Recall charges drag down Stryker's strong Q4 sales
|Stryker CEO Kevin Lobo|
For Stryker ($SYK), the good news is it brought in $2.3 billion in fourth-quarter revenue, good for 5.5% growth over the same period in 2011. The downside: Charges tied to device recalls and restructuring pulled net income down 32.7% to $270 million.
On the quarter, Stryker spent about $133 million to deal with the fallout over Rejuvenate and ABG II--all-metal hip implants yanked off the market last year--and the company said earlier this month that the cost of settling suits and covering surgeries could balloon to $390 million before the issue's wrapped up.
But on the sales side, the Kalamazoo, MI, device giant has much to celebrate in Q4. Stryker reported revenue growth in all three of its business units, led by a 9.7% jump in neurotechnology and spine, which brought in $414 million, and a somewhat surprising 6.7% leap for the company's reconstructive business, which contributed about $1 billion.
Stryker's trauma and extremities unit grew 10.2% to $278 million, reflecting the company's recent commitment to build up its foot-and-ankle offerings. Even the beleaguered hip business had a nice quarter, posting 3.6% growth of $325 million.
The devicemaker is rosy about 2013, too. Stryker is projecting annual growth of between 3% and 5.5%, buoyed along by the planned integration of China's Trauson Holdings, which Stryker has agreed to buy for $764 million. Stryker expects that deal to close next quarter, and once it does, the company will own China's largest orthopedic device manufacturer, giving it greater access to a huge market with an aging population.
And there's certainly room for overseas expansion. Despite overall revenue growth in the reconstructive department, international sales for Stryker's hip, knee and extremities devices all declined in the fourth quarter. As CEO Kevin Lobo said in announcing the Trauson deal, jumping into China with an already established brand will help the devicemaker cash in quickly.
- read Stryker's full results