Financial

Stryker reports second quarter 2018 operating results

Kalamazoo, Michigan – July 24, 2018 – Stryker Corporation (NYSE:SYK) reported operating results for the second quarter of 2018:

Second Quarter Highlights

2018 Net Sales Growth Overview
Reported Excluding ASC 606 Adoption(2) Foreign Currency Exchange Constant Currency Acquisitions Organic
Orthopaedics 7.6 % 8.0 % 1.4 % 6.6 % 6.6 %
MedSurg 8.9 10.0 0.8 9.2 1.9 7.3
Neurotechnology and Spine 19.4 20.1 1.6 18.5 6.1 12.4
Total 10.3 % 11.0 % 1.1 % 9.9 % 2.0 % 7.9 %

“We continue to execute on our strategy and delivered another strong quarter of organic sales growth, adjusted operating margin expansion and adjusted net earnings per diluted share,” said Kevin A. Lobo, Chairman and Chief Executive Officer.  “Our diversified and decentralized business unit model combined with strong talent and culture continue to serve us well. We have raised our guidance to reflect the strong results and positive outlook for the remainder of the year.”

Sales Analysis (percentages exclude ASC 606(2) adoption impact)

Consolidated net sales of $3.3 billion increased 11.0% in the quarter and 9.9% in constant currency. Organic net sales increased 7.9% in the quarter including 9.0% from increased unit volume partially offset by 1.1% from lower prices.

Orthopaedics net sales of $1.2 billion increased 8.0% in the quarter and 6.6% in constant currency. Organic net sales increased 6.6% in the quarter including 8.9% from increased unit volume partially offset by 2.3% from lower prices.

MedSurg net sales of $1.5 billion increased 10.0% in the quarter and 9.2% in constant currency. Organic net sales increased 7.3% in the quarter including 7.6% from increased unit volume partially offset by 0.3% from lower prices.

Neurotechnology and Spine net sales of $0.6 billion increased 20.1% in the quarter and 18.5% in constant currency. Organic net sales increased 12.4% in the quarter including 13.3% from increased unit volume partially offset by 0.9% from lower prices.

Earnings Analysis

Reported net earnings of $452 million increased 15.6% in the quarter. Reported net earnings per diluted share of $1.19 increased 15.5% in the quarter. Reported net earnings include certain items, including charges for acquisition and integration-related activities, the amortization of purchased intangible assets, restructuring-related and other charges, compliance with European Medical Devices Regulation, Rejuvenate and other recall-related matters, regulatory and legal matters and tax matters. The effect of each of these matters on reported net earnings and net earnings per diluted share appear in the reconciliation of GAAP to non-GAAP financial measures. Excluding the aforementioned items increases gross profit margin from 65.9% to 66.1% in the quarter and increases operating income margin from 20.2% to 25.7%(1), including a 20 basis point favorable impact related to the adoption of the new revenue recognition standard(2). Excluding the impact of the items described above, adjusted net earnings(4) of $670 million increased 15.3% in the quarter. Adjusted net earnings per diluted share(3) of $1.76 increased 15.0% in the quarter.

2018 Outlook

Based on our year-to-date performance we now expect 2018 organic net sales growth, which excludes the impact related to adoption of the new revenue recognition standard(2), to be in the range of 7.0% to 7.5% and expect adjusted net earnings per diluted share(5) to be in the range of $7.22 to $7.27. In 2018 our calculation of organic net sales growth excludes the impact of adopting ASC 606(2), which includes primarily the reclassification of costs previously reported within selling expenses to a reduction of sales, which for 2017 was approximately $112 million ($28 million per quarter). For the third quarter we expect adjusted net earnings per diluted share(5) to be in the range of $1.65 to $1.70. If foreign currency exchange rates hold near current levels, we expect net sales in the third quarter will be negatively impacted by approximately 0.9% and full year will be positively impacted by approximately 0.5% and net earnings per diluted share will be neutral in the third quarter and positively impacted by $0.05 in the full year.

 (1) A reconciliation of operating income to adjusted operating income, a non-GAAP financial measure, and other important information accompanies this press release.

(2) Consistent with previous press releases and financial disclosures, we adopted Accounting Standards Update 2014-09, Revenue From Contracts with Customers, as well as related amendments (ASC 606), issued by the Financial Accounting Standards Board on a modified retrospective basis, effective January 1, 2018. The impact of the adoption of ASC 606 related primarily to the reclassification of certain costs previously presented as selling, general and administrative expenses to net sales.

(3) A reconciliation of reported net earnings per diluted share to adjusted net earnings per diluted share, a non-GAAP financial measure, and other important information accompanies this press release.

(4) A reconciliation of reported net earnings to adjusted net earnings, a non-GAAP financial measure, and other important information accompanies this press release.

(5) A reconciliation of expected net earnings per diluted share to expected adjusted net earnings per diluted share for the third quarter and full year and other important information accompanies this press release.

Conference Call on Tuesday, July 24, 2018

As previously announced, Stryker will host a conference call on Tuesday, July 24, 2018 at 4:30 p.m., Eastern Time, to discuss the Company’s operating results for the quarter ended June 30, 2018 and provide an operational update.

To participate in the conference call dial (844) 826-0610 (domestic) or (973) 453-3249 (international) and be prepared to provide conference ID number 7449506 to the operator.

A simultaneous webcast of the call will be accessible via the Company’s website at www.stryker.com. The webcast will be archived on the Investors page of this site.

A recording of the call will also be available from 8:00 p.m., Eastern Time, on Tuesday, July 24, 2018, until 11:59 p.m., Eastern Time, on Tuesday, July 31, 2018. To hear this recording, you may dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter conference ID number 7449506.

Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; potential supply disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to the Rejuvenate and ABG II matter; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; changes in the competitive environment; our ability to integrate acquisitions; and our ability to realize anticipated cost savings. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Stryker is one of the world’s leading medical technology companies and, together with its customers, is driven to make healthcare better. The Company offers innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. More information is available at www.stryker.com.

For investor inquiries please contact:

Katherine A. Owen, Stryker Corporation, 269-385-2600 or katherine.owen@stryker.com

For media inquiries please contact:

Yin Becker, Stryker Corporation, 269-385-2600 or yin.becker@stryker.com

 

STRYKER CORPORATION
For the Three and Six Months June 30
(Unaudited – Millions of Dollars, Except Per Share Amounts)
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Six Months
2018 2017 % Change 2018 2017 % Change
Net sales $ 3,322 $ 3,012 10.3 % $ 6,563 $ 5,967 10.0 %
Cost of sales 1,132 1,021 10.9 2,236 2,012 11.1 %
Gross profit $ 2,190 $ 1,991 10.0 % $ 4,327 $ 3,955 9.4 %
% of sales 65.9 % 66.1 % 65.9 % 66.3 %
Research, development and engineering expenses 216 192 12.5 420 384 9.4 %
Selling, general and administrative expenses 1,190 1,130 5.3 2,426 2,232 8.7 %
Recall charges 2 72 (97.2 ) 6 98 (93.9 )%
Amortization of intangible assets 110 95 15.8 212 183 15.8 %
Total operating expenses $ 1,518 $ 1,489 1.9 % $ 3,064 $ 2,897 5.8 %
Operating income $ 672 $ 502 33.9 % $ 1,263 $ 1,058 19.4 %
% of sales 20.2 % 16.7 % 19.2 % 17.7 %
Other income (expense), net (49 ) (58 ) (15.5 ) (98 ) (115 ) (14.8 )%
Earnings before income taxes $ 623 $ 444 40.3 % $ 1,165 $ 943 23.5 %
Income taxes 171 53 222.6 270 108 150.0 %
Net earnings $ 452 $ 391 15.6 % $ 895 $ 835 7.2 %
Net earnings per share of common stock:
Basic net earnings per share of common stock $ 1.21 $ 1.04 16.3 % $ 2.39 $ 2.23 7.2 %
Diluted net earnings per share of common stock $ 1.19 $ 1.03 15.5 % $ 2.35 $ 2.20 6.8 %
Weighted-average shares outstanding:
Basic 373.9 373.9 373.9 373.7
Diluted 380.1 379.8 380.4 379.6

 

READ THE REST HERE

 

 

Tags

Mason Krell

Mason began his career in the Orthopedic Industry in 2017 when he joined The De Angelis Group as a Research Manager. He has developed a strong network within the industry and is very dedicated to helping companies maximize opportunities and disrupt markets.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Close
Themed By teapots