Stryker (Kalamazoo, MI) continues to feel the heat from last year's metal-on-metal hip implant recalls. Ongoing costs associated with this and other challenges dampened positive sales in Q2. In total, the company reported a 34.5% profit drop.

For its second quarter, net sales increased 5.5% to $2.2 billion. However, Stryker was forced to pay out $170 million to cover revision surgeries and lawsuits associated with Its ABG II and Rejuvenate hip implants. This led to reduced profits of $213 million.

As of now, the company has spent $400 million to cover fallout from both these now-recalled hip implants. This is $10 million more than the company estimated it would pay out as part of a worst-case scenario. Attendant changes from the recalls have sucked up revenue gains of 5%, 1.3% and 5.5% over the company's past quarters.

While this is bad news for Stryker, sales growth has been strong. In its second quarter, the company's reconstructive device segment landed $979 million in sales, a 5.6 % increase from Q2 of 2012. Surgical technology also did well, pulling in $819 million in a 4.2% increase. If recalls and other unpleasantries are removed from Stryker's balance sheet, net profit would have been $380 million, a 1.3% increase.

The company's European business also showed a significant turnaround. While the company did not provide information on European revenue, international sales increases from $722 million to $754 million over the year, representing a 4% jump.

"Europe being negative sales over the past few quarters finally turned to positive sales this quarter. The market in Europe has is the same challenging market that frankly it has been over the last couple of years. We are really pleased with our performance in the U.K, in France. Spain has really turned the corner," stated Kevin Lobos, CEO of Stryker.

A spokesperson for Stryker stated that the company doesn't provide international revenue figures based on geographic regions.

When questioned by one analyst at a press conference, Lobo stated that the company's strong international hip and knee performance was possible through new leadership. Over the past year, the company placed an increased emphasis on bringing in new leaders to manage its European segments.

While the company continues to be mired by ongoing legal expenses and settlement costs, the company did adjust the lower end of its revenue forecast upwards. For the full year, the company expects sales growth of 4% to 5.5%. If the company stays on track, this would equal $9.2 billion in revenue for the year.