Stryker's strong 2018 results; 2019 outlook

Kalamazoo, Michigan – Stryker reported operating results for the fourth quarter and full year of 2018 and offered a 2019 outlook.

Fourth quarter highlights

• Reported net sales increased 9.4% to $3.8 billion
• Organic net sales increased 8.6%
• Reported operating income margin of 18.4%
• Adjusted operating income margin(1) expanded 50 bps (30 bps excluding ASC 606(2)) to 27.5%
• Reported EPS increased 924.2% to $5.44
• Adjusted EPS(3) increased 11.2% to $2.18, at the high end of guidance range

Full year highlights

• Reported net sales increased 9.3% to $13.6 billion
• Organic net sales increased 7.9%
• Reported operating income margin of 18.7%
• Adjusted operating income margin(1) expanded 70 bps (40 bps excluding ASC 606(2)) to 25.9%
• Reported EPS increased 248.5% to $9.34
• Adjusted EPS(3) increased 12.6% to $7.31, exceeding the high end of guidance range

"We had an excellent finish to 2018 with the best organic sales growth in a decade, and strong adjusted earnings performance," said Kevin A. Lobo, Chairman and Chief Executive Officer. "Our multi-year momentum reflects the strength of our diversified model, progress on globalization and outstanding people and culture. We are well positioned to deliver for our customers, employees and shareholders in 2019 and beyond."

Sales analysis (percentages exclude ASC 606(2) adoption impact)
Consolidated net sales of $3.8 billion and $13.6 billion increased 10.1% and 10.2% in the quarter and full year and 11.3% and 9.8% in constant currency. Organic net sales increased 8.6% and 7.9% in the quarter and full year including 10.1% and 9.3% from increased unit volume partially offset by 1.5% and 1.4% from lower prices.

Orthopaedics net sales of $1.4 billion and $5.0 billion increased 5.9% and 6.4% in the quarter and full year and 7.0% and 5.9% in constant currency. Organic net sales increased 7.0% and 5.9% in the quarter and full year including 8.9% and 8.1% from increased unit volume partially offset by 1.9% and 2.2% from lower prices.

MedSurg net sales of $1.7 billion and $6.0 billion increased 9.9% and 10.1% in the quarter and full year and 11.1% and 10.0% in constant currency. Organic net sales increased 10.1% and 8.6% in the quarter and full year including 11.3% and 9.3% from increased unit volume partially offset by 1.2% and 0.7% from lower prices.

Neurotechnology and Spine net sales of $0.7 billion and $2.6 billion increased 20.1% and 18.6% in the quarter and full year and 21.4% and 18.0% in constant currency. Organic net sales increased 8.4% and 10.6% in the quarter and full year including 10.2% and 12.2% from increased unit volume partially offset by 1.8% and 1.6% from lower prices.

2019 outlook
We expect 2019 organic net sales growth to be in the range of 6.5% to 7.5% and expect adjusted net earnings per diluted share(5) to be in the range of $8.00 to $8.20. We expect adjusted net earnings per diluted share(5) to be in the range of $1.80 to $1.85 in the first quarter.