Stryker reports first quarter 2020 operating results

Kalamazoo, Michigan, April 30, 2020 (GLOBE NEWSWIRE) -- Stryker (NYSE:SYK) reported operating results for the first quarter of 2020:

The response to the COVID-19 pandemic has included unprecedented measures to slow the spread of the virus taken by local governments and health care authorities globally, including the deferral of elective medical procedures and social contact restrictions, which have had a significant negative impact on Stryker’s operations and financial results.

First Quarter Results

• Reported net sales increased 2.0% to $3.6 billion
• Organic net sales increased 2.4%
• Reported operating income margin of 17.7%
• Adjusted operating income margin⁽¹⁾ contracted 110 bps to24.0%
• Reported EPS increased 19.3% to $1.30
• Adjusted EPS⁽¹⁾ decreased 2.1% to $1.84

	First Quarter Net Sales Growth Overview
	Reported			Foreign Currency Exchange			Constant Currency			Acquisitions				Organic
Orthopaedics	(2.1	)%		(0.9	)%		(1.2	)%		—		%		(1.2	)%
MedSurg	6.2			(0.8	)		7.0			0.7				6.3
Neurotechnology and Spine	0.7			(0.8	)		1.5			1.2				0.3
Total	2.0	%		(0.9	)%		2.9	%		0.5	%			2.4	%

"Our first quarter organic sales growth of 2.4% reflects strong momentum through much of the quarter before experiencing a significant negative impact from the COVID-19 pandemic," said Kevin Lobo, Chairman and Chief Executive Officer. "We have taken a number of steps designed to ensure the safety of our employees and customers while continuing to meet the needs of hospitals and caregivers providing essential services. While the fluidity of the current environment makes it difficult to predict our financial performance for the remainder of 2020, given the strength of our balance sheet and cost containment efforts underway, we believe we are well positioned to manage through this unprecedented situation. And as patients who have deferred surgical procedures begin to return over the coming weeks and months, we will work with our customers to help meet the expected demand. On behalf of the Stryker leadership team, I would like to offer my thanks to our thousands of employees around the globe and to the caregivers and first responders for their tremendous efforts in dealing with this health crisis."

Sales Analysis

Consolidated net sales were significantly negatively impacted by the global response to the COVID-19 pandemic, resulting in lower than previously expected unit volume growth rates across all segments.

Consolidated net sales of $3.6 billion increased 2.0% in the quarter and 2.9% in constant currency. Organic net sales increased 2.4% in the quarter including 2.8% from increased unit volume partially offset by 0.4% from lower prices.

Orthopaedics net sales of $1.2 billion decreased 2.1% in the quarter and 1.2% in constant currency. Organic net sales decreased 1.2% in the quarter including 1.5% from lower prices partially offset by 0.3% from increased unit volume.

MedSurg net sales of $1.6 billion increased 6.2% in the quarter and 7.0% in constant currency. Organic net sales increased 6.3% in the quarter including 6.0% from increased unit volume and 0.3% from higher prices.

Neurotechnology and Spine net sales of $0.7 billion increased 0.7% in the quarter and 1.5% in constant currency. Organic net sales increased 0.3% in the quarter from increased unit volume.

Earnings Analysis

Earnings were significantly negatively impacted by the global response to the COVID-19 pandemic. Reported net earnings of $493 million increased 19.7% in the quarter. Reported net earnings per diluted share of $1.30 increased 19.3% in the quarter. Reported gross profit margin and reported operating income margin were 65.0% and 17.7% in the quarter. Adjusted gross profit margin⁽¹⁾ and adjusted operating income margin⁽¹⁾ were 65.3% and 24.0%, a decline of 110 basis points in the quarter. Adjusted net earnings⁽¹⁾ of $699 million decreased 2.1% in the quarter. Adjusted net earnings per diluted share⁽¹⁾ of $1.84 decreased 2.1% in the quarter.

2020 Outlook

The global response to the COVID-19 pandemic has had, and we expect will continue to have, a significant negative impact on Stryker’s operations and financial results. While we reported overall increased unit volume in the quarter, most of our businesses saw dramatic declines in the month of March 2020. Due to the uncertain scope and duration of the pandemic, and uncertain timing of global recovery and economic normalization, we are unable to estimate the overall impacts on our operations and financial results, which could be material. Accordingly, we will not be providing second quarter or full-year organic sales growth or earnings guidance for 2020.

(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.

Conference Call on Thursday, April 30, 2020

As previously announced, Stryker will host a conference call on Thursday, April 30, 2020 at 4:30 p.m., Eastern Time, to discuss the company's operating results for the quarter ended March 31, 2020 and provide an operational update.

To participate in the conference, call dial (877) 702-4565 (domestic) or (647) 689-5532 (international) and be prepared to provide conference ID number 4595129 to the operator.

A simultaneous webcast of the call will be accessible via the company's website at www.stryker.com. The call will be archived on the Investor Relations page of this site.

A recording of the call will also be available from 8:00 p.m., Eastern Time, on Thursday, April 30, 2020, until 11:59 p.m., Eastern Time, on Thursday, May 7, 2020. To hear this recording, you may dial (800) 585-8367 (domestic) or (416) 621-4642 (international) and enter conference ID number 4595129.

Caution Concerning Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: the impact on our operations and financial results of the COVID-19 pandemic and any related policies and actions by governments or other third parties; the failure to satisfy any of the closing conditions to the acquisition of Wright Medical Group N.V. ("Wright"), including the receipt of any required regulatory clearances (and the risk that such clearances may result in the imposition of conditions that could adversely affect the expected benefits of the transaction); timing of the closing of the acquisition of Wright; unexpected liabilities, costs, charges or expenses in connection with the acquisition of Wright; the effects of the proposed Wright transaction (or the announcement thereof) on the parties' relationships with employees, customers, other business partners or governmental entities; weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products, including Wright products; potential supply disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to recall-related matters; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; costs to comply with medical device regulations; changes in financial markets; changes in the competitive environment; our ability to integrate and realize the anticipated benefits of acquisitions in full or at all or within the expected timeframes, including the acquisition of Wright; and our ability to realize anticipated cost savings. Additional information concerning these and other factors is contained 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 statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.

Stryker is one of the world's leading medical technology companies and, together with its customers, is driven to make healthcare better. The company offers innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. More information is available at www.stryker.com.

For investor inquiries please contact:

Katherine Owen, Vice President, Strategy & Investor Relations at 269-385-2600 or katherine.owen@stryker.com

For media inquiries please contact:

Yin Becker, Vice President, Communications, Public Affairs and Corporate Marketing at 269-385-2600 or yin.becker@stryker.com