Stryker, St. Jude, Boston Scientific's Q2 Sales Rise

By Jof Enriquez,
Follow me on Twitter @jofenriq

Second-quarter earnings reports from medical device companies show Stryker Corporation increased sales across three segments, while St. Jude Medical and Boston Scientific overcame sluggish sales in heart rhythm management to post modest overall earnings growth.

Johnson & Johnson (J&J) saw decreased worldwide medical device sales overall, but posted slight gains after excluding acquisitions and divestitures. Becton, Dickinson and Company (BD) saw its Q2 revenues drop slightly.

Stryker reported that consolidated net sales increased 2.9 percent, to $2.4 billion, during the second quarter. Net sales of orthopedics rose 0.6 percent, MedSurg grew by 3.9 percent, and neurotechnology and spine surged 6.4 percent.

In the same period, Stryker's net earnings increased 206.3 percent to $392 million. Reported diluted net earnings per share of $1.03 increased 212.1 percent in the quarter. The company reported revenue of $2.43 billion, beating analysts' expectations.

"We continue to execute well across our businesses and delivered organic sales growth of approximately 7 percent in the second quarter," said Kevin A. Lobo, Stryker chairman and CEO, in the announcement. "Our strong first half performance and positive momentum is reflected in our raised guidance and underscores the strength of our people and diversified portfolio."

Stryker ended the second quarter with $4.3 billion in cash and marketable securities — including repatriated case amounting to about $700 million in the first half of the year — with an additional $1 billion more expected late in this year, and over $2 billion available for share repurchase. The company says it likely will allocate the capital for future acquisitions.

"We still have M&A as our first priority and use of cash, and you can see based on the activities done over the past couple of years, they are contributing to our esteemed organic growth performance because after the anniversary of the first year then they become part of our organic business, and we still see significant scope for acquisitions within the three segments that we planned to date," Lobo told analysts during an earnings call discussing the quarterly report.

Stryker's acquisitions so far this year include the purchase of a pair of bed manufacturers. Last year, it bought Small Bone Innovations, Berchtold Holding AG, and Pivot Medical, Inc.

St. Jude Medical and Boston Scientific reported modest earnings dampened by flat growth in bailiwick products, such as pacemakers and defibrillators.

For the second quarter, St. Jude Medical announced that net sales amounted to $1.41 billion, a 3 percent decrease compared to net sales of $1.448 billion in the second quarter of last year. However, on a constant currency basis, net sales increased by about 6 percent compared to the same period last year.

“St. Jude Medical’s second quarter results reflect the continued success of our innovation-based growth strategy. We remain confident in our key programs that accelerated sales growth in the first half of 2015 and are raising our sales guidance in order to demonstrate our strong outlook for the remainder of the year," stated Daniel J. Starks, St. Jude Medical chairman, president and CEO.

Total sales of the Cardiac Rhythm Management (CRM) business, which includes pacemakers and defibrillators, dropped 9 percent compared to the prior year quarter, according to St. Jude. If adjusted for foreign currency, CRM sales dipped just 1 percent, year-on-year.

Weak sales in the CRM business were offset by Atrial Fibrillation (AF) segment product sales, which posted a 9 percent spike during the quarter. On a constant currency basis, AF sales grew 1 percent for the period. Also, on a constant currency basis, total cardiovascular sales increased 7 percent versus the prior year quarter. 

Dismal sales of heart rhythm devices in the United States also impacted Boston Scientific. The division declined by 1 percent to $490 million, according to the Star Tribune. However, it was the company's lone business to post a contraction in the second quarter. The cardiovascular devices division increased sales by 10 percent to $812 million, and the MedSurg unit for endoscopy, urology, and neuromodulation products expanded sales by 7 percent, on a constant currency basis. The second quarter was the fourth consecutive quarter of constant-currency revenue growth of 6 percent for Boston Scientific, which generated total sales of $1.843 billion during the period.

"Our strong performance in the second quarter reflects the consistent execution of our global teams," said Mike Mahoney, president and CEO, Boston Scientific, in a statement. "We are particularly pleased with the improved growth in MedSurg and continued strength in Cardiovascular.  We look forward to continued momentum with several ongoing product launches and the planned closing of the American Medical Systems (AMS) urology portfolio acquisition in the third quarter of 2015."

Earlier this month, Johnson and Johnson (J&J) reported that second quarter sales decreased 8.8 percent to $17.8 billion. Domestic sales dropped 2.4 percent, while international sales plummeted 14.3 percent. However, excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 1.7 percent, domestic sales increased 0.6 percent and international sales increased 2.7 percent, according to a news release.

Worldwide medical devices sales decreased 12.2 percent to $6.4 billion, compared to the second quarter of 2014, consisting of an operational decrease of 4.7 percent and a negative currency impact of 7.5 percent. Adjusted without the net impact of acquisitions and divestitures, on an operational basis, worldwide sales of medical devices rose 1.4 percent, domestic sales increased 1.6 percent and international sales grew 1.4 percent, stated the J&J report.

J&J identified endocutters, electrophysiology products, joint reconstruction products, contact lenses, biosurgicals, and energy products as the main contributors of growth in the second quarter.

In May, BD announced revenues of $2.051 billion for the second fiscal quarter ended March 31, 2015, representing a decline of 1 percent from the prior year period, or an increase of 4.9 percent on a foreign currency-neutral basis. Strong sales in BD's Medical Surgical division offset the dismal performance of the Diabetes Care and Pharmaceutical Systems units.