Stryker reports third-quarter 2023 operating results
Kalamazoo, Mich., Nov. 2, 2023 (GLOBE NEWSWIRE) — Stryker (NYSE:SYK) reported operating results for the third quarter of 2023:
Third quarter Results
- Reported net sales increased 9.6% Unpleasant $4.9 billion
- Organic net sales increased 9.2%
- Reported operating profit margin of 19.0%
- Adjusted operating income margin(1) increased 110 bps to 23.4%
- Reported earnings per share fell 15.9% to $1.80
- Custom EPS(1) increased 16.0% Unpleasant $2.46
| Overview of net sales growth in the third quarter | ||||||||||||||
| Reported | Exchange foreign currencies | Constant currency | Acquisitions / divestments | Biological | ||||||||||
| MedSurg and neurotechnology | 10.5 | % | 0.2 | % | 10.3 | % | 0.2 | % | 10.1 | % | ||||
| Orthopedics and spine | 8.4 | 0.4 | 8.0 | — | 8.0 | |||||||||
| Total | 9.6 | % | 0.3 | % | 9.3 | % | 0.1 | % | 9.2 | % | ||||
“We delivered another quarter of strong organic revenue growth and continued margin expansion,” said Kevin A. Lobo, chairman and CEO. “The positive momentum in our business remains intact, including a strong procedural environment and our super cycle of innovation.”
Sales analysis
Consolidated net sales of $4.9 billion increased 9.6% in the quarter and 9.3% at constant exchange rates. Organic net sales increased by 9.2% in the quarter, of which 8.9% due to higher unit volume and 0.3% due to higher prices.
MedSurg and Neurotechnology net sales of $2.9 billion increased 10.5% in the quarter and 10.3% at constant exchange rates. Organic net sales increased by 10.1% in the quarter, of which 8.7% due to higher unit volume and 1.4% due to higher prices.
Orthopedics and Spine net sales of $2.1 billion increased 8.4% in the quarter and 8.0% at constant exchange rates. Organic net sales increased 8.0% in the quarter, of which 9.1% was due to higher unit volume, partially offset by 1.1% due to lower prices.
Revenue Analysis
Reported net income of $692 million fell 15.2% in the quarter. Reported net income per diluted share of $1.80 fell 15.9% in the quarter. Reported gross profit margin and reported operating profit margin were 64.3% and 19.0% in the quarter. The reported net profit includes certain items, such as costs for acquisition and integration-related activities, the amortization of purchased intangible assets, structural optimization and other special costs (including depreciation and impairment of assets), costs to comply with certain regulatory requirements medical devices, recall-related matters, regulatory and legal matters and tax matters. Excluding the above items, adjusted gross profit margin(1) was 64.7% in the quarter, and an adjusted operating income margin(1) amounted to 23.4% in the quarter. Adjusted net profit(1) of $944 million rose 16.5% in the quarter. Adjusted net income per diluted share(1) of $2.46 rose 16.0% in the quarter.
Outlook for 2023
Given our year-to-date performance, robust capital equipment backlog and continued positive procedural trends, we now expect organic net sales growth for full year 2023(2) between 10.0% and 10.5%, including slightly positive prices for the year. If exchange rates remain near their current levels, we expect net sales to be adversely affected by approximately 0.6% and adjusted net earnings per diluted share(2) will be adversely affected by $0.10 to $0.15 for the full year, both of which are included in our guidance. Based on our performance in the first nine months of the year, together with our strong sales momentum, we now expect adjusted net income per diluted share(2) are between $10.35 and $10.45.
(1) A reconciliation of the non-GAAP financial measures: adjusted gross profit margin, adjusted operating income and adjusted operating income margin, adjusted net income and adjusted net income per diluted share, with the most directly comparable GAAP measures: gross profit margin, operating income and operating income margin, net income and net income per diluted share, and other important information are attached to this press release.
(2) We are unable to provide a quantitative reconciliation between our expected net sales growth and expected organic net sales growth because we are unable to estimate 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 between our expected net income per diluted share and expected adjusted net income per diluted share because we cannot estimate with reasonable certainty and without unreasonable effort the impact and timing of structural optimization and other special costs, acquisitions and predict takeovers. -related costs and adjustments to the fair value of inventories and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and depends on several factors, including timing, and could be material to our consolidated statements of operations.
Conference call enabled Thursday November 2, 2023
As previously announced, we are organizing a conference call Thursday November 2, 2023 at 4:30 p.m., Eastern Time, to discuss our operating results for the quarter ended September 30, 2023 and provide an operational update.
Register for this conference call at: https://www.veracast.com/webcasts/stryker/events/SYK3Q23.cfm. Once registered, an email confirmation will be sent, including dial-in information and unique conference call access codes required for call entry. Registration is open during the live call. To ensure that you are connected before the start of the call, we recommend that you register at least 15 minutes before the start of the call.
A simultaneous webcast of the call will be accessible via the Investor Relations page of our website at www.stryker.com. For those who do not intend to ask a management question, we recommend listening via the webcast. Please allow 15 minutes to register, download and install the necessary software.
A replay will be available on our website following the conference call for up to one year from the time of the earnings call.
Caution Regarding Forward-Looking Statements
This press release contains information that contains or is based on forward-looking statements within the meaning of the federal securities laws, which are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by such statements. Such factors include, but are not limited to: weakening of economic conditions, or anticipation thereof, which could adversely affect the level of demand for our products; pricing pressures generally, including cost control measures that could adversely affect the price of or demand for our products; changes in the foreign exchange markets; legislative and regulatory actions; unexpected issues arising in connection with clinical trials and otherwise affecting the approval of new products by the U.S. Food and Drug Administration; inflationary pressure; higher interest rates; supply chain disruptions; changes in reimbursement levels from third-party payers; a significant increase in product liability claims; the final total costs related to recall-related matters; the impact of investigative and legal proceedings and compliance risks; settlement of tax audits; changes in tax laws and regulations; the impact of federal legislation to reform the United States health care system; costs to comply with medical device regulations; changes in the financial markets; changes in our credit ratings; changes in the competitive environment; our ability to integrate and realize the expected benefits of acquisitions in full or within the expected time frames; our ability to achieve expected cost savings; potential negative impacts resulting from environmental, social and governance (ESG) and sustainability issues; the impact on our operations and financial results of a public health emergency and related policies and actions of governments or other third parties; and breaches or failures of our or our suppliers’ information technology systems or products, including through cyber-attacks, data breaches, unauthorized access or theft. Additional information about these and other factors is included in our filings with the U.S. 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 statements to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based or that could affect the likelihood that actual results will occur differ from the results. included in the forward-looking statements.
Stryker is one of the world’s leading medical technology companies, and together with our customers, we are passionate about making healthcare better. We provide innovative products and services in medical, surgical, neurotechnology, orthopedics and spine that help improve patient and healthcare outcomes. In addition to our customers around the world, Stryker impacts more than 130 million patients annually. More information is available at www.stryker.com.
For investor questions, please contact:
Jason Beach, Vice President, Investor Relations at 269-385-2600 or jason.beach@stryker.com
For media inquiries please contact:
Yin Becker, Vice President, Chief Corporate Affairs Officer at 269-385-2600 or yin.becker@stryker.com
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