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01/10 16:16
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted strong financial performance with 10.1% organic sales growth and a 13.6% increase in adjusted EPS. Despite the loss from the spinal implants business sale, the company has a positive outlook with strong demand in the ortho market and successful integration of Inari. Management's optimistic guidance and positive pricing strategy further support a positive sentiment. The lack of share repurchase or dividend announcements is a minor downside, but overall, the strong growth and positive outlook indicate a likely positive stock price movement.
Organic Sales Growth 10.1% growth, compared to 10% in Q1 2024, driven by strong demand across product portfolio despite one less selling day.
Adjusted EPS $2.84, reflecting a 13.6% increase from Q1 2024, driven by strong sales performance and margin expansion.
Adjusted Gross Margin 65.5%, favorable by 190 basis points compared to Q1 2024, driven by manufacturing cost improvements, positive pricing, and business mix.
Adjusted Operating Margin 22.9%, 100 basis points favorable to Q1 2024, driven by gross margin improvements, somewhat offset by higher SG&A spending.
Adjusted Other Income and Expense $73 million, $24 million higher than Q1 2024, driven by higher interest expense from recent debt issuances.
Cash Flow from Operations $250 million year-to-date, reflecting net earnings and seasonal cash outflows, along with one-time costs associated with the Inari deal.
Effective Tax Rate 13.7%, reflecting geographic mix and certain discrete tax items.
Mako Spine and Shoulder Launch: Stryker is on track for the full U.S. commercial launch of Mako Spine in the second-half of this year and Mako Shoulder in the first quarter of 2026.
Mako 4 Smart Robotic System: Launched next generation Mako 4 smart robotic system featuring improved visibility, smaller OR footprint, and better integration with Q guidance system.
LIFEPAK 35 Defibrillator: Continues to experience robust demand with strong order book; anticipated launch in additional international markets including Europe and Japan later this year.
Pangea Plating System: Continues to drive strong growth; expected launch in Australia and Canada this year and in Japan in the first-half of 2026.
International Market Growth: Healthy growth across international markets, particularly in Australia, New Zealand, Japan, and Europe, seen as a significant catalyst for future growth.
Organic Sales Growth: Achieved organic sales growth of 10.1% in Q1 2025, with double-digit growth in MedSurg & Neurotechnology and high-single-digit growth in orthopedics.
Adjusted EPS Growth: Quarterly adjusted EPS of $2.84, reflecting 13.6% growth compared to Q1 2024, driven by strong sales performance and margin expansion.
Operating Margin Expansion: Operating margin expansion of approximately 100 basis points expected despite negative impacts from tariffs and acquisition dilution.
Acquisition of Inari Medical: Completed acquisition of Inari Medical; integration is progressing well and is expected to enhance Stryker's vascular division.
Sale of U.S. Spinal Implants Business: Completed the sale of the U.S. Spinal Implants business, with results no longer included in operating results from Q2 2025.
Tariff Impact: Estimated tariff impact of approximately $200 million in 2025 due to announced and effective tariffs, including a 10% baseline, product-specific, and geographic-specific tariffs.
Supply Chain Challenges: Supply disruptions affecting the medical business, which are expected to linger through Q2.
Debt and Interest Expense: Increased interest expense related to debt issuances in September 2024 and January 2025, impacting overall financial performance.
Foreign Exchange Impact: Unfavorable foreign currency impact of 0.9% on sales, with an estimated negative impact of $0.00 to $0.10 on adjusted EPS if current rates hold.
Loss of Spinal Implants Business: The sale of the U.S. spinal implants business will result in a loss of contributions for nine months, affecting overall sales and performance.
Acquisition of Inari Medical: Completed the acquisition of Inari Medical at the end of February 2025, with integration proceeding well.
Launch of Mako Spine and Shoulder: On track for full U.S. commercial launch of Mako Spine in the second-half of 2025 and Mako Shoulder in Q1 2026.
LIFEPAK 35: Continues to drive strong demand and sales, with plans to launch in additional international markets later this year.
Pangea Plating System: Expected to release in Australia and Canada in 2025 and in Japan in the first-half of 2026.
Full-Year Organic Sales Growth: Anticipate organic sales growth of 8.5% to 9.5% for 2025.
Adjusted EPS Guidance: Expect adjusted EPS in the range of $13.20 to $13.45 for 2025.
Operating Margin Expansion: Guidance implies approximately 100 basis points operating margin expansion despite negative impacts from tariffs and acquisition dilution.
Tariff Impact: Estimating a tariff impact of approximately $200 million in 2025, with measures in place to offset costs.
Effective Tax Rate: Expect full-year effective tax rate to be in the range of 15% to 16% for 2025.
Adjusted Other Income and Expense: Expect approximately $430 million for 2025, reflecting additional interest expense from the Inari acquisition.
Share Repurchase Program: Stryker Corporation has not announced any share repurchase program during the call.
Dividend Program: No discussions regarding a dividend program were mentioned in the call.
The earnings call highlights strong financial performance with adjusted margin improvements, robust cash flow, and a positive outlook on procedural volumes and capital markets. Despite some supply chain disruptions, the company maintains a strong growth trajectory, supported by new product launches and strategic acquisitions. The Q&A section reveals healthy market conditions and confidence in sustaining growth, albeit with some management evasiveness on long-term targets. Overall, the positive guidance and strategic initiatives suggest a positive stock price movement.
The earnings call reveals strong financial performance, with record new system additions for Mako and a 19% growth in U.S. Endoscopy. The company is on track with product launches and international expansion, despite tariff impacts. Optimistic EPS guidance and operational strength offset uncertainties, and shareholder returns are likely to be positive. Overall, the sentiment leans towards a positive stock price movement.
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