How did 5 orthopedic device giants fare in the most recent fiscal period? 45 notes on Stryker, Medtronic & more

Written by Anuja Vaidya | June 02, 2016 | Print  |

The most recent financial quarter — the first quarter for most companies — was full of activity for medical device companies. The first few months of the year includes product launches, mergers and acquisitions as well as restructuring of businesses.

Here are 45 things to know about the most recent financial period for the largest orthopedic companies.


Stryker — Q1 of fiscal year 2016


1. Stryker reported net sales grew 4.9 percent to $2.5 billion from the first quarter of 2015.

2. Acquisitions, such as its acquisition of Physio-Control and SafeWire, did not significantly impact net sales in the quarter.

3. The company reported net earnings of $402 million, up 79.5 percent from the first quarter of 2015.

4. Reported net earnings include certain charges for the Rejuvenate and ABG II recall, amortization of intangible assets, legal matters, acquisition- and integration-related activities and restructuring-related activities.

5. Excluding the impact of these charges, gross profit margin in the first quarter 2016 increased from 67.9 percent to 68 percent and operating income margin increased in the quarter from 20.8 percent to 24.2 percent.

6. Net sales of Stryker's orthopedics business increased 3.3 percent from the same period last year to $1.1 billion.

7. The company's neurotechnology and spine businesses saw an increase of 12 percent in net sales from quarter one 2015, reaching $480 million.

8. Net sales of the company's MedSurg reached $958 million.

9. Stryker expects 2016 organic sales growth to be in the range of 5.5 percent to 6.5 percent.


10. Stryker also acquired Stanmore Implants from SIW Holdings in early May. Stanmore focuses on orthopedic oncology implants.


Zimmer Biomet — Q1 of fiscal year 2016


1. The company reported net sales of $1.9 billion in the first quarter of 2016, an increase of 67.8 percent on a reported basis and an increase of 1.2 percent on an adjusted pro forma, constant currency basis, as compared to the first quarter of 2015.  

2. Net earnings for the first quarter were $105.9 million on a reported basis and $404.3 million on an adjusted basis, representing an increase of 51.5 percent adjusted over the same period last year.  

3. Operating cash flow for the first quarter of 2016 was $265.2 million.

4. Zimmer Biomet's knees category saw net sales of $703.3 million. The hips category saw net sales of $467.9 million and the spine and CMF category saw net sales reach $141.2 million.

5. Zimmer Biomet used $415.5 million to repurchase 4.2 million shares.  

6. The company paid $44.6 million in dividends and declared a first quarter dividend of $0.24 per share in the first quarter of 2016.

7. The company increased its full-year 2016 constant currency revenue and adjusted earnings per share guidance.  

8. Zimmer Biomet now expects constant currency revenue for the full year 2016, as compared to adjusted pro forma 2015 revenue, to increase between 2 percent and 3 percent.


9. Previously, the company had expected full-year constant currency revenue to increase between 1.5 percent and 2.5 percent.


10. Most recently, Zimmer Biomet acquired Cayenne Medical, a company that develops and markets soft tissue repair and reconstruction solutions for conditions of the knee, shoulder and extremities.


Smith & Nephew — Q1 of fiscal year 2016


1. Revenue was up 4 percent in the first quarter to $1.1 billion, compared to the same period last year. The company had a 2 percent benefit from acquisitions.

2. Established markets revenue grew 6 percent; the United States led the way with an 8 percent revenue growth.


3. However, revenue in emerging markets declined 6 percent. Weakness in China offset double-digit growth in most other countries and there was a significant slow-down in tendering and sales in the oil-dependent Gulf states.

4. The knee implant revenue was up 9 percent in the quarter while hip implant revenue jumped 4 percent. Sports medicine and the advanced wound devices business grew 11 percent.

5. The trauma and extremities revenue was down 7 percent, with China and Gulf states decreases offsetting a strong showing in the United States. The advanced wound management business was flat.

6. U.S. revenue hit $563 million while the emerging markets reported $153 million. The other established markets revenue was reported as $421 million.

7. The company's largest market is the United States, where the quarter was successful. Smith & Nephew also reported sustainable improvements in the European market with four consecutive quarters of positive revenue growth last year.

8. The company continues to integrate Blue Belt Technologies' robotics-assisted orthopedic surgery business, which was acquired last year. Capital sales of the Navio system were included in the "other surgical business" segment, which reported 19 percent revenue growth.

9. Over the next year, Smith & Nephew's expectations for the group are unchanged from the previous report. "Overall, we continue to expect good underlying revenue growth in 2016 as we benefit from our investments in established businesses, acquisitions and pioneering technologies," said CEO Olivier Bohuon.


10. In February, OrthAlign entered into a multi-country distribution agreement with Smith & Nephew. Under the agreement, Smith & Nephew can distribute OrthAlign's KneeAlign technology as part of its portfolio in 21 countries.


Johnson & Johnson — Q1 of fiscal year 2016


1. Johnson & Johnson, the parent company of DePuy Synthes, reported sales of $17.5 billion, an increase of 0.6 percent compared to the first quarter of 2015.

2. The company's net earnings totaled $4.3 billion and the diluted earnings per share were $1.54.

3. The company's worldwide medical devices sales hit $6.1 billion, a decrease of 2.4 percent compared to the same period the year prior.


4. The company updated the 2016 full-year sales guidance to between $71.2 billion to $71.9 billion.


5. DePuy Orthopaedics, part of the DePuy Synthes Companies of Johnson & Johnson, recently acquired BioMedical Enterprises. BioMedical Enterprises manufactures Nitinol orthopedic implants for small bone fixation. Nitinol is a nickel-titanium alloy that provides dynamic continuous active compression.


Medtronic — Q4 of fiscal year 2016, as Medtronic ends its fiscal calendar year on the last Friday in April


1. The company reported fourth quarter worldwide revenue of $7.57 billion, compared to the $7.30 billion reported in the fourth quarter of 2015, a 4 percent increase, or 6 percent on a constant currency basis.

2. Fourth quarter 2016 non-GAAP net income was $1.79 billion.  

3. Medtronic's 2016 revenue totaled $28.83 billion, while 2016 net earnings were $3.54 billion.

4. U.S. revenue in the fourth quarter of 2016 reached $4.22 billion, which represented 56 percent of company revenue. Non-U.S. developed market revenue totaled $2.39 billion.

5. The company's minimally invasive therapies group saw worldwide revenue of $2.46 billion in the fourth quarter of 2016 — a 3 percent increase, or 6 percent on a constant currency basis, from the same period last year.

6. The restorative therapies group, which includes the spine, neuromodulation, surgical technologies and neurovascular, reported worldwide fourth quarter revenues of $1.88 billion.

7. Fourth quarter revenue for the spine business was $737 million, down 1 percent from the same period last year. Core spine and interventional spine both delivered improved growth. Full-year 2016 revenue from the spine business totaled $2.92 billion worldwide, down 2 percent from 2015.

8. BMP declined in the low-single digits on a constant currency basis. Mid-single digit growth in the United States only partially offset the continued loss of BMP sales in Europe as a result of a product hold.


9. In May, Medtronic signed two agreements with Mazor Robotics. The first is a two-stage, multi-faceted commercial agreement for co-promotion and development and distribution of Mazor products. The second is an equity investment Medtronic made in Mazor.


10. Medtronic also launched Spine Essentials in May at the Ambulatory Surgical Center Association annual meeting in Dallas. Spine Essentials is a platform of spinal implants and instruments intended to make cervical spine fusion procedures more efficient.


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