Stryker Corporation (SYK - Free Report) reported second-quarter 2020 adjusted earnings per share (EPS) of 64 cents, which beat the Zacks Consensus Estimate of 62 cents by 3.2%. However, the bottom line plunged 67.7% year over year owing to the impact of the COVID-19 pandemic.
The Michigan-based medical device company reported revenues of $2.76 billion, which surpassed the Zacks Consensus Estimate by 5.3%. However, the top line declined 24.3% on a year-over-year basis and 23.5% at constant currency (cc).
Revenues by Geography
Revenues in United States came in at $1.97 billion, down 27.1% year over year. International sales declined 16.4% to $798 million.
Orthopaedic: In the quarter under review, revenues in the segment totaled $894 million, down 29.8% year over year. The segment’s revenues declined 29.3% at cc. The downside can be attributed to weak performance at the Knees, Hips and Trauma and Extremities sub segments.
MedSurg: This segment reported sales of $1.32 billion, down 17.3% year over year. Sales at the segment decreased 16.4% at cc. Per management, the segment declined 29.3% organically in the reported quarter, owing to weak Instruments, Endoscopy and Medical performances.
Neurotechnology and Spine: Sales in the segment amounted to $546 million, down 29.6% year over year and 28.9% at cc. Organically, the segment witnessed a decline of 29.9%. Per management, the downside was can be attributed to a slowdown in procedures in the second quarter in all the neurotech product lines.
In the second quarter, adjusted gross profit totaled $1.58 billion, down 34.1% from the year-ago quarter. Adjusted gross margin was 57.3%, down 850 basis points (bps).
Adjusted operating income amounted to $345 million, down 63.5% from the prior-year quarter. Adjusted operating margin was 12.5%, down 1340 bps.
Cash and cash equivalents came in at $6.54 billion, up 50.8% from the year-end 2019.
Cumulative net cash provided by operating activities in the second quarter were $1.21 billion, reflecting an increase of 46.4% from the year-ago period.
Due to the continued uncertainty surrounding the magnitude and duration of the COVID-19 pandemic, and the uncertain timing of global recovery and economic normalization, the company is unable to project the overall impact on its operations and financial results. Consequently, the company hasn’t provided third-quarter or full-year 2020 organic sales or earnings outlook.
Stryker exited second-quarter 2020 on a strong note, with both earnings and revenues surpassing the Zacks Consensus Estimate. However, the company witnessed weak performance across its segments. Decline in international sales was also a dampener.
Moreover, Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space also remains a concern. Further, contraction in both gross and operating margins in the reported quarter remains a headwind.
Although the second quarter results were negatively affected by the pandemic, the company remains committed to continued advancement of its new product pipelines. Per management, the company is poised to capitalize on the broader resumption of deferrable surgeries.
Stryker currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , PerkinElmer, Inc. (PKI - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion outpaced the consensus mark by 0.1%.
PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.
West Pharmaceuticals reported second-quarter 2020 adjusted EPS of $1.25, outpacing the Zacks Consensus Estimate of 91 cents. Revenues of $527.2 million surpassed the consensus estimate by 6.9%.
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