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Stryker (SYK) Q2 Earnings and Revenues Surpass Estimates

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Stryker Corporation (SYK - Free Report) reported second-quarter 2021 adjusted earnings per share (EPS) of $2.25, which surpassed the Zacks Consensus Estimate of $2.12 by 6.1%. The bottom line improved significantly from the year-ago figure of 64 cents.

GAAP EPS in the quarter was $1.55, against the year-ago quarter’s loss of 22 cents.

Revenue Details

The Michigan-based medical device company reported revenues of $4.29 billion, which outpaced the Zacks Consensus Estimate by 4.1%. The top line surged 55.4% on a year-over-year basis and 51.8% at constant currency (cc).

Revenues by Geography

Revenues in United States were $3.10 billion, up 57.7% year over year. International sales were up 49.7% to $1.19 billion.

Segmental Analysis

Orthopaedics: In the quarter under review, revenues in the segment totaled $1.63 billion, up 82.3% year over year. The segment’s revenues rose 77.9% at cc. The upside can be attributed to increase in elective procedures, particularly with respect to the Knees, Trauma and Extremities sub segments, and strong demand for Mako.

Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote

MedSurg: This segment reported sales of $1.75 billion, which improved 32.3% on a year-over-year basis. Sales at the segment rose 29.7% at cc. Per management, the segment decreased 1.6% organically in the reported quarter.

Neurotechnology and Spine: Sales in the segment amounted to $918 million, up 66.9% year over year and 62.4% at cc. Per management, the upside was driven by double-digit growth in all four of the company’s neurotech businesses.


In the second quarter, adjusted gross profit totaled $2.83 billion, up 78.9% from the year-ago quarter. Adjusted gross margin was 66%, up 870 basis points (bps).

Total operating expenses were $2.04 billion, up 30.1% from the year-ago quarter.

Adjusted operating income amounted to $1.11 billion, compared to $345 million in the prior-year quarter. Adjusted operating margin was 25.9%, up 1340 bps.

Financial Update

The company exited the second quarter with cash and cash equivalents of $2.24 billion, remaining flat on a sequential basis.

Cumulative net cash provided by operating activities in the second quarter were $1.33 billion, compared with $1.21 billion in the year-ago period.

2021 Outlook

The company will continue to track and evaluate the impact of the COVID-19 pandemic on its operations and financial results. With the ongoing recovery from the pandemic, Stryker anticipates organic net sales growth between 9% and 10% from that of 2019.

Adjusted EPS is projected in the band of $9.25 to $9.40 (which includes the impact of the buyout of Wright Medical for the full year). The Zacks Consensus Estimate for the same is pegged at $9.18.

Wrapping Up

Stryker exited second-quarter 2021 on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. The company witnessed strong performance across all three segments. Growth in international sales is an added positive. Expansion in both gross and operating margins in the reported quarter buoys optimism.

Per management, it anticipates the business momentum gained during the first half of 2021 to sustain, with the Wright Medical buyout that is advancing ahead of its expectations.

However, Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space also remains a concern.

Zacks Rank

Stryker currently carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks, which are expected to report earnings soon, are AMN Healthcare Services Inc. (AMN - Free Report) , Catalent, Inc. (CTLT - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus mark for second-quarter revenues stands at $829.4 million.

The Zacks Consensus Estimate for Catalent’s fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.04. The consensus mark for fiscal fourth-quarter revenues stands at $1.13 billion.

The Zacks Consensus Estimate for West Pharmaceutical’s second-quarter 2021 adjusted EPS is currently pegged at $1.74. The consensus mark for its revenues stands at $665.6 million.