Mako’s Q4 turnaround has Stryker feeling confident (MassDevice)
With 20 placements of Mako’s surgical robots in the final quarter of 2014, Stryker CEO Kevin Lobo is confident in the $1.7 billion acquisition – and in Stryker’s ability to integrate future acquisitions.
Stryker (NYSE:SYK) posted a stellar quarter of sales for the robotic surgical system it acquired in its $1.7 billion deal for Mako Surgical.
The Kalamazoo, Mich.-based orthopedic giant said this week that it placed 20 Mako systems into hospitals during the 3 months ended Dec. 31 – a 150% increase over Q3 and more than were sold during the previous 3 quarters combined.
CEO Kevin Lobo told investors at the J.P. Morgan Healthcare Conference in San Francisco this week that it was the highest number systems Mako ever sold in a single quarter, including prior to Stryker acquisition.
“Obviously, we had some troubles in the earlier part of our integration. In the 1st quarter we sold 2 robots, then 6, then 8, then 20 in the 4th quarter,” Lobo said at the conference. “So we feel very good about the momentum that we’ve built.”
Lobo said the company also re-located an undisclosed number of systems that were in less than ideal locations.
“Those relocations do not show up in these numbers but we believe they will lead to placements in 2015,” he said.
This year will bring more good news for the Mako systems, including a potential FDA clearance for a total knee system, which Lobo called the “key application for the robot that will drive large-scale adoption.”
It’s quite a contrast to Stryker’s somewhat pessimistic outlook last October, when company officials admitted that the integration of Mako systems had been rockier than they expected.
Stryker vice president of strategy Katherine Owen said back then that the Mako integration process had been challenging and suggested executives may have been overly optimistic in their earlier assessments about how quick their hospital customers would adopt the technology.
“I think it’s fair to say we underestimated the complexity of it, but feel very comfortable with the trajectory we are on,” Owen said at the time. “It’s just integrating a capital sales force alongside a very large implant sales force, and going through the necessary training and coordination that has to take place in existing accounts. So it’s nothing truly unique, it’s just that it’s a big job to do, given how large our sales force is. So we are making really good headway, very excited about the pipeline we are seeing and our ability to continue to drive sequential acceleration in robot sales.”
The turnaround in Mako sales seems to have also lifted the company’s expectations when it comes to integrating future acquisitions, which are are certainly on the minds of Stryker executives. Lobo this week touted the company’s strong cash position, saying it would allow acquisitions that are “small, medium or even large.”
“We don’t intend to sit on our cash indefinitely,” he said.
One of those deals, the long-rumored buyout of British rival Smith & Nephew (FTSE:SN, NYSE:SNN), overshadowed both companies in San Francisco. Smith & Nephew CEO Olivier Bohuon expressed some exasperation about the persistent rumors during a Q&A with investors.
“You don’t imagine how many questions I have had on Stryker,” Bohuon said. “I’ve had millions and my answer is I cannot comment.”
Bohuon added that he was “not a fan of the concept ‘big is beautiful,'” and noted that the company had decided not to go down the path of consolidation.