Stryker beats The Street on Q1 results, warns of significant COVID-19 impact

May 1, 2020 By Sean Whooley

Stryker (NYSE:SYK) shares dropped slightly today on first-quarter results that came in ahead of the consensus forecast.

The Kalamazoo, Mich.-based orthopedic device company posted profits of $493 million, or $1.30 per share, on sales of $3.6 billion for the three months ended March 31, 2020, for a 19.7% bottom-line gain on sales growth of 2%.

Adjusted to exclude one-time items, earnings per share were $1.84, 15¢ ahead of Wall Street, where analysts were looking for sales of $3.4 billion.

According to a news release, COVID-19 significantly impacted Stryker’s consolidated net sales in a negative way, resulting in unit volume growth rates that were lower than expected across all segments.

On the company’s earnings call, Stryker VP of strategy & IR Katherine Owen noted that between 40% and 50% of its global revenue includes elective procedures that can be deferred. These kinds of procedures have practically come to a halt everywhere as attention is turned to the COVID-19 crisis.

During April alone, Stryker’s orthopedics and spine sales were down approximately 65%, while its medical-surgical and neurotechnology businesses posted 25% declines.

“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,” Stryker chairman & CEO Kevin Lobo said in the news release. “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.”

Stryker previously reported an expected organic sales growth for 2020 to be in the range of 6.5% to 7.5% and its full-year earnings per share to range between $9.00 and $9.20. However, in March, the company withdrew its guidance amid the uncertainties caused by the coronavirus pandemic.

SYK shares were down -1.4% at $183.92 per share in mid-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was down 1.3%.

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