Summary
Stryker Corporation's 2017 10-K filing reveals a company demonstrating robust growth and strategic acquisitions in the medical technology sector. Total net sales increased by 9.9% to $12.44 billion, driven by strong performance in the MedSurg and Orthopaedics segments, with organic sales growth of 8.2% excluding acquisitions and currency impacts. The company's strategic focus on acquisitions is evident with the completion of NOVADAQ and the announced agreement to acquire Entellus Medical, underscoring its commitment to expanding its innovative product portfolio and market reach. While the company reported a decrease in net earnings to $1.02 billion from $1.65 billion in the prior year, largely impacted by a significant one-time tax expense related to the Tax Cuts and Jobs Act of 2017, the underlying operational performance remains strong. Adjusted net earnings per diluted share saw a healthy increase of 11.9%. Investors should note the ongoing legal proceedings, particularly related to the Rejuvenate and ABG II hip stems recall, which continues to represent a significant financial contingency, though the company has established reserves for these matters.
Financial Highlights
54 data points| Revenue | $12.44B |
| Cost of Revenue | $4.27B |
| Gross Profit | $8.18B |
| R&D Expenses | $787.00M |
| SG&A Expenses | $4.55B |
| Operating Expenses | $5.88B |
| Operating Income | $2.30B |
| Interest Expense | $247.00M |
| Net Income | $1.02B |
| EPS (Basic) | $2.73 |
| EPS (Diluted) | $2.68 |
| Shares Outstanding (Basic) | 374.00M |
| Shares Outstanding (Diluted) | 380.10M |
Key Highlights
- 1Total net sales grew by 9.9% to $12.44 billion in 2017, with organic sales growth of 8.2% (excluding acquisitions and currency impacts).
- 2The MedSurg segment was the largest contributor to net sales, increasing by 13.6% year-over-year, followed by Orthopaedics (6.6% growth) and Neurotechnology and Spine (8.2% growth).
- 3Stryker completed two significant acquisitions in 2017: NOVADAQ Technologies Inc. for approximately $716 million and announced a definitive merger agreement to acquire Entellus Medical, Inc. for approximately $662 million.
- 4Net earnings decreased to $1.02 billion from $1.65 billion in 2016, primarily due to a substantial income tax expense related to the Tax Cuts and Jobs Act of 2017.
- 5Despite the reported net earnings decrease, adjusted net earnings per diluted share grew by a healthy 11.9%, demonstrating strong operational performance.
- 6The company continues to invest in research and development, with R&D expenses representing 6.3% of net sales in 2017, highlighting a commitment to innovation.
- 7Stryker is managing significant contingent liabilities related to the Rejuvenate and ABG II Modular-Neck hip stems recall, with an estimated range of probable loss between $2.07 billion and $2.31 billion.