Stryker reports 60% bump in Q3 robotic total knees, continues K2M integration


Stryker experienced significant sales growth in the third quarter, despite a few roadblocks.

During the third quarter earnings call on Oct. 29, Chairman and CEO Kevin Lobo; Vice President of Strategy and Investor Relations Katherine Owen; and CFO Glenn Boehnlein outlined the big trends in robotics, spine and the integration of K2M.

The Mako Total Knee procedure increased 60 percent during the third quarter to 18,000 procedures; overall Mako utilization hit 27,000 procedures during the quarter. "Beyond the knee indication, we also continue to see strong demand for Mako hips, with 40 percent year-over-year growth," said Ms. Owen, based on the transcription from Seeking Alpha. "Looking ahead, our Mako order book remains robust and supports our expectation for continued share gains in both hips and knees."

She said the company still plans to make a global footprint with the robotic technology in China for multiple indications. The company has more than 100 robots placed outside of the United States and expects to continue adding systems and countries in the future.

Mr. Boehnlein touched on the company's growth as well, specifically in the spine business. Stryker finalized its K2M acquisition last year and remains in the integration process.

"Our spine business saw headwinds during the quarter driven by U.S. sales softness and price erosion," he said. "Our K2M integration efforts are ongoing and we are ahead of our plan relative to realized cost synergies. Related to our salesforce integration efforts, we are not ramping as quickly as expected, as cross selling, scaling of rep hires and whole inventory available is taking longer than expected."

Mr. Lobo said the company plans to accelerate its spine program next year, although he didn't give specifics on what that will look like. In the meantime, the company is focused on getting the inventory to scale for all Stryker salespeople on the spine side with K2M products. "We are very optimistic that we've made the right decisions," he said. "Our ability to forecast obviously was a bit off, but we're still growing, which I think is different than most other spine integrations."

Last week, Stryker finalized its acquisition of Mobius and Cardan Robotics, bringing robotic technology to spine. "In longer term, we believe there'll be an opportunity to further bolster our efforts to bring robotic spine to market."

The company remains confident that it is on a "good path for the future," according to Mr. Boehnlein, but expects 2019 combined sales growth in the low single digits.


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