Stryker reports second quarter 2023 operating results

Stryker reported operating results for the second quarter of 2023:

Second quarter results

• Reported net sales increased 11.2% to $5.0 billion
• Organic net sales increased 11.9%
• Reported operating income margin of 19.3%
• Adjusted operating income margin⁽¹⁾ increased 60 bps to 24.3%
• Reported EPS increased 12.2% to $1.93
• Adjusted EPS⁽¹⁾ increased 12.9% to $2.54

“We delivered strong organic sales growth in the second quarter as demand for our products remains strong,” said Kevin A. Lobo, Chair and CEO. “We are back on our margin expansion pathway, and our supercycle of innovation is going well.”

Sales analysis
Consolidated net sales of $5.0 billion increased 11.2% in the quarter and 11.9% in constant currency. Organic net sales increased 11.9% in the quarter including 11.4% from increased unit volume and 0.5% from higher prices.

MedSurg and Neurotechnology net sales of $2.9 billion increased 12.2% in the quarter and 12.9% in constant currency. Organic net sales increased 12.9% in the quarter including 11.5% from increased unit volume and 1.4% from higher prices.

Orthopaedics and Spine net sales of $2.1 billion increased 9.9% in the quarter and 10.6% in constant currency. Organic net sales increased 10.6% in the quarter including 11.3% from increased unit volume partially offset by 0.7% from lower prices.

Earnings analysis
Reported net earnings of $738 million increased 12.5% in the quarter. Reported net earnings per diluted share of $1.93 increased 12.2% in the quarter. Reported gross profit margin and reported operating income margin were 63.7% and 19.3% 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 63.9% in the quarter, and adjusted operating income margin(1) was 24.3% in the quarter. Adjusted net earnings(1) of $976 million increased 13.5% in the quarter. Adjusted net earnings per diluted share(1) of $2.54 increased 12.9% in the quarter.

2023 outlook
Considering our year-to-date results, our strong order book for capital equipment and continued positive procedural trends, we now expect full year 2023 organic net sales growth(2) to be in the range of 9.5% to 10.5% including slightly positive pricing for the year. If foreign exchange rates hold near their current levels, we anticipate net sales will be unfavorably impacted by 0.3% and adjusted net earnings per diluted share(2) will be unfavorably impacted by $0.05 to $0.10 for the full year, both of which are included in our guidance. Based on our performance in the first half of the year, together with our strong sales momentum, we now expect adjusted net earnings per diluted share(2) to be in the range of $10.25 to $10.45.

(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 fair value adjustments to inventory 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.
MB Bureau