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Stryker’s Second-Quarter Sales Rise 3 Percent

Lower recall charges boost earnings.

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By: Michael Barbella

Managing Editor

Declining hip implant recall expenses and surging neurotechnology and spinal device sales helped Stryker Corp.’s earnings rebound dramatically in the second quarter of 2015.

The Kalamazoo, Mich.-based orthopedic manufacturing behemoth reported a 2.9 percent spike in net sales (to $2.4 billion) during the three months ended June 30. Stryker reported profits of $392 million, up more than 206.3 percent for the quarter as compared with the same period the year before. The company finally is finding relief from charges related to recalls of its Rejuvenate and ABG II modular-neck hip stems that plagued its earnings last year. Stryker voluntarily recalled its hip products after finding out the implants caused tissue damage and hip pain.

“We continue to execute well across our businesses and delivered organic sales growth of approximately 7 percent,” Chairman/CEO Kevin A. Lobo said. “Our strong first half performance and positive momentum is reflected in our raised guidance and underscores the strength of our people and diversified portfolio.”

Neurotechnology and spinal sales jumped 6.4 percent to $458 million, with neurotechnology product revenue surging 10.5 percent to $272 million and spinal sales expanding 0.8 percent to $186 million. 

Orthopedic sales climbed 0.6 percent to $1.03 billion, fuled by a 4 percent rise in trauma/extremities proceeds ($309 million) and an 8.9 percent spike in “other” devices ($60 million). Hip and knee sales both fell compared to the same period in 2014; knee revenue slipped 1 percent to $346 million while hip sales slid 2.1 percent to $320 million.

The medical surgical segment grew sales 3.9 percent to $939 million, driven mostly by an 11 percent increase in medical proceeds ($197 million). Instrument revenue jumped 4.3 percent to $354 million and sustainability sales swelled 4 percent to $53 million, though both gains were somewhat offset by a 0.2 percent decrease in endoscopy sales ($335 million).

“The second quarter results underscore the momentum we are seeing across our three segments, as we leverage strong sales and marketing execution and realize the benefits from both internally developed products and acquisitions,” Lobo told analysts on a July 23 conference call. “We’re focused on growing organic sales at the high end of med tech. And this marks our ninth consecutive quarter of achieving organic sales growth of at least 5 percent.”

Executives noted during the conference call that unfavorable exchange rates in Europe had a negative impact on the company’s performance and are expected to negatively affect third-quarter and full-year sales by 3.5 percent to 4 percent, and decrease adjusted diluted earnings per share by 25 cents.

Stryker expects sales growth of 5.5 percent to 6.5 percent for 2015, with adjusted diluted EPS (earnings per share) of $5.06 to $5.12. The company expects adjusted diluted EPS of $1.20 to $1.25 in the third quarter.

“Our strong second quarter results give us additional confidence in our ability to deliver improved operating results for the year,” Chief Financial Officer/Vice President William Jellison said. “But pricing pressure will continue and prices are currently expected to be on a nearly 2 percent decline for the company moving forward, consistent with the pricing environment we experienced over the last year.”

Stryker Corp. grew sales across all of its business units in the second quarter and more than doubled earnings.

The Kalamazoo-based Stryker (NYSE: SYK) this afternoon reported sales of $2.43 billion for the period that ended June 30, an increase of 2.9 percent from the second quarter of 2014. Six-month revenue increased 3.1 percent to $4.81 billion.

Net income for the quarter totaled $392 million, or $1.03 per diluted share, more than double the second quarter of 2014.

Stryker expects sales growth for the present third quarter of 6.5 percent to 7.5 percent with adjusted diluted net earnings of  $1.20 to $1.25 per share, and $5.06 to $5.12 per diluted share for the full year.

– See more at: http://mibiz.com/item/22731-stryker-earnings-more-than-double-in-second-quarter#sthash.cAnkmbP0.dpuf
Stryker Corp. grew sales across all of its business units in the second quarter and more than doubled earnings.
The Kalamazoo-based Stryker (NYSE: SYK) this afternoon reported sales of $2.43 billion for the period that ended June 30, an increase of 2.9 percent from the second quarter of 2014. Six-month revenue increased 3.1 percent to $4.81 billion.
Net income for the quarter totaled $392 million, or $1.03 per diluted share, more than double the second quarter of 2014.
Stryker expects sales growth for the present third quarter of 6.5 percent to 7.5 percent with adjusted diluted net earnings of  $1.20 to $1.25 per share, and $5.06 to $5.12 per diluted share for the full year.
– See more at: http://mibiz.com/item/22731-stryker-earnings-more-than-double-in-second-quarter#sthash.cAnkmbP0.dpufStrykerCorp.’s second-quarter earnings edged up narrowly on Thursday as an increase in expenses masked a 7% rise in sales.
The results include charges for its ABG II hip implants and its Neptune Waste Management system recalls, which had driven down earnings sharply in the previous quarter.
Meanwhile, the company adjusted its full-year projections.
The Kalamazoo, Mich., company now expects sales growth between 5% and 6%, up from its previous estimate of 4.5% to 6%, and per-share adjusted earnings of $4.75 to $4.80, down from its previous estimate of $4.75 to $4.90.
For the current quarter, the company said it expects per-share adjusted earnings between $1.12 and $1.16.
Analysts surveyed by Thomson and Reuters expect $4.80 a share for the year and $1.16 for the current quarter.
For the most recent period, Stryker reported a profit of $215 million, up from $213 million a year earlier. Per-share earnings remained unchanged at 56 cents. Excluding acquisition, restructuring and other expenses, adjusted earnings rose to $1.08 from $1. Revenue increased nearly 7% to $2.36 billion.
Analysts polled by Thomson Reuters expected per-share profit of $1.08 and revenue of $2.35 billion.
During the latest quarter, Stryker’s sales of reconstructive products rose about 6.5%, or 6.3% in constant currency. Hip products sales rose about 2.2% and knee products 2.7%, both excluding currency impacts.
The neurotechnology and spine segment sales improved about 3.8%, or 3.9% excluding foreign-currency exchange impacts. Spine-product sales, however, fell about 1.6%, or 1.5% excluding currency effects.
Shares, up nearly 9% since the beginning of the year, edged up to $82.10 in recent after-hours trading.StrykerCorp.’s second-quarter earnings edged up narrowly on Thursday as an increase in expenses masked a 7% rise in sales.
The results include charges for its ABG II hip implants and its Neptune Waste Management system recalls, which had driven down earnings sharply in the previous quarter.
Meanwhile, the company adjusted its full-year projections.
The Kalamazoo, Mich., company now expects sales growth between 5% and 6%, up from its previous estimate of 4.5% to 6%, and per-share adjusted earnings of $4.75 to $4.80, down from its previous estimate of $4.75 to $4.90.
For the current quarter, the company said it expects per-share adjusted earnings between $1.12 and $1.16.
Analysts surveyed by Thomson and Reuters expect $4.80 a share for the year and $1.16 for the current quarter.
For the most recent period, Stryker reported a profit of $215 million, up from $213 million a year earlier. Per-share earnings remained unchanged at 56 cents. Excluding acquisition, restructuring and other expenses, adjusted earnings rose to $1.08 from $1. Revenue increased nearly 7% to $2.36 billion.
Analysts polled by Thomson Reuters expected per-share profit of $1.08 and revenue of $2.35 billion.
During the latest quarter, Stryker’s sales of reconstructive products rose about 6.5%, or 6.3% in constant currency. Hip products sales rose about 2.2% and knee products 2.7%, both excluding currency impacts.
The neurotechnology and spine segment sales improved about 3.8%, or 3.9% excluding foreign-currency exchange impacts. Spine-product sales, however, fell about 1.6%, or 1.5% excluding currency effects.
Shares, up nearly 9% since the beginning of the year, edged up to $82.10 in recent after-hours trading.

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