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Understanding Stryker’s Operational Performance

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Dec. 4 2020, Updated 10:52 a.m. ET

Operating expenses

Stryker (SYK) incurred SG&A (selling, general, and administrative) expenses of $1.19 billion in the second quarter.

As a percentage of its sales, Stryker’s SG&A expenses fell from 37.5% in the second quarter of 2017 to 35.8% in the second quarter of 2018 due to leverage from increased sales volumes and its focus on cost-saving initiatives.

Its research, development, and engineering expenses also rose from $192 million in the second quarter of 2017 to $216 million in the second quarter of 2018.

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The recall charges incurred by the company decreased from $72 million in the second quarter of 2017 to $2 million in the second quarter of 2018, as there were no adjustments to the liability associated with the voluntary recalls of Rejuvenate and the ABG2 modular neck hip stems during the period. Its amortization of intangible assets increased from $95 million in the second quarter of 2017 to $110 million in the second quarter of 2018.

Stryker’s total operating expenses increased from $1.49 billion in the second quarter of 2017 to $1.52 billion in the second quarter of 2018. Stryker’s operating income increased from $502 million in the second quarter of 2017 to $672 million in the second quarter of 2018 primarily due to higher sales volumes and synergies from acquisitions.

Bottom line

Stryker’s net other expenses decreased from $58 million in the second quarter of 2017 to $49 million in the second quarter of 2018. Stryker’s income tax, on the other hand, increased from $53 million in the second quarter of 2017 to $171 million in the second quarter of 2018.

Stryker’s net earnings increased from $391 million in the second quarter of 2017 to $452 million in the second quarter of 2018, which translated to a net income per share of $1.19 in the second quarter. Its net income per share was $1.03 in the second quarter of 2017.

We’ll take a look at Stryker’s product performance and analysts’ recommendations for it in the next article.

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