Stryker (NYSE:SYK) officials said this week that the company is still trying to overcome hurdles integrating Mako Surgical into its existing sales force, resulting in some lackluster performance for surgical robotics firm Stryker paid $1.7 billion for last year.
During an earnings call Stryker vice president of strategy Katherine Owen said the Mako integration process has been challenging and suggested executives may have been overly optimistic in their earlier assessments about how quick their hospital customer’s would adopt the technology.
"I think it’s fair to say we underestimated the complexity of it, but feel very comfortable with the trajectory we are on," Owen said. "It’s just integrating a capital sales force alongside a very large implant sales force, and going through the necessary training and coordination that has to take place in existing accounts. So it’s nothing truly unique, it’s just that it’s a big job to do, given how large our sales force is. So we are making really good headway, very excited about the pipeline we are seeing and our ability to continue to drive sequential acceleration in robot sales."
During the 3rd quarter, Stryker posted profits of $57 million, or 16¢ per share, on sales of $2.39 billion for the 3 months ended Sept. 27.
Although Stryker didn’t break out Mako’s performance in the Q3 report, its reconstructive unit, which houses Mako, saw an 8.5% sales increase, to $1.01 billion, compared with Q3 2013. But only 3.7%, or about $2.7 million, of that growth stemmed from recent acquisitions.
Owen said the company sold about 8 robotic systems in Q3 and was encouraged by the progress, but acknowledged the numbers are behind the forecast.
"We are confident that the market for robots is improving, as we have a strong pipeline of deals we are working on closing," Owen said during the call. "We expect continued sequential improvement in Q4 and into next year for several reasons.
"I think the biggest thing is just the pace of the integration, and we were probably a bit – we weren’t probably, we were overly optimistic on how quickly we could integrate and do all the coordination that’s required between the capital reps and our very large Stryker implant reps, and there is a lot of coordination, particularly when you get into individual accounts," she added. "Certain regions have embraced it, they understand the differences in implant sales versus the cap-ex sales and how to partner, and there we are seeing great success and uptick in utilization. But we are only a couple of quarters in and it’s going to take some time here to really leverage that breadth of combining those 2 sales forces. So nothing that’s significant or really different. It was really just us being overly optimistic about the pace of managing that integration."