Stryker sees profit slip as sales rise

Kalamazoo, MI-based Stryker saw its Q1 2011 reported net earnings decrease 4.4 percent to $307 million from $322 million during the same period last year. However, the company also saw its net sales grow to $2.02 billion, representing a 12 percent increase over net sales of $1.80 billion recorded in Q1 2010.  

"Our first quarter results reinforce the strength provided by our balanced portfolio of products and services across many key segments of medical technology," Stephen MacMillan, Stryker's chairman, president and CEO, said in a statement. "And as evidenced by the significant increase in R&D, our commitment to innovation remains intact while simultaneously investing in our comprehensive quality and compliance programs."

As Reuters notes, the orthopedic sector has been hit hard in the economic downturn. But analysts are anticipating a rise in hip and knee surgeries as the economy improves. Stryker rivals Johnson & Johnson and Biomet also reported slower knee sales in Q1.

Even though underlying hip and knee sales were lower than Deutsche Bank's estimate, MedSurg helped make up the difference, Benzinga quotes DB as saying. Worldwide sales of MedSurg products were $764 million during Q1, representing an increase of 13.1 percent, according to Stryker's earnings report. The increase was based on higher shipments of surgical equipment and surgical navigation systems, endoscopic and communications systems and patient handling and emergency medical equipment as well as sales growth through acquisitions. 

In addition, worldwide sales of neurotechnology and spine products were $340 million for the first quarter of 2011, representing an increase of 48.3 percent. The company attributes this rise to higher shipments of neurotechnology products as well as sales growth through acquisitions. Stryker recently bought Boston Scientific's neurovascular business, and the company had to cough up roughly $46 million toward the $1.5 billion sales price, as MassDevice points out. However, sales at this business were stronger than expected, notes Jefferies analyst Raj Denhoy, as quoted by Reuters.

Back in January, analysts were speculating whether Stryker would make more buys. "All the big guys are looking for new avenues of growth," said Susquehanna analyst David Turkaly. He added the company had $2 billion in net cash so more acquisitions could be in the works.

- read Stryker's earnings statement
- check out the Reuters story
- see the Deutsche Bank comments at Benzinga
- get the MassDevice report

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