KALAMAZOO — Stryker Corp. recorded a modest sales increase in the first quarter, as the COVID-19 pandemic cut into demand from medical procedures that were delayed or postponed and as hospitals were unable to perform elective medical procedures.
The Kalamazoo-based Stryker (NYSE: SYK) on Thursday afternoon reported $3.58 billion in sales for the first quarter, up 2 percent from the $3.51 billion in the same period a year earlier.
The company said that “consolidated net sales were significantly (and) negatively impacted by the global response to the COVID-19 pandemic, resulting in lower than previously expected unit volume growth rates across all segments.”
Sales results reflect “strong momentum for the first two months of the quarter and into March, followed by a marked slowdown, principally to a deferral in elective procedures,” Chairman and CEO Kevin Lobo said in a conference call to discuss quarterly results.
“We took a number of steps in March to aggressively limit travel to ensure the safety of our employees and customers, while ensuring our essential personnel were available to support health care workers around the world. These efforts, along with other cost controls, helped to mitigate some of the impact in earnings from the slowdown in sales,” Lobo said.
The sales decline “became more pronounced toward the end of March,” Lobo said.
Sales during the last week of the month alone declined 30 percent from the prior year, with the biggest decrease in hips, knee and spinal implants, as well as in endoscopy products, Lobo said. He expects sales for April to decline by 35 percent to 40 percent compared to 2019.
Stryker expects sales in China, where the pandemic began late last year, to begin to recover during the second quarter, “but most other geographies will get worse, given the spread of the virus,” Lobo said.
“Looking at the remainder of the quarter, we are encouraged by the planned, gradual resumption of elective surgeries in the U.S. and abroad,” he said. “Overall, given our mix of businesses and the cost-control initiatives underway, coupled with our strong balance sheet, we believe we are well-positioned to manage through this slowdown.”
Stryker will maintain cost-control initiatives for most of 2020 and “we are also setting ourselves up to respond quickly as customer demands return,” Lobo said.
The company continues to invest in new products and is proceeding with the integration of Wright Medical Group N.V., a Netherlands-based maker of orthopedic products for the ankle, wrist, foot and shoulder that Stryker is buying for $4 billion in cash. The deal, approved last week by Wright Medical shareholders, should close around the end of the third quarter, Lobo said.
Stryker reported $493 million in quarterly net income, or $1.30 per diluted share. That compares with net income of $412 million, or $1.09 per diluted share, in the first quarter of 2019.
The corporation did not offer sales and earnings guidance, stating that the pandemic will continue to have “a significant negative impact on Stryker’s operations and financial results.”
“Due to the uncertain scope and duration of the pandemic, and uncertain timing of global recovery and economic normalization, we are unable to estimate the overall impacts on our operations and financial results, which could be material,” Stryker said in Thursday’s earnings release.