On the eve of the JP Morgan Healthcare conference in San Francisco this week, Stryker pre-announced its sales results for the 2015 fourth quarter and full year. Stryker’s fourth quarter sales were $2.7 billion which is +6.4% higher than the same period last year and a sequential growth rate acceleration compared to the third quarter when overall sales rose 5.5% from Q3 2014.
Stryker Caps 2015 With Strong Q4 Sales
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Secondary
The key to Stryker’s fine end-of-the-year sales report was a surging robotics business (31 MAKO robots sold in the fourth quarter compared to 17 in the third quarter) and a reinvigorated Neuro & Spine business (up 9.9%). MedSurg, which is Stryker’s medical equipment business, rose 5.6% excluding currency effects.
Q4 Segment Details
MedSurg sales were $1.1 billion (up 3.0%; up 5.6% ex-FX) which was a slight sequential growth rate improvement from 3Q15 (sales that quarter were up 0.6%; up 4.1% ex-FX).
Stryker’s Orthopedics sales were $1.1 billion (up 3.3%; up 7.1% ex-FX) included sales of 31 MAKO robots (versus 17 in 3Q15; 13 in 2Q15; 9 in 1Q15).
Neurotechnology and Spine sales were $483 million (up 6.5%; up 9.9% ex-FX).
Stryker’s management also announced that the company had repurchased $700 million worth of common stock. Looking ahead, Stryker also let it be known that it plans to reinvest the majority of the MedTech tax benefit ($0.13 in 2015).
" data-large-file="https://i0.wp.com/ryortho.com/wp-content/uploads/2016/01/Stryker_4Q15Table.jpg?fit=730%2C131&ssl=1" src="https://i0.wp.com/ryortho.com/wp-content/uploads/2016/01/Stryker_4Q15Table.jpg?resize=730%2C131&ssl=1" alt="Source: Stryker Corporation" width="730" height="131">Source: Stryker Corporation
Wall Street’s Assessment
Wells Fargo’s Take:
“We see the results as positive for SYK and note that SYK continues to grow at the high end of the large cap medical device names.”
BMO Capital Market’s Take:
“While we will have to wait for its earnings call to gain further clarity on the quarter, we expect a number of topics to be addressed, including: 1) hospital capital equipment purchasing trends; 2) the orthopaedic landscape, including the usual conversation on volumes and price, but also the competitive landscape; 3) emerging markets (as macroeconomic issues in China and Brazil began to weigh on the MedSurg segment in 2Q, and affected Orthopaedic sales in Q also); 4) new product launches, including MAKO applications in Recon and the 1588 camera platform in Endoscopy (launched at the end of 2015); 5) operating leverage; and 6) 2016 guidance.”
RBC Capital Market’s Take:
“Overall, SYK reported largely in-line 4Q15 results. SYK raised the bottom end of its 2015 cash EPS guidance range to $5.09–$5.12 (from $5.07–$5.12). This implies 4Q15 cash EPS of $1.53–$1.56 (RBCe: $1.56, FCe: $1.55).”
React:
Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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