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Stryker reported 1Q20 orthopedic revenue of USD $1,793.7 million, -2.9% vs. 1Q19. The company’s orthopedic business suffered only modest impact from COVID-19 in the first quarter. Knee sales, particularly in the U.S., held up well compared to competitors as Stryker continued to take market share on the strength of Mako and cementless implants. Like all capital equipment in the market, Mako sales have slowed since late March, but no orders have been canceled outright. Stryker is confident that its Flex Financial team can continue to make Mako a viable purchase for hospitals and ASCs. Trauma sales are more insulated from deferral than other orthopedic procedures, but sales in the segment were hampered by fewer people driving automobiles and working at construction sites due to stay at home orders across the U.S.
For April, the company’s U.S. orthopedic sales declined approximately -65%. Stryker management expects the recovery of deferred procedures to come in waves, with furloughed employees who still have health insurance being some of the first patients to return. Stryker Chairman and CEO Kevin Lobo does not foresee any additional delays for the return of joint replacement procedures, pointing out the revenue-generating ability of those procedures for hospitals. Stryker leadership also pushed back on predictions that the recovery from COVID-19 would meaningfully accelerate the growth of ASCs. They noted that most of the 300 ASCs in the U.S. that perform knee and hip procedures are already operating at full capacity, and that spine cases in that setting tend to be low in complexity.
Finally, Stryker is proceeding with integration efforts of Wright Medical after Wright shareholders approved the deal in late April. The companies are continuing to work through closing conditions, with an expected close in 3Q20.
“Hospitals are very motivated to do our procedures. If you think about orthopedics and spine procedures, they are moneymakers for hospitals. The hospitals treating coronavirus patients now are bleeding in their P&Ls. The hospital CEOs and surgeons I’ve spoken to are all absolutely gearing up to start bringing back their patients.” – Kevin Lobo, Stryker Chairman and CEO
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $924.0 | $952.6 | ($28.6) | (3%) |
| Knees | $508.7 | $515.8 | ($7.2) | (1.4%) |
| Hips | $375.2 | $395.7 | ($20.5) | (5.2%) |
| Extremities | $40.1 | $41.1 | ($0.9) | (2.3%) |
| Spine | $248.5 | $257.6 | ($9.1) | (3.5%) |
| Trauma | $356.4 | $358.6 | ($2.3) | (0.6%) |
| Sports Medicine | $136.3 | $144.5 | ($8.2) | (5.7%) |
| Orthobiologics | $58.1 | $59.5 | ($1.4) | (2.4%) |
| Other (CMF) | $70.4 | $73.8 | ($3.4) | (4.6%) |
| Total | $1,793.7 | $1,846.6 | ($52.9) | (2.9%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,363.2 | $1,366.5 | ($3.3) | (0.2%) |
| Ex-US | $430.5 | $480.1 | ($49.6) | (10.3%) |
| EMEA | $233.2 | $249.3 | ($16.1) | (6.5%) |
| Asia Pacific | $170.4 | $203.1 | ($32.7) | (16.1%) |
| Other | $26.9 | $27.7 | ($0.8) | (2.9%) |
| Total | $1,793.7 | $1,846.6 | ($52.9) | (2.9%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $3,588.0 | |
| Cost of Sales | $1,257.0 | 35% |
| Selling and Admin | $1,330.0 | 37.1% |
| R & D | $254.0 | 7.1% |
| Other | $254.0 | 7.1% |
| Net Earnings | $493.0 | 13.7% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
Stryker reported 1Q20 orthopedic revenue of USD $1,793.7 million, -2.9% vs. 1Q19. The company’s orthopedic business suffered only modest impact from COVID-19 in the first quarter. Knee sales, particularly in the U.S., held up well compared to competitors as Stryker continued to take market share on the strength of Mako and cementless...
Stryker reported 1Q20 orthopedic revenue of USD $1,793.7 million, -2.9% vs. 1Q19. The company’s orthopedic business suffered only modest impact from COVID-19 in the first quarter. Knee sales, particularly in the U.S., held up well compared to competitors as Stryker continued to take market share on the strength of Mako and cementless implants. Like all capital equipment in the market, Mako sales have slowed since late March, but no orders have been canceled outright. Stryker is confident that its Flex Financial team can continue to make Mako a viable purchase for hospitals and ASCs. Trauma sales are more insulated from deferral than other orthopedic procedures, but sales in the segment were hampered by fewer people driving automobiles and working at construction sites due to stay at home orders across the U.S.
For April, the company’s U.S. orthopedic sales declined approximately -65%. Stryker management expects the recovery of deferred procedures to come in waves, with furloughed employees who still have health insurance being some of the first patients to return. Stryker Chairman and CEO Kevin Lobo does not foresee any additional delays for the return of joint replacement procedures, pointing out the revenue-generating ability of those procedures for hospitals. Stryker leadership also pushed back on predictions that the recovery from COVID-19 would meaningfully accelerate the growth of ASCs. They noted that most of the 300 ASCs in the U.S. that perform knee and hip procedures are already operating at full capacity, and that spine cases in that setting tend to be low in complexity.
Finally, Stryker is proceeding with integration efforts of Wright Medical after Wright shareholders approved the deal in late April. The companies are continuing to work through closing conditions, with an expected close in 3Q20.
“Hospitals are very motivated to do our procedures. If you think about orthopedics and spine procedures, they are moneymakers for hospitals. The hospitals treating coronavirus patients now are bleeding in their P&Ls. The hospital CEOs and surgeons I’ve spoken to are all absolutely gearing up to start bringing back their patients.” – Kevin Lobo, Stryker Chairman and CEO
Revenue Data
All revenue data is provided in USD millions unless otherwise noted. Sales and growth rates are estimated on an as-reported basis.
Segment Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| Joint Replacement | $924.0 | $952.6 | ($28.6) | (3%) |
| Knees | $508.7 | $515.8 | ($7.2) | (1.4%) |
| Hips | $375.2 | $395.7 | ($20.5) | (5.2%) |
| Extremities | $40.1 | $41.1 | ($0.9) | (2.3%) |
| Spine | $248.5 | $257.6 | ($9.1) | (3.5%) |
| Trauma | $356.4 | $358.6 | ($2.3) | (0.6%) |
| Sports Medicine | $136.3 | $144.5 | ($8.2) | (5.7%) |
| Orthobiologics | $58.1 | $59.5 | ($1.4) | (2.4%) |
| Other (CMF) | $70.4 | $73.8 | ($3.4) | (4.6%) |
| Total | $1,793.7 | $1,846.6 | ($52.9) | (2.9%) |
Geographic Sales
| 1Q20 | 1Q19 | $ Chg | % Chg | |
|---|---|---|---|---|
| US | $1,363.2 | $1,366.5 | ($3.3) | (0.2%) |
| Ex-US | $430.5 | $480.1 | ($49.6) | (10.3%) |
| EMEA | $233.2 | $249.3 | ($16.1) | (6.5%) |
| Asia Pacific | $170.4 | $203.1 | ($32.7) | (16.1%) |
| Other | $26.9 | $27.7 | ($0.8) | (2.9%) |
| Total | $1,793.7 | $1,846.6 | ($52.9) | (2.9%) |
Earnings
| Amt | % of Sales | |
|---|---|---|
| Sales | $3,588.0 | |
| Cost of Sales | $1,257.0 | 35% |
| Selling and Admin | $1,330.0 | 37.1% |
| R & D | $254.0 | 7.1% |
| Other | $254.0 | 7.1% |
| Net Earnings | $493.0 | 13.7% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
