horizon. And once that occurs, we've got a heck of a backlog that we need to work through. Now the timing of when you work through it, it's based on capacity, capabilities in different markets and those types of things, but we feel it's very sizable, and we're excited to start working through it.

And we'll take our next question from David Lewis with Morgan Stanley.

Just 2 for me, and I'll start strategically on the spin, Bryan. A lot of times in spins, we create a lot of value through multiple arbitrage between the 2 assets. We even finished our math there. My sense is the multiple spreads won't be that wide here. So the real value creation for Zimmer is sort of to execute your goals or grow faster. So, when you say 50 bps of growth, Bryan, does this get you to 4% to 5% growth faster or are we talking about it's just going to get you to a higher end or higher structural growth rate at some point towards the end of the LRP? And then I have a quick follow-up…

Yes, yes. So for us, when we just think about growth rate, we're kind of sticking to that 4% to 5% that we've been talking about. But what we should look at here is that you should have greater confidence, obviously in our ability to do that and potentially be on the higher end of that range. And so that is a key focus for us. And really the significant value for us is that ability to focus. Remember, we talked before about getting to 4% to 5%. We had a number of variables associated with it. One of those variables, even though we didn't have the same level of investment in these businesses, was that they had to grow at least at the lower end of the market. And over time, if you're not investing appropriately in businesses, there's risk in that. So, we've eliminated that risk as we spin these out, and we've unlocked value for SpinCo because ultimately -- or NewCo because ultimately, they're going to invest more intently in those businesses. So, it provides value in both ways, but go ahead on your second question there.

Sure. And sorry, Bryan, can we think about our confidence which suggests that maybe 4% to 5% growth is possible in the next 2 years? Is it there any faster? And then I'll ask my other question for Suky just real quick. Suky, there’s a lot of focus this call on the USD number. Can you just give us any sense as it relates to the USD number, what was the impact of those strategic deals or bulk purchase deals on the fourth quarter and how does the ROSA contribution in the fourth quarter on a revenue basis look relative to the third quarter?

Suky you could talk, you’re on mute.

Yes, thank you, Bryan. So thanks for the question, David. On your first question relative to the year-end and the U.S. number, it's not uncommon at the end of any quarter, especially at the end of the year-end, to see higher sales and some potential timing favorability or headwinds for that matter. In this quarter, we actually saw some incremental uptake in our U.S. business. Again, probably not different than what many others saw across our sector as many accounts were utilizing their year-end budgets to bring in some product. For us, we look at it, it was a modest benefit on the total company. It was in the low-single digits. But again, it was something that was above our normal trend, so we wanted to make sure we called it out. And again, any impact that, that might have into 2021 is reflected in those Q1 estimates that I've already provided. So overall, still a very, very strong quarter for the company versus market, both in knee and hip. Your second question relative to ROSA. We did see a shift in the fourth quarter, especially with those expanded hospital budgets or remaining budgets, I should say, more dollar sales on installments than we've previously seen in Q2 and Q3. But year-over-year, Q4 last year to this year, it was not a major material headwind or tailwind on our overall growth numbers.

Operator, can we have the next question please.

We'll take our next question from Larry Keusch with Raymond James.

Just wanted to first come back to the spin-off here. I guess, what I'm really curious about is why is now the right time for this spin-off? And along with that why a spin versus the sale? And then I'll come back to the second question.

Yes. So the timing of it is -- it fits right into the phases of where we look at transforming the business. For us, it was sequential. We wanted to make sure that phase 1 in our transformation was in great shape, and it is. Phase 2 would need to be well underway before we want to take something like this on. And I think based on our performance over the last few quarters versus our competitors, it's pretty clear that Phase 2 is working quite well. And now's the time. It's time for active portfolio management. And in a time when we don't have as much capital to work with, this is clearly one of the most significant ways that we can impact and influence the portfolio in a positive way for both companies, I do believe that. So that's the why now. And we're excited about it. We truly are. We're excited about it for our organization, NewCo -- and we're excited about it for NewCo. And we'll be in it together for the next year, 1.5 years and even post that. So that's the margin -- the line now. And we've looked at multiple ways to drive value with these businesses. Just know that this isn't the only option that we've looked at. And just given the number of options on the table, we felt that this was the most significant way that we could drive value for our shareholders and our businesses and our team members. So that's the reason for the spin.

Okay. Very good. And then, Bryan, look, you guys seem to be increasingly well positioned in creating sort of this digital ecosystem in orthopedics. If I think about it, you've got a surgical planning, you've got robotics, you've got mymobility, you've got Persona-IQ. So maybe just talk about how you see the product offering evolving at Zimmer and how the ecosystem can help improve outcomes? And what are you thinking about sort of reimbursement for Persona-IQ from both the implant and the remote monitoring aspect of it?

Yes. So no, I won't get into specifics on reimbursement for Persona-IQ, but we definitely see it as a very important piece of the puzzle when we think about the ecosystem that you're referencing. And I would just say that we're taking it very seriously when we look at ecosystem versus just the typical implant. We've had a significant shift in our research and development dollars towards robotic storage, data infomatics to build that ecosystem that's going to be meaningful for patients and for our customers alike. And I got to say, there's a lot of excitement around that in our organization, a lot of excitement from our customer base as well. And the competency that we've built over the last few years in this area is, in my opinion, second to none. And where we don't have the competency, we've been working with external partners that have pretty significant names like Apple, and you're going to hear more about those coming up as well. So we feel really good about where we are today. And we feel, in my opinion, anyway, that these ecosystems to be able to capture data before, during and after procedure are going to be a significant benefit for patient outcomes. And ultimately, at some point, when we pick up enough data and have the data like available to us, be able to have predictive analytics to be able to make better pure decisions before the surgery occurs. And that's really the intent. So we're very excited about it. We've shifted dramatically research and development in this area, and we feel we're ahead right now versus our competitors.

Our next question comes from Larry Biegelsen with Wells Fargo.

Just 2 financial questions for me, probably both for Suky. So Suky, the margins of the Spine and Dental businesses, how do they compare to the new or current Zimmer? You talked about them being similar to peers, but there are a lot of different peers out there. Can you give us a little bit more color on the margins of those businesses, please? And I have one follow-up.

Sure. Good morning, Larry. So the first thing I would say is we’ve provide some color on the pro forma accretion impact on our RemainCo EBITDA and operating margins, which should give you a good initial view as to what the NewCo margins could look like. Just stepping back, overall, both those businesses are, Spine, Dental and our bone healing business, have a gross margin profile that's a little bit below the overall company average. I would say bone healing is actually a little bit above the company average. But really, it comes down to the cost to serve where the spending levels in both those businesses are much higher than the company average, which overall drives the operating margin for both Spine and Dental lower than where ZB HoldCo is from a standalone basis. So as we think about margin opportunity going forward in both those businesses, we do think that there's opportunity to enhance margins. One will come through, we believe, a real opportunity to accelerate top-line growth, which will bring some operating leverage to the business. But there's also opportunity for mix shift and potential efficiency within the existing cost structure. So hopefully, that gives you a little bit more color on how to think about margins in those businesses going forward.

That's helpful. And then on 2021, you gave some helpful color on Q1 revenue growth, Suky. Maybe you could talk about sales growth cadence through the year, just any reaction to consensus, which assumes about 2% growth over 2019. I know you don't have guidance out there, but just directionally -- and operating margins. In the past, I think you said they could come close to 2019 but maybe lag a bit. How should we be thinking about that for full year 2021?

Yes. Yes, absolutely. So first, on revenue, why we're not providing guidance is because there are a number of variables that are just really difficult to predict at this time with any level of credibility or confidence. The first being where is the trough in this most recent surge that we're seeing. January, February, where does it land in Q1? What does that uptake look like post adoption of vaccine. And then when do you ultimately return to normalized market growth and potential tailwind from the deferred procedures. So we're running a number of scenarios. There are some scenarios where absolutely we could see a path to growth versus 2019. But again, those variables are, at this point, just too uncertain. But clearly, I think just stepping back, once we do have adoption -- wide adoption of that vaccine, which we believe will have at some point in 2021, we think that there's a real opportunity for some strong growth, again, once we return to normalized market and are augmented by that tailwind. But it's just too difficult to say what our cadence looks like at this time. Regarding margins, you're absolutely right. As the margins or revenue continues to improve throughout the year, which we believe it will, once we have good uptake with the vaccine, the margins should follow. There may be a slight lag, consistent with how we've talked about things before as we catch up on certain investments. But make no mistake, they will expand, and we do see the opportunity for significant margin expansion over time as we normalize our revenue uptake.

Our next question comes from Amit Hazan with Goldman Sachs.

I wanted to start on the U.S. market for knees and hips. And obviously, with the dollars, there's a lot of noise as you mentioned. So just from an underlying basis, I'm wondering what you think about market share -- what you think what happened to market share in the fourth quarter for you in both knees and hips in the U.S. from a volume perspective?

Yes. Yes. So what I would say is, I try not to look at any specific quarter and draw too much of a conclusion. I would now -- saying that I'd much rather have what we just saw in the fourth quarter, where we're significantly above-market growth that always feels good. But instead, more look at a trend. And if I just go back, let's call it, 3 quarters, that gives you more of a sense of how we're doing versus market. And if I think about U.S., which is probably the cleanest way to look at this because there's a lot of noise in the mix and everything else that people may have outside of the U.S., but we just look at U.S. and we're somewhere in the neighborhood, just think about large joints, 500 to 600 basis points over the last 3 quarters above market, above our key competitors. Knees is a little better than hips, but we're seeing outperformance in both. Knees probably more 600 basis points to 700 basis points and hips, more like 500 basis points to 600 basis points better. So that's what I look at. Not a single quarter, but a combination of quarters and where we're seeing that trend. And by the way, I fully expect us to continue that trend. And I talked about the innovation that is going to be pretty pivotal this year in both hips and knees with the current momentum that we already have, with the commercial prowess that we have as an organization, and that innovation is still yet to come, and our confidence level is pretty high.

And I just wanted a follow-up -- focus on R&D. And as we look at just the absolute number this year, I was on that you haven't spent this little on R&D in several years. It's down 15% for the year. And that kind of separates you from other companies in medtech, and like that medtech and clinical. I'm wondering if you can give some color to where you've made the cuts, how you're prioritizing that budget, and how that impacts your future product cadence?

Would I like too much to run a business? It's, first and foremost, always assessing how are you spending research and development dollars and then making mix shift spend to make sure that you're spending it wisely. And so that's why you saw -- you're not seeing research and development increase. You saw some slight compression there. But it really was just to get straight on what are we going to spend our dollars on. And we killed a lot of projects that just didn't have returns that we expected. And that's the cleanup, if you will. What you're going to see from here, though, is an increase, for sure, in research and development. I always want to make sure that we're spending money wisely before we say whether we're spending enough or too little or do we need to spend more. We have a real good deal now for what we should be spending money on, that we're spending money in a disciplined fashion, and we have a lot of things in the bulk in now that we want to turn on. So as we look forward, you should expect to see increased spend in research and development, but increased spend in a very disciplined way.

Our next question comes from Bob Hopkins with Bank of America.

I'll just state my 2 questions upfront in the interest of time. So the first one is just to come back to something people have been asking about already, but I was wondering if we could get just a little bit of a better sense for the impact of the bulk orders that you're calling out on Q4, specifically on U.S. hips and U.S. knees. And again, the reason I ask is that your hip and knee growth in the U.S. is so materially above what we're seeing from peers. And the gap was just very, very wide this quarter. So any sense as to the quantification on U.S. hips and U.S. knees in those bulk orders would be great? And then on the second question, which is on the spin announcement, Bryan. I mean, I don't think it's unfair to say that Spine and Dental are 2 relatively subscale businesses with not a lot of synergies between them. So I guess my question is, why not sell them to the folks with scale? It just seems like that will be a lot cleaner. So would love your take on that.

Yes. So first of all, on the quarter itself, again, we feel great about our quarter performance. And I would say that when you're looking at this year, in COVID, in particular, there was a lot of money that folks had to spend, and we always see in the fourth quarter, we've seen purchases that occur. We see it every quarter, but fourth quarter, in particular. So it's not abnormal to see as Suky referenced before. If I was going to try to put a number to it, I'd say maybe in the 200 basis points to 300 basis points of benefit that we saw, if you're thinking about large joints. So it was important for us in a normal quarter given this quarter differential between us and competitors, not as material. And I would be surprised, quite frankly, if others didn't see the same thing. But either way, that's -- we just want to make sure we call it out as being transparent as we possibly can. And that was the order of magnitude that we saw in the quarter. As far as the spin and having both Dental and Spine together, if you're going to spin a business, you want to make sure that it has a reasonable amount of scale, obviously, for it to be a viable publicly traded company. We feel that $1 billion-plus is kind of that number. Although there's not obvious reasons that you would look at from a strategic standpoint that those businesses would be together from a commercial perspective, there is a lot of capability and know-how and materials that are used for implants across Dental as well as Spine that there is some value in. And so it was really more around the idea of scale and the importance of that scale and utilizing those competencies, if you will, on those raw materials that go across those 2 businesses. And that was the reason why we spun both together.

Our next question comes from Joanne Wuensch with Citibank.

So as you think about spinning this out in the next 18 months, what do you need to prepare? And does it accelerate tuck-in acquisitions or anything in terms of spending so that the next company heads into its stand-up phase in a good position?

Yes. I would say it's generally business as usual for most of the organizations. We're going to continue to focus where we have. We've got pretty good separation between businesses. So it's not going to be highly disruptive. There's a lot of work to be done. Don't get me wrong for this thing to occur and to occur as effectively as we wanted to. But it's not going to be disruptive to the 2 organizations because they're pretty again separated today. But yes, we're actually increasing, not a significant amount, but increasing spend in these businesses to get them a good tailwind coming into the spin itself. And if there was small opportunities for us to spend capital over the next 12 months, that would make sense to again, to bolster that portfolio, we would certainly consider it in the same way that we would have beforehand. But we want to make sure that we're setting up NewCo to the first success. And we're very close on a CEO to bring in, and that person will bring leadership right out of the gate. And so that's really the way we're looking at it. If we can give them a little more money to spend to get things going, that's what we're going to do here in 2021. And if, again, very small deals, but if there were things that we could do to, again, bolster their portfolio, we'd do that as well.

And a quick follow-up question for Suky. How do you think about us modeling over the coming quarters in terms of sequential improvement, starting with the fourth quarter commentary?

So Joanne, as I said, it's difficult to predict at this point until we start to see a little bit more stabilization in our -- some of our key or larger markets. If you go back to last year, we're hopeful that this is a 1 to 2-month trough, and we begin to see a V-shaped recovery as we did last year within Q2, leading into Q3. If that happens into Q2, and we start to see stabilization of market growth in the back end of the year and then potentially that tailwind that we've been talking about with preferred patients, that could present a nice trajectory for us and one of those pathways to potential growth for this year. But it really is just too early to tell. As we’ve done over 2020, we will keep you updated as we learn more and as we understand how this impacts our business.

Our next question comes from Chris Pasquale with Guggenheim.

First one from me, just hoping you can give us any more clarity on the timing of the new ROSA Knee and Hip applications. I think I heard you say late '21 for hips. Just trying to get a sense for whether either of those can really have an impact this year?

Yes, we think both will have an impact this year. Obviously, the U Knee will be first -- will be in the first half of the year. That's one that we are very excited about. We have a significant share of the U Knee market, and we're excited to be able to bring robotics to that market. And then hip will be second half of the year. And even though second half, we still believe it will have an opportunity for us to be the hit number in the back half of the year.

Great. That's helpful. And then can you talk a little bit more about the performance at ASC and how you see those individual positions heading into '21? I'm curious whether there's any notable differences between them in terms of how you finish the year and whether you're seeing any opportunities within extremities, in particular, to take advantage of some of the disruption in that market?

Yes. I mean, for us, obviously, S.E.T is not all created equal. We talked about sports and extremities as being key focus. Upper extremities is the here and the now. Lower extremities would be more in the future. In sports, is the here and the now with the recent acquisition that we did to tuck-in -- to fill in some product gaps that we have. But we feel good about all 3 of those areas. And our ASC presence, again, with the tuck-in acquisition that we recently did to give us more scale in the ASC and the contracting team that we put into place, was not as fulsome yet as hip or knee, but it's getting there pretty quick. So our confidence level is high that we're going to see the growth rate that we need in S.E.T, and it's going to be driven by sports, it's going to be driven by extremities, and it's going to be driven by our presence in the ASC.

We'll take our next question from Kyle Rose with Canaccord.

So I'll ask my -- both of my upfront. First is, Bryan, you talked a lot about data and the ecosystem -- connected ecosystem. Can you kind of just help us understand how that translates relative to revenues or driving lower cost? I mean, you changed the commercial model? Does it help you develop better technologies? And these have good long-term outcomes. But I'm just trying to understand how this drives incremental growth longer term. And then, obviously, you're having great success with ROSA in robot placements. Help us understand maybe utilization there and then maybe any benefits you're seeing with respect to price and mix on the actual implant side?

Yes. If you think about it, we're trying to attack is the fact that 20% of patients in the knee right now are still not satisfied with the outcome that they have. That's a pretty significant number. And we truly do believe that the ecosystem is going to be able to help resolve that disappointment in any procedure. And that's good for everybody, by the way. As we move down this path, we make those outcomes at better as a result of capturing the data and then making different decisions as a result of the data, that's going to allow us to get better outcomes. And when that occurs, you're going to have more patients get bold enough to move into the funnel because it's underserved today. There are patients that need a knee procedure that are afraid of the outcome, are not competent as a result of it, and they're not entering the funnel. So as we can change that outcome, and we believe we can, then we're going to have more people into the funnel, and let's get to the entire market. That's the way we're thinking about data and informatics and driving better outcomes over time. As far as ROSA goes, I'll tell you, I'm excited. We've got one application in our robotic system. I think that's what people -- remind people of just one application, there's 2 more coming this year, but there's one right now. I mentioned in my prepared remarks that we were at the higher end of our placement goal in 2020. But what I would tell you is that in reality, we were above that number. When I say higher end, I actually meant above 300. And the quarter was significant. And I think this is really important. We placed over 115 units in the fourth quarter, which was just an outstanding performance by the team. And what I love about that is that happened in concert with one of our other players in the marketplace, one of our competitors also having a record quarter in the fourth quarter. And that's good news because that tells you that orthopedics is open for robotics -- wide open for robotics. And that tells you that you've got an opportunity for all boats to rise as a result. So we truly do believe that the market is accepting of robotics, it's moving quickly, it's hitting the pivot point, and it's going to be very accepting, we believe, as well of the data and informatics that can come with it.

Yes. And if I could just build on what Bryan said, it was a question earlier about the strength of our U.S. number in recon and yes, absolutely, we had some benefits due to timing. But one of the great things about some of that benefit that we saw is really -- it came because of some stocking because of new accounts and account conversion. And I think that's yet another proof point of the strength that we're seeing in our commercial execution and with our new products. So we had a really strong quarter, no doubt in the U.S. We'll continue to see momentum for all the products that Bryan mentioned earlier. And that just actually accelerated in the fourth quarter. And now we've shown it consistently for a few quarters. So we're pretty excited about where this is leading into 2021 and even more excited about where that potential is through recovery and post recovery.

I think we have time for maybe one last question before we hit the 9:30 time.

Our next question comes from Kaila Krum with Truist Securities.

Just 2 quick ones on portfolio management. I mean, it sounds like you'll continue to do tuck-ins. But I mean, first, is it fair to say you'll now focus on these core areas in orthopedics? And then second, I'm curious, do you think that a different portfolio of buying products with greater scale can be more synergistic with your ortho business? Or do you simply think that there are limited synergies between the spine and ortho markets overall?

Yes. So our strategy around M&A and how we would spend capital dollars to augment the portfolio is unchanged. There are certain categories that we've talked about in the past where we believe we have a right to win, that we have a brand recognition that gives us that right to win, and there's a path for leadership as a result of that. And they're profitable. And those are really the main things we're focused on. How do we enter into spaces, build scale in faster growth markets, where we have a right to win, and we have a path to leadership and the profitable businesses. And that wasn't the case for us for Spine. But it doesn't mean that Spine can't be a very attractive business. It's just not one that we would invest in to become a leader because there's other opportunities for us to spend in sports or extremities or thoracic that are just more attractive markets and more profitable. So we would look at these as being better as a result of that as separate businesses versus a part of our portfolio. And I don't believe -- and we certainly haven't seen that there's a real benefit in having even a fulsome spine business in concert with large joints or S.E.T. We just don't see a lot of contracting -- large contracts that pull-through either one of those businesses.

Great. I think that takes us to 9:30. We'd like to thank everyone for joining us on this morning's call. Of course, the IR team, and -- of course, the team will be available today if there are any further questions. I'm sure we'll be talking to all of you. Thanks so much and have a great day.

Thank you again, for participating in today's call. You may now disconnect.