Summary
Stryker Corporation (SYK) reported its first-quarter financial results for the period ending March 30, 2014. The company experienced a net sales increase of 5.3% year-over-year, reaching $2.3 billion. However, net earnings significantly declined by 77.0% to $70 million, or $0.18 per diluted share, compared to $304 million, or $0.79 per diluted share, in the prior year. This substantial decrease in profitability was largely attributed to a significant charge of $340 million related to the Rejuvenate and ABG II modular-neck hip stem recalls, a substantial increase in Selling, General and Administrative (SG&A) expenses primarily driven by acquisition integration costs and recall-related expenses, and higher Research, Development, and Engineering (R&D) investments.
Financial Highlights
51 data points| Revenue | $2.31B |
| Cost of Revenue | $776.00M |
| Gross Profit | $1.53B |
| R&D Expenses | $150.00M |
| SG&A Expenses | $859.00M |
| Operating Expenses | $1.40B |
| Operating Income | $131.00M |
| Net Income | $70.00M |
| EPS (Basic) | $0.19 |
| EPS (Diluted) | $0.18 |
| Shares Outstanding (Basic) | 378.20M |
| Shares Outstanding (Diluted) | 382.60M |
Key Highlights
- 1Net sales grew by 5.3% to $2.31 billion, driven by increased unit volume and contributions from recent acquisitions.
- 2Net earnings saw a sharp decrease of 77.0% to $70 million, primarily impacted by a $340 million charge related to hip implant recalls.
- 3Diluted EPS fell to $0.18 from $0.79 in the prior year, largely due to the significant recall charge and increased operating expenses.
- 4Selling, General, and Administrative (SG&A) expenses increased significantly by 31.6% due to acquisition integration costs, recall expenses, and regulatory matters.
- 5Research, Development, and Engineering (R&D) expenses increased by 16.3% as the company continued to invest in new technologies and products.
- 6The company completed the acquisition of Patient Safety Technologies, Inc. (PST) for $120 million and announced its intent to acquire Berchtold Holding, AG, which closed in April 2014 for approximately $172 million.
- 7Cash flow from operations was $206 million, a decrease from $236 million in the prior year, impacted by the recall charges and changes in working capital.