Kalamazoo, Michigan, Oct. 31, 2022 (GLOBE NEWSWIRE) — Stryker (NYSE:SYK) reported operating results for the third quarter of 2022:
Third Quarter Results
- Reported net sales increased 7.7% to $4.5 billion
- Organic net sales increased 9.9%
- Reported operating income margin of 18.0%
- Adjusted operating income margin(1) contracted 310 bps to 22.3%
- Reported EPS increased 87.7% to $2.14
- Adjusted EPS(1) decreased 3.6% to $2.12
“We delivered strong organic sales growth in the quarter, despite product shortages and disruptions to full return of surgeries,” said Kevin A. Lobo, Chair and CEO. “Worsening foreign currency and ongoing inflation, including premiums on spot buys for key components, pressured our adjusted earnings and will impact our full year results. We are taking additional actions to address these persistent issues.”
Sales Analysis
Consolidated net sales of $4.5 billion increased 7.7% in the quarter and 11.4% in constant currency. Organic net sales increased 9.9% in the quarter including 10.6% from increased unit volume partially offset by 0.7% from lower prices.
MedSurg and Neurotechnology net sales of $2.6 billion increased 10.2% in the quarter and 13.5% in constant currency. Organic net sales increased 10.8% in the quarter including 9.8% from increased unit volume and 1.0% from higher prices.
Orthopaedics and Spine net sales of $1.9 billion increased 4.4% in the quarter and 8.7% in constant currency. Organic net sales increased 8.7% in the quarter including 11.6% from increased unit volume partially offset by 2.9% from lower prices.
Earnings Analysis
Reported net earnings of $816 million increased 86.3% in the quarter. Reported net earnings per diluted share of $2.14 increased 87.7% in the quarter. Reported gross profit margin and reported operating income margin were 62.1% and 18.0% in the quarter. Reported net earnings include certain items, such as charges for acquisition and integration-related activities, the amortization of purchased intangible assets, asset write-offs and impairments and restructuring-related and other charges, costs to comply with certain medical device regulations, recall-related matters, regulatory and legal matters and tax matters. Excluding the aforementioned items, adjusted gross profit margin(1) was 62.6% in the quarter, and adjusted operating income margin(1) was 22.3% in the quarter. Adjusted net earnings(1) of $810 million decreased 3.8% in the quarter. Adjusted net earnings per diluted share(1) of $2.12 decreased 3.6% in the quarter.
2022 Outlook
Considering our third quarter results, the strong order book for capital equipment and the sales momentum in our implant and capital businesses, we now expect full year 2022 organic net sales growth(2) to be in the range of 8.5% to 9.0%. If foreign currency exchange rates hold near current levels, we now expect net sales in the full year to be adversely impacted by approximately 4% and adjusted net earnings per diluted share(2) to be adversely impacted by approximately $0.35 to $0.40 in the full year. Based on our performance in the third quarter including consideration of continued inflationary pressures, together with our strong sales and additional cost reduction actions, and most significantly, the anticipated future impact of foreign currency, we now expect adjusted net earnings per diluted share(2) in the range of $9.15 to $9.25 per share.
(1) A reconciliation of the non-GAAP financial measures: adjusted gross profit margin, adjusted operating income and adjusted operating income margin, adjusted net earnings and adjusted net earnings per diluted share, to the most directly comparable GAAP measures: gross profit margin, operating income and operating income margin, net earnings and net earnings per diluted share, and other important information accompanies this press release.
(2) We are unable to present a quantitative reconciliation of our expected net sales growth to expected organic net sales growth as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of acquisitions and divestitures and the impact of foreign currency exchange rates. We are unable to present a quantitative reconciliation of our expected net earnings per diluted share to expected adjusted net earnings per diluted share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of restructuring-related and other charges, acquisition-related expenses and fair value adjustments to inventory and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and is dependent on various factors, including timing, and could be material to our Consolidated Statements of Earnings.
Conference Call on Monday, October 31, 2022
As previously announced, Stryker will host a conference call on Monday, October 31, 2022 at 4:30 p.m., Eastern Time, to discuss the Company’s operating results for the quarter ended September 30, 2022 and provide an operational update.
Please register for this conference call at: https://www.netroadshow.com/events/login?show=ef1f360c&confId=40138. After registering, a confirmation will be sent via email, including dial-in details and unique conference call access codes required for call entry. Registration is open throughout the live call. To ensure you are connected prior to the beginning of the call, the Company suggests registering a minimum of 15 minutes before the start of the call.
A simultaneous webcast of the call will be accessible via the Investor Relations page of the Company’s website at www.stryker.com. For those not planning to ask a question of management, the Company recommends listening via the webcast. Please allow 15 minutes to register, download and install any necessary software.
Following the conference call, a replay will be available at (866) 813-9403 (Toll Free) or (929) 458-6194 (International). The replay passcode is 382708. An archive of the webcast will also be available on the Company’s website two hours after the live call ends.
Caution Concerning Forward-Looking Statements
This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities law 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: the impact on our operations and financial results of the COVID-19 pandemic and any related policies and actions by governments or other third parties; unexpected liabilities, costs, charges or expenses in connection with the acquisition of Vocera Communications, Inc. (Vocera); the effects of the Vocera transaction on the relationships of the parties with employees, customers, other business partners or governmental entities; 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 United States Food and Drug Administration approval of new products, including Vocera products; inflationary pressures; supply chain disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to recall-related matters; 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; costs to comply with medical device regulations; changes in financial markets; changes in the competitive environment; our ability to integrate and realize the anticipated benefits of acquisitions in full or at all or within the expected timeframes, including the acquisition of Vocera; our ability to realize anticipated cost savings; and potential negative impacts resulting from environmental, social and governance (ESG) and sustainability related matters. Additional information concerning these and other factors is contained in our filings with the United States Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.
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 Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and hospital outcomes. Alongside its customers around the world, Stryker impacts more than 100 million patients annually. More information is available at www.stryker.com.
For investor inquiries please contact:
Jason Beach, Vice President, Investor Relations at 269-385-2600 or [email protected]
For media inquiries please contact:
Yin Becker, Vice President, Chief Corporate Affairs Officer at 269-385-2600 or [email protected]