Stryker Q3 - Continues to Grow

Medtech giant Stryker is another core holding in Vestact portfolios in New York. The company makes medical devices, surgical tools, replacement hips and knees and many other human spare parts. Stryker released their third-quarter numbers last week and show no signs of slowing down. Organic net sales grew at 7.9% to $3.2 billion, thanks to a 9.5% increased unit volume, which also allowed the company to price their products at a cheaper level than its competitors.

Kevin Lobo, Stryker CEO, said in a press release, "We had another impressive quarter, as our talented teams continue to deliver strong results and execute on acquisitions. . . The strength of our operating model and culture is evident in the consistency of our performance over time, and we remain optimistic about the future."

The performance spread across the portfolio by net sales was as follows. Orthopaedics saw an increase of 4% to $1.2 billion in net sales. MedSurg grew by 9.5% to $1.4 billion, and Neurotechnology and Spine grew by a staggering 17.4% to $600 million.

Third-quarter net earnings of $590 million grew by 36% which translates to $1.55 per share, which was on the high end of management's guidance. Stryker anticipates the 2018 organic net sales growth to be between 7% and 7.5% and the adjusted net earnings per diluted share to be between $7.25 and $7.30.

Stryker continued to make bite-sized acquisitions as my colleague Byron wrote earlier in the month. They acquired HyperBranch MedTech for $220 million. Their Adherus AutoSpray Dural Sealant product is one of only two FDA-approved dural sealants on the market. For the record, dural repairs are required when you have a leak in your dura (spinal cord), after surgery or an epidural.

Stryker also bought Invuity in a $190 million deal, see Paul's comments here. Invuity is a leader in advanced photonics and single-use, lighted instruments that deliver enhanced visualisation for a wide variety of clinical applications including orthopaedic and spine surgery, general surgery, and women's health procedures.

Product recalls in the quarter were minimal thanks to incremental but continuous improvements in production processes. The company continues to sell more Mako robots which are mostly used in knee surgeries, as knee procedures across the globe are increasing with growing obesity and with an ageing population.

Stryker is still our preferred company in the Medtech space. This business has the margins of a Rolls-Royce and production volumes of a Toyota. Its strong brands drive volumes, because the company has positioned itself as the favourite across the medical community.