Stryker Backs Full-Year Outlook, Touts Broadened Lineup

Stryker Corp. (SYK) on Wednesday stuck to its full-year financial targets, despite continued pressure in an orthopedics market hurt by high unemployment, while talking up the benefits of its increasingly diverse product mix.

The Kalamazoo, Mich., company announced plans Monday to acquire Orthovita Inc. (VITA), a smaller maker of orthobiologic and biosurgery products, for about $304 million in cash. The deal also includes about $12 million in debt. This follows Stryker's $1.5 billion purchase in January of a neurovascular-device business from Boston Scientific Corp. (BSX).

These deals bolster a Stryker product lineup that includes big businesses for replacement orthopedic joints and hospital products like scopes, beds and stretchers. The company noted that it spent $2.4 billion on deals between 2008 and 2010, up from $400 million in the 2004 to 2007 period.

Stryker's portfolio means "no one franchise, no one product approval, makes an enormous difference positive or negative," Stephen MacMillan, Stryker's chairman and chief executive, said during an analyst meeting broadcast over the internet.

That diversity proved helpful during the first quarter, when the market for replacement joints remained under pressure from economic factors like high unemployment, which has caused patients to defer replacement knee surgery and other procedures. Stryker managed to offset flat hip-and-knee sales with strong growth in its hospital supplies business, however.

MacMillan said replacement joints and spinal products have been hit by an "overcorrection" as U.S. consumers get used to paying more for health care out of pocket, but also talked about the benefit of new products coming through Stryker's pipeline. Pressure on product prices is a constant issue in the medical-device sector, as hospitals work to cut costs, but MacMillan said new offerings still help.

"We still believe there is an opportunity to get premium pricing for innovative products," he said.

The company on Wednesday backed its full-year guidance, first given in January, for 11% to 13% sales growth excluding the impact of currency rates. Stryker also continues to expect adjusted per-share earnings of $3.65 to $3.73.

Stryker shares recently traded up 19 cents to $63.99 and have risen 19% so far this year.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; [e-mail]