Medical device maker Stryker Corp. (SYK), Tuesday reported a 14 percent increase in profit for the first quarter, driven mainly by higher gross margins and revenues. Stryker's earnings for the quarter came in line with estimates, while sales surpassed expectations.
The results indicate a positive sign for the orthopedic industry, where growth had been stunted by the weak economy and high rate of unemployment. Patients have started to consider elective surgeries, such as hip and knee replacements, which they had postponed earlier.
Sales at reconstructive business, its largest by revenue, grew 5.2 percent to $958 million, including a 5.1 percent increase for knee products and 9 percent growth for trauma implant systems.
Sales of its MedSurg products, such as surgical equipment, endoscopic and communications systems, rose 7.5 percent to $821 million from a year ago. Revenue from neurotechnology and spine products advanced 12.4 percent to $382 million.
Stryker, which makes artificial hips and knees and surgical products, said first quarter net sales grew 7.2 percent to $2.16 billion from $2.02 billion last year. Twenty five Street analysts on a consensus estimated revenues of $2.12 billion for the quarter.
Gross margin, or gross profit as a percentage of sales, advanced to 67.2 percent from 65.8 percent last year.
Kalamazoo, Michigan-based Stryker's net earnings for the first quarter improved to $350 million or $0.91 per share from $307 million or $0.78 per share last year.
On an adjusted basis, net earnings rose to $0.99 per share from $0.90 per share last year. On average, twenty seven analysts polled by Thomson Reuters expected earnings of $0.99 per share for the quarter. Analysts' estimates typically exclude special items.
Curt Hartman, interim chief executive officer and chief financial officer, said, "The 7 percent revenue and 10 percent adjusted per share earnings growth reflect the momentum we are seeing on both a product and geographic level and have us on track to deliver on our financial commitments."
Looking forward, the company projects 2012 adjusted earnings to grow at double-digit levels over 2011. In 2012, the company anticipates charges to reduce earnings by about $0.22 per share.
Sales forecast for 2012, excluding expected impact of foreign currency and acquisitions, is projected at 2 to 5 percent.
SYK closed Tuesday's trading on the NYSE at $54.89, up $0.65 or 1.20%, on a volume of 2.1 million shares.
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