Stryker’s Second-Quarter Revenue Swells 55 Percent

Stryker Corp.’s finances continued to improve in the second quarter this year (ended June 30). Net sales jumped 55.4 percent to $4.3 billion, a 17.6 percent increase from the same period in 2019. Gross profit skyrocketed 79 percent to $2.77 billion; for the first half, Stryker increased its gross profit 36 percent to $5.28 billion. 

Reported operating income margin was 17 percent, adjusted operating income margin was 25.9 percent, and reported EPS (earnings per share) totaled $1.55. 
 
“We delivered strong financial results in the second quarter,” said Kevin Lobo, chair and CEO. “Business momentum continues to build as the pandemic moderates and the integration of Wright Medical is pacing ahead of plan. Our positive outlook is reflected in our raised guidance.”
 
Organic net sales increased 42.9 percent in the quarter including 43.4 percent from increased unit volume partially offset by 0.5 percent from lower prices. From 2019 consolidated net sales increased 17.6 percent in the quarter and 16.1 percent in constant currency. Organic net sales increased 9.3 percent in the quarter including 9.9 percent from increased unit volume partially offset by 0.6 percent from lower prices.
 
Orthopaedics net sales of $1.6 billion increased 82.3 percent in the quarter and 77.9 percent in constant currency from 2020. Organic net sales increased 50.7 percent in the quarter including 52.2 percent from increased unit volume partially offset by 1.5 percent from lower prices. From 2019 Orthopaedics net sales increased 27.8 percent in the quarter and 26 percent in constant currency. Organic net sales increased 6.7 percent in the quarter including 9 percent from increased unit volume partially offset by 2.3 percent from lower prices.
 
MedSurg net sales of $1.7 billion increased 32.3 percent in the quarter and 29.7 percent in constant currency from 2020. Organic net sales increased 29.6 percent in the quarter including 29.5 percent from increased unit volume and 0.1 percent from higher prices. From 2019 MedSurg net sales increased 9.4 percent in the quarter and 8.3 percent in constant currency. Organic net sales increased 8.3 percent in the quarter including 7.9 percent from increased unit volume and 0.4 percent from higher prices.
 
Neurotechnology and Spine net sales of $900 million increased 66.9 percent in the quarter and 62.4 percent in constant currency from 2020. Organic net sales increased 61.8 percent in the quarter including 62.4 percent from increased unit volume partially offset by 0.6 percent from lower prices. From 2019 Neurotechnology and Spine net sales increased 18 percent in the quarter and 16 percent in constant currency. Organic net sales increased 15.5 percent in the quarter including 15.4 percent from increased unit volume and 0.1 percent from higher prices.
 
Reported net earnings (loss) of $592 million increased from ($83) million in the quarter. Reported net earnings (loss) per diluted share of $1.55 increased from ($0.22) in the quarter. Reported gross profit margin and reported operating income margin were 64.6 percent and 17 percent in the quarter. Reported net earnings (loss) include certain items, such as charges for acquisition and integration-related activities, the amortization of purchased intangible assets, 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 66 percent in the quarter, and adjusted operating income margin¹ was 25.9 percent in the quarter. Adjusted net earnings¹ of $861 million increased from $245 million in the quarter. Adjusted net earnings per diluted share¹ of $2.25 increased from $0.64 in the quarter.
 
The company is monitoring and evaluating the impact the global response to the COVID-19 pandemic has had, and will continue to have, on its operations and financial results. As the world recovers from the pandemic, Stryker now expects 2021 organic net sales growth to be in the range of 9 percent to 10 percent from 2019, and now expect adjusted net earnings per diluted share² to be in the range of $9.25 to $9.40, including the full year impact of the acquisition of Wright Medical. Consistent with the pricing environment experienced in both 2019 and 2020, Stryker expects continued unfavorable price reductions of approximately 1 percent in 2021. If foreign currency exchange rates hold near current levels, EPS is expected to be positively impacted by approximately $0.10 for the full year. This guidance assumes an ongoing recovery in key geographies leading to more normalized elective procedure levels continuing into the second half of 2021. 

References 
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 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.