Orthopedics company Stryker made a bold move in buying surgical robotics maker MAKO Surgical for $1.65 billion last year. At the time, at least one analyst sounded a note of caution, and it appears he may have been correct.
A year later, even Stryker executives are not satisfied with sales. The company’s vice president of strategy and investor relations noted in October that Stryker underestimated the complexity of integrating the two sales forces.
Another reason for Stryker’s dubious distinction this year, is the out-of-court settlement the company made with plaintiffs hurt by its defective hip implant products. There is no upper limit—individual patients will receive damages based on a review of their case—so Stryker cautioned that the final cost could be higher than the $1.43 billion it has estimated.
In early December, Stryker also announced that it would pay $80 million plus interest to the Department of Justice regarding its civil and criminal investigations into the sales and marketing of the OtisKnee, a product acquired in November 2009 when Stryker acquired OtisMed. Stryker is taking the hit even though it was unaware of OtisMed's misdeeds.
The Zimmer-Biomet merger has also put the Kalamazoo, Michigan, company in a defensive position. Stryker was interested in a takeover of rival Smith & Nephew, but a news report in the spring on its plan sent the target's stock soaring, which led a UK agency to ask Stryker to make public its intentions. Forced to a decision, the company backed off. Later in the year, it was once again rumored to be interested in buying Smith & Nephew.