Stryker reports third quarter 2024 operating results
Portage, Michigan, Oct. 29, 2024 (GLOBE NEWSWIRE) -- reported operating results for the third quarter of 2024:
Third Quarter Results
Reported net sales increased 11.9% to $5.5 billion
Organic net sales increased 11.5%
Reported operating income margin of 19.7%
Adjusted operating income margin(1) increased 130 bps to 24.7%
Reported EPS increased 20.0% to $2.16
Adjusted EPS(1) increased 16.7% to $2.87
Third Quarter Net Sales Growth Overview
Reported
Foreign Currency Exchange
Constant Currency
Acquisitions / Divestitures
Organic
MedSurg and Neurotechnology
12.8
%
(0.1) %
12.9
%
0.2
%
12.7
%
Orthopaedics and Spine
10.7
(0.1)
10.8
1.1
9.7
Total
11.9
%
(0.1) %
12.0
%
0.5
%
11.5
%
"We delivered another strong quarter across our businesses and geographies and are on track to achieve our adjusted operating margin expansion goals," said Kevin A. Lobo, Chair and CEO. "Our product innovation and acquisitions will help to sustain our growth at the high end of MedTech."
Sales Analysis
Consolidated net sales of $5.5 billion increased 11.9% in the quarter and 12.0% in constant currency. Organic net sales increased 11.5% in the quarter including 10.3% from increased unit volume and 1.2% from higher prices.
MedSurg and Neurotechnology net sales of $3.2 billion increased 12.8% in the quarter and 12.9% in constant currency. Organic net sales increased 12.7% in the quarter including 11.0% from increased unit volume and 1.7% from higher prices.
Orthopaedics and Spine net sales of $2.3 billion increased 10.7% in the quarter and 10.8% in constant currency. Organic net sales increased 9.7% in the quarter including 9.3% from increased unit volume and 0.4% from higher prices.
Earnings Analysis
Reported net earnings of $834 million increased 20.5% in the quarter. Reported net earnings per diluted share of $2.16 increased 20.0% in the quarter. Reported gross profit margin and reported operating income margin were 64.0% and 19.7% in the quarter. Reported net earnings include certain items, such as charges for acquisition and integration-related activities, the amortization of purchased intangible assets, structural optimization and other special charges (including asset write-offs and impairments), 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 64.5% in the quarter, and adjusted operating income margin(1) was 24.7% in the quarter. Adjusted net earnings(1) of $1.1 billion increased 17.3% in the quarter. Adjusted net earnings per diluted share(1) of $2.87 increased 16.7% in the quarter.
2024 Outlook
Based on our year-to-date performance, sustained demand for our capital products and healthy procedural volumes, we now expect full year 2024 organic net sales growth(2) to be in the range of 9.5% to 10.0% with a favorable pricing impact in the range of 0.5% to 1.0%. If foreign exchange rates hold near current levels, we anticipate a slightly unfavorable impact on full year net sales and now expect adjusted net earnings per diluted share(2) will be negatively impacted by approximately $0.10. This is reflected in our guidance. With a strong first nine months of the year and our strong sales momentum going into the fourth quarter, we now expect adjusted net earnings per diluted share(2) to be in the range of $12.00 to $12.10.
(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 sales growth to expected organic net sales growth as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of acquisitions and divestitures and the impact of foreign currency exchange rates. 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 structural optimization and other special charges, acquisition-related expenses 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.
Conference Call on Tuesday, October 29, 2024
As previously announced, we will host a conference call on Tuesday, October 29, 2024 at 4:30 p.m., Eastern Time, to discuss our operating results for the quarter ended September 30, 2024 and provide an operational update.
Please register for this conference call at: https://www.veracast.com/webcasts/stryker/events/SYK3Q24.cfm. After registering, a confirmation will be sent via email, including dial-in details and unique conference call access codes required for call entry. Registration is open throughout the live call. To ensure you are connected prior to the beginning of the call, we suggest registering a minimum of 15 minutes before the start of the call.
A simultaneous webcast of the call will be accessible via the Investor Relations page of our website at www.stryker.com. For those not planning to ask a question of management, we recommend listening via the webcast. Please allow 15 minutes to register, download and install any necessary software.
Following the conference call, a replay will be available on our website up to one year from the time of the earnings call.
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 law 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: weakening of economic conditions, or the anticipation thereof, that could adversely affect the level of demand for our products; geopolitical risks, including from international conflicts and elections in the United States and other countries, which could, among other things, lead to increased market volatility; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign currency exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect approval of new products by the United States Food and Drug Administration and foreign regulatory agencies; inflationary pressures; increased interest rates or interest rate volatility; supply chain disruptions; changes in labor markets; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to recall-related and other regulatory and quality matters; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; changes in tax laws and regulations; the impact of legislation to reform the healthcare system in the United States or other countries; costs to comply with medical device regulations; changes in financial markets; changes in our credit ratings; 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; our ability to realize anticipated cost savings; potential negative impacts resulting from climate change or other environmental, social and governance and sustainability related matters; the impact on our operations and financial results of any public health emergency and any related policies and actions by governments or other third parties; and breaches or failures of our or our vendors' or customers' information technology systems or products, including by cyber-attack, data leakage, unauthorized access or theft. Additional information concerning these and other factors is contained in our filings with the United States 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 a global leader in medical technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Alongside our customers around the world, we impact more than 150 million patients annually. More information is available at www.stryker.com.
For investor inquiries please contact:
Jason Beach, Vice President, Finance and Investor Relations at 269-385-2600 or
For media inquiries please contact:
Yin Becker, Vice President, Chief Corporate Affairs Officer at 269-385-2600 or
STRYKER CORPORATION
For the Three and Nine Months September 30
(Unaudited - Millions of Dollars, Except Per Share Amounts)
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months
Nine Months
2024
2023
% Change
2024
2023
% Change
Net sales
$
5,494
$
4,909
11.9
%
$
16,159
$
14,683
10.1
%
Cost of sales
1,977
1,751
12.9
5,893
5,328
10.6
Gross profit
$
3,517
$
3,158
11.4
%
$
10,266
$
9,355
9.7
%
% of sales
64.0
%
64.3
%
63.5
%
63.7
%
Research, development and engineering expenses
377
353
6.8
1,108
1,038
6.7
Selling, general and administrative expenses
1,896
1,710
10.9
5,583
5,200
7.4
Amortization of intangible assets
159
164
(3.0)
467
486
(3.9)
Total operating expenses
$
2,432
$
2,227
9.2
%
$
7,158
$
6,724
6.5
%
Operating income
$
1,085
$
931
16.5
%
$
3,108
$
2,631
18.1
%
% of sales
19.7
%
19.0
%
19.2
%
17.9
%
Other income (expense), net
(42)
(62)
(32.3)
(144)
(184)
(21.7)
Earnings before income taxes
$
1,043
$
869
20.0
%
$
2,964
$
2,447
21.1
%
Income taxes
209
177
18.1
517
425
21.6
Net earnings
$
834
$
692
20.5
%
$
2,447
$
2,022
21.0
%
Net earnings per share of common stock:
Basic
$
2.18
$
1.82
19.8
%
$
6.42
$
5.33
20.5
%
Diluted
$
2.16
$
1.80
20.0
%
$
6.35
$
5.27
20.5
%
Weighted-average shares outstanding (in millions):
Basic
381.1
379.8
380.9
379.5
Diluted
385.6
384.0
385.4
383.7
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30
December 31
2024
2023
Assets
Cash and cash equivalents
$
3,850
$
2,971
Short-term investments
750
—
Marketable securities
84
82
Accounts receivable, net
3,736
3,765
Inventories
5,292
4,843
Prepaid expenses and other current assets
961
857
Total current assets
$
14,673
$
12,518
Property, plant and equipment, net
3,429
3,215
Goodwill and other intangibles, net
21,336
19,836
Noncurrent deferred income tax assets
1,562
1,670
Other noncurrent assets
2,833
2,673
Total assets
$
43,833
$
39,912
Liabilities and shareholders' equity
Current liabilities
$
7,669
$
7,921
Long-term debt, excluding current maturities
13,325
10,901
Income taxes
368
567
Other noncurrent liabilities
2,322
1,930
Shareholders' equity
20,149
18,593
Total liabilities and shareholders' equity
$
43,833
$
39,912
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months
2024
2023
Operating activities
Net earnings
$
2,447
$
2,022
Depreciation
319
292
Amortization of intangible assets
467
486
Changes in operating assets, liabilities, income taxes payable and other, net
(922)
(617)
Net cash provided by operating activities
$
2,311
$
2,183
Investing activities
Acquisitions, net of cash acquired
$
(1,598)
$
(390)
Purchases of property, plant and equipment
(489)
(430)
Other investing, net
(610)
10
Net cash used in investing activities
$
(2,697)
$
(810)
Financing activities
Borrowings (payments) of debt, net
$
2,378
$
(312)
Payments of dividends
(914)
(854)
Other financing, net
(195)
(142)
Net cash provided by (used in) financing activities
$
1,269
$
(1,308)
Effect of exchange rate changes on cash and cash equivalents
(4)
(49)
Change in cash and cash equivalents
$
879
$
16
STRYKER CORPORATION
For the Three and Nine Months September 30
(Unaudited - Millions of Dollars)
SALES GROWTH ANALYSIS
Three Months
Nine Months
Percentage Change
Percentage Change
2024
2023
As Reported
ConstantCurrency
2024
2023
As Reported
ConstantCurrency
Geographic:
United States
$
4,109
$
3,678
11.7
%
11.7
%
$
12,070
$
10,901
10.7
%
10.7
%
International
1,385
1,231
12.5
13.0
4,089
3,782
8.1
10.1
Total
$
5,494
$
4,909
11.9
%
12.0
%
$
16,159
$
14,683
10.1
%
10.6
%
Segment:
MedSurg and Neurotechnology
$
3,224
$
2,859
12.8
%
12.9
%
$
9,340
$
8,409
11.1
%
11.5
%
Orthopaedics and Spine
2,270
2,050
10.7
10.8
6,819
6,274
8.7
9.2
Total
$
5,494
$
4,909
11.9
%
12.0
%
$
16,159
$
14,683
10.1
%
10.6
%
SUPPLEMENTAL SALES GROWTH ANALYSIS
Three Months
United States
International
Percentage Change
2024
2023
As Reported
Constant Currency
As Reported
As Reported
Constant Currency
MedSurg and Neurotechnology:
