Stryker Corp. (NYSE:SYK) completed its bounce-back year with a 15 percent increase to its bottom line, fueled by strong 2010 sales for its medical/surgical division.
But it’s the Kalamazoo, Mich.-based-medical device maker’s orthopedic business that Wall Street analysts are watching closely, as they try to gauge the impact of the recession on that market, which has been battered by the last 12 months.
Stryker officials said sales for the company’s knee and hip businesses rose about 6 percent during the year to $4.3 billion, despite strong headwinds and pricing pressures that officials called a “perfect storm.”
“Clearly, there’s more pressure in the industry, but we still feel pretty good about market dynamics,” CEO Stephen MacMillan said in a conference call with investors.
Katherine Owen, vice president if strategy and investor relations, added that long-term prospects remained solid for knee and hip replacements because the “ability to permanently defer a hip or knee replacement is not possible.”
It wasn’t all good for the orthopedics unit, however, as Stryker’s spine business contracted by about 4 percent during the year. MacMillan told analysts that the company would be “retooling its R&D offering to get better cadence of product flow,” but didn’t provide any color on new products the company might launch to pump life into the business.
Overall, Stryker reported profits of $1.27 billion, or $3.19 per diluted share, on $7.32 billion in sales during the 12 months ended Dec. 31, 2010, a 15 percent increase from earnings of $1.1 billion, or $2.79 per diluted share, on $6.7 billion in sales during 2009.
During the three months ended Dec. 31, the company reported income of $295 million on sales of $1.99 billion, a 3.6 percent bottom-line slide from $306 million during Q4 2009. The company said fourth-quarter results included a charge of $124 million from the sale of its troubled OP-1 bone growth putty line.
Stryker’s medical-surgical division set the pace for Stryker during the year, posting a 15 percent top-line increase to $3.0 billion, compared to $2.6 billion in 2009. Rebounding capital spending clearly helped — sales of hospital beds and stretchers were up some 24 percent over the prior year.
The company said it expects sales growth of 11 percent to 13 percent in 2011, with earnings per share in the range of $3.65 to $3.73 as Stryker begins to log increased business from the recently acquired neuromuscular business of Boston Scientific Corp. (NYSE:BSX).