Stryker Made Sales Gains in 2013, But Earnings Took a Hit

Stryker Corp. posted gains for it’s full year 2013 and fourth quarter (ended Dec. 31). Neurotechnology and spine were the strongest performers for the company overall in 2013, though overall earnings took a double-digit hit for the year.

“We are pleased with our organic sales growth and operational earnings achieved in 2013. With our broad based product portfolio and commitment to innovation and globalization we are well positioned to build on this momentum in 2014,” said Kevin A. Lobo, president and CEO of the Kalamazoo, Mich.-based firm.

By the Numbers
Consolidated net sales of $2.5 billion and $9 billion increased 5.6 percent and 4.2 percent in the quarter and full year, respectively. Net sales in the quarter grew by 7.3 percent due to increased unit volume and changes in product mix and 1.5 percent as a result of acquisitions. Net sales in the quarter were unfavorably impacted by 1.4 percent due to changes in price and 1.8 percent due to the unfavorable impact of foreign currency exchange rates on net sales. Excluding the impact of acquisitions, net sales in the quarter increased 5.8 percent in constant currency.

Reconstructive net sales of $1.1 billion increased 5.8 percent in the quarter, as reported, and 8 percent in constant currency. Net sales grew by 7.1 percent due to increased unit volume and changes in product mix and 2.8 percent as a result of acquisitions. Net sales were unfavorably impacted by 2 percent due to changes in price and 2.2 percent due to the unfavorable impact of foreign currency exchange rates on net sales. Excluding the impact of acquisitions, Reconstructive net sales increased 5.2 percent in constant currency.

MedSurg net sales of $924 million increased 5.4 percent in the quarter, as reported, and 6.6 percent in constant currency. Net sales grew by 7.3 percent due to increased unit volume and changes in product mix. Net sales were unfavorably impacted by 0.7 percent due to changes in price and 1.2 percent due to the unfavorable impact of foreign currency exchange rates on net sales.

Neurotechnology and Spine net sales of $437 million increased 5.4 percent in the quarter, as reported and 7.5 percent in constant currency. Net sales grew by 7.6 percent due to increased unit volume and changes in product mix and 1.5 percent as a result of acquisitions. Net sales were unfavorably impacted by 1.7 percent due to changes in price and 2.1 percent due to the unfavorable impact of foreign currency exchange rates on net sales. Excluding the impact of acquisitions, Neurotechnology and Spine net sales increased 6.0 percent in constant currency.

Reported net earnings of $386 million and $1 billion increased 43 percent and decreased 22.5 percent in the quarter and full year, respectively. Reported diluted net earnings per share of $1.01 and $2.63 increased 42.3 percent and decreased 22.4 percent in the quarter and full year, respectively. Reported net earnings per share in 2013 included approximately 4 cents and 13 cents per diluted share of costs in the quarter and full year, respectively, associated with the new Medical Device Excise Tax.

Reported net earnings include charges for the Rejuvenate, ABG II and Neptune recalls, acquisition and integration related charges related to the Neurovascular, Surpass, Trauson and MAKO Surgical Corp. acquisitions, additional cost of sales for inventory sold that was “stepped up” to fair value related to the Trauson and MAKO acquisitions, restructuring and related charges, certain charges related to legal and regulatory matters, a donation to an educational institution and benefits associated with the resolution of certain tax matters. These charges reduced the reported gross profit margin in the quarter from 66.3 percent to 65.5 percent and the reported operating income margin from 25.3 percent to 17.4 percent.

Excluding the impact of the items described above, adjusted net earnings of $469 million and $1.6 billion million increased 7.6 percent and 3.6 percent in the quarter and full year, respectively. Adjusted diluted net earnings per share of $1.23 and $4.23 increased 7.9 percent and 3.9 percent in the quarter and full year, respectively.