05.06.15
Stryker Corp. is off to a strong financial start this year.
The Kalamazoo, Mich.-based orthopedic device behemoth posted a 4.7 percent jump in adjusted earnings per share (EPS) during the first quarter, driven by 3.2 percent growth in net sales. At constant currency, net sales swelled 7.4 percent from the year-ago quarter.
Organic growth was nearly 6 percent in the period ending March 31, driven by improving volume and product mix but partially offset by pricing headwinds. Acquisitions added 1.9 percent, while a strong U.S. dollar negatively impacted overall sales by 4.2 percent in the quarter. The year-over-year growth in net sales primarily was led by a solid performance from the MedSurg segment.
“We are pleased with our first quarter results, with another quarter of nearly 6 percent organic sales growth and disciplined expense management,” Chairman/CEO Kevin A. Lobo said. “We expect this momentum, which is balanced across segments and regions, to continue and are raising the low end of full-year sales and earnings guidance.”
Adjusted operating margin contracted 80 basis points (bps) to 23.3 percent on a year-over-year basis. The contraction primarily was caused by negative impacts from an unfavorable foreign exchange rate, pricing headwinds and unfavorable mix caused by recent acquisitions. However, the downsides partially were offset by operating improvements in the first quarter. Research and development expenses, as a percentage of sales, contracted 10 bps.
U.S. sales surged 8.5 percent year over year to $1.67 billion, driven by higher demand for orthopedic products (up 9.7 percent from Q1 2014), and strong MedSurg and Neurotechnology growth, up 8.1 percent and 10.4 percent respectively. International sales slipped 7.4 percent compared with the first quarter of last year (up 5.4 percent at constant currency) to $706 million, primarily due to unfavorable foreign exchange rates.
Orthopedic sales increased 2.4 percent (7.5 percent at constant currency) to $1.02 billion, due primarily to an 8.7 percent spike in Trauma & Extremities sales and a whopping 17.8 percent jump in other sales. The gains fully offset a 1.9 percent and 0.9 percent decline in hip and knee sales, respectively.
U.S. Trauma & Extremities sales surged 18.4 percent. The segment reported a 3.5 percent decline (up 10.9 percent at constant currency) in the international market. Hips delivered a strong performance in the United States, with sales growth of 7.5 percent in the quarter.
MedSurg sales increased 4.6 percent (up 7.7 percent at constant currency) to $927 million compared with Q1 2014. Executives attributed the increase to solid growth in the medical business. Endoscopy, Medical and Sustainability sales reportedly grew 2.8 percent, 13.5 percent and 9.2 percent, respectively.
Finally, the Neurotechnology and Spine segment grew almost 2.1 percent (6.6 percent at constant currency) to $429 million, thanks to 9.2 percent growth in Neurotechnology sales. Spine sales declined 3 percent on a year-over-year basis in the quarter.
Management raised the lower end of both its earnings and sales guidance for 2015. Adjusted EPS for 2015 now is expected to range between $4.95 and $5.10 (previously $4.90–$5.10). For the second quarter of 2015, adjusted EPS is expected to be $1.15–$1.20.
The Kalamazoo, Mich.-based orthopedic device behemoth posted a 4.7 percent jump in adjusted earnings per share (EPS) during the first quarter, driven by 3.2 percent growth in net sales. At constant currency, net sales swelled 7.4 percent from the year-ago quarter.
Organic growth was nearly 6 percent in the period ending March 31, driven by improving volume and product mix but partially offset by pricing headwinds. Acquisitions added 1.9 percent, while a strong U.S. dollar negatively impacted overall sales by 4.2 percent in the quarter. The year-over-year growth in net sales primarily was led by a solid performance from the MedSurg segment.
“We are pleased with our first quarter results, with another quarter of nearly 6 percent organic sales growth and disciplined expense management,” Chairman/CEO Kevin A. Lobo said. “We expect this momentum, which is balanced across segments and regions, to continue and are raising the low end of full-year sales and earnings guidance.”
Adjusted operating margin contracted 80 basis points (bps) to 23.3 percent on a year-over-year basis. The contraction primarily was caused by negative impacts from an unfavorable foreign exchange rate, pricing headwinds and unfavorable mix caused by recent acquisitions. However, the downsides partially were offset by operating improvements in the first quarter. Research and development expenses, as a percentage of sales, contracted 10 bps.
U.S. sales surged 8.5 percent year over year to $1.67 billion, driven by higher demand for orthopedic products (up 9.7 percent from Q1 2014), and strong MedSurg and Neurotechnology growth, up 8.1 percent and 10.4 percent respectively. International sales slipped 7.4 percent compared with the first quarter of last year (up 5.4 percent at constant currency) to $706 million, primarily due to unfavorable foreign exchange rates.
Orthopedic sales increased 2.4 percent (7.5 percent at constant currency) to $1.02 billion, due primarily to an 8.7 percent spike in Trauma & Extremities sales and a whopping 17.8 percent jump in other sales. The gains fully offset a 1.9 percent and 0.9 percent decline in hip and knee sales, respectively.
U.S. Trauma & Extremities sales surged 18.4 percent. The segment reported a 3.5 percent decline (up 10.9 percent at constant currency) in the international market. Hips delivered a strong performance in the United States, with sales growth of 7.5 percent in the quarter.
MedSurg sales increased 4.6 percent (up 7.7 percent at constant currency) to $927 million compared with Q1 2014. Executives attributed the increase to solid growth in the medical business. Endoscopy, Medical and Sustainability sales reportedly grew 2.8 percent, 13.5 percent and 9.2 percent, respectively.
Finally, the Neurotechnology and Spine segment grew almost 2.1 percent (6.6 percent at constant currency) to $429 million, thanks to 9.2 percent growth in Neurotechnology sales. Spine sales declined 3 percent on a year-over-year basis in the quarter.
Management raised the lower end of both its earnings and sales guidance for 2015. Adjusted EPS for 2015 now is expected to range between $4.95 and $5.10 (previously $4.90–$5.10). For the second quarter of 2015, adjusted EPS is expected to be $1.15–$1.20.