Kalamazoo, Michigan – July 24, 2018 – Stryker Corporation (NYSE:SYK) reported operating results for the second quarter of 2018:

Second Quarter Highlights

“We continue to execute on our strategy and delivered another strong quarter of organic sales growth, adjusted operating margin expansion and adjusted net earnings per diluted share,” said Kevin A. Lobo, Chairman and Chief Executive Officer.  “Our diversified and decentralized business unit model combined with strong talent and culture continue to serve us well. We have raised our guidance to reflect the strong results and positive outlook for the remainder of the year.”

Sales Analysis (percentages exclude ASC 606⁽²⁾ adoption impact)

Consolidated net sales of $3.3 billion increased 11.0% in the quarter and 9.9% in constant currency. Organic net sales increased 7.9% in the quarter including 9.0% from increased unit volume partially offset by 1.1% from lower prices.

Orthopaedics net sales of $1.2 billion increased 8.0% in the quarter and 6.6% in constant currency. Organic net sales increased 6.6% in the quarter including 8.9% from increased unit volume partially offset by 2.3% from lower prices.

MedSurg net sales of $1.5 billion increased 10.0% in the quarter and 9.2% in constant currency. Organic net sales increased 7.3% in the quarter including 7.6% from increased unit volume partially offset by 0.3% from lower prices.

Neurotechnology and Spine net sales of $0.6 billion increased 20.1% in the quarter and 18.5% in constant currency. Organic net sales increased 12.4% in the quarter including 13.3% from increased unit volume partially offset by 0.9% from lower prices.

Earnings Analysis

Reported net earnings of $452 million increased 15.6% in the quarter. Reported net earnings per diluted share of $1.19 increased 15.5% in the quarter. Reported net earnings include certain items, including charges for acquisition and integration-related activities, the amortization of purchased intangible assets, restructuring-related and other charges, compliance with European Medical Devices Regulation, Rejuvenate and other recall-related matters, regulatory and legal matters and tax matters. The effect of each of these matters on reported net earnings and net earnings per diluted share appear in the reconciliation of GAAP to non-GAAP financial measures. Excluding the aforementioned items increases gross profit margin from 65.9% to 66.1% in the quarter and increases operating income margin from 20.2% to 25.7%⁽¹⁾, including a 20 basis point favorable impact related to the adoption of the new revenue recognition standard⁽²⁾. Excluding the impact of the items described above, adjusted net earnings⁽⁴⁾ of $670 million increased 15.3% in the quarter. Adjusted net earnings per diluted share⁽³⁾ of $1.76 increased 15.0% in the quarter.

2018 Outlook

Based on our year-to-date performance we now expect 2018 organic net sales growth, which excludes the impact related to adoption of the new revenue recognition standard⁽²⁾, to be in the range of 7.0% to 7.5% and expect adjusted net earnings per diluted share⁽⁵⁾ to be in the range of $7.22 to $7.27. In 2018 our calculation of organic net sales growth excludes the impact of adopting ASC 606⁽²⁾, which includes primarily the reclassification of costs previously reported within selling expenses to a reduction of sales, which for 2017 was approximately $112 million ($28 million per quarter). For the third quarter we expect adjusted net earnings per diluted share⁽⁵⁾ to be in the range of $1.65 to $1.70. If foreign currency exchange rates hold near current levels, we expect net sales in the third quarter will be negatively impacted by approximately 0.9% and full year will be positively impacted by approximately 0.5% and net earnings per diluted share will be neutral in the third quarter and positively impacted by $0.05 in the full year.

 (1) A reconciliation of operating income to adjusted operating income, a non-GAAP financial measure, and other important information accompanies this press release.

(2) Consistent with previous press releases and financial disclosures, we adopted Accounting Standards Update 2014-09, Revenue From Contracts with Customers, as well as related amendments (ASC 606), issued by the Financial Accounting Standards Board on a modified retrospective basis, effective January 1, 2018. The impact of the adoption of ASC 606 related primarily to the reclassification of certain costs previously presented as selling, general and administrative expenses to net sales.

(3) A reconciliation of reported net earnings per diluted share to adjusted net earnings per diluted share, a non-GAAP financial measure, and other important information accompanies this press release.

(4) A reconciliation of reported net earnings to adjusted net earnings, a non-GAAP financial measure, and other important information accompanies this press release.

(5) A reconciliation of expected net earnings per diluted share to expected adjusted net earnings per diluted share for the third quarter and full year and other important information accompanies this press release.

Conference Call on Tuesday, July 24, 2018

As previously announced, Stryker will host a conference call on Tuesday, July 24, 2018 at 4:30 p.m., Eastern Time, to discuss the Company’s operating results for the quarter ended June 30, 2018 and provide an operational update.

To participate in the conference call dial (844) 826-0610 (domestic) or (973) 453-3249 (international) and be prepared to provide conference ID number 7449506 to the operator.

A simultaneous webcast of the call will be accessible via the Company’s website at www.stryker.com. The webcast will be archived on the Investors page of this site.

A recording of the call will also be available from 8:00 p.m., Eastern Time, on Tuesday, July 24, 2018, until 11:59 p.m., Eastern Time, on Tuesday, July 31, 2018. To hear this recording, you may dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter conference ID number 7449506.

Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; potential supply disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to the Rejuvenate and ABG II matter; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; changes in the competitive environment; our ability to integrate acquisitions; and our ability to realize anticipated cost savings. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Stryker is one of the world’s leading medical technology companies and, together with its customers, is driven to make healthcare better. The Company offers innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. More information is available at www.stryker.com.

For investor inquiries please contact:

Katherine A. Owen, Stryker Corporation, 269-385-2600 or katherine.owen@stryker.com

For media inquiries please contact:

Yin Becker, Stryker Corporation, 269-385-2600 or yin.becker@stryker.com

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July 26, 2018

BY JOHN MURAWSKI / July 24, 2018

RALEIGH – North Carolina’s largest health insurer is proposing a solution to control runaway health care costs: paying people to use cheaper doctors and procedures.

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WARSAW, Ind., July 27, 2018 /PRNewswire/ — Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended June 30, 2018.  The Company reported second quarter net sales of $2.008 billion, an increase of 3.0% over the prior year period, and an increase of 1.0% on a constant currency basis.  Diluted earnings per share for the second quarter were $0.90, flat when compared to the prior year period.  Second quarter adjusted diluted earnings per share were $1.92, a decrease of 7.7% from the prior year period.

Bryan Hanson, President and CEO of Zimmer Biomet, said:  “Our achievements during the second quarter, including the improvement of our global Knee and Hip sales performance and ongoing growth within the Asia Pacific region, validate our confidence in our full-year outlook.  To continue building on our year-to-date progress, we will remain focused on strategies to support long-term, sustainable revenue growth and value-creation.  These priorities include the completion of quality remediation activities, supply recovery efforts, new product introductions and the continuous enhancement of our culture.”

Net earnings for the second quarter were $185.0 million, and $392.0 million on an adjusted basis.  Operating cash flow for the second quarter was $393.3 million.  Free cash flow in the quarter was $300.6 million.

In the quarter, the Company paid $48.8 million in dividends and declared a second quarter dividend of $0.24 per share.

Guidance

The Company is updating its full-year 2018 revenue guidance.  For the full year, the Company now expects revenue growth to be in a range of 1.0% to 2.5% compared to the prior year, including the positive contribution of between 100 and 150 basis points of foreign currency translation.  Additionally, the Company now expects its full-year free cash flow to be in a range of $1.2 billion to $1.35 billion ⁽¹⁾.  All other prior guidance for 2018 remains unchanged.

Conference Call

The Company will conduct its second quarter 2018 investor conference call today, July 27, 2018, at 8:30 a.m. Eastern Time.  The audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at http://investor.zimmerbiomet.com.  It will be archived for replay following the conference call.

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (888) 312-9837 and entering conference ID 7278985.  For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com.  A digital recording will be available 24 hours after the completion of the conference call, from July 28, 2018 to August 27, 2018.  To access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820 and enter the Access Code ID 7278985.

Sales Tables

The following sales tables provide results by geography and product category, as well as the percentage change compared to the prior year quarter and six months, on both a reported basis and a constant currency basis.

 About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet.

Website Information

We routinely post important information for investors on our website, www.zimmerbiomet.com, in the “Investor Relations” section.  We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.  Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.  The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Reclassifications

Beginning this quarter, in our consolidated statements of earnings we have reclassified expenses that were previously recognized in a financial statement line item labeled, “Acquisition, quality remediation and other” to the financial statement line items of “Research and development”, “Selling, general and administrative”, “Intangible asset impairment”, “Acquisition, integration and related”, and “Quality remediation”.  Prior periods have been reclassified to conform to the current year presentation.

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Sales change information for the three and six-month periods ended June 30, 2018 are presented on a GAAP (reported) basis and on a constant currency basis.  Constant currency percentage changes exclude the effects of foreign currency exchange rates.  They are calculated by translating current and prior-period sales at the same predetermined exchange rate.  The translated results are then used to determine year-over-year percentage increases or decreases.

Net earnings and diluted earnings per share for the three and six-month periods ended June 30, 2018 are presented on a GAAP (reported) basis and on an adjusted basis.  Adjusted earnings and adjusted diluted earnings per share exclude the effects of inventory step-up; certain inventory and manufacturing-related charges including charges to discontinue certain product lines; intangible asset amortization; intangible asset impairment; acquisition, integration and related expenses; quality remediation expenses; certain litigation gains and charges; other charges; and any related effects on our income tax provision associated with these items; and other certain tax adjustments.

Free cash flow and projected free cash flow are additional non-GAAP measures that are presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.

Management uses non-GAAP financial measures internally to evaluate the performance of the business.  Additionally, management believes these non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company.  Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported income but that do not impact the fundamentals of our operations.  The non-GAAP measures enable the evaluation of operating results and trend analysis by allowing a reader to better identify operating trends that may otherwise be masked or distorted by these types of items that are excluded from the non-GAAP measures.  In addition, constant currency sales changes, adjusted operating profit, adjusted diluted net earnings per share and free cash flow are used as performance metrics in our incentive compensation programs.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects.   We generally use the words “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “assumes,” “guides,” “targets,” “forecasts,” “sees,” “seeks,” “should,” “could,” “intends” and similar expressions to identify forward-looking statements.   All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements.   Such statements are based upon the current beliefs and expectations of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially.  These risks, uncertainties and changes in circumstances include, but are not limited to:  our chief executive officer transition, including disruptions and uncertainties related thereto, the potential impact on our business and future strategic direction resulting from our transition to a new chief executive officer, and our ability to recruit and retain other key members of senior management; the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management’s attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality remediation efforts at our Warsaw North Campus facility; challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration (FDA) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; competition; pricing pressures; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries.  For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017.  Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us.  Forward-looking statements speak only as of the date they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Readers of this release are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate.  This cautionary statement is applicable to all forward-looking statements contained in this release.

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ROCKVILLE, Md., July 27, 2018 /PRNewswire/ — Healthcare market researcher Kalorama Information believes this week’s vote to repeal the medical device tax in the House could have real effects on a relatively slow-growing U.S. device market, though those effects might be long-term.  The United States device market revenues grow 22% slower than the global market, according to the firm’s report The Global Market for Medical Devices, 8^th Edition.  The firm said that although the largest component of the market is in the United States, the majority of sales are non-US, and considerable future growth is occurring in other markets.

“Repeal won’t immediately lead to a spike to revenues, but we do suspect some revisited R&D budgets and more interest from venture capital in medical devices,” said Bruce Carlson.  “That in turn could fuel investment which may lead to new products, and new innovations boost markets.”

The same report said the market for medical devices was estimated at $386.1 billion in 2016.  With average 3.8% growth, the market will grow to $483.8 billion in 2022.  The United States is the largest medical device market with 47% of the global market and over $180 billion dollars in revenue.  Growth in device sales are expected to be at 3.1% over the next five years.  The use of technologically superior devices combined with a steady replacement rate to remain competitive in the industry will be significant factors for growth.

Another development that could be even more helpful for the U.S. device tax repeal – aging population with more healthcare needs and shifting many reusable devices for single-use devices due to risk mitigation strategies to reduce healthcare acquired infections.

As part of the Affordable Care Act, the medical device industry was taxed 2.3% on medical devices products sold.  The healthcare market researcher said that while there are other challenges U.S. devicemakers face, such as limited reimbursement, recent increases in registration fees and FDA approval processes, the tax was an additional burden and its repeal will be welcomed by the industry.

Beyond the market dynamic, Kalorama believes medical devices also have impacts on the general healthcare economy and patient outcomes.  While medical device spending has grown, as total spending has, the price of most medical devices have not risen as fast as other medical services and products.  The cost of medical devices has remained constant as a share of total national health expenditures.  During much of the past fifteen years, a significant driver of changed medical practice has been the development of new medical devices from stents to implantable defibrillators to artificial hips and knees to new imaging modalities to new diagnostic tests to new surgical tools.

About Kalorama Information

Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama’s website and are also available on www.marketresearch.com and www.profound.com.

We routinely assist the media with healthcare topics. Follow us on Twitter, LinkedIn and our blog on our company website: https://www.kaloramainformation.com/.

Press Contact: 

Bruce Carlson 

212 807 2262      

bcarlson@marketresearch.com

SOURCE Kalorama Information

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