Stryker’s Strong Q2 Sees Starring Roles From Neurotechnology And Spine

In short

Stryker Corporation has reported its operating results for the second quarter of 2012 with net sales of $2.1 billion, up 2.9% and adjusted diluted net earnings per share of $0.98, an increase of 8.9%.

Background

Sales

Consolidated net sales of $2.1 billion increased 2.9% in the quarter over the prior year, as reported, and 5.0% in constant currency. Net sales in the quarter grew by 4.4% due to increased unit volume and changes in product mix and 2.2% as a result of acquisitions.

Increases were partially offset by an unfavourable impact of 1.6% due to changes in price and 2.0% due to the unfavourable impact of foreign currency exchange rates on net sales.

Excluding the impact of acquisitions, net sales increased 2.7% in constant currency over the prior year.

By division

Reconstructive: net sales of $927 million (+1.2% over the prior year), and 3.5% in constant currency.

Net sales in the quarter grew by 4.0% due to increased unit volume and changes in product mix and 1.9% as a result of acquisitions. These increases were partially offset by an unfavourable impact of 2.4% due to changes in price and 2.3% due to the unfavourable impact of foreign currency exchange rates on net sales.

Excluding the impact of acquisitions, Reconstructive net sales increased 1.6% in constant currency over the prior year.

MedSurg: net sales of $786 million(+1.7% over the prior year), and 3.3% in constant currency.

Net sales in the quarter grew by 3.0% due to increased unit volume and changes in product mix and 0.3% as a result of acquisitions. These increases were partially offset by an unfavourable impact of 0.1% due to changes in price and 1.6% due to the unfavourable impact of foreign currency exchange rates on net sales.

Excluding the impact of acquisitions, MedSurg net sales increased 3.0% in constant currency over the prior year.

Neurotechnology and Spine: net sales of $393 million (+10.1% over the prior year), and 12.4% in constant currency.

Net sales in the quarter grew by 8.2% due to increased unit volume and changes in product mix and 7.2% as a result of acquisitions. These increases were partially offset by an unfavorable impact of 3.0% due to changes in price and 2.2% due to the unfavorable impact of foreign currency exchange rates on net sales.

Excluding the impact of acquisitions, Neurotechnology and Spine net sales increased 5.2% in constant currency over the prior year.

Earnings

Reported net earnings in the quarter include restructuring and related charges of $12 million (net of taxes), and acquisition and integration related charges of $5 million (net of taxes) related to acquisitions completed in 2011, including integration related costs and additional cost of sales for inventory sold in the quarter that was “stepped up” to fair value.

As previously disclosed, Stryker also recorded a non-tax deductible charge of $33 million in the quarter for a United States Department of Justice matter related to sales and marketing of our OtisKnee device. These charges reduced reported gross profit margin from 68.2% to 68.1% and reported operating income margin from 24.1% to 21.1%.

Net earnings of $325 million increased 4.8% in the quarter over the prior year. Diluted net earnings per share of $0.85 increased 7.6% in the quarter over the prior year.

Company comments

“Leveraging the strength of our broad based product offering, our Q2 revenues increased 3% as reported and 5% in constant currency. Through solid sales growth coupled with margin expansion we delivered adjusted per share earnings growth of 9%,” commented Curt R. Hartman, Interim Chief Executive Officer and Vice President and Chief Financial Officer. “We remain on track to deliver on our financial commitments for 2012 which include 2% to 5% growth excluding the impact of acquisitions and currency and double-digit adjusted per share earnings growth.”

Source: Stryker Corporation

The full release can be found here.