Kalamazoo, Michigan – July 23, 2015 – Stryker Corporation (NYSE:SYK) reported operating results for the second quarter of 2015:
Second Quarter Highlights
Raises full year organic sales growth guidance to 5.5% to 6.5%
Raises full year adjusted diluted net earnings per share guidance to $5.06 to $5.12
Net sales grew 2.9% to $2.4 billion (7.6% constant currency)
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Orthopaedics 0.6% or 6.2% constant currency
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MedSurg 3.9% or 7.4% constant currency
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Neurotechnology and Spine 6.4% or 11.5% constant currency
Reported diluted net earnings per share increased 212.1% to $1.03
Adjusted diluted net earnings per share(1) increased 11.1% to $1.20
“We continue to execute well across our businesses and delivered organic sales growth of approximately 7% in the second quarter,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “Our strong first half performance and positive momentum is reflected in our raised guidance and underscores the strength of our people and diversified portfolio.”
Sales Analysis
Consolidated net sales of $2.4 billion increased 2.9% in the quarter, as reported, and 7.6% in constant currency as net sales were negatively impacted by 4.7% due to the impact of foreign currency exchange rates. Excluding the 0.7% impact of acquisitions, net sales in the quarter increased 6.9% in constant currency, including 8.7% from increased unit volume partially offset by 1.8% lower prices.
Orthopaedics net sales of $1.0 billion increased 0.6% in the quarter, as reported, and 6.2% in constant currency as net sales were negatively impacted by 5.6% due to the impact of foreign currency exchange rates. Excluding the 0.9% impact of acquisitions, net sales in the quarter increased 5.3% in constant currency, including 7.7% from increased unit volume partially offset by 2.4% lower prices.
MedSurg net sales of $939 million increased 3.9% in the quarter, as reported, and 7.4% in constant currency as net sales were negatively impacted by 3.5% due to the impact of foreign currency exchange rates. Excluding the 0.7% impact of acquisitions, net sales in the quarter increased 6.7% in constant currency, including 7.3% from increased unit volume partially offset by 0.6% lower prices.
Neurotechnology and Spine net sales of $458 million increased 6.4% in the quarter, as reported, and 11.5% in constant currency as net sales were negatively impacted by 5.1% due to the impact of foreign currency exchange rates. Net sales in the quarter in constant currency increased 14.1% from increased unit volume partially offset by 2.7% lower prices.
Earnings Analysis
Reported net earnings of $392 million increased 206.3% in the quarter. Reported diluted net earnings per share of $1.03 increased 212.1% in the quarter. Reported net earnings include charges for the Rejuvenate and ABG II recall, legal settlements, acquisition and integration related activities, additional cost of sales for inventory sold that was “stepped up” to fair value related to acquisitions, and restructuring related activities. The effect of each of these matters on reported net earnings appears in the reconciliation of GAAP to non-GAAP measures provided below. These charges reduced the reported gross profit margin in the quarter from 66.3% to 66.0% and reduced the reported operating income margin in the quarter from 23.8% to 17.6%.
Excluding the impact of the items described above, adjusted net earnings(2) of $458 million increased 10.4% in the quarter. Adjusted diluted net earnings per share(1) of $1.20 increased 11.1% in the quarter.
2015 Outlook
We expect 2015 constant currency sales growth in the range of 6.5% to 7.5%, including organic sales growth in the range of 5.5% to 6.5%. Based on current foreign currency exchange rates we expect adjusted diluted net earnings per share to be in the range of $1.20-$1.25 and $5.06-$5.12 in the third quarter and the full year, respectively. If foreign currency exchange rates hold near current levels, we expect sales in the third quarter and full year of 2015 to be negatively impacted by approximately 3.5% to 4.0% and adjusted diluted net earnings per share to be negatively impacted by approximately $0.25 in the full year.
