Thank you all. My name is Caroline Brask. I'm an associate here at the JP Morgan Healthcare Team. It is my pleasure to introduce Matt Trerotola, the CEO, Ben Berry, the CFO, and Derek Leckow , the Vice President of Investor Relations here at Enovis.
Great. Thank you. Thank you very much. It's great to be here and have a chance this afternoon to introduce you to our company, Enovis. In some ways, we're a brand new company as of April 4th of last year. We've got actually a very rich heritage. We came from a company called Colfax that was founded by Mitch and Steve Rales, who founded the extremely successful Danaher Corporation. Our med tech businesses have rich and deep heritage within the orthopedics space as well. You can read the forward-looking statement. I'm gonna talk a little bit about our markets and our positions in them and what's great about those positions in the markets.
Talk about our strategy, for how we're gonna grow our company high single digits organically, increase our margins over time, and then complement that organic growth with strategic acquisitions that drive compounding shareholder value. Also gonna talk a little bit along the way about, you know, some of the great progress and momentum that we've been building. As I said, we were a brand new company. This is a picture from April 4th. We had been a diversified company for a number of years, and went through a reshaping of our portfolio that ultimately led to all of our industrial businesses being sold or spun off and us becoming a focused med tech company, initially in the orthopedics space.
We renamed the company symbolizing innovation and vision of the future, that O in the middle that really shows how we're gonna bring our continuous improvement history forward into these businesses to drive continuous improvement. As you can see from our vision, we're all about creating better patient outcomes and also bringing technologies to improve workflows in healthcare. We're also all about continuous improvement and having a culture and a business system to drive that. Our, you know, 6,000 associates around the world are absolutely passionate about what we do for our patients. This page introduces our company. We're about $1.6 billion of revenue. About 2/3 of that is in our Prevention and Recovery segment, which is leadership positions in bracing and in rehab. I'll talk more about that.
About a third of the company is our fast-growing Recon segment. Recon was about 20% of the company back in 2018. We've really been aggressively growing organically and inorganically, that double-digit growth Recon part of our company. We're global, with the largest position in the most attractive market, the U.S. here. Our P&R businesses have been very global for a long time. We really globalized our Recon business pretty aggressively in 2021 with acquisition of a company called Mathys. We serve great markets, over $50 billion in the huge orthopedics market that grows about 4% overall, driven by the, you know, some of the drivers on the right-hand side, like aging populations.
Our Recon business is in, as you can see on the page, we participate in about $20 billion of surgical business in hips and knees and extremities. We're disproportionately weighted towards the extremities, which as you can see on the page, is the highest growth part of the entire orthopedics space. Our P&R business, we're about a $1 billion player in a $5 billion global market. Really more leadership positions there. What's great about our P&R business, you can see on the page, it touches all of the surgical parts of orthopedics, the ones we're in and the ones we're not, and it creates synergy into those businesses, but also deep insights into those businesses.
When we decide to go somewhere like foot and ankle, where we made three acquisitions in the past few years, we already know that market very deeply, and know what it takes to win there, and we're able to choose whether we enter the whole market or the most attractive parts. As we enter, we've got some synergy, you know, back to our P&R businesses. A little bit more about the two segments. P&R, as I said, leading positions, number one in embracing globally iconic brands like DonJoy and Aircast. Number one globally in key areas of rehab with Chattanooga being a very powerful global brand. We acquired a fast-growing laser business called LiteCure a few years ago. A great addition to this business as well.
Our Recon segment on the right, about a $500,000,000 , very fast-growing. You can see shoulder and foot and ankle, they make up that extremities part. That's about half of this segment for us. That is high single-digit market market growth. We've got small positions in the huge hip and knee market, where we're about a 1.5%, 2% share player that grows substantially higher than the market every year, as I'll talk about. Our Recon business has grown double-digit consistently, except for COVID year, for many years, we've got a strategy to continue that double-digit growth. The biggest part of the business, shoulder, we're one of the top shoulder companies in the world, and we've really pioneered the lateralized reverse shoulder.
Reverse shoulder has become the preferred way to do shoulder implants, and then lateralized as the design has also become the preferred design. We've really got a great leadership position in the technology within the shoulder space. We've acquired three foot and ankle businesses, and I show the Dyna Nail technology. One of the three businesses we bought, a business called MedShape, has a tremendous technology with a lot of IP that's used in fracture healing. Something that makes us unique is that we're the only player in orthopedics that plays along the full continuum of care, from before surgery to surgery, to the recovery after surgery.
Historically, this has been an advantage as we were building our surgical business, the well-known DonJoy brand and presence, was something that helped us to get people to take a look at our great surgical product, like our EMPOWR Knee, that is just a better knee. So we've had synergy over time from this position in the continuum of care. Today and going forward, there's even more strategic leverage from this continuum of care. You know, the rapid growth in the ASC is leading to often entities that have multiple areas of participation within this continuum of care. They've got a surgical theater in ASC, they got rehab right next to it, and we already participate in the rehab side, now we're involved in the surgery.
In many cases, we've also got workflow solutions for their orthopedic clinics that are, you know, adjacent to that. The trends towards more ASCs are advantaging a player like us that plays along this continuum of care. The new opportunity in connected medicine, which is early days in terms of things like connected braces that can follow the patient journey throughout this whole continuum are something that really creates a real opportunity for someone like us that plays before, after, and during surgery to create strategic advantage over time.
This page really shows what's exciting about us for investors. In orthopedics, there are a handful of very large players who play in the top of this triangle.
Tremendous companies, well-respected companies, but with the scale and scope that they have in the orthopedic space, there are limits to the kind of organic growth that they can consistently generate. They show how high the margins can be, but it's challenging to keep driving the margins up from there. For us in the mid-tier, we're scaled enough to have good margins and have the opportunity for good, healthy cash flow. At the same time, we're agile enough to be able to grow consistently faster than the market and to pick and choose where else we go within orthopedics so that we can enhance our growth as we expand in the space. Clearly, we have a lot of opportunity to grow our margins as you look at the larger players and where their margins are.
Finally, for a player like us that has compounding acquisitions as part of our strategy, that fragmented base of the triangle is extremely attractive as well. We've already shown in the last two or three years how we can acquire companies and technologies and product lines from that base of the triangle, bring them in, create strategic acceleration in our company, create a lot of value for shareholders in our company. I think we've already got a reputation in this phase as a great acquirer. Someone that if we acquire a business, you're gonna become a part of something exciting and special that's playing out at Enovis. We've been able to retain the lion's share of the talent of the businesses that we've acquired, and I think that over time, that's gonna be a hallmark of ours.
We've got a great team. Across the bottom, you can see our leadership team. A really great depth of orthopedics and broader med tech experience, but then also, some terrific experience in very high-performing business systems and companies. Our board is across the top, diverse, deep and wide in med tech, just great capabilities. We took the separation that we went through and the creation of a focused med tech company to continue to shape this board to what it is today, and it's something I feel, you know, very fortunate, to have such a tremendous board to guide us as we go.
One of the things that makes us distinctive, is our commitment to our EGX business system.
As I said, we were founded by the Rales brothers and have roots that go back through Colfax to Danaher. For many years at Colfax, we've been cultivating a culture of continuous improvement, a focus on talent that has an appetite for continuous improvement and how we train and develop that talent, and the tools and processes to drive continuous improvement that is sustainable across all parts of the business, from the supply chain through the innovation engine, the commercial engines, how we do strategy, how we drive successful acquisitions, and how we build a support infrastructure that can scale as we grow. We've got a great start. We're almost four years in now since we acquired our current med tech businesses.
We've had a really a great start now in terms of, you know, getting moving on this journey of continuous improvement with our EGX business system. I showed a couple of the operational supply chain examples on the right of, you know, big improvements in our safety performance in our plans, great improvements in how well we serve customers, you know, a large warehouse where we made dramatic improvements with a lot of different Kaizen in terms of our lines per hour of shipping. These operational improvements with the business system are foundational. Over time, we've also made improvements to other areas.
Making the foundational improvements in operations, in all of the places, that I've applied this business system over time are, you know, the start, and then you build from there and keep moving through all different parts of the business as we've been doing in the past, in past years. I'm very excited about the start that we've had bringing EGX into these businesses. We took the opportunity with the creation of Enovis to really put even more energy into our business system, rename it, Enovis Growth Excellence, and really emphasize the growth parts of it as much as the operational parts of it and get our teams even more excited about applying this business system.
We've got a clear view of how we're gonna grow our company to $2 billion and beyond in the coming years. We really within our existing businesses, we've got a clear runway to get in the next couple years, to $2 billion, between organic growth and a little bit of acquisition that we've got plenty of firepower for.
Beyond that, there's plenty of opportunity to continue to expand and grow in existing segments, but also interesting opportunities that would be logically adjacent to orthopedics but move us into other attractive areas within med tech. We're clearly focused on building a company that consistently can grow high single digits organically by growing our Recon business double digits as it gets to be a larger and larger part of the company, and growing our P&R business in the mid-single digit range, a little above those P&R markets. That's the formula for high single digits growth and then doing acquisitions over the way, is how we'll also then complement that and grow even faster. We've got a clear view of how we'll expand our margins as we grow our company. This page talks a little bit about some of our key strategic focus areas.
Within P&R, we're focused on shaping that business for sustained mid-single digit growth, a little higher than the markets we participate in. We're a leader, so we know that if we do the right things, we can grow a little faster than the markets we participate in. In Recon, we're focused on aggressive growth, aggressive organic growth, and also expansions of that platform into other attractive areas in the Recon space. One of the great things about growing our Recon business fast is that the gross margins are meaningfully higher in Recon than in P&R. As we grow our Recon business fast, we have a natural mix improvement that is happening in our portfolio. We're also focused on complementing that mix improvement with operational and scale-based improvement with our EGX business system that get us a long journey of margin improvement.
Finally, we're focused on the right acquisitions that accelerate our strategy and shape our company in an attractive direction. On the right-hand side, you can see that the way that we'll drive these strategies is about innovation for better outcomes, digital technologies, and using our business system to create the right supply chains and commercial engines. A little more about P&R on this page. We've been focused on rebuilding a strong innovation engine here. It's a business that under previous ownership had not been invested in, the innovation had really tailed off to close to none for a couple years. We quickly doubled the innovation, doubled the vitality in the business. It's gone up further in 2022 and will get into the 20s in the coming years.
Getting back to what we should do as a leader, right? Consistent innovation in a business like that. We're also focused on digital workflows. Over the past handful of years, we have built a very strong position in orthopedic clinics with our MotionMD software that's used to really run key aspects of those clinics. It's very sticky, creates a strong position in those clinics, and in some of them, gets us software revenues. In others, we get to participate more deeply in the products that we sell in those clinics. We're also starting a strategic journey on connected medicine. We launched a terrific connected knee brace and sleeve in 2022.
A lot of excitement by surgeons about the potential to create better compliance on the backside of surgery, to empower patients in their recovery, and really lead to better outcomes at a lower total cost. This is something that's gonna take time to build, but we're very excited to be out there leading the way in the industry, and we think it's gonna create a whole nother wave of innovation beyond form and function in bracing, a wave of innovation for many years to come in terms of connected braces. Finally, we are focused on investing in attractive rehab and recovery modalities. That's the area that's growing the fastest in the rehab space. We acquired LiteCure, a high-powered laser company a few years back, really, you know, very fast growth going on with that technology.
We've doubled the sales force that sells those lasers into human and companion environments. We're also working organically on other forms of, you know, high growth modalities to accelerate the growth of our rehab businesses. This page shows how the P&R growth has developed over time. You know, if you went back further in time, there was a long run of time when the P&R businesses grew about mid-single digits, a little over market because they were managed well. There was a period of time they were not managed well. They were under-invested in. The growth slowed down to 3% and then went negative for about a year and a half.
We acquired the business, quickly got the supply chain back in good shape, put some investment into new products and into improving the innovation engine, and leveraged the position in the clinics with workflow. Quickly got the business growing again, 2% for 2019. Much more than that for the back half of 2019. Outgrew the markets through COVID. There are some objective sources we can go to to see how we go do versus the markets. We've consistently outgrown the markets through COVID and grew about 4% for the first nine months of last year, which we're confident is above the markets that we serve.
This is a business that we expect to be able to grow in the low single digits plus and then really solidify it in a mid-single digit range as a really a very strong and powerful cash generator in our company that helps to fuel the things that we do in other parts of the company. In Recon, we're focused on leveraging two flagship products for share gain. We've got an AltiVate reverse shoulder. We pioneered the reverse shoulder, and we developed the technology that is lateralized and has proven to be the better way to do a reverse shoulder. We've been able for a number of years to grow very fast in the shoulder space based on our phenomenal AltiVate product.
We continue to do very well in the US. Now that we've globalized our business, we're able to take AltiVate around the world. In knee, our EMPOWR Knee deep 3D knee is a better knee. It's a knee that was designed with kinematics that more closely resemble the natural knee. Over time, as we've been able to get people to try that knee, they find that it makes their patients more satisfied, and getting that... There were always good outcomes in knee. The satisfaction was lower. We're getting the satisfaction now higher as well. That's been able to get us systematically adding more and more knee sure surgeons over time. As we've innovated to bring other parts of the hip and knee and shoulder offering, we've been able to sell more and more into those surgeons.
We're also focused on winning in the ASC. Our knee is a product that is a very good fit for the ASC, so we've done well there. We've had other offerings that are focused on that ASC environment, including our recent ARVIS launch of an augmented reality solution that is small and inexpensive and adds, you know, very little time to the procedure. Very fit for purpose solution for the ASC. Plenty good for a hospital, but extremely good for an ASC. We're growing and scaling our foot and ankle business that we've acquired, and we acquired Mathys to expand globally and have been really bringing our products from outside the U.S. into the Mathys channel in the H2 of next last year to accelerate their growth.
We've got great cross-selling opportunities for many years to come through that Mathys acquisition, and also some tremendous cost synergies that we've been working through in that acquisition as well. The most common question we get is, "Wow, you've been growing double digits in Recon. Why do you believe you can keep doing that?" I wanted to just spend a few minutes talking about that. This is a pretty detailed page that we created a little while back, and we just updated with nine months of 2022. It essentially lays out the math piece by piece of how we have been growing double digits in Recon and how we will grow double digits in Recon. It starts from market exposure.
Our Recon portfolio is 50% extremities, our weighted average market growth rate is already in the 5%-6% range versus a Recon market that's, you know, in, say, the 3%-4% range. We start out with an advantage from the shape of our portfolio. Even within that, we've got extra exposure to reverse shoulder, extra exposure to the ASC. You might argue that we've got an even higher WAMGR than I show on the page. We've consistently outgrown the market through the innovation we bring and how that enables us to convert surgeons and sell more deeply into those surgeons. It's been implant innovation largely to date, with ARVIS, now we're getting into more and more enabling technologies to complement those implant innovations.
We're confident that we can do that. The first two rows here are only just continuing what we've demonstrated, right? We have grown in this range. I'll show it in the next page. We did it the first nine months of last year, and we expect to be able to continue to. Our foot and ankle business, two out of the three pieces we bought had been consistently growing well into the double digits. The third, the STAR Ankle, we knew we had to modernize. As we do that whole portfolio will be able to grow double digits. You can see it only grew 8% nine months last year, we announced on our Q3 call that it grew double digits in Q3, and that we expected it to grow double digits in Q4.
A very clear path to get foot and ankle solidly in the double-digit range. Mathys historically was about a mid-single-digit grower, but with the synergy that we're bringing from bringing cross-selling products in and some of the investments that we've enabled them to make in channel, Mathys is already growing in the double digits. Over time, we expect it to be able to at least grow high single digits. This is just the U.S. part, so 60% of our Recon segment. Almost 10 years of 14% CAGR, including the COVID year on the shoulder side. Almost 10 years of 17% CAGR, including the COVID year on the hip and knee side. Consistent year-by-year, quarter-by-quarter, and you can see the nine months of last year numbers as well.
A lot of proven track record that we can grow these businesses very aggressively. Also we've been still doing the right things in terms of putting fuel in them, in terms of innovation, both traditional and newer innovation, to be able to continue this growth path. Mathys has opened up more pastures in terms of where we can go to expand and grow the business as well. Obviously, enabling tech and computer-assisted surgery has become an important part of the equation in Recon. We have a clear strategy there. You know, we're focusing on making sure we've got the right solution for each part of the anatomy. We've had a great solution for shoulder with Match Point, a great planning and PSI solution, and we're gonna continue to stay on the forefront in shoulder.
In foot and ankle, we just brought out a terrific, you know, preoperative planning and PSI solution that was needed there for the STAR Ankle. We launched ARVIS last year that brings us a state-of-the-art guidance technology for hip and knee initially, but certainly with opportunities to extend into other technologies. We've been focused on making sure we got the right solution throughout the workflow and making sure that whatever we do is fit for purpose for the ASC. We figure if it's great in the ASC, it can just as well be used back in the hospital. Let's be great in the place that's growing the fastest, and then make sure that, you know, we're good enough back in the environment that's not growing.
Margins are a key part of how we're gonna create value over time. We've got a clear path for how to expand our margins over time. I think we've talked very openly about the fact that we can clearly see getting from the, you know, 16% or so that we had it back in 2021 to 20%+, and that 20% is not the ceiling, but that our EBITDA margins can continue to go from there when you benchmark and think about and look at what we can do.
You know, how we get there is a combination of the natural mix that comes from growing Recon faster, acquisitions that we've done that have high gross margins but haven't scaled yet, and then a whole range of operational opportunities ranging from pulling back the price cost pressure we've had during COVID in our P&R businesses to operating leverage as we grow and productivity improvements and scale in our company as we grow. We're confident we can grow at least 50 basis points of margin expansion over time. Certainly, the opportunity to do a lot more than that should inflation abate quickly or, you know, should we bring more revenue in quicker that we can scale our structure. We're confident that we can climb up the curve consistently and surpass that 20% plus margins over time.
Then finally, acquisitions. Lots of opportunities, both within our existing markets and extensions and expansions beyond. Really the things we've done in the past three, four years are very representative of the opportunities that we have in our funnel today. An entry into the high-growth foot and ankle segment, buying through businesses, integrating them together, bringing technologies into our Recon business, like augmented reality, that enable us to continue our very strong share gain and growth there. High growth modalities that shape our P&R platform in a positive direction and global expansion. There's well over $300 million of revenue on this page that we've acquired over the past handful of years, that's growing at double digits, that's accreted to our gross margins, and that has opportunity to scale over time. We've got plenty of firepower.
With about one times leverage, we've got plenty of opportunity to invest in these kinds of acquisitions and others over time. Hopefully you got a good feel for what we're all about as a company, the great position we've got in a great market for our strategy for how we're gonna compound value through high single-digit organic growth, attractive acquisitions that complement that and driving our margins up continuously over time. We've got some great momentum building, you know, some great progress last year, and very excited about what's to come here in 2023. Thank you.
Thank you. We'll move on to the Q&A a little bit. I guess beginning a little bit more broadly and high level, do you mind talking a little bit about what you're seeing within the elective surgery market specifically?
Yeah, sure. I mean, obviously we can't comment on our own business in the Q4, but I can definitely talk about the things that are out there in the public domain that I've seen and heard. You know, we talked on our quarterly call in Q3 about elective surgery trends, expecting kind of a normal seasonal increase in the Q4, which would then, you know, set things up well in terms of how things would roll over into 2023. Everything I've read, you know, supports that there was kind of that normal seasonal uptick.
There's a few things about maybe some extra vacations in December and things. By and large, everything I've read, says that elective surgery saw that normal seasonal uptick. You know, we also have a number of, you know, clinical businesses that drive our, you know, orthopedic clinics and get people getting into orthopedic clinics. I think, you know, if you look at a lot of the public information that's out there from the Q4 about med tech businesses that are in clinics, I think there's, you know, there was some pressure in the Q4 in terms of clinic traffic and staffing issues and things like that.
I think, you know, some, you know, transitory kinds of things going on in, you know, the clinic-driven parts of the business. Elective surgery, normal seasonal uptick.
Great. Maybe can you talk about the last nine months since the spin and since you became a separate company, has it been what you experienced, and has there been any surprises, challenges or anything like that?
Yeah, sure. I'm incredibly proud of our team in that we got to the separation in great shape right on time. I think it was very well executed, and I think Enovis got to start its life in a powerful way with a new brand, some good momentum, building a great team and board. ESAB, the business we spun off, started its life in a terrific way with good momentum as well. You know, I'm really proud of the team in terms of how everybody, you know, really worked through that separation. I think it's been extremely exciting for our team. I've been impressed at how fast we've been able to get the industry to know who Enovis is.
You know, this industry is a small industry. I've learned pretty quickly over the past three or four years. You know, ortho world every day is talking about someone, so it's been terrific how fast we have become Enovis, and people know who Enovis is. We haven't lost the heritage of DJO. We haven't lost the heritage of Colfax. I think people know that we've got each of those, but they know who Enovis is and have started to understand who we are and what we're gonna be all about. I'm extremely excited about that. I think, you know, we made a lot of great progress in the year.
I'm excited about our acquisitions, and how they've been doing and also about some of the, you know, key share gain that we made. We made share gain, we think, across essentially every business through the year, significant share gain in our Recon businesses again. A lot of great things in the year. You know, certainly, you know, some of the kind of up and down markets as we worked through the year were not ideal. It felt in May like things were gonna really, you know, really kick for the rest of the year potentially, and that would've been really fun our first year as a new company, just have the markets, you know, really terrific all the way through.
That, you know, summer slowdown, you know, took a little bit out of what could have been a, you know, pretty fantastic year in terms of how the markets, you know, the demand markets treated us. You know, certainly the inflation and FX pressure through the year was, you know, was not ideal and, you know, led to some extra things to deal with. I think we're really proud. We're proud of what we did on the growth front in terms of outperforming our competition. We're proud that in a year when most people are not improving margins, you know, we're on track to have our margins, you know, improve.
We think that shows that we have that underlying capability to climb up the margin curve, and we'll be able to do it over time.
Yeah. Hitting on like the inflation and foreign exchange rates, has there been a specific impact in terms of your supply chain or just about the business in general specifically, or have you had any issues with that?
As far as inflation, the biggest inflation we've seen is on inputs and freight, and we started to see that quickly in kinda late 2020 in our P&R businesses. We've been fighting that for a couple years. We, you know, we, you know, got quite a bit of squeeze in late 2020 throughout 2021. Started to get some price through to offset that and got another wave of inflation here in early 2022 that was not ideal. We've been working hard, and I think in the back half of the year have gotten, you know, back to where we're starting to pull back a little. The price versus cost seems like that part of it has largely stabilized.
We're trying to be a little careful in our planning in that, you know, there could be another wave of inflation. Let's be a little careful about how we plan for 2023. We're hopeful that 2023 is a year where we start to pull back some of the price versus cost. In terms of availability in the supply chain, our teams have done a fantastic job. We had already laid the foundation of our business system, so there was a lot of good discipline there. We made the call on putting inventory in to protect our customers, and so we did consume quite a bit of cash in putting inventory in to protect our customers. We're confident that in PNR, we serve customers better through this, you know, through this period than our competitors did.
Within Recon, I think we've done a nice job continuing to serve customers. you know, we feel like, yeah, it's been tough in terms of product availability, but we've been able to navigate through it between the discipline of our business system, our willingness to invest to protect customers.
Great. Touching a little bit upon this in your presentation, can you talk a little bit about your new capital structure and organic growth as it relates to following the monetization of your retained stake?
Daniel,
Yeah, I'll take that one. Thanks. As Matt said in the presentation, we're about 1 times net leverage right now, have access to plenty of capital, about $1 billion if we wanted to lever up, in terms of, you know, executing our strategy around M&A and investing in the growth drivers of the business. The retained stake was all part of the tax-free spin. All of that, you know, went as planned other than the fact that the market, you know, was a little bit softer than when we originally anticipated, you know, going forward. Overall, I'd say we have ample capacity for growth.
We have great banking relationships, a great track record of being able to do deals and diversity of types of deals. Nothing should slow us down as we go to execute our strategy with capital structure.
Great. Maybe going a little bit more in, up detail into that, how are you thinking about your M&A strategy kind of looking into the new year?
We got a, you know, quite a lot of deals done, in the last two years, but mostly not last year. You know, we did some smaller things last year, but most of the deals we did were in, you know, 2021, 2020, even late 202019. We've been, you know, for the past year, more focused on successfully integrating than on, you know, doing the next wave. At the same time, we've been doing a lot of work, a lot of strategy work, and a lot of cultivation work, getting things coming through the pipeline.
I see, you know, great opportunities here in 2023, to get, you know, get some good deals done that, you know, move the ball forward in terms of the strategies of our businesses, continue to shape our business in a positive way. I think the environment for acquiring companies has gotten a little bit better. You know, there was a time period there where everybody, you know, they were gonna go public for some huge valuation unless you know, unless you wanted to buy them. That's passed. Now I think you can have, even with very high-quality businesses, you can have a rational discussion about value.
I'm quite optimistic with the firepower that we've got, with the track record we've got, and the opportunities we've got in the funnel. I'm, you know, pretty excited about the kind of things we can do this year and next year.
Great. Wanted to open it up to the audience in case there's any questions.
Can you just talk about how your business mix of ASC versus hospital is kind of different than the market? Now with some of the larger players talking about ASC more and focusing more, how that kind of impacts your comment?
Yeah.
on maintaining the growth going forward?
We definitely have a disproportional amount of our hip and knee business in the ASC versus versus the market. You know, we've shared that our knee business is 20% plus in the ASC environment. Our hip business is actually approaching that. Hip and knee, you know, we're in the kinda 20-ish range. The best facts we would have would be that the market's closer to 10 or a little above 10. Now, this is ASC, not outpatient total, right? It's the fast-growing ASC area. We feel like we're, you know, 50%-100%, you know, above, you know, higher. Definitely have a larger part of our portfolio in that high growth ASC.
You know, we've gotten there because for a couple different reasons. One is our knee is a better knee for a more active patient. When they're selecting people into the ASC environment, you know, we're a really good fit for that. The surgeons that are, you know, more aggressive about moving into the ASC market, there's more of them who have, you know, liked and used our knee. We've also been very proactive about things like simplifying our instrument sets and bringing a software-based tool that they use to assess the risk of a patient being done in the ASC environment, and being agile and ready and willing to, you know, to serve them as they're moving patients from here to there and things like that.
I think we've, you know, we've had the right products and solutions as well as the right mindset to succeed serving the ASC. Our ARVIS product that we've launched now, you know, is an augmented reality solution that is terrific for the ASC because of its small footprint, low cost, etc . We think that's just gonna continue to help us. Yeah, there's other big players out there focused on the ASC. I think the important thing is, yeah, we've got 1.5, two share position in hip and knee, and, you know, we're over-indexed ASC. Maybe we have a three or four share position in the ASC.
We can succeed very, very well in the ASC, and one or two other big players who might have good ASC strategies, they can succeed well, as well in the ASC. You know, in addition to the things we have on the recon side, you know, in many cases, those ASCs also have ortho clinics and rehab clinics and things that are part of kind of the entity that they're a part of. You know, we've also had an advantage where people know us, they know who they are, maybe we're on other contracts and things like that.
That's, you know, while others might be working on building out, you know, some of the operating theater, you know, we might already be there in terms of what we're doing on the rehab side. Other questions from the group? Got a few more minutes.
Can you maybe elaborate a little bit more on your enabling technologies? I know you touched upon it.
Yeah.
a little bit in your presentation.
Yeah, sure. I'll talk a little bit more about that. You know, it's been clear to us for a number of years that, you know, surgical workflow and the enabling technologies that make the workflow, you know, more efficient, are, you know, are gonna be an important part of the future competitive dynamics in Recon. We've led a strategy, one, to make sure that we've got the right thing for each part of the anatomy, as I talked about. Like in shoulder, you know, our MatchPoint is a terrific software-based shoulder planning solution, and where appropriate, they can do a patient-specific instrument. In shoulder, we've been on the forefront with the right solution there.
In hip and knee it became clear, you know, over the past few years, that there was a thirst for, you know, kinda newer technologies and, you know, there's this first wave of large robots. Our strategy was really focused on really trying to look at where are things gonna go from here and not trying to follow the large robot trend, but trying to think about, you know, what's really gonna be needed.
You know, we launched ARVIS because we're convinced that, you know, the guidance is the most important part of what needs to be done there, and having a guidance solution that doesn't require a preoperative scan and allows the, you know, the surgeon to make quick decisions about who goes into what environment, has a very small footprint, so it doesn't clutter up the operating theater in the ASC or in the hospital, and it's low cost in terms of, you know, the capital buy it and/or the per-use fee. We feel like for the ASC environment, that's critical. ARVIS brings that and we have instantly found, as we talk to surgeons about ARVIS, that they see that as the next technology.
You know, we've had a number of surgeons that were getting pressure from their hospital to look at robots, and they went to the hospital and said, "Hey, look, I have ARVIS. That's the next technology." The hospital said, "Great, use that." You know, I think we've been able to now enter the game with a technology that is leading edge technology for our surgeons. It's a technology that I think has better potential to give them, you know, more precise surgery at a kind of lower total cost and time. There's certainly opportunities to bring ARVIS into other anatomies over time, but also opportunities, you know, should there need to be, you know, some mechanization of the positioning of the cutting versus, you know, just the guidance.
I think there's kinda natural extensions that we could move down to get to what might be the right ultimate solution in terms of enabling technologies, particularly for the ASC, but also for other parts of the industry.
Great. Just maybe one last question, but what are you kind of most excited about as you're thinking about 2023?
If I think about 2023, you know, I gotta say I'm excited about. I know, you know, COVID's not behind us for good, but the reality is, I think in our industry, by and large, we're now on the top side of 2019 as an industry. We're way above it, but the industry, I think, is now kind of generally on the top side of 2019 and, you know, while I'm sure that 2023 will have some aspects of COVID and flu and who knows what, I think it's likely to be a subtext versus the main event.
We can get back to doing what we do best, innovating and taking share and driving continuous improvement to drive margins up and have some of these big macro issues, you know, hopefully become a little smaller part of the story. With the progress that we've made over the past, handful of years with all the challenges, I just can't imagine what the team can achieve in a more normal environment. I'm incredibly excited to see that.
Great. Well, thank you very much for joining us today. That concludes our presentation.
Thanks, everybody, for coming.
Thank you.