01—Abstract
Summary
Summary of the 10-Q filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Stryker Corporation reported a strong first quarter for 2024, demonstrating robust top-line growth and improved profitability.
Net sales increased by 9.7% year-over-year to $5.24 billiona, driven by solid performance in both the MedSurg and Neurotechnology and Orthopaedics and Spine segments. This growth was primarily attributed to increased unit volume across all businesses, with pricing also contributing positively. The company also achieved a significant increase in net earnings, rising 33.1% to $788 million, with diluted EPS growing to $2.05 from $1.54 in the prior year period.
The company's operational efficiency improved, with gross profit margin increasing to 63.6%b and operating income margin expanding to 18.5%. This was supported by favorable volume dynamics and easing inflationary pressures on manufacturing costs.
Stryker also made a strategic acquisition of SERF SAS for $246 millionc, strengthening its Joint Replacement business. Despite ongoing macroeconomic uncertainties, including inflation and higher interest rates, Stryker's financial position remains strong, with healthy liquidity and a positive outlook for continued growth.
02—Key points
Key Highlights
- Consolidated net sales increased 9.7% to $5.24 billion in Q1 2024 compared to $4.78 billion in Q1 2023.
- Net earnings surged by 33.1% to $788 million, with diluted EPS increasing to $2.05 from $1.54 year-over-year.
- Gross profit margin improved to 63.6% from 63.1% in the prior year period, driven by favorable volumes.
- Operating income margin expanded to 18.5% from 15.4% in Q1 2023, reflecting improved operational efficiency.
- The company acquired SERF SAS for $246 million, enhancing its Orthopaedics and Spine segment, specifically in Joint Replacement.
- MedSurg and Neurotechnology segment sales grew 11.5% (12.0% in constant currency), while Orthopaedics and Spine segment sales grew 7.5% (8.0% in constant currency).
- Cash provided by operating activities was $204 million, a decrease from $445 million in the prior year, mainly due to working capital timing.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Stryker Corp kept $0.15.
- Revenue$5.24B100.0%
- Cost of revenue−$1.91B36.4%
- Gross profit$3.33B63.6%
- Operating costs−$2.36B45.0%
- Operating income$972.0M18.5%
- Interest, other & tax−$184.0M3.5%
- Net income$788.0M15.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 1, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $5.24B$4.78B | +9.7% |
| Cost of Revenue | $1.91B$1.76B | +8.4% |
| Gross Profit | $3.33B$3.02B | +10.5% |
| R&D Expenses | $368.00M$339.00M | +8.6% |
| SG&A Expenses | $1.84B$1.78B | +3.1% |
| Operating Expenses | $2.36B$2.28B | +3.5% |
| Operating Income | $972.00M$735.00M | +32.2% |
| Net Income | $788.00M$592.00M | +33.1% |
| EPS (Basic) | $2.07$1.56 | +32.7% |
| EPS (Diluted) | $2.05$1.54 | +33.1% |
| Shares Outstanding (Basic) | 380.40M379.00M | +0.4% |
| Shares Outstanding (Diluted) | 385.10M383.20M | +0.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Stryker's net sales growth in the first quarter of 2024?
Stryker's net sales grew by 9.7% in the first quarter of 2024, primarily driven by an increase in unit volume across both its MedSurg and Neurotechnology and Orthopaedics and Spine businesses. Pricing also contributed positively to the growth.
How did the acquisition of SERF SAS impact Stryker's financial results in Q1 2024?
Stryker acquired SERF SAS for $246 million on March 20, 2024. This acquisition strengthens the company's Joint Replacement business within its Orthopaedics and Spine segment. The financial impact of the acquisition is reflected in the investing activities section of the cash flow statement, showing increased cash used in investing activities for Q1 2024.
What is Stryker's outlook regarding macroeconomic factors such as inflation and interest rates?
Stryker acknowledges ongoing macroeconomic challenges, including increased inflationary pressures, higher interest rates, and supply chain disruptions. The company anticipates these conditions may affect customer order patterns and capital product deal mixes. However, they are also experiencing some relief from inflationary pressures on manufacturing costs.
How did Stryker's profitability metrics change in Q1 2024 compared to Q1 2023?
Stryker demonstrated improved profitability in Q1 2024. Gross profit margin increased to 63.6% from 63.1%, and operating income margin expanded significantly to 18.5% from 15.4%. This led to a substantial increase in net earnings, up 33.1% year-over-year.
06—Continue