Stryker Posts Healthy Q1 Financials With Revenue Up Across Product Areas

In short

Stryker has released its financial results for Q1 2012 and is showing a healthy increase in revenue across all divisions to $2.2Bn, which means a 5.2% increase on a constant currency basis and net of acquisitions.

Excluding the impacts of restructuring and related charges, and acquisition and integration-related charges, adjusted net earnings for the quarter of $379 million increased 7.4% in the quarter over the prior year.

Sales Summary

Net sales in the quarter grew by 6.9% due to increased unit volume and changes in product mix and 2.3% as a result of acquisitions. These increases were partially offset by an unfavorable impact of 1.7% due to changes in price and 0.2% due to the unfavorable impact of foreign currency exchange rates on net sales. Excluding the impact of acquisitions, net sales increased 5.2% in constant currency over the prior year.

Sales by Product Area

The Reconstructive Division’s net sales of $958 million increased 5.2% in the quarter over the prior year, as reported, and 5.2% in constant currency. Net sales in the quarter grew by 6.1% due to increased unit volume and changes in product mix and 1.8% as a result of acquisitions. These increases were partially offset by an unfavorable impact of 2.6% due to changes in price. Excluding the impact of acquisitions, Reconstructive net sales increased 3.4% in constant currency over the prior year.

The MedSurg Division’s net sales of $821 million increased 7.5% in the quarter over the prior year, as reported, and 7.9% in constant currency. Net sales in the quarter grew by 8.2% 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 unfavorable impact of 0.5% due to changes in price and 0.4% due to the unfavorable impact of foreign currency exchange rates on net sales. Excluding the impact of acquisitions, MedSurg net sales increased 7.6% in constant currency over the prior year.

The Neurotechnology and Spine Division’s net sales of $382 million increased 12.4% in the quarter over the prior year, as reported, and 12.3% in constant currency. Net sales in the quarter grew by 6.2% due to increased unit volume and changes in product mix and 8.0% as a result of acquisitions. These increases were partially offset by an unfavorable impact of 2.0% due to changes in price. Excluding the impact of acquisitions, Neurotechnology and Spine net sales increased 4.3% in constant currency over the prior year.

Earnings Analysis

Reported net earnings in the quarter includes restructuring and related charges of $12 million (net of taxes), and acquisition and integration related charges of $17 million (net of taxes) related to the Neurovascular, Orthovita, Memometal and Concentric acquisitions, including integration related costs and additional cost of sales for inventory sold in the quarter that was “stepped up” to fair value. These charges reduced reported gross profit margin from 67.8% to 67.2% and reported operating income margin from 23.7% to 22.0%.

Projections

The financial forecast for 2012 includes a constant currency sales increase of 3.5% to 6.5%. If foreign currency exchange rates hold near current levels, the company says it anticipates net sales will be impacted negatively by approximately 1.0% to 2.0% in the second quarter of 2012 and negatively impacted by approximately 0.5% to 1.5% for the full year of 2012. Excluding the expected impact of foreign currency and acquisitions, projected sales growth is 2% to 5%.

Company comments

“Our dedicated employees continue to execute on the strategy we have been pursuing. The 7% revenue and 10% adjusted per share earnings growth reflect the momentum we are seeing on both a product and geographic level and have us on track to deliver on our financial commitments, ” commented Curt R. Hartman, Interim Chief Executive Officer and Vice President and Chief Financial Officer. “We are committed to growing our diverse mix of businesses and global market presence. Our focus remains on internally driven innovation, strategic acquisitions and our ongoing commitment to both quality and operating efficiencies while optimizing capital allocation through share buybacks and dividends.”

Full published financials can be found here.

Source: Stryker Corporation