Archive photo: Stryker Endoscopy in San Jose, California, January 2010. © BrokenSphere / Wikimedia Commons / CC BY-SA 3.0; cropped.
Stryker reported third-quarter sales of $6.52 billion Thursday, up 7.7%, while net earnings fell 12.3% and the medical-device maker updated its full-year outlook.
The company’s October 29 results release put net earnings at $753 million, or $1.96 per diluted share, compared with $859 million, or $2.22 per share, a year earlier. Adjusted earnings moved in the opposite direction, rising 10.3% per share to $3.52.
Chair and CEO Kevin A. Lobo said organic sales growth and double-digit adjusted earnings growth still fell short of the company’s expectations. He said Stryker expected a solid fourth quarter and momentum heading into 2027. Those are management’s expectations, not completed results.
Sales grew across both divisions
MedSurg and Neurotechnology sales reached about $3.7 billion, up 9.2% on a reported basis. Organic growth was 9.1%, primarily driven by increased unit volume, the company said.
Orthopaedics sales were about $2.9 billion, up 5.7% as reported and 5.9% in constant currency. Organic growth was also 5.9%, with Stryker again pointing to increased unit volume.
The consolidated figures show demand growth across the company’s two reporting segments, while the profit figures show why reported and adjusted results need to be read separately. Reported operating margin fell to 15.9%, compared with 18.7% a year earlier. Adjusted operating margin increased 60 basis points to 26.2%.
Reported profit and adjusted earnings diverged
Stryker said reported earnings included acquisition and integration costs, amortization of purchased intangible assets, restructuring-related and other special charges, impairments, and regulatory, recall, legal and tax matters. Its adjusted figures exclude specified items and are non-GAAP measures.
The earnings statement included $293 million of goodwill and other impairments in the quarter, compared with $73 million a year earlier. Adjusted net earnings rose 10.1% to about $1.4 billion, while reported net earnings declined.
For the full year, Stryker now expects organic net sales growth of 6.5% to 7.0% and adjusted diluted earnings per share of $14.80 to $14.90. The company said the sales outlook includes a modestly positive pricing effect. Foreign exchange would have a slightly favorable effect on sales and adjusted earnings if rates remained near current levels.
The company cautioned that it could not provide quantitative reconciliations for those forward-looking non-GAAP measures without unreasonable effort because the timing and effect of acquisitions, divestitures, foreign exchange and certain charges remain uncertain.
Stryker also said it repurchased $1 billion of shares during the third quarter. Its board approved a $3 billion increase to the existing repurchase program in October, with the timing and amount of purchases left to management based on market conditions and other factors.
The new development is Thursday’s quarterly financial report and updated outlook. The release does not announce a new clinical approval, and its adjusted profit measures should not be confused with the lower earnings reported under generally accepted accounting principles.
JBizNews Desk | Markets
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