That strong performance was put to the test when Stryker announced its third-quarter results after the market closed on Tuesday. However, Stryker didn't strike out. Here are the highlights from the company's Q3 update.
By the numbers
Stryker reported revenue of $3.58 billion in the third quarter, up 10.6% year over year. This result matched the consensus Wall Street Q3 revenue estimate.
The company announced net income in the third quarter of $466 million, or $1.23 per share, based on generally accepted accounting principles (GAAP). This reflected significant deterioration from the GAAP net income of $590 million, or $1.55 per share, posted in the prior-year period.
Stryker reported adjusted net income of $1.91 per share, compared with $1.69 per share in the same period in 2018. This narrowly beat the average analysts' Q3 earnings estimate of $1.90 per share.
Behind the numbers
Sales in all of Stryker's business segments rose in the third quarter. Orthopedic sales increased by nearly 8% to $1.3 billion. Medical-surgical sales rose 9% to $1.6 billion. Neurotechnology and spine segment sales jumped 19% to $700 million.
Foreign exchange fluctuations weighed on Stryker's Q3 revenue to some extent. On a constant-currency basis, the company's revenue increased by 11.5% over the prior-year period.
The company's bottom line, however, went in the wrong direction -- at least on a GAAP basis. What happened? Stryker's tax bill was a lot worse than a year ago. In the third quarter of 2018, the company enjoyed a $56 million tax benefit. Stryker paid $115 million in income taxes in the recent quarter. That swing caused the steep year-over-year decline in earnings.
Stryker's adjusted earnings per share (EPS) figure for Q3 factored out the impact of these taxes. On a more apples-to-apples basis, the company's bottom line improved nicely over the same quarter last year.
CEO Kevin Lobo liked what he saw with Stryker's growth in Q3. He said the company expects "this momentum to continue, which positions us well to deliver above the high end of our initial guidance range for both organic sales and adjusted EPS."
Stryker's revised guidance backs up Lobo's optimism. The company now anticipates full-year adjusted net earnings per share to be between $8.20 and $8.25, compared with its prior guidance of $8.15 to $8.25. For the fourth quarter of 2019, Stryker expects adjusted net earnings per share to fall between $2.43 and $2.48.
Investors can also look forward to an impact from Stryker's acquisition of Mobius Imaging and its sister company, GYS Tech. Stryker announced the closing of this transaction on Oct. 21.