October 31, 2016 – By Jof Enriquez
Despite this year’s acquisition spree, Stryker Corporation will remain financially disciplined in executing M&A deals, company executives told analysts during its third quarter earnings call recently.
Stryker reported $3 billion in cash and marketable securities for the quarter ending Sept. 30, 2016. Around 80 percent of that amount currently is held outside the United States. Stryker said it would like to repatriate that cash at some point, but to what purpose is still unclear.
“You know, we’ve said before about what our priorities are around capital allocation and that would mean M&A, that would mean dividends, and it may mean share buybacks. But commenting beyond that — I don’t think I can do that at this point of time,” Stryker CEO Kevin Lobo told analysts, according to a Seeking Alpha transcript.
Since February, Stryker has closed a string of notable deals: hospital supplies provider Sage Products ($2.78 billion), emergency medical services (EMS) equipment manufacturer Physio-Control ($1.3 billion), Synergetics’ neurology portfolio (undisclosed amount), orthopedic oncology firm Stanmore Implants ($52 million), meniscal repair company Ivy Sports Medicine (undisclosed amount), and endoscopic instrumentation maker Instratek (undisclosed amount).
Stryker executives said during the call that these acquisitions were designed to strengthen the company’s core businesses. They also touted the smooth integration of the Sage and Physio-Control portfolios and sales teams with Stryker’s, which indicates that their M&A strategy is indeed sound.