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Stryker Beats Consensus but Still Feels COVID-19 Sting

The Kalamazoo, MI-based company said net sales of $2.8 billion decreased 24.3% in the quarter.

Orthopedic companies are feeling the pressures of COVID-19 and the virus’s negative effect on elective surgeries. Stryker Corp’s 2Q20 earnings were negatively impacted even though the Kalamazoo, MI-based company was able to beat consensus forecast.

Stryker said net sales of $2.8 billion decreased 24.3% in the quarter and 23.5% in constant currency. Organic net sales decreased 24% in the quarter including 23.8% from decreased unit volume and 0.2% from lower prices.

The company’s orthopedics net sales of $0.9 billion decreased 29.9% in the quarter and 29.3% in constant currency. Organic net sales decreased 29.3% in the quarter including 28.1% from decreased unit volume and 1.2% from lower prices. 

“Our second-quarter sales declined organically by 24%, reflecting the impacts of COVID-19 across all geographies and the majority of our product lines,” Kevin Lobo, Stryker and CEO said according to a Seeking Alpha transcript of the earnings call.

Lobo added, “The results reflect progressive improvement in overall sales through the quarter but do vary by region. The sequential improvement can be tied to the initial cancellation and subsequent gradual return elective procedures during the quarter.”

The company said because of uncertainties surrounding COVID-19,  it would not give guidance for next year. 

Late last year, Stryker announced it would acquire Wright Medical for about $4 billion. During the earnings call, Lobo said that this won’t be the last acquisition - but look for smaller tuck-in deals in the near future.

“We're taking on a lot of depths with this Wright Medical acquisition, and so, part of our commitment with cash is going to be to pay down some of the debt, but it won't be exclusively and we've [said] that we will continue to stay active on M&A, but it will be obviously smaller tuck-in type of deals for the near-term,” Lobo said according to a Seeking Alpha transcript of the call.

 

TAGS: COVID-19
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