'The worst is behind us': Amid mounting order backlog, Stryker beats own estimates with $18.4B in 2022 sales

After the third quarter of 2022, even as supply chain issues continued to hinder Stryker’s ability to meet demand for its devices in a timely manner, CEO Kevin Lobo told investors that organic net sales for the full year were likely to clock in at the high end of the company’s previous estimates, with growth between 8.5% and 9%.

In fact, Stryker ended up flouting that forecast. According to its full-year earnings report, which came out Tuesday, the devicemaker saw its organic net sales jump by 9.7% compared to 2021. Overall, with the effects of changing foreign exchange rates and Stryker’s acquisitions and divestitures factored back in, the company registered a total net sales increase of 7.8%, to reach $18.45 billion.

Stryker’s net earnings also got a boost. After raking in just below $2 billion in 2021, profits increased by more than 18% a year later, coming out to nearly $2.4 billion in 2022.

Those fiscal wins came even as the “all-time high” order backlog that Lobo reported the previous quarter grew even larger in the final months of the year.

On another call with investors on Tuesday, the CEO highlighted the “giant growth” of Stryker’s medical segment, which spent the fourth quarter “really digging out of some of the backlog that they had of orders,” and was able to rack up a 32% year-over-year increase in global sales for the period.

Even so, Lobo noted, “If you look at the backlog entering 2023, it’s actually higher than what we had at the end of [2021].”

The company is therefore expecting to spend 2023 continuing to chip away at that demand and move past the supply chain stranglehold—resulting in what CFO Glenn Boehnlein said should be visible improvements by the second half of the year.

“We actually feel pretty good about our access to supply. We are seeing a reduced volume of spot buys—which are those really high-cost items—and we are also beginning to work with our original set of vendors, and also going up the food chain and actually working with chip suppliers,” Boehnlein told investors. “We feel like we have a good handle on what’s going to happen with the supply chain.”

As Lobo noted in his concluding remarks on Tuesday’s call, “We obviously are going to continue to have some challenges around spottiness in the supply chain, but it certainly feels like the worst is behind us.”

With that “spottiness” in mind, for the year ahead, Stryker has mapped out a relatively conservative forecast, with organic net sales growing between 7% and 8.5% throughout 2023.

Chugging away at that rate—essentially, the standard market growth rate—will allow the company to focus much of its energy toward upcoming additions to its Mako robotic surgery system, Lobo said on the call, after which the company will be able “to start to grow above market.”

Mako is already available for use in performing joint replacement procedures, and Stryker is now planning on adding indications for use in spine and shoulder surgeries, with initial rollouts set for the latter half of 2024, according to Jason Beach, the company’s VP of investor relations.