Stryker Corp. CEO says company has ‘appetite’ for more acquisitions (Michigan Live)
Stryker Corp. (download 4-page analysis of Stryker HERE) President and CEO Kevin Lobo said the Kalamazoo-based medical device company is looking to purchase more companies.
Lobo and key executive leaders gave a presentation for investors at the Bank of America Merrill Lynch 2013 Health Care Conference on Wednesday morning. The presentation addressed how various risks and uncertainties will impact the company’s year-end projections.
The medical device company reported reconstructive knee and medical surgery instruments sectors continue to be the company’s largest drivers for growth, with more than 65 percent of sales in the U.S. market.
Lobo also detailed the importance of acquiring Orthovita Inc. bone graft materials in 2011 and Surpass, a Tel Aviv, Israel-based stent technology company, in 2012. Earlier this year, Stryker completed the $764 million purchase of Trauson Holdings Company Limited, one of the fast growing companies in the Chinese orthopaedic market.
Lobo confirmed earnings growth projections ranging from 3 to 5 percent in 2013 but said foreign exchange rates will have a greater impact than expected, approximately 15 percent on earnings.
Stryker reported a 13.1 percent drop in profits to $304 million in the first quarter due to product recalls. The company projects the decreasing value of the Japanese yen will have a 4 to 5 cent impact on each upcoming 2013 quarterly earnings report.
Projected diluted earnings per share will range from $4.25 to $4.40, he said, a figure that includes the $100 million medical device excise tax that kicked in this year.
Lobo said he is most excited about orthopedic and spine sectors, as the spine market has “huge unmet needs” and expressed confidence in the team focused on the recently acquired Trauson Holding Co. in China.
Lobo said there are huge opportunities in shared services for lowering expenses and said he does not expect to lower prices.
“Being a decentralized company for a long time has enabled redundancies to occur and we attacked those at operations but not in other areas,” Lobo said. “When you talk about sales, you talk about the commission line but there are other costs of selling. Like distribution, we’ve made centralized distribution centers and hubs. All of these efficiencies show up on selling expenses.”
Executives stressed the company was looking at acquisitions and plans to consistently repurchase shares moving forward.
“We do have an appetite to do more acquisitions,” Lobo said.