$22.60 Billion
Prior Fiscal: $20.50 Billion
Percentage Change: +10.2%
R&D Expenditure: $1.5B
Best FY24 Quarter: Q4 $6.4B
Latest Quarter: Q2 $56B
No. of Employees: 53,000

A company is unlikely to remain successful if it doesn’t grow. Some do so with continuous innovation in the development of new products (i.e., organic growth). Others acquire technologies and companies to expand their reach and product portfolio (i.e., inorganic growth). While both methods are used within the medical device industry, the faster route is typically the inorganic method.

While acquisitions have become somewhat commonplace within the medical device manufacturing industry (both on the service provider and OEM sides), there are some companies that seem to lead the crowd in M&A activity. Stryker is one of those organizations, as it often reports numerous company and technology purchases throughout a given fiscal year. However, while it was still gobbling up a number of firms in 2024, arguably the most significant news came more recently with the announcement of the planned sale of its Spine unit.

Less than a month after the close of its 2024 fiscal year, Stryker confirmed it signed a deal to sell its U.S. Spine Implants business to Viscogliosi Brothers LLC, a family-owned investment firm specializing in the neuro-musculoskeletal space. The new entity would be called VB Spine LLC.

While the new company will be separated from Stryker, the firms will still maintain connections. Primarily, VB Spine will retain exclusive access to the Mako Spine robotic arm and Copilot smart solutions for use with its implants in spine procedures.

“We believe that the spinal implants business, with its comprehensive portfolio and strong sales channel, will thrive as an independent company,” said Kevin A. Lobo, chair and CEO of Stryker. “With dedicated resources and a focused strategy, the business will be well positioned to succeed as part of Viscogliosi Brothers.”

The deal also included a binding offer for Viscogliosi Brothers to acquire Stryker’s spinal implants business in France. The sale of Stryker’s spinal implants business in other international markets was also expected to take place at a later time.

The transaction officially closed on April 1, 2025, with the sale of international markets pending legal and regulatory requirements as well as employee consultations.

Returning to the aforementioned M&A strategy, 2024 was no different than most other years for Stryker. The activity started with an announcement less than two weeks before the close of its 2023 fiscal year. At that time, Stryker declared it was buying SERF SAS, a joint replacement firm based in France. For more than 50 years, SERF SAS has been known for its innovations in hip implants, including the invention of the original Dual Mobility Cup. The acquisition would complement Stryker’s existing presence in France and across Europe. The deal was completed near the end of the first quarter of 2024.

About a month later, Stryker had completed a deal that brought mfPHD under its roof. The acquired firm provides modular stainless steel wall systems for hospitals and ambulatory surgery centers. The procurement makes Stryker the provider of Fortress, a modular wall system that consolidates construction timelines, allowing for earlier operating room utilization as well as expedited room repair or modification when disruptive events occur. According to the company, the purchase of mfPHD accelerates Stryker’s turn-key offerings and will drive focus on modular OR design.

With no intention of taking the summer off, Stryker then declared it would be moving to buy Artelon, an organization specializing in innovative soft tissue fixation products for foot and ankle and sports medicine procedures. The company’s product portfolio expands Stryker’s offerings, providing differentiated solutions for ligament and tendon reconstruction. Artelon’s differentiated synthetic technology is designed to enhance biological and mechanical ligament and tendon reconstruction, with over 60,000 implantations worldwide.

On July 15, 2024, the deal was completed. “Integrating Artelon’s portfolio into Stryker’s offerings will allow us to deliver best-in-class soft tissue fixation solutions,” said Tim Lanier, president of Stryker’s Trauma & Extremities division. “This acquisition strengthens our competitive edge. Leveraging Artelon’s unique synthetic technology and extensive expertise positions us to continue driving innovation and solidify our leadership in the foot and ankle and sports medicine segments.”

The organization then closed another deal about two weeks later. MOLLI Surgical Inc., a privately held company specializing in the development of wire-free soft tissue localization technology for breast-conserving surgery, was absorbed. The MOLLI 2 localization system was designed for ease of use and reliability to support a more efficient surgical workflow. The MOLLI Marker is the smallest on the market at 3.2 mm and is detectable in dense breasts and through hematoma. The MOLLI 2 tablet provides surgeons with four real-time types of feedback: distance, visual, auditory, and 3D directional guidance.

ANALYST INSIGHTS: “Following the recent Inari acquisition, Stryker is likely to continue acquiring nimble, fast-growing companies in specialty medtech segments that reinforce its core robotics, neurovascular, and orthopedic offerings. The big question, for years, has been “will Stryker finally acquire S+N”?

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Midway through the month of August, Stryker demonstrated interest in helping healthcare professionals more efficiently organize clinical workflow. It announced it would acquire care.ai, a privately held company specializing in delivering AI-assisted virtual care workflows, smart room technology, and ambient intelligence solutions, strengthening its growing healthcare IT offering and wirelessly connected medical device portfolio.

Seeking to address ongoing nursing shortages, employee retention challenges, overworked and cognitively burdened staff, and a rise in workplace safety concerns, care.ai provides Stryker with complementary technology that was expected to integrate seamlessly with its Vocera platform and other medical devices. Together, this solution provides customers with an enterprise-wide ecosystem that can deliver dynamic clinical workflows and further the development of smart care facilities. care.ai’s platform and sensors enable a variety of AI-assisted workflows that can help deliver a responsive and personalized healthcare environment, allowing caregivers to spend more time with patients.

The deal was officially completed a month later.

Just 10 days after the care.ai announcement, another M&A headline was generated. Vertos Medical Inc., a privately held company providing a minimally invasive solution for treating chronic lower back pain caused by lumbar spinal stenosis, was brought into the fold. The deal was made final on Oct. 1.

“The acquisition of Vertos Medical enhances our unique, non-surgical solutions for interventionalists addressing chronic lower back pain, while broadening our presence in ambulatory surgery centers,” said Andy Pierce, group president, MedSurg and Neurotechnology, at Stryker. “We look forward to enabling physicians with the minimally invasive mild procedure so patients can reclaim their quality of life.”

On Sept. 20, it was revealed Stryker had completed yet another purchase. Strengthening its commitment to neurotechnology through tumor and stroke care, Stryker finalized the acquisition of NICO Corporation. The privately held company provides a systematic approach to minimally invasive surgery for tumor and intracerebral hemorrhage (ICH) procedures. ICH is the second most common cause of stroke and also the deadliest. NICO’s BrainPath and Myriad products enable a treatment option for ICH with improved functional outcomes compared to guideline-based medical management alone, the current standard of care.

Finally, just days after the close of the 2024 fiscal, Stryker announced the terms of an agreement that likely rivaled any of the purchases made during 2024 (or possibly even with all of them combined). At $80 per share, the organization acquired Inari Medical Inc. for a total fully diluted equity value of approximately $4.9 billion.

“Inari has positively impacted the lives of hundreds of thousands of patients through the development of purpose-built tools that address unmet patient needs,” said Drew Hykes, Inari’s CEO. “With Stryker’s capabilities and global infrastructure, we will be even better positioned to accelerate the development of innovative new solutions and expand our footprint.”

Founded in 2011, Inari provides Stryker with a leading peripheral vascular position in the venous thromboembolism (VTE) segment. According to the release announcing the agreement, Inari’s product portfolio is highly complementary to Stryker’s Neurovascular business and includes mechanical thrombectomy solutions for peripheral vascular diseases such as deep vein thrombosis and pulmonary embolism.

“The acquisition of Inari expands Stryker’s portfolio to provide life-saving solutions to patients who suffer from peripheral vascular diseases,” said Lobo. “These innovations elevate the standard of care for venous thromboembolism patients and will accelerate Stryker’s impact in endovascular procedures.”

The deal was closed a little more than a month following the announcement.

All of these firms join a company that has enjoyed significant growth over the past several years, primarily credited to its aggressive M&A philosophy. In fact, since 2020, Stryker has made advances of multiple billions in total annual revenue each year. For 2024, its total intake was $22.60 billion, representing a ballooning of 10.2% over the prior year. That total is generated through sales by Stryker’s two main business units—MedSurg & Neurotechnology and Orthopaedics.

On the whole, MedSurg and Neurotechnology enjoyed a year that saw 11.1% growth to achieve $13.52 billion. Leading the five units was Medical with a tally of $3.85 billion, up 11.4%. Endoscopy finished second with $3.39 billion, representing a 10.5% gain. Instruments contributed $2.83 billion, reflecting an 11.9% increase. Leading the segment in percentage growth over the prior year at 13.9%, Neuro Cranial added $2.14 billion to total revenue. Finally, Neurovascular enjoyed a modest 6.6% rise to finish at $1.31 billion.

Within Orthopaedics, the percentage gains were similarly positive with one exception. Knees rose 7.6% to secure $2.45 billion in revenue, while Hips grew 10.3% to reach $1.70 billion. Trauma and Extremities led the division in both percentage gain and total revenue with 11.4% and $3.51 billion, respectively. Other expanded 8.1%, which translated to $712 million. Spinal Implants was essentially flat (0.7% decrease) to finish with $707 million. In total, Orthopaedics posted $9.08 billion for the 2024 fiscal year, an 8.9% surge.

Likely in anticipation of the impending sale of some spine technologies, Stryker performed a reorganization of the unit. The spine enabling technologies portfolio (Enabling Technologies) was reclassified to Other Orthopaedics, the interventional spine portfolio was reclassified to Neuro Cranial, and the remaining Spine business was renamed Spinal Implants. That was the portion sold to Viscogliosi Brothers LLC, as previously mentioned.

While successful in its inorganic growth strategy, Stryker certainly does not rely on it exclusively. During its latest fiscal year, it made headlines with a number of product offerings.

It started the year in January with an expansion of its Gamma4 Hip Fracture Nailing System, with the addition of an intermediate nail, the RC Lag Screw, and an anti-rotation clip with sleeve components. Since its launch in August 2022, the Gamma4 System has been used in over 19,000 cases across more than 850 facilities.

About two weeks later, the Prophecy Footprint was launched, an expansion of the Prophecy Surgical Planning system, which offers comprehensive surgical planning across the entire foot. The new addition coincided with the tenth anniversary of the organization’s Infinity Total Ankle System, a low-profile implant indicated for total ankle replacement in patients with end-stage ankle arthritis.

In June, Stryker released the LIFEPAK 35 monitor/defibrillator, offering advanced technology and built on an intuitive, modern platform to help advance patient care. The device is a connected solution, giving life-saving teams real-time access to crucial patient information. It presents with a slim, light, ergonomical design and a large intuitive touch screen to provide a customizable clinical experience.

The Q Guidance System with Spine Guidance 5 Software featuring Copilot received 510(k) clearance from the U.S. FDA in late July. This first-to-market technology integrates smart-powered instruments into Stryker’s growing ecosystem. The solution was built to provide multiple feedback modalities for supporting bone resection, pedicle preparation, and screw delivery to help maximize a surgeon’s effectiveness and enhance patient outcomes. Stryker engaged over 850 orthopedic spine surgeons and neurosurgeons to develop the technology.

Just a week later, the Pangea Plating System was introduced to the market. It received FDA clearance in late 2023. The system is indicated for the internal fixation and stabilization of bone fractures, osteotomies, and arthrodesis in normal and osteopenic bone. Offering an evidence-based design for implant fit, it was designed to enhance plate fit and screw placement while elevating the plating market through anatomically contoured implants in patient populations with a wide variety of fracture patterns. The intuitive and streamlined instrumentation and implant trays include 20 anatomic plates and 13 utility plates, all accessible in one platform.

Courtesy of an acquisition from 4WEB Medical,  Stryker added two new products to its Foot & Ankle portfolio—the Osteotomy Truss System (OTS) and Ankle Truss System (ATS). The ATS, which includes Arthrosphere and Arthrocube implants, is an innovative product designed to restore limb length while providing structural integrity for the limb during tibiotalocalcaneal fusions. The OTS is comprised of Cotton, Evans, and Utility wedges, and is indicated for internal bone fixation and osteotomies in the foot and ankle.

During Q4, the company launched the next generation of SurgiCount+ within its sponge management portfolio. Now integrated with Triton technology, SurgiCount+ addresses two key challenges: retained surgical sponges and blood loss assessment. Integrating these previously separate digital solutions provides the added benefit of a more efficient, streamlined workflow for hospitals.

Days later, the Oculan Lighting Platform was unveiled. This technology is an innovative lighting solution designed to provide consistent, high-quality illumination, allowing surgeons to focus on delivering the highest standard of care. It offers a range of features that help ensure even light distribution and less heat dissipation.

$20.50 Billion
Prior Fiscal: $18.45 Billion
Percentage Change: +11.1%
R&D Expenditure: $1.39B
Best FY23 Quarter: Q4 $5.8B
Latest Quarter: Q1 $5.2B
No. of Employees: 52,000

Across industries, companies seem to be reconsidering or pulling back on diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) efforts. Others are simply paying it “lip service,” but even that has subsided. In fact, according to the Public Relations Society of America, executives mentioned ESG, DEI, or sustainability on 575 earnings calls from April 1 to June 5 (2023), which was a 31% decrease during the same period in 2022.

Meanwhile, Stryker has been leaning into these initiatives for some time. In fact, the company produces a Comprehensive Report that is almost as extensive as its annual report. The major difference between the two, however, (other than the absence of annual report boilerplate language) is the focus. While both highlight financial milestones and achievements for the year, the Comprehensive Report goes into great lengths to share insights on the company’s “environmental, social, and governance” initiatives. Stryker’s annual efforts in employing a diverse workforce, FDA recall and inspection findings, workplace awards, community impact, and carbon emissions are all spelled out for anyone to see. The degree of transparency published within the Comprehensive Report rivals the most forthcoming organizations.

One such initiative showcased in 2023 was the completion of its Sunflower Wind project. This effort involved the development of a 200-megawatt wind farm in Marion County, Kan. Stryker stated this project was a “key step toward our goal to be powered by 100 percent renewable electricity in our facilities by 2027.” The wind farm is expected to provide sufficient electricity to account for 70% of the firm’s North American facilities over the next 12 years.

While other companies waver on their commitment to ESG and DEI alongside states banning certain aspects of its use, Stryker’s focus on these initiatives do not seem to be hampering its bottom line. In fact, the 11.1% increase over 2022 was yet another gain in a series that’s occurred every year since the start of the new millennium (save for a small drop in 2020). The $20.5 billion tally in 2023 was comprised of a 58% to 42% split between the organization’s two segments—MedSurg/Neurotechnology and Orthopaedics/Spine, respectively.

For MedSurg and Neurotechnology, that 58% translated into $11.84 billion in net sales for the fiscal period—an 11.5% rise. Within this segment, every unit enjoyed double-digit growth save for one. Instruments rose 12.7% to land at $2.57 billion. As a result of its 11.3% gain over prior year, Endoscopy nudged just over $3 billion. (It also became the new home for MedSurg and Neurotechnology’s “Other” products and services.) Leading the pack at $3.46 billion was Medical, ballooning by 14.1%, which led all percentage gains across the company.

Neuro Cranial, contributing $1.55 billion to the company’s coffers, enjoyed a 12.6% increase. Boasting a modest 2.1% expansion, Neurovascular added $1.23 billion to the books. The company attributed the widespread growth within all business units to higher shipments of products across the segment.

Within the Orthopaedics and Spine division, the total was $8.66 billion—a 10.5% increase over 2022. Knees celebrated the greatest annual percentage increase. Its 13.9% gain to finish at $2.27 billion was the highest among its peer business units within the division. Hips came in at $1.54 billion, reflected in 9.2% growth year-over-year. Trauma and Extremities contributed $3.15 billion to the net sales total, a 12.1% rise. With a 3.8% gain, Spine finished with $1.19 billion on the books. Finally, Other inflated by $7.1% to add $509 million to the 2023 total. Similarly, Stryker credited the higher figures to greater sales across all units.

Not a company to rest on its laurels, Stryker shared a great number of product announcements in 2023 that will help keep its financials on the aforementioned upward trajectory.

In February, the Q Guidance System with Cranial Guidance Software—an image-based planning and intraoperative guidance system designed to support cranial surgeries—gained 510(k) clearance from the U.S. FDA. The Q Guidance System originally arrived on the market for spinal applications. The system tracks navigated instruments and displays the position and orientation of the instruments in patient images.

Then in May, Dr. Melvin Field, medical director for the Minimally Invasive Brain Surgery program at AdventHealth, and member of Orlando Neurosurgery, became one of the first surgeons to bring the system to his OR. Regarding the system, Dr. Field said it “could be the new gold standard for image-guided neurosurgical navigation.”

Finally, in July, Stryker announced the commercial launch of the system.

The next month saw the launch of the CD NXT System, an addition to Stryker’s power tools. This patented technology provides real-time depth measurement as the surgeon drills, allowing for fast, accurate, consistent digital depth measurement across various procedures. The CD NXT streamlines instrumentation and surgical steps, offering an accurate and reproducible measurement while removing errors commonly associated with a manual depth gauge.

At the American Academy of Orthopaedic Surgeons 2023 meeting, the company announced the launch of its Mako Total Knee 2.0. Informed by over 500,000 Mako knee procedures, version 2.0 introduced an intuitive design, customizable workflow, and an digital tensioner that allows surgeons to assess the stability of the knee intraoperatively during a total knee arthroplasty without the need for additional instrumentation.

“Mako Total Knee 2.0 combines our cutting-edge Mako Technology with our clinically proven Triathlon implants to help surgeons deliver enhanced patient outcomes,” said Don Payerle, president of Stryker’s Joint Replacement division. “Over the last six years, we’ve gathered key feedback from our customers and incorporated those findings into the development of Mako Total Knee 2.0—reflecting our ongoing commitment to our customers and their patients.”

At the same event, the company celebrated the completion of more than 1 million Mako procedures worldwide. “Stryker’s recent one million procedure milestone is an unprecedented achievement in orthopedic robotics and a testament to the overwhelming global adoption and patient impact of Mako SmartRobotics,” added Payerle.

By the time of the March 2023 event, the 2.0 version had already been used for more than 3,000 cases itself.

Before the last day of March, the previously cleared (via De Novo) Tornier Pyrocarbon Humeral Head was first used in the U.S. in a clinical procedure performed by Armodios M. Hatzidakis, M.D., FAAOS, Western Orthopaedics, PC, Denver Surgery Center and Rose Medical Center. Pyrocarbon is an advanced bearing material that has surface properties more similar to bone than traditional orthopedic metallic bearing surfaces. It has been utilized internationally for a variety of orthopedic procedures since the early 1990s and in shoulder cases since 2013. Stryker was the first company to offer an FDA-cleared pyrocarbon implant for shoulder hemiarthroplasty in the U.S.

The next month, the Xpedition powered stair chair was launched. Improving on the original stair chair, the Xpedition includes increased comfort and security for both the patient and the first responder team. It also features a decreased risk of patient and caregiver injury when moving patients up and down stairs on a durable power track (no lifting required), a secure patient containment system to help reduce patient safety concerns and increase physical/psychological security, and a larger seat pan area for patient comfort while maintaining the same folder storage footprint as Stryker’s Stair-PRO stair chair.

In May, another version of the Q Guidance system was launched, this time for the orthopedic sector. This solution enables advanced surgical planning and guidance for hip and knee procedures, easily controlled by the surgeon from the sterile field. The system combines new optical tracking options via a redesigned, state-of-the-art camera with sophisticated algorithms of the newly launched Ortho Guidance software to deliver additional surgical planning and guidance capabilities. When used with Ortho Q, the Ortho Guidance software for Express Knee, Precision Knee, and Versatile Hip serves as a planning and intraoperative guidance system that enhances procedural speed and efficiency through a smart, streamlined workflow.

With the close of the summer, the firm’s Pangea Systems—including femur, fibula, tibia, humerus, and utility—received 510(k) clearance from the U.S. FDA. Designed by the collaborative efforts of world-renowned orthopedic surgeons (according to Stryker), the Pangea plates offer an evidence-based design for implant fit. The system was developed to enhance plate fit and screw placement while elevating the plating market through anatomically contoured implants in patient populations with a wide variety of fracture patterns. The instrumentation and implant trays include 20 anatomic plates and 13 utility plates, all accessible in one platform.

About a week later, the 1788 platform was unveiled—Stryker’s next-generation of minimally invasive surgical cameras. The all-in-one surgical camera platform offers a more vibrant image with balanced lighting, a wider color gamut, and a clearer delineation of fluorescence signals. The platform is designed for improved visualization of blood flow and critical anatomy and can visualize multiple optical imaging agents. The company partnered with surgeon users to design the platform to enhance the surgical experience across specialties.

At the American Orthopaedic Foot & Ankle Society (AOFAS) Annual Meeting in September, the organization launched the PROstep MIS Lapidus. This offering is an internal fixation system intended for treating bunions using a minimally invasive surgical reduction of hallux valgus deformity and subsequent fusion of the first metatarsal cuneiform joint. Traditionally, surgeons performing Lapidus bunion procedures use an open approach, but minimally invasive surgery techniques are being adopted in numerous surgical specialties because of the surgeon and patient advantages. The PROstep system offers fixation stability through a minimal incision. It features MIS joint preparation, triplanar reduction, and a three-screw construct designed to create a tension band for biomechanical stability.

Prime Connect—the first smart, connected hospital stretcher designed to support fall prevention protocols from anywhere in a facility—was introduced at the Emergency Nursing 2023 event in late September. The stretcher has both visual and audible bed exit alarms, providing seamless communication with various hospital systems, including the nurse call dome light. As a result of the acquisition of Vocera Communications in February 2022, Prime Connect can also wirelessly communicate vital patient information in near real-time to the Vocera Badge or the nurses’ station through Vision, a protocol management dashboard for streamlined workflows and on-the-go monitoring.

In addition to organic growth, Stryker followed suit with many of its peers and sought to grow through inorganic means as well (i.e., company acquisition). While it didn’t make a big splash during the 2023 fiscal, it did add on two companies to help bolster its portfolio of offerings.

In May, Stryker completed the acquisition of Cerus Endovascular Ltd.—a privately held, commercial-stage, medical device company engaged in the design and development of neurointerventional devices for the treatment of intracranial aneurysms. Financial details of the deal were not shared. Cerus’ CE-marked products—the Contour Neurovascular System and the Neqstent Coil Assisted Flow Diverter—joined the organization’s portfolio of aneurysm treatment solutions.

“The acquisition of Cerus Endovascular is highly complementary to Stryker’s Neurovascular business, and strengthens our hemorrhagic portfolio globally,” stated Jim Marucci, president of Stryker’s Neurovascular division. “We look forward to working with the Cerus team to deliver on our mission of making healthcare better. Together, we will enable physicians to treat a broader range of aneurysms.”

Then, near the end of the 2023 fiscal year, Stryker announced its intention to purchase SERF SAS, a France-based joint replacement company. The firm’s focus is on hip implants, including the original Dual Mobility Cup. The deal was closed in March 2024 with no financial details disclosed.

“The SERF SAS product portfolio is built on a trusted legacy within the orthopaedic industry,” said Mathieu Badard, vice president and general manager of Stryker’s Joint Replacement division, Europe. “We are thrilled to combine our best-in-class product portfolios and work together to expand our presence within Europe and increase patient access to differentiated products for joint replacement.”

In still another attempt to expand its net sales, Stryker began a national, direct-to-patient marketing campaign centered around its Mako robotic system. “Scan. Plan. Mako Can.” was an awareness effort to share the capabilities and benefits of the SmartRobotics solution for those needing hip or knee replacement surgery due to arthritis.

Payerle explained, “We have an unwavering commitment to revolutionizing joint replacement technology and enabling surgeons to achieve enhanced outcomes for their patients. We are eager to share this campaign with patients experiencing joint pain so they can seek care and begin their journey towards returning to the activities they love.”

While Stryker had much to celebrate in its record-revenue year of 2023, not all the news was rosy. Several subsidiaries in five other countries—Argentina, Greece, Mexico, Poland, and Romania—were the cause of SEC violations. Specifically, the company was charged with violating the Foreign Corrupt Practices Act and agreed to pay $13.2 million to settle the charges.

The accusations involved the bribery of doctors, healthcare professionals, and other government-employed officials to obtain or retain business. The SEC stated Stryker made approximately $7.5 million in illicit profits as a result of the improper payments.

$18.45 Billion
Prior Fiscal: $17.11 Billion
Percentage Change: +7.8%
R&D Expenditure: $1.45B
Best FY22 Quarter: Q4 $5.20B
Latest Quarter: Q1 $4.78B
No. of Employees: 51,000

Company acquisitions in the medical device space are accomplished for a variety of reasons. They can expand clinical coverage of a specific condition with new technology innovations developed by another firm. They can expand the reach a company has by bringing an organization in house with a customer base in a new region of the world. They can also be used to rapidly establish a foothold within a medical device segment not core to the acquiring company. In most of these instances, however, the move brings a medical device portfolio into the fold.

Stryker’s transaction, which was announced just days after the start of its 2022 fiscal year, presented a slightly different scenario. Instead of bolstering its product portfolio with a new surgical instrument or innovative device, the company sought to aid nurses and hospital workers with a better communication platform. It paid approximately $3 billion for Vocera Communications to do just that.

Founded in 2000, Vocera’s focus is on digital care coordination and communication. It provides a solution to facilitate a connection between care staff and disparate data-generating medical devices in order to enhance efficiency. The company’s system, which is made up of both software and hardware technologies, also enables secure communication between patients and their families. According to the company, “the combined business will further advance Stryker’s focus on preventing adverse events throughout the continuum of care.”

“This acquisition provides significant opportunities to advance innovations and accelerate our digital aspirations,” said Kevin Lobo, chair and CEO of Stryker. “We welcome the Vocera team to Stryker and look forward to working together to enable safer patient care and help our customers improve outcomes.”

Vocera’s communication capabilities include the aforementioned family connection, as well as secure text messaging, alarm management, pager replacement, and integration with more than 150 clinical and operational systems used in hospitals. It can be used within healthcare facilities such as hospitals, long-term care centers, and veterinary care, while also being a fit for retail, hospitality, education, and energy.

ANALYST INSIGHTS: Stryker continues to crush it with its Mako Surgical Robotic platform in orthopedics. Combining their increasing robotic footprint plus the increase in elective procedures will give Stryker impressive tailwinds heading into 2024. When this happens, watch for some type of interesting M&A activity as Stryker is at its best in aggressive inorganic activity when it has tailwinds propping up its quarter-to-quarter results.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Then, less than a week after the close of the transaction, it was announced Vocera was offering its latest evolution in hands-free communication for healthcare workers. The Minibadge is a wearable, voice-driven device that enables the hands-free functionality.

According to the company, during human-centered design sessions and beta testing for the Minibadge, Major Health Partners (MHP) team members expressed their delight with the device, emphasizing its ease of use, the long life of the battery, and its small, sleek form factor. MHP enables hospital leaders and frontline workers to collaborate to find innovative ways to improve the safety and well-being of their patients, families, staff, and community.

“For more than 21 years, Vocera has led the way in hands-free communication, innovating on voice-driven solutions that simplify workflows and improve the safety and well-being of our customers and the people they serve,” said Dave Lively, senior vice president of product management at Vocera. “The Minibadge is a perfect example of that evolution. Its seamless compatibility with smartphones provides a valuable ‘and’ rather than ‘or’ option for organizations—empowering a broader spectrum of team members who need the flexibility to choose the best device for their assignment or task.”

While the announcement marked Vocera’s first product launch under the Stryker banner, it was hardly the only release made by the acquiring organization. Stryker orchestrated a number of releases during the year.

Days prior to the Vocera launch, Stryker introduced its new PROstep MICA SOLO Guide at the American College of Foot and Ankle Surgery 2022 meeting. The all-in-one procedure guide is used during PROstep MICA minimally invasive bunion procedures and is designed for use by a solo surgeon, potentially eliminating the need for additional surgical assistance during the operation.

Mid-March saw the debut of the Power-PRO 2 powered ambulance cot—the first connected offering of its kind in the industry, according to the company. The cot offers improved maneuverability, increased safety, and connectivity tools to help optimize time and budget. In addition to benefits highlighted from ergonomic and flexible design features, it also provides remote “last known cot location” tracking with the company’s Smart Equipment Management dashboard.

At the 2022 American Academy of Orthopaedic Surgeons, the Insignia Hip Stem was introduced. It was engineered to optimize patient fit and surgeon ease of implantation in muscle-sparing approaches for total hip and hemiarthroplasty procedures. Further, the Insignia is compatible with Mako SmartRobotics utilizing Total Hip 4.1 software, which allows surgeons to use data from a 3D CT-based plan to capture each patient’s unique anatomy.

Stryker also offered a solution for high-demand foot and ankle applications in the form of its EasyFuse Dynamic Compression System. Created using nitinol, this foot and ankle staple system was designed to decrease surgical complexity, provide strong dynamic-compression implants, and reduce waste in the operating room.

The first day of June marked a clearance from the FDA for the Q Guidance System for spine applications. The product, when used with the Spine Guidance Software, is an advanced planning and intraoperative guidance system designed to enable open or percutaneous computer-assisted surgery. The Spine Guidance Software is the first spine navigation software, according to Stryker, to receive clearance from the FDA for use with pediatric patients aged 13 and older. The company then launched the system at the end of September and featured it at several meetings in October.

Seemingly taking the summer off in terms of product introductions, the organization announced a new technology on the first of September with the launch of its new Gamma4 Hip Fracture Nailing System. The nail is indicated for the treatment of stable and unstable fractures as well as for stabilization of bones and correction of bone deformities in the intracapsular, trochanteric, subtrochanteric, and shaft regions of the femur (including osteoporotic and osteopenic bone).

Those attending the 2022 American Orthopaedic Foot & Ankle Society Annual Meeting bore witness to the launch of the Pulse Intelligent Delivery Platform. The technology is a full-circle product and fulfillment offering optimized for high-volume foot and ankle procedures in the ambulatory surgery center (ASC) setting.

At the same event, Stryker also featured its Prophecy Footprint Surgical Planning, which was the first surgical planning tool to provide clinical guidance on the whole foot in connection with total ankle arthroplasty, according to the organization.

A 510(k) clearance was gained from the FDA for the OptaBlate bone tumor ablation system. The September announcement explained that the addition of the OptaBlate technology to Stryker’s Interventional Spine portfolio expanded on its core competencies in vertebral augmentation and radiofrequency ablation. Further, it completed its portfolio of treatment options for metastatic vertebral body fractures. As Stryker’s first interventional oncology technology, OptaBlate optimizes all aspects of the procedure—from set-up to ablation.

Bolstering its 3D-printed interbody device portfolio, the firm presented the Monterey AL Interbody System with new pre-clinical data. The standalone device was designed for anterior lumbar interbody fusion (ALIF). It is made up of both solid and porous structures within a single implant, leveraging Stryker’s proprietary Tritanium In-Growth Technology, a material designed to mimic cancellous bone and provide an environment favorable to bone regeneration and fusion. The new data demonstrated that undifferentiated stem cells grown on Tritanium exhibited osteogenic alkaline phosphatase without requiring growth factor supplements.

Midway through December, the Citrefix Suture Anchor System was released with Citregen biomaterial to support bone regeneration and the natural healing process. Citregen is an award-winning bioresorbable material designed to mimic the chemistry and structure of native bone. Citrefix is a disposable suture anchor system that features a resorbable biomimetic anchor body. The sterile-packed set includes a cartridge with preloaded implant and eyelet, a drill bit, a drill guide, and pre-assembled inserter.

The addition of both Vocera and the array of new innovations launched, plus the continuation of a renewed demand for surgical products, resulted in another year of successful revenue growth for Stryker. While 2020 posed a small hiccup in the year-over-year growth of the company’s revenue, it has seen favorable gains since 2018 when the firm posted $13.6 billion. Compare that to 2022’s fiscal year, which was almost $18.5 billion (a 7.8% increase over the prior year), and the rise has been impressive.

Within the MedSurg and Neurotechnology unit, every business segment saw revenue headway. Instruments swelled by 8% to post $2.28 billion to the total. Endoscopy added $2.42 billion to the company’s coffers (a 13.2% rise), while Medical led all Stryker business segments in both percentage surge and 2022 revenue total (16.2% and $3.03 billion). Rounding out the tallies for the unit was Neurovascular’s modest 1.1% gain ($1.2 billion), Neuro Cranial’s 13.3% bump ($1.38 billion), and Other’s 9.2% improvement ($302 million). All-in-all, a wonderful 11.2% addition for a total of $10.61 billion.

Within sister unit Orthopaedics and Spine, total revenue expanded but not as dramatically—3.5% expansion translating to $7.84 billion. Knees was up 8% to finish at $2 billion, while the other large joint business, Hips, ballooned by 5.3% to $1.41 billion. Trauma and Extremities—the highest revenue generator for this unit—blossomed by 5.4% to land at $2.81 billion. Representing the only losses for Stryker year-over-year, Spine revenue shrunk 1.8% to $1.15 billion and Other fell 13.3% to close at $475 million.

To help ensure ongoing success with a healthy product pipeline for surgeons and other healthcare professionals, Stryker announced two new facilities during the 2022 fiscal year. It opened a research and development facility—Stryker’s Global Technology Centre (SGTC)—at the International Tech Park in Gurgaon, India. The 150,000-square-foot facility was built to help accelerate innovation in India and globally, while also further supporting the company’s mission to make healthcare better. With an intense customer focus, the center is designed to connect with healthcare professionals and develop new technologies to meet their needs. Customers can access a range of Stryker’s products and learn more about the engineering behind the company’s life-changing technologies and innovations.

Andy Pierce, group president of MedSurg and Neurotechnology, explained, “Innovation is in Stryker’s DNA. SGTC strengthens our ability to innovate and develop new products and solutions that help improve and save lives around the world. We are proud that Stryker positively impacts more than 100 million patients’ lives each year and the demand for our offerings is growing.”

Elsewhere in the world, Stryker cut the ribbon on a new, high-tech facility in Anngrove, Ireland, that will focus on additive manufacturing. The 156,000-square-foot facility will eventually house 600 jobs and is located in the same area as the company’s AMagine Institute, which is the center of excellence for additive manufacturing across Stryker. The institute develops breakthrough technologies, from early research and development to full commercial launch and scaling, and deploys these new technologies across its full portfolio of products and services.

To help showcase the innovation the company offers, Stryker opened its “OR of the Future” for customers to visit and “experience tomorrow’s OR today.” The model operating room is located within the organization’s Flower Mound, Texas, facility. According to the company, it offers a one-of-a-kind interactive experience for customers to conceptualize new OR design and technology. Constructed with patient safety and OR uptime in mind, the model is designed and integrated to help enhance protection against infection and increase cleanability, while employing intelligent technology and time-efficiency components.

“The OR of the Future transforms the traditional operating room into a modern, state-of-the-art environment. Seeing this model OR allowed us to envision a space that empowers surgical teams and allows them to focus on what matters most—delivering quality, best-in-class patient care,” said Jenny Niblock, chief clinical officer of Citizens Medical Center in Kansas.

$17.1 Billion
Prior Fiscal: $14.35 Billion
Percentage Change: +19.2%
R&D Expenditure: $1.23B
Best FY21 Quarter: Q2 $4.29B
Latest Quarter: Q2 $4.49B
No. of Employees: 46,000 (total)

The irony was unmistakable.

And a bit surreal.

For a few brief seconds, Jeff Brantley’s mind could not comprehend the sight before his eyes.

The milk carton was on the floor.

It had been sitting in his refrigerator less than a minute ago, and now it was on the floor.

How? Why?

Brantley’s shoulder promptly answered those questions. Specifically, the pain in his shoulder provided the answers.

At that point, reality kicked in and Brantley realized how the milk carton wound up on the floor—he was reaching for the milk when a lightning bolt of pain shot down his right arm—his pitching arm.

The pain was baffling to Brantley, a former Major League Baseball pitcher who hurled bullets for the San Francisco Giants, Cincinnati Reds, Philadelphia Phillies, St. Louis Cardinals, and Texas Rangers. The 1990 All-Star led the National League in 1996 with 44 saves (2.41 ERA), and struck out 728 batters throughout his 14-year career.

Brantley couldn’t comprehend how an arm once capable of throwing 92-mph fastballs could suddenly stop working. “I was really concerned because I’m right-handed,” he said. “I can’t even get a carton of milk out of the refrigerator? I’m a pro athlete. I should be able to do that in my sleep.”

In theory, perhaps.

The shoulder is the body’s most mobile joint, facilitated by a junction of flexible tendons and ligaments that store vast amounts of elastic energy. This elasticity—and outward-facing shoulders—gives humans the ability to throw faster and further than any other animal (chimps, for instance, can only throw 20 mph at best).

The shoulder’s tendons and ligaments are thick and short; as such, they stretch like an elastic band when the arm is cocked in pre-throw preparation. Once the arm whips forward, those fibers spring back to their original positions and release their elastic energy, propelling the ball (or other object) from the thrower’s hand.

Kind of like a slingshot.

The best slingshots, of course, are those with new bands, as their elasticity can wane over time.

“At the end of the day, despite the fact that we evolved to throw,” noted George Washington University anthropologist Dr. Neil Roach, “when we overuse this ability it can end up injuring us.”

Those injuries can be serious, too. Brantley—who pitched 859 innings, facing 3,644 batters over the course of his career—replaced his deteriorating shoulder with one made by Kalamazoo, Mich.-based Stryker Corp. Surgeons allayed Brantley’s concerns about the procedure by previewing it through Stryker’s Blueprint 3D Planning software.

Gained through the $5.6 billion Wright Medical acquisition, Blueprint allows surgeons to virtually position and create a patient-matched shoulder implant. Studies have shown 3D pre-operative planning software results in more accurate glenoid positioning compared with standard techniques.

Blueprint is among the features Stryker built into its latest shoulder implant, the Tornier Perform Humeral Stem. Formally introduced last summer, the Perform Stem was designed with four collar diameters and is available in multiple lengths to optimize the humeral fit and provide size options to surgeons. The smaller stem sizes are ideal for addressing smaller patient anatomies, according to Stryker.

The Tornier Perform Humeral Stem is compatible with Stryker’s full line of standard and augmented Perform glenoid options for anatomic and reversed procedures.

“We’re delivering on our mission to make healthcare better—for surgeons and the patients they serve,” Mike Panos, president of Stryker’s Trauma & Extremities division, said when Perform made its debut. “The Tornier shoulder arthroplasty portfolio will set Stryker apart in the shoulder market.”

Such differentiation clearly drove Stryker’s 2019 purchase of Wright Medical, as the deal added both the Tornier and Aequalis product lineups to the multinational’s meager shoulder portfolio.

Stryker further bolstered its shoulder solutions last summer with the U.S. Food and Drug Administration (FDA) de novo clearance of its InSpace balloon implant, an arthroscopic treatment for massive irreparable rotator cuff tears (MIRCT). InSpace restores the shoulder’s subacromial space without sutures or fixation devices, and is considered the first product of its kind in the U.S. market.

Not unlike the Tornier portfolio, Stryker gained the InSpace balloon technology via its 2019 deal for OrthoSpace Ltd. ($220 million). The biodegradable solution is affirmed by more than a decade of clinical data and 29,000 outside-U.S. implantations as well as a Level I study in North America.

“…InSpace provides a new surgical option for surgeons to address their unmet MIRCT needs in the shoulder continuum of care,” Matt Moreau, Stryker’s Sports Medicine vice president and general manager, said upon the FDA clearance. “…InSpace offers a unique opportunity for us to better partner with our customers on their clinical objectives to improve patient outcomes around a very challenging pathology in the shoulder.”

InSpace was one of several innovations unveiled last year within Stryker’s Trauma and Extremities franchise—the most profitable for the company. Sales in this division outpaced the other 10, skyrocketing 54.6% to $2.66 billion.

Trauma and Extremities’ strong showing in 2021 helped boost Orthopaedics and Spine Segment proceeds 26% to $7.57 billion. Each of the segment’s five franchises achieved double-digit revenue growth, with Other leading the way at 18.2% ($549 million), followed by Knees at 18% ($1.84 billion), Spine at 11.5% ($1.16 billion), and Hips at 11.2% ($1.34 billion).

The MedSurg and Neurotechnology segment mostly followed the same pattern: Neuro Cranial expanded sales 25% ($1.21 billion), while Neurovascular topped out revenue at 22% ($1.18 billion), and Endoscopy posted a 21.5% gain ($2.14 billion). Other sales swelled 10.4% to $277 million, and Medical proceeds climbed 3.3% to $2.6 billion. Overall MedSug and Neurotechnology Segment revenue ballooned 14.3% to $9.53 billion.

The dynamic growth in Stryker’s two reporting segments lifted total FY21 sales 19.2% to $17.1 billion. Gross profit rose 21.1% to $10.96 billion, operating income jumped 16.2% to $2.58 billion, and net earnings improved 24.7% to $1.99 billion.

“Stryker delivered above-market sales growth with strong earnings and cash flow in 2021,” Chair and CEO Kevin A. Lobo told shareholders in the company’s 2021 annual report. “Stryker’s innovative spirit is alive and well as we continue to launch new products and pursue acquisitions to fuel growth across our business units.”

Those new products included the Citrelock Tendon Fixation Device System, T2 Alpha Femur Retrograde Nailing System, and Prophecy Infinity Resect-Through Guides in Trauma and Extremities; and the T7 personal protection system in Other.

The T7 and T7 plus is a next-generation protective helmet and system that keeps surgeons cool and comfortable while maintaining protection during procedures. The helmet and its accompanying personal protective equipment allow surgeons to clearly see and operate while preventing them from infecting patients.

Introduced in January 2021, the new helmet is Stryker’s lightest and quietest, featuring a 40 percent noise reduction compared to previous models. Its interior foam conforms to surgeons’ heads, and the helmet itself is designed for better balance and ergonomics.

The T2 Alpha Femur Retrograde Nailing System debuted last August and features a redefined data-driven nail design, an advanced locking screw option that provides axial stability where desired, and a dedicated proximal targeting system designed to reduce the number of X-ray shots compared to freehand locking.

The Citrelock system offers surgeons a differentiated design through a tendon thread containing Citregen, a resorbable technology comprised of citrate, calcium, and phosphate—the molecules inherent to bone anatomy.

Citregen has a material polymer structure that mimics an extracellular matrix protein network. Citregen maintains its structural integrity during the healing phase, too, while the implant is replaced by host tissue over time.

Unveiled in mid-September last year, Citrelock features a controlled and homogeneous resorption process designed to prevent bulk degradation and chronic inflammation while offering strength comparable to cortical bone with a modulus comparable to cancellous bone, according to Stryker.

“Our customers are looking for a more predictable and effective bioresorbable materials than what is currently on the market,” Michael Rankin, vice president, marketing and medical education for Stryker’s Foot & Ankle business, said upon Citrelock’s release. “The Citrelock Tendon Fixation Device System helps fill that need…Citregen is an exciting addition to Stryker’s existing biomaterial portfolio and will be expanded for use in additional Trauma & Extremities indications in the future.”

Trauma and Extremities followed the Citrelock release with the November launch of the Prophecy Infinity Resect-Through Guides for total ankle replacements. The Guides enable surgeons to take fewer steps in total ankle replacement procedures compared with the Prophecy standard pin-through technique. The system helps increase OR efficiency, as only one guide is needed for both drilling and cutting. Metal guides maintain cutting stability, while optional holes can couple alignment for the talus. The system also uses fluoroscopic visualization for better coronal alignment views, positioning, and implant sizing.

In addition to its expanded capabilities in Trauma and Extremities and surgery, Stryker broadened its array of Endoscopy and digital solutions via acquisition. The company completed deals for both Thermedx and Gauss Surgical; the former transaction helps Stryker improve visualization in women’s health and elevates the standard of care in urology, while the latter purchase gives it ownership of an artificial intelligence-enabled platform for real-time monitoring of blood loss during surgery.

“Gauss Surgical’s Triton technology will help fill the void of quantifying blood loss to enable accuracy, early detection of hemorrhage and prevention of maternal morbidity,” Dylan Crotty, president of Stryker’s Instruments division, said when the deal closed in September 2021. “Our belief is that Triton technology will help improve the industry standards for quantifying blood loss in the labor and delivery department…”

$14.35 Billion
Prior Fiscal: $14.88 Billion
Percentage Change: -3.6%
No. of Employees: 43,000

Orthopedic giant and ODT Top 10 champion Stryker proclaimed one of the largest medtech M&A announcements of 2019 on Nov. 4 of that year, announcing it would snap up Dutch firm Wright Medical Group N.V. for $5.4 billion to fortify its position in the trauma and extremities markets. Stryker knew it would be a while before the deal was completed, revealing to investors at the time that it expected the transaction to close during the second half of 2020.

But the best laid plans of mice and orthopedic companies oft go awry. The COVID-19 pandemic stifled elective surgeries, and caused complexities in closing the deal for Wright.

Last February, the tender offer for Wright was extended to April 30. On April 27, it was postponed to June 30. On June 29, it was delayed yet another two months. On Aug. 28, it was lengthened a month, and so on and so forth until November.

To get the Federal Trade Commission’s (FTC) blessing, on Nov. 3 Stryker agreed to sell its Star total ankle replacement and Tactys finger joint implant products to fellow orthopedic giant DJO Global. As a result, the FTC approved the transaction on Nov. 3 and the U.K. Competition and Markets Authority followed suit the next day.

Stryker released to the press the closing was imminent on Nov. 10, the most recent deadline for the latest tender offer. The following day, after more than two years of negotiations and pandemic struggles, Stryker completed the deal for Wright.

“This acquisition enhances our global market position in trauma and extremities, providing significant opportunities to advance innovation and reach more patients,” Stryker Chairman and CEO Kevin A. Lobo proclaimed to the press on the day of the deal’s close. “We welcome the Wright Medical team to Stryker and look forward to growing the combined business by delivering solutions that improve patient outcomes.”

ANALYST INSIGHTS: Stryker has been built on aggressive organic and inorganic growth objectives for the past 20 years. We expect that to continue. Stryker will focus on robotics and enabling technologies to secure its market share position across its key market segments. Stryker is “all-in” on robotics and data. Expect both bolt-on M&A along with that surprise major deal from time to time.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

The pandemic was not kind to the orthopedic and surgical products provider. 2020 revenue fell 3.6 percent to $14.35 billion, the first reported loss in recent history for Stryker. The second quarter was particularly damaging: reported net sales plummeted 24.3 percent from the year prior to $2.8 billion. The main driver was unit volume decrease due to postponement of elective procedures—shipments of instruments, endoscopy, neurotechnology, spine, knee, and hip products in particular. The company rebounded somewhat in Q3, growing its bottom line by 33.3 percent with $3.7 billion in proceeds.

Orthopaedics sales dropped 5.6 percent to $5 billion due to postponement of elective procedures due to the global pandemic. The unit volume decrease was the main driver for loss, due to lower knee (down 13.7 percent to $1.6 billion), hip (down 12.8 percent to $1.2 billion), and trauma and extremities product shipments. The trauma and extremities portfolio rebounded, however, rising 5.1 percent to reach $1.7 billion.

Last September, the company rolled out the T2 intramedullary nailing system for Charcot foot, fracture fixation, osteotomies, non- and mal-unions, and fusions. T2 ICF is designed to prevent nail back-out, with a medial and lateral column that promotes rigid fixation via the ability to apply up to 10 mm of compression through the nail.

“We are always looking for ways to improve fixation strategies in Charcot patients, as they tend to have poor bone quality and often end up needing limb-salvage procedures,” Vinod Panchbhavi, M.D., FACS, FAOA, FABOS, FAAOS, professor and chief of Ankle & Foot Surgery, UTMB Health told the press. “The T2 ICF nails are lightweight and sturdy, and easy to use.”

Last September the company also released Mako Total Hip 4.0, the latest generation of CT-based 3D modeling and planning software to be used in tandem with Mako robotic-assisted surgery for hip replacement. It touts approach-specific, region-based pelvice registration and visualization of femur-to-pelvis and component relationship to detect potential impingement risk. AccuStop haptic technology and a patient-specific CT scan allows single-stage reaming and guided cup impactions to promote accurate implant placement.

Neurotechnology and Spine proceeds fell 4.7 percent due to operating expense savings action taken in response to the pandemic. Neurotechnology sales sank 1.9 percent to accrue $1.9 billion, and Spine sales dropped 9.5 percent with $1.9 billion in revenue last year.

Last August the company launched its Surpass Evolve flow diverter, a 64-wire cobalt chromium device to redirect blood flow and promote aneurysm healing. An increased braid angle boosted flow diversion and enhanced contact with the vessel wall. Higher mesh density (versus traditional 48-wire flow diverters) can lead to faster aneurysm occlusion. Physicians have stated Surpass Evolve offers effortless delivery, predictable deployment and implant opening, and excellent vessel wall apposition.

During last October’s North American Spine Society (NASS) meeting, the firm made several announcements:

Showcased the Bone Vac autologous bone dust collector, which collects drilled bone dust to use as autograft material for ortho/spine, cranial, otology, or other procedures where bone generation is desired. It cleanly ejects collected material with one push, with no inverting mesh baskets or scraping out loose bone dust.

Unveiled the Niagra lateral access system, a minimally invasive instrument set for spinal deformities. The broad instrument array is designed for all types of lateral lumbar fusion surgery.

Surpassing 1 million Mesa pedicle screw implantations since the product’s launch in 2006.

The MedSurg division experienced the least loss last year, falling 1.4 percent to $6.4 billion due to lower instrument, endoscopy, and sustainability product shipments. Higher medical product shipments somewhat offset the loss. Instrument sales sank 5 percent to $1.9 billion; endoscopy proceeds dropped 11 percent to $1.8 billion, and Sustainability revenue shrank 12.3 percent to $250 million. Continued demand for medical products provoked an 11.5 percent growth to $2.5 billion in the Medical business.

Responding to the pandemic, last April saw rollout of a low-cost, limited-release emergency response bed. The readily available solution helped serve frontline healthcare workers. Its 30-degree head of bed angle accommodated patients in respiratory distress, including ventilated patients. It also features low height and an attached IV pole.

October saw the release of the ProCuity wireless hospital bed, claimed to be the industry’s first and only. The intelligent bed helps reduce in-hospital patient falls at all acuity levels, improves nurse workflow efficiency and safety, and helps lower hospital costs. It can connect to nurse call systems without cables or wires. Its height is set at 11.5 inches, with intuitive patient positioning, bed alarms, ergonomic side rails, and touchscreens.

In October Stryker divested its Performance Solutions (SPS) Business to Healthcare Outcomes Performance Company (HOPCo). The business is a value-based care convener franchise with orthopedic service line analytics subscription. In the transaction, HOPCo gained Episode Performance Manager, software for outcomes management.

“We expect the transition of SPS customers to the HOPCo platform to be virtually seamless and we see nothing but additional value for existing customers,” DeLyle Manwaring, a HOPCo vision leader, told the press. “In the coming months, customers will have the ability to integrate with our custom suite of existing IT tools and analytics in order to help them move to true population health for musculoskeletal care.”

Rank: #1 (Last year: #1)
$14.88 Billion
Prior Fiscal: $13.60 Billion
Percentage Change: +9.4%
No. of Employees: 40,000 (total)

The Stryker shopping spree rolls on and it’s been quite an impressive run that continued in 2019. In recent years, the firm has made significant splashes in M&A headlines. While not always the largest deal of the year, the company has enjoyed a number of noteworthy acquisitions to put it in the spotlight. The organization seemed to be ahead of the robotic surgery curve within the orthopedic space when it brought Mako into the fold in 2013, instantly establishing itself as a major player. In 2016, Stryker paid more than $4 billion in M&A activity throughout the year. And again making noise, the corporate entity beefed up its spine segment with the K2M buy in 2018.

The 2019 fiscal saw modest acquisition moves by Stryker, until the fourth quarter when it was announced there was a deal in place for the company to buy Wright Medical (a company that’s appeared on MPO’s sister publication’s top company list—ODT—for a good number of years). The buy, valued at $5.4 billion, would give Stryker a strong foothold in extremities and biologics, two segments of the orthopedic sector that have enjoyed a higher growth rate in sales versus the more established technologies such as those in large joint.

“We believe this transaction will provide truly unique opportunities and will create significant value for our shareholders, customers, and employees,” said Robert Palmisano, executive director, CEO, and president of Wright Medical. “By merging our complementary strengths and collective resources, we will be able to advance our broad platform of extremities and biologics technologies with one of the world’s leading medical technology companies that shares our vision of delivering breakthrough and innovative solutions to improve patient outcomes.”

Terms of the agreement saw Stryker paying $30.75 per share for the company, which represented a substantial increase in the stock’s price at the time of the announcement. Both entities anticipated the deal to close by the second quarter of 2020. Unfortunately, potential challenges could derail that timetable.

As of this writing, the deal still had not closed and the biggest reason seemed to be inquiries by both the U.S. Federal Trade Commission and the U.K.’s Competition and Markets Authority. Both agencies were investigating potential anticompetitive consequences as a result of the merger. Stryker may find itself in an unusual position compared to its recent dealings, where it’s the seller and not the acquirer, depending on the findings of the investigations. As a result of the delay, Stryker extended its stock purchase offer since the inquiry could extend into the summer, well past the original anticipated closing timeframe.

ANALYST INSIGHTS: Having its momentum slowed by COVID, expect Stryker to resume its normal aggressive growth initiatives through its own R&D and also through M&A. Stryker has difficulty “sitting still” and 2020/2021 will be no different as it rebounds from the recent events.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

While the Wright deal simmers, Stryker will have plenty of other purchases to process and bring aboard from its spending spree in 2019. One such agreement was the acquisition of TSO3, a company that produces sterilization products for the healthcare environment. Since devices such as colonoscopes, gastroscopes, and duodenoscopes encounter challenges with the heat in standard steam sterilizers, the firm’s low-temperature solutions offer an acceptable alternative. With a purchase price of $51.7 million (including existing debt), the agreement marks an 18 percent premium on the firm’s stock.

Closer to the start of the 2019 fiscal, Stryker announced it had completed a deal to beef up its ENT portfolio. The Menlo Park, Calif.-based Arrinex’s primary product was ClariFix, a novel cryoablation technology for the treatment of chronic rhinitis. The technology had been marketed in 2017 within the U.S. to treat the condition that affects more than 24 million people in the country each year.

“This acquisition aligns with our focus on providing ENT physicians with new technologies that deliver more treatment options and better patient outcomes,” explained Spencer Stiles, then Stryker’s Group President of Neurotechnology, Instruments, and Spine.

The orthopedic giant closed another deal about a month later when it announced the purchase of OrthoSpace. The Israeli firm was focused on providing a highly differentiated technology for the treatment of massive irreparable rotator cuff tears. The organization’s technology—InSpace—is a biodegradable sub-acromial spacer, designed to realign the natural biomechanics of the shoulder. At the time of the buy, the technology had not been approved for use in the U.S., although it had already been incorporated into the treatment regimen of 20,000 patients across 30 countries.

Those other transactions, however, didn’t compare to what would have been Stryker’s largest M&A deal of the year had they not made the move for Wright. In early September, it was announced Stryker would be acquiring a pair of companies, Mobius Imaging and GYS Tech (more commonly known as Cardan Robotics), for $500 million. Within the robotic surgery segment for orthopedics, the buy represented the fifth-largest such deal and second by Stryker (the aforementioned Mako purchase representing the first).

Mobius was founded in 2008 and integrated advanced imaging technologies into the medical workflow. Its Airo TruCT scanner was a mobile, real-time, diagnostic-quality CT imaging system. Its sister firm, Cardan Robotics, on the other hand, wasn’t established until 2015 and had been developing innovative robotics and navigation technology systems for surgical and interventional radiology procedures.

“This acquisition brings expertise in advanced imaging and robotics as well as a robust product pipeline that add to Stryker’s portfolio and will allow the Spine division to provide more complete procedural solutions, including sales, service, and support,” said Stiles.

In a news article regarding the transaction, Evaluate Vantage writer Elizabeth Cairns noted that a Journal of Spine report from 2017 said Cardan’s Orion robot could “be combined with the Airo CT scanner for endoscopic spinal procedures such as decompression.”

The constant string of transactions by Stryker has translated into positive sales growth numbers for several years, seeing 2015’s $9.9 billion mushroom to $14.9 in 2019. The 9.4 percent growth between 2019 and the prior year was almost a mirror of the previous fiscal’s gain of 9.3 percent. Although the U.S. represents the majority of Stryker’s market share and dollar growth in sales, international gains have been consistent as well, only serving to help the overall figures. 2019 saw domestic net sales reach almost $11 billion, while international came close to topping $4 billion. Those represented percentage increases of 11.3 percent and 4.6 percent respectively compared to the 2018 fiscal.

Digging deeper, it’s no wonder Stryker has made the strategic investments in certain types of companies it has. The Orthopaedics unit enjoyed a modest 5.2 percent gain over the prior year ($5.3 billion vs. $5 billion). Comprising this business segment is Knees ($1.82 billion; up 6.7 percent), Hips ($1.38 billion; up 3.5 percent), Trauma and Extremities ($1.64 billion; up 3.7 percent), and Other ($415 million; up 11.2 percent).

The MedSurg unit experienced even greater percentage gains over the 2018 figures. On the whole, it reported an 8.8 percent rise over the previous year, translating into $6.57 billion in net sales. By each business, Medical led the group at $2.26 billion in sales (up 6.9 percent), followed by Instruments with $2.04 billion (up 12 percent), then Endoscopy ($1.98 billion; up 7.5 percent), and finally Sustainability ($286 million; up 10.4 percent).

The real winner among Stryker’s three business units, however, was clearly Neurotechnology and Spine—not so coincidently, the segment also represented the new home for the majority of the organization’s latest acquisitions. Combined, it posted $3.06 billion in net sales, which was a tremendous 19.2 percent gain over the unit’s previous year revenue. While the Neurotechnology segment experienced a double digit increase over the prior year of 13.5 percent to finish at $1.97 billion, it was eclipsed by Spine. The 31.1 percent growth was far and away the most substantial figure posted by any reporting segment throughout the company. It finished 2019 with almost $1.1 billion, and may have represented substantial growth again in 2020 if it wasn’t for the COVID-19 impact (see sidebar).

Perhaps recognizing that its major driver of sales growth has come from an aggressive M&A strategy, Stryker sought to bolster its R&D capabilities when it announced a plan to invest more than 200 million euros (approximately $225 million at the time) into three sites in Cork, Ireland. The locations at the focus of the investment were tied to the firm’s neurovascular business, where it designs stroke treatment products; the Instruments Innovation Centre, which focuses on surgical devices for a range of application areas; and the AMagine Institute, which develops 3D printed technologies for the spine, head, and joints.

The firm also made news with several of its products during the year. It launched its LIFEPAK CR2 defibrillator with LIFELINKcentral AED Program Manager in the U.S. The device allows chest compressions to continue during ECG analysis, helping to increase hands-on time and reduce the longest pauses in CPR.

Stryker also gained premarket approval from the U.S. Food and Drug Administration (FDA) for its Neuroform Atlas Stent System to treat brain aneurysms. According to the company, the device was only the second aneurysm adjunctive stent to be granted PMA approval for the treatment of wide-neck, intracranial aneurysms in conjunction with embolic detachable coils. While the technology had been previously approved under a humanitarian device exemption restricting use to specific hospitals with institutional review board approval, this approval was granted based on robust clinical trial evidence proving the efficacy of the device.

The company showcased its Sonopet iQ Ultrasonic Aspirator System at the American Association of Neurological Surgeons annual meeting in April. The ultrasonic aspirator system gives surgeons the ability to fragment, emulsify, and aspirate soft tissue and bone during complex cranial neurosurgery; spine; and ear, nose, and throat procedures.

Also for the orthopedic market, Stryker received clearance from the FDA for its SAHARA Lateral 3D Expandable Interbody System, which features the organization’s Lamellar 3D Titanium Technology (brought aboard as a result of the K2M acquisition). The firm claims the device is the first ever 3D-printed lateral expandable fusion device and features passive expansion capabilities designed to allow surgeons to achieve up to 30 degrees of sagittal spinal correction in skeletally mature patients.

It also launched visualization tools to enhance the surgical experience for arthroscopy. The HipCheck platform is focused on advancing the field of hip arthroscopy as an interactive tablet integrating into existing OR workflow, calculating intraoperative measurements, and working to deliver a higher degree of accuracy in measuring bone deformities. The 1688 AIM 4K Platform features several enhancements, such as 4K resolution and fluorescence, auto-light technology, as well as better ergonomics. Finally, its Connected OR Hub enables connectivity between devices. In addition, the system allows surgeons to capture, record, stream, and print images directly from the 1688 AIM 4K Platform.

Even with a number of new products in the pipeline, Stryker  still sought to capitalize on opportunities beyond its walls. Not acquiring the firm, it struck an agreement with Conformis on the latter’s iFit Image-to-Implant technology platform. The deal, potentially valued at $30 million at the time, saw Conformis receive $14 million up-front and up to an additional $16 million in milestone payments for selling, licensing, and developing part of its intellectual property portfolio to Stryker in order to design, manufacture, and commercialize patient-specific instrumentation for use in Stryker’s knee implant offerings, including the Triathlon Total Knee System.

“Innovations in healthcare are being driven by advancements in personalized medicine,” said Mark Augusti, president, and CEO of Conformis. “Conformis is excited to partner with Stryker—a leader in orthopedic surgical innovation—to further expand CT-based solutions to the market. Such solutions are the future of healthcare, enabling surgeons to provide personalized care based on a patient’s unique anatomy.”

COVID-19 Consequences

Q2 2020 Revenue: $2.76 Billion
Q2 2019 Revenue: $3.65 Billion
Percentage Change: -24.3%

Stryker’s spending seems to have slowed substantially in 2020—perhaps due to the Wright deal still in limbo or perhaps due to the uncertainty caused by the COVID-19 pandemic. The orthopedic industry has been particularly hard hit due to the virus, as elective procedures were put on hold. While its first quarter was nothing like what was expected (up overall 2.4 percent), the firm displayed the impact in the second quarter, losing 24 percent of revenue over prior year during the same period.

Still, leadership seems to remain calm. “I am pleased with the resiliency and creativity that our team displayed in supporting our customers and continuing to advance our new product pipelines,” said Kevin A. Lobo, chairman and CEO. “We were encouraged to see increased sales momentum through the quarter and into July and are poised to capitalize on the broader resumption of deferrable surgeries.”

Due to the uncertainty experienced, the company avoided providing expectations on its third quarter or full-year organic sales growth or earnings guidance for the remainder of 2020. It was noted that June showed positive signs with most businesses within Stryker seeing gradual recoveries

Surprisingly, Stryker did state that it placed robotic systems during the quarter, despite expectations hospitals wouldn’t be spending on such expenditures. The specific number, however, was not provided.

AT A GLANCE
$13.60 Billion
Prior Fiscal: $12.44 Billion
Percentage Change: +9.3%
No. of Employees: 36,000

Stryker’s epic run of tuck-in acquisitions shows no sign of slowing down, and its largest buy last year really showed some backbone.

The orthopedic giant proclaimed its intent to acquire Virginia-based spinal device maker K2M Group Holdings for $1.4 billion last August. “This acquisition underscores our commitment to the spinal market, which is the largest segment of orthopedics with significant unmet needs,” Chairman and CEO Kevin Lobo stated to the press at the time of announcement.

K2M is known for its Balance ACS platform of products, services, and research to help surgeons achieve three-dimensional spinal balance across the axial, coronal, and sagittal planes. The firm’s portfolio also includes minimally invasive implants like the adjustable MOJAVE 3D printed spinal support implant, biologics, and complex spine injury treatments like the MESA 2 Deformity Spinal System.

“K2M’s main focus is complex spine, which we believe is an attractive segment since the procedures are typically performed by high-volume surgeons and generate significant revenue per case,” Mike Matson, an analyst with Needham & Co., wrote in a research note. “K2M faces only two key competitors in complex spine (Johnson & Johnson and Medtronic) and its innovative products including its MESA 2 system have enabled it to gain significant share in this segment.”

Analysts have said Stryker’s Spine unit has struggled as of late. K2M raked in nearly $300 million in 2017 thanks to a strong position in the complex spine markets, an attractive minimally invasive surgery portfolio, and additive manufacturing capabilities.

“Spine has been a problem child for Stryker,” Evercore analyst Vijay Kumar said in a report to clients. “We think K2M provides visibility in spine turning into a low-single-digit to mid-single-digit growth segment once the deal annualizes.”

The deal, which closed in November, also reaffirmed Stryker’s acquisition strategy. Early last summer, chatter suggested the firm may have been in the market to buy Boston Scientific. Stryker later squashed that rumor.

“There was some nervousness around whether Stryker was contemplating a departure from its tuck-in strategy,” Kumar told Investor’s Business Daily. “The K2M deal should provide confidence in Stryker sticking to its well-oiled strategy of tuck-in acquisitions that are accretive to (the top line) and margins.”

This acquisition strategy helped land Stryker well in the black once again. The company recorded its 39th consecutive year of sales growth with last year’s $13.6 billion, a healthy 9.3 percent jump from the year prior. Higher shipments of medical, instruments, endoscopy, neurotechnology, knees, and trauma and extremities products were the main cause for the near-double-digit revenue hike.

ANALYST INSIGHTS: Stryker continues to be aggressive with both organic and inorganic growth opportunities. Look for Stryker to continue to be opportunistic in M&A across its market segments while also looking for M&A to expand its outside U.S. footprint.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Neurotechnology and Spine’s performance last year easily outstripped the rest even without K2M’s help, skyrocketing 18 percent to rest at $2.6 billion in sales. Not much was offered in the way of reasoning for this momentous increase apart from higher shipments of neurotechnology products and the addition of new neurovascular products last year. Neurotechnology claimed the lion’s share of the earnings with $1.7 billion—a whopping 22.1 percent over the prior year. Spine sales grew 10.3 percent, accruing $828 million (though this segment is likely to blossom next year as K2M becomes fully integrated).

Stryker and 3D Systems began a distribution partnership for craniomaxillofacial Virtual Surgical Planning (VSP) and anatomical models last January. VSP is a service-based approach to personalized surgery, combining medical imaging, surgical simulation, and 3D printing. To use VSP, the surgeon brings clinical knowledge and a desired surgical plan to an online meeting with a 3D Systems biomedical engineer to simulate and plan the procedure. The result is a digital plan transferred to the operating room via accurate 3D printed patient-specific models, guides, and templates.

The company closed the $664 million Entellus Medical buy initiated in December 2017 last February. With this purchase, Stryker gained a family of minimally invasive balloon device products, including Entellus’ flagship Xpress device, which treats blocked sinuses.

Stryker’s Trevo Retriever acquired an expanded indication last February as a front-line treatment for acute ischemic stroke up to 24 hours from symptom onset, increasing the treatment window by 18 hours. The Trevo Retriever, which is the first and only thrombectomy device FDA cleared to significantly reduce disability up to 24 hours from symptom onset, received the expanded indication thanks to last year’s updated treatment guidelines from the American Heart Association and American Stroke Association.

The company crossed the 95 percent thresholds in the VEXIM acquisition it had begun in October 2017 last February. In the weeks following, Stryker filed a proposed public buy-out offer for all outstanding shares. VEXIM specializes in minimally invasive treatment of vertebral fractures. Its SpineJack Implantable Fracture Reduction System, which reduces painful osteoporotic vertebral compression fractures, obtained FDA clearance last September. SpineJack has been proven to be superior to balloon kyphoplasty in terms of freedom from adjacent level fracture and midline vertebral height restoration, pain reduction, and improvement in function.

Last March saw FDA clearance for the Tritanium TL Curved Posterior Lumbar Cage, a 3D-printed interbody fusion cage for lumbar fixation. The hollow implant features a configuration of both solid and porous structures built using Stryker’s proprietary AMagine manufacturing process. The Tritanium TL Cage is composed of Tritanium Technology, a highly porous titanium material inspired by the microstructure of cancellous bone. Central graft and lateral windows help reduce the cage’s stiffness, aid in fusion visualization, and allow for bone graft containment. Its multidirectional teeth facilitate multidirectional fixation so surgeons can steer and rotate the cage to their desired placement.

The Surpass Streamline Flow Diverter attained FDA pre-market approval last July to treat unruptured large and giant wide neck intracranial aneurysms. It is the first flow diverter for large and giant posterior communicating artery aneurysms, which are more challenging to treat due to their location and surrounding anatomy. The stent reliably opens and provides consistent mesh density across the neck of the aneurysm to help with occlusion while maintaining perforator artery patency. It can also be resheathed, repositioned, and recaptured without losing distal wire position.

Stryker acquired HyperBranch Medical Technology for $220 million last October. HyperBranch develops medical devices based on its proprietary polymers and cross-linked hydrogels, and its Adherus AutoSpray Dural Sealant is one of two FDA-approved dural sealants on the market. The PMA approved and CE marked hydrogel is an adjunct to standard dural repair methods, creating a watertight closure of the dura. The Adherus product complements Stryker’s craniomaxillofacial portfolio.

ANALYST INSIGHTS: Kevin Lobo continues to do his John Brown imitation by delivering predictable high performance shareholder return. This is built on the back of thoughtful, well executed organic and inorganic growth strategies that span all divisions and, as usual, best in industry leadership and management throughout the organization.

—Patrick West, Partner, Mirus Capital Advisors

Orthopaedics division revenue swelled 5.9 percent last year to reach $5 billion. Unit volume expanded thanks to higher shipments of knees and trauma and extremity products, partially offset by lower prices. With $1.7 billion of proceeds last year, knee sales grew 6.6 percent. Hips sales widened 2.5 percent to collect $1.3 billion. Trauma and Extremities gathered $1.6 billion for a 6.9 percent jump, and “other” orthopedic products blossomed 11 percent with $374 million in revenue.

The company launched the Trident II Acetabular System at last year’s American Academy of Orthopaedic Surgeons meeting. The system is composed of Trident II Tritanium, which combines AMagine additive manufactured Tritanium In-Growth Technology with the precision of Mako Robotic-Arm Assisted Surgery. Trident II Tritanium’s slim wall allows for large femoral size options and optimal poly thickness to aid in greater range of motion, joint stability, and lower dislocation risk. The Trident II Tritanium Acetabular System gained FDA clearance in October 2016. The full release offers five shell options—three in Tritanium, and three in hydroxyapatite.

That same day saw the launch of Pivot Guardian, the industry’s first post-free hip distraction system. Pivot Guardian helps to mitigate groin complications and heel slip linked to hip arthroscopy. The post-free design lets surgeons create adequate force for distraction without applying pressure to the groin while alleviating heel slip and excessive pressure applied to the foot.

The next day witnessed another market first with the unveiling of Cobra, a new reusable suture passing technology for rotator cuff repair. The first-of-its-kind technology features novel needle manufacturing and innovative jaw design to produce the first reusable needle technology. Cobra’s improved needle stiffness helps prevent intraoperative misfires and distal needle tip breakages. The suture passer utilizes technology acquired from Arthrogenx in 2017.

MedSurg franchise revenue last year advanced 8.8 percent to $6 billion. Higher shipments of medical, instruments, and endoscopy products all contributed to this rise, which was somewhat offset by lower prices. Within the division, Instruments proceeds grew 8.6 percent to $1.8 billion, Endoscopy sales rose 11.7 percent to $1.8 billion, Medical revenue jumped 7.6 percent to $2.1 billion, and Sustainability earnings flattened at $259 million.

Building on a partnership to reprocess single-use devices (SUDs) that began in 2015, Hygia Health Services entered Stryker’s fold last May. With this buy, Stryker hopes to help hospitals and health systems increase the value their SUD reprocessing programs deliver. Hygia’s product lineup includes air transfer mattresses, fall alarms, ECG leads, cerebral-somatic sensors, and infusor bags. In 2017, Stryker helped its almost 3,000 SUD reprocessing customers collective save $326 million in supply costs and divert 13.4 million pounds of waste from landfills.

Stryker nabbed Swiss surgical smoke evacuation solutions firm SafeAir AG last June. Highly complementary to the Instruments division, the company’s smoke evacuation products help reduce exposure to hazards associated with surgical smoke. The acquisition closed in the fourth quarter of last year.

The string of acquisitions continued last September when Stryker bought San Francisco-based Invuity Inc. for $190 million. The deal added advanced photonics and single-use, lighted instruments that offer enhanced visualization during orthopedic and spine surgery, general surgery, and women’s health procedures to the firm’s Instruments business. The acquisition was completed a month and a half later.

The Stryker F1 Small Bone Power System was introduced last March. The cordless, balanced, lightweight powered instrument boosts the efficiency of distal extremity procedures. Surgeons can choose from two gripping styles—either pencil or pistol-style. The device features five motors and three attachments that are interchangeable between the SmartGRIP Control Module to let surgeons choose their specific approach. The F1 System also connects to an online data module that helps optimize management of Stryker’s smart devices through device-derived, actionable data.

$12.4 Billion
NUMBER OF EMPLOYEES: 33,000

Taylor Koob was running out of options. Fast.

Floodwaters from a meteorological monster named Harvey were inundating his Jeep, trapping the 25-year-old Houston man inside. Pounding waves and a tremendous storm surge turned the vehicle into a virtual sarcophagus by jamming its doors and sparing the windshield from Koob’s repeated blows.

“I started kicking the front windshield. I kicked the windshield about 40 or 50 times and all there was was hairline cracks,” he recalls. “I really thought that I would die. I remember taking my last breath, and looking up at the windshield wiper motor in the back of the Jeep…after that, I passed out.”

It’s been nearly a year since Harvey dropped record amounts of rainfall on America’s fourth-largest city, and Koob still isn’t sure how he escaped his submersed tomb; he only remembers “emerging out of the water” rejuvenated. Firefighters pulled him from the deluge, but it took them eight hours (via a dump truck, boat and ambulance) to transport the dazed and injured millennial a mere 11 miles to the nearest hospital. Koob arrived at St. Joseph Medical Center with a shattered ankle and serious flood-water-soaked gashes on his leg.

Koob spent a month in the hospital recuperating from his injuries. He underwent five surgeries and continues to be monitored for infection due to his exposure to contaminated water. Key to his recovery—at least from his surgeons’ perspective—was the Hoffmann 3 Modular External Fixation system from Stryker Corp., a lightweight device made of carbon-based materials that provides support for open and/or unstable fractures complicated by soft tissue damage. The Fixator remained on Koob’s ankle for two months as he convalesced at home.

“The Hoffmann Fixator was put on to stabilize my foot and my ankle because my tendons and ligaments were ripped and torn,” Koob explains in a Stryker website video. “I had it on for two months—I ate with it [on], slept with it [on]. It was really imperative to my recovery and getting me to where I am today in being able to walk around and starting to lift weights again. I didn’t feel like I was ever going to walk again.”

Certainly, regaining the ability to walk was an integral part of Koob’s recovery, but it’s going to take time to heal the emotional wounds that linger from Harvey. Flashbacks of rising water and vehicular entrapment still haunt Koob, making driving difficult at times (fortunately, he no longer owns a Jeep).

Despite occasional bouts of anxiety, Koob maintains a laser-like focus on his recovery. He credits his resolve to the Hoffmann 3 Fixator that helped rebuild his foot and is now a permanent part of his bedroom decor. “I keep it there on my bookshelf just to kind of remind me where I’ve been and where I still need to go in terms of recovery,” he says in the Stryker video. “As far as coming to terms with everything that happened, I think that’s a lengthy process, but we’re making steps to get back on the right path and get things back to normal.”

Normal is a relative term, though. For Koob, normal means lifting weights again and driving without fear. But for the company that saved his foot and ankle, normal translates into solid profits and product portfolio diversification.

Stryker basked in the glory of a mostly normal year in 2017 as sales topped $12 billion for the first time in its 72-year history and new solutions unfolded in total knee arthroplasty, power tools, veterbral compression fracture technology, and minimally invasive ENT (ear, nose, throat) treatment.

The new offerings supplemented Stryker’s product portfolio through both acquisitions and market releases. In the year’s most significant and highly anticipated rollout, Stryker unveiled a total knee replacement application for its Mako System robotic arm. The advancement, according to company executives, distinguishes Mako as the first and only functional robotic technology for total knee, hip, and partial knee replacement procedures.

The new application gives Mako the ability to implant Stryker’s Triathlon knee, which won U.S. Food and Drug Administration (FDA) approval in August 2015. Mako creates customized surgical plans for patients through computed tomography-based 3D modeling of bone anatomy; it also allows for intra-operative planning and assists in bone resectioning procedures.

By adding the Triathlon knee to Mako’s skill set, Stryker is casting the robot as a market share and quality improvement play—both crucial factors given the slow growth of the global hip and knee replacement market and dearth of significant technological innovations, particularly in the hip arena. The strategy seems to be paying off, too: Just three months after commercially releasing the Triathlon application (March 2017), Mako performed its 100,000th robotic arm-assisted procedure in the United States. In November, the company added a cementless option to its offerings—Mako Total Knee with Triathlon Tritanium.

“This [procedural] milestone demonstrates strong continuing acceptance of this technology and highlights how together with our customers, we are creating the future by growing the robotics market,” Bill Huffnagle, president of Stryker’s Joint Replacement Division, said in marking Mako’s milestone.

In addition to growing the robotics sector, Stryker expanded its power tool market share with the March release of the System 8 product line, a family of instruments that deliver extended battery life (a 30-day shelf life), improved ergonomics, and better durability compared to previous System 7 models.

New to System 8 is the EZout Powered Acetabular Revision System, a line of hip revision tools that enable surgeons to remove an acetabular cup in three to five minutes. Other System 8 rookies include a cordless driver for drilling, cutting, and reaming in sports medicine and trauma procedures; a lightweight saggital saw for optimal cutting speed, control, and accuracy; and a precision saw featuring an oscillating tip to reduce vibration and enhance handpiece control.

All System 8 tools are designed as smart devices and connect to Stryker’s new online data module called Smart Equipment Management. The module aims to help clinicians manage the company’s smart products through device-derived, actionable data.

Stryker followed up the System 8 product release with an enhancement to its non-power ENT instrument portfolio, purchasing ear, nose, and throat device maker Entellus Medical Inc. for $662 million. The December acquisition gave Stryker ownership of Entellus’ complete slate of products including forceps, sinuscopes, implants, wireless cameras, and the XprESS Multi-Sinus Dilation System.

The latter device was the subject of an April 2017 FDA warning letter that admonished the company for failing to prevent doctors from violating the approved protocol for an XprESS pediatric clinical trial. Entellus was authorized to conduct clinical trial surgeries on the maxillary sinuses of children younger than 12 but did not have clearance to operate on the frontal and sphenoid sinuses of subjects aged 12 and under. Yet 18 of the trial’s 33 pediatric sinus surgeries involved balloon sinuplasty on the frontal or sphenoid sinuses.

“This off-protocol use could have led to serious medical complications in these children, including cerebrospinal fluid leaks, intracranial complications, and meningitis,” the FDA stated in its letter, made public in September. “You were informed on several documented occasions that the FDA had safety concerns and did not approve the use of the device for the treatment of the frontal and sphenoid sinuses on pediatric patients ages 2-12.”

Entellus’ warning letter came to light about a month before Stryker acquired a controlling interest in Vexim, a French medical device company specializing in minimally invasive vertebral compression fracture treatment. The firm’s flagship product, the SpineJack system, is a mechanical expandable VCF implant for fracture reduction and stabilization. Vexim’s technology is a natural fit for Stryker’s Interventional Spine business and a logical catalyst for market growth.

Indeed, the $223 million Vexim purchase—like most of Stryker’s acquisitions in recent years—was conceived with existing market expansion in mind. But its $674 million buyout (June) of Novadaq Technologies Inc. (and Entellus to lesser extent) is indicative of the company’s willingness to tap new sectors.

Mississauga, Canada-based Novadaq sells fluorescence imaging systems that allow surgeons to visualize blood flow during open surgery—procedures in which Stryker’s core devices are not generally used. Clinical studies, however, have shown Novadaq’s technology reduces postoperative complications in breast reconstruction operations and potentially can lower hospital costs—key survival factors for the 21st- century healthcare environment.

“Fluorescence imaging is like having a GPS system during surgery,” Dr. Santiago Horgan, from the School of Medicine & Center for the Future of Surgery at the University of California, San Diego, noted in Stryker’s 2017 annual report. “It will become the standard of care.”

Upon closing the Novadaq deal, Stryker incorporated the fluorescence imaging technology into the Endoscopy division of its MedSurg business, its most profitable unit in 2017. Total sales jumped 13.6 percent to $5.5 billion, due largely to double-digit growth in the Endoscopy and Medical divisions (12.4 percent and 20.5 percent, respectively). Instrument revenue swelled 8.1 percent to $1.68 billion, while Sustainability solutions (reprocessed and remanufactured medical devices) grew proceeds 8.9 percent to $258 million.

Interestingly, the MedSurg unit proved immune to any sustained fallout from last summer’s voluntary recall of certain Sage Products items. The late August recall was triggered by an FDA warning letter about contamination issues with a handful of cloth products manufactured by a third-party supplier. The letter cited three consumer complaints about Sage’s Comfort Shield cloths as well as positive testing for Burkholderia cepacia, the same bacteria responsible for four previous Sage cloth recalls from 2006-2016.

Last year’s market retraction affected Sage cloths distributed between July 2015 and August 2017; the affected Oral Care products were manufactured on equipment shared with “non-pharmaceutical” items, according to FDA. Although the contaminated cloths did not cause any serious harm to consumers, Stryker acknowledged reports of some minor irritations and allergic reactions associated with the tainted batches.

To safeguard future production of its Sage cloths, Stryker cut ties with the culpable supplier and moved all Oral Care product manufacturing in-house.

Stryker shares slipped 3.7 percent on the recall news and its third-quarter sales fell by $45 million, but the company nevertheless turned a healthy profit in 2017, growing total revenue 9.9 percent to $12.4 billion and diluted earnings per share 11.9 percent to $6.49. Moreover, gross profit rose 9 percent to $8.1 billion and operating income climbed 5.7 percent to $2.3 billion.

“Our sales growth was once again at the high end of the medical technology industry,” Chairman and CEO Kevin A. Lobo told investors in Stryker’s 2017 annual report. “We maintained our commitment to R&D, spending 6.3 percent of sales and…we also continued to be acquisitive. In 2017, our growth was well-balanced across businesses and geographies.”

Actually, growth was nearly identical geographically: U.S. sales jumped 10.1 percent while international proceeds ballooned 9.4 percent.

Gains were a bit more disproportionate among Stryker’s business units and divisions. Orthopaedics, for example, reported a 6.6 percent sales increase last year as Neurotechnology and Spine revenue surged 8.2 percent. Growth in the latter segment mostly was driven by a 13.4 percent rise in Neurotechnology division proceeds ($1.42 billion) and tempered by flatlining Spine sales ($751 million).

Such disparity was evident in Orthopaedics as well, though no division crossed into negative territory last year. The segment’s “Other” category was the top performer, growing sales 18 percent to $337 million. Trauma and Extremities trailed behind with an 8.3 percent revenue bump (to $1.47 billion), followed by Knees (7 percent increase to $1.6 billion) and Hips (1.6 percent boost to $1.3 billion).

$11.3 Billion
NUMBER OF EMPLOYEES: 33,000

Mergers and acquisitions are a large part of the OEM environment in today’s medical device space. Companies are seeking strategic targets to purchase as a rapid method with which to enhance their international footprint, improve product offerings in specific device sectors, or supplement R&D with the procurement of a startup company that’s developing a cutting-edge technology. It’s become a pervasive element in the strategy of most medtech OEMs. Stryker, however, may have been one of the more active in 2016. Perhaps not in total dollars, but in terms of the number of transactions, they were likely near the top of the list. And looking at the company’s revenues for the 2016 fiscal year, it seems to be a profitable success.

Overall, Stryker invested more than $4 billion into M&A activities in fiscal 2016. Its two larger purchases were Sage Products and Physio-Control International. In addition, it bought the SafeWire product portfolio, Synergetics USA’s neuro portfolio, Stanmore Implants Worldwide, Ivy Sports Medicine, and BD’s vertebral compression fracture portfolio.

On Feb. 1, Stryker announced it was purchasing Sage Products from Madison Dearborn Partners at a price tag of $2.775 billion. The firm produces disposable products intended to reduce “never events” within the intensive care unit and MedSurg hospital unit setting. The company’s products address issues such as hospital-acquired infections (HAIs), skin injuries, and healthcare worker injury. Sales of these products in 2015 totaled $430 million, which was an increase of 13 percent over the prior year. Undoubtedly, with the shift to value-based care and the efforts toward reducing the instances of such events (particularly HAIs), Stryker views the company as a growth opportunity.

“The company’s established leadership team and innovative products that help prevent hospital-acquired conditions have driven consistent double-digit sales growth,” Kevin A. Lobo, chairman and CEO of Stryker, stated in a release first announcing the transaction. “This acquisition aligns with Stryker’s focus on offering products and services that support a mindset of prevention, specifically in the area of ‘never events’ such as hospital-acquired infections. Today, through our Medical division, Stryker offers products that are complementary to those produced by Sage. Sage has a 45-year history of focus on patients and caregivers that is evident in their culture and fits well with our Medical division. This business will also provide a consistent disposable revenue stream that will complement our capital equipment offerings. We look forward to welcoming the Sage team to Stryker.”

The deal formally closed only a couple of months later, on April 1, 2016. Four days later, Stryker noted the completion of its other significant deal in fiscal 2016—the acquisition of Physio-Control International Inc. This transaction—valued at $1.28 billion—was first announced on Feb. 16, 2016. The firm was sold to Stryker by Bain Capital Private Equity in an all-cash transaction. Physio-Control offers more of an emergency medicine type of product line to Stryker, with monitors/defibrillators, automated external defibrillators, and CPR-assist devices making up the bulk of the company’s offerings. It also offers data management and support services. Sales in 2015 totaled $503 million, which was an increase over the prior year by 6 percent.

Another valuable aspect of Physio-Control was its established presence and infrastructure internationally. “Physio-Control has achieved global leadership positions with a strong brand and customer-centered solutions that can predict or intervene in life-threatening emergencies,” Lobo stated in a release first announcing the transaction.  “Physio-Control’s focused strategy and their culture will fit well within the EMS business of our Medical division, further leveraging our existing call pattern. We look forward to welcoming the Physio-Control team to Stryker.”

While these two were the larger transactions for Stryker in 2016, the other deals the OEM made were still significant. Starting in February, it was announced that the neuro portfolio of Synergetics USA was to shift to Stryker in an all-cash deal. This portfolio is comprised of products including the Malis generator, Spetzler Malis disposable forceps, and Stryker’s existing Sonopet tips and RF generator. Sales of approximately $31 million were attributed to the portfolio in 2015.

“The acquisition of the Synergetics neuro portfolio is highly complementary to Stryker Instruments’ Neuro Spine & ENT (NSE) business and is aligned with NSE’s strategy of expanding its neurosurgical product offering,” Timothy J. Scannell, group president of MedSurg and Neurotechnology, stated at the time of the announcement.

Shortly after the Synergetics deal was completed (April 1, 2016), Stryker had another M&A announcement. On April 10, the OEM declared that it was purchasing the SafeWire product portfolio, which had been composed of the Y-Wire guidewire and the Tiger Jamshidi Needle family for use in minimally invasive spine surgery. The products were purchased to enhance Stryker’s spine product portfolio and its focus on minimally invasive spine surgery offerings.

In a release issued announcing the acquisition, Brad Paddock, president of Stryker’s Spine division, said the introduction of the SafeWire portfolio reflects Stryker’s ongoing commitment to patient safety and providing surgeons with innovative technology needed to treat patients undergoing minimally invasive spine surgery. “This acquisition increases our competitive advantage as we broaden our product line and extend our customer base among teaching facilities, competitive accounts, and existing SafeWire customers.”

Another April acquisition was the purchase of BD’s vertebral augmentation solutions business, which included the AVAmax, AVAtex, and AVAprep brands. These minimally invasive products are used in vertebroplasty and vertebral augmentation procedures. They originally came out of the BD acquisition of CareFusion. Similar to several aforementioned transactions, this purchase was accomplished with the intent of bolstering Stryker’s preexisting product line in the space.

“The acquisition of BD’s VCF portfolio is highly complementary to Stryker Instruments’ Interventional Spine (IVS) business and is aligned with IVS’s strategy of expanding its VCF footprint,” Scannell stated at the time of the deal announcement. “It also further strengthens Stryker’s brand in the Neurotechnology space.”

ANALYST INSIGHTS: Despite solid performance in recent years, Stryker’s biggest challenge will be to successfully sell outside North America. The company sees approximately 70 percent of revenues from the U.S. and Canada while these markets now represent under 50 percent of the total market.

—Tony Freeman, President, AS Freeman Advisors LLC

The purchase of Stanmore Implants Worldwide Limited from SIW Holdings Limited for a purchase price of £35.6 million rounded out Stryker’s April buying spree. Stanmore offers custom and off-the-shelf solutions that address the needs of surgeons treating adult and juvenile orthopedic oncology.

Although quiet through the summer months, Stryker kicked off September with its final M&A declaration in fiscal 2016 with the announcement of the acquisition of Ivy Sports Medicine LLC. Ivy Sports Medicine’s product offering was centered around the minimally invasive repair of the meniscus. The portfolio included the only FDA-approved collagen meniscus implant (CMI) and an inside-out meniscal suturing platform.

“The acquisition of Ivy Sports Medicine strengthens our capabilities and fits strategically with our current portfolio. Ivy’s complete meniscal platform, coupled with their clinical history, will allow us to provide our customers with multiple solutions to address meniscal repair,” Matt Moreau, vice president and general manager of Stryker’s Sports Medicine business, said at the time of the announcement. “This is an area of sports medicine where there is continued opportunity to address unmet customer needs. The Ivy portfolio provides a unique platform for us to build upon as we seek to continue advancing the treatment of meniscal injuries.”

Undoubtedly as a result of the completion of several of these transactions within fiscal 2016, coupled with the success of acquisitions made in earlier years as well as organic sales growth of Stryker’s legacy and newly released products, the OEM enjoyed a significant boost in sales in 2016. For the first time in its history, the company bypassed both the $10 billion and $11 billion sales marks to finish the year at $11.3 billion (an increase of 13.9 percent over the prior year), compared to $9.9 billion in 2015 and $9.7 billion in 2014. Possibly a concern for future growth (or a great opportunity, depending upon how it’s viewed), the company’s sales in fiscal 2016 were primarily driven by the United States, which accounted for 73 percent of total revenue. Across the board, the company’s three main segments—Orthopaedics, MedSurg, and Neurotechnology and Spine—will need to better penetrate international markets to enjoy even greater growth in the years to come.

The Orthopaedics segment is primarily focused on implants for knee and hip joint replacements, as well as trauma and extremity surgeries. Notable within the segment is the company’s Mako total knee application, which joined the company’s other Mako offerings in the robotic arm-assisted reconstructive surgery line after it received FDA clearance in 2015. The company celebrated the full launch of the total knee in March 2017. Looking at the segment’s full offering, sales break down fairly evenly among several divisions. Knees were responsible for $1.5 billion in sales, followed by Trauma and Extremities at $1.4 billion. Hips came in at $1.3 billion, with “Other” accounting for $285 million, totaling $4.4 billion for the entire segment. This represented an increase of 4.7 percent over 2015.

MedSurg, which bypassed Orthopaedics in 2016 in terms of percentage of overall contribution to the company’s sales figure for the first time in several years (43 percent for MedSurg versus 39 percent for Orthopaedics), was bolstered by several of the aforementioned acquisitions. The end result was a substantial 25.6 percent increase in sales over 2015. The product offerings from this segment include surgical equipment and navigation systems (Instruments); endoscopic and communications systems (Endoscopy); patient handling, emergency medical equipment, and intensive care disposable products (Medical); and reprocessed and remanufactured medical devices (Sustainability). Similar to the Orthopaedics segment, the sales are spread almost evenly across the divisions, totaling $4.9 billion in sales. Medical led the segment’s sales with more than $1.6 billion, followed by Instruments at just under $1.6 billion. Endoscopy was close behind with $1.5 billion and at a distant fourth for the segment was Sustainability at $238 million.

Neurotechnology and Spine (the name also reflects the only two divisions within the segment) contributed 18 percent to the company’s total sales. The Neurotechnology offering includes products used for minimally invasive endovascular techniques; a line of products for traditional brain and open skull-based surgical procedures; orthobiologic and biosurgery products, including synthetic bone grafts and vertebral augmentation products; and minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke. The Spine products include cervical, thoracolumbar, and interbody systems used in spinal injury, deformity, and degenerative therapies. Sales translated to a 62/38 percent split with Neuro contributing almost $1.3 billion to sales, while Spine was at $754 million. In total, the segment’s $2 billion in sales reflected a 9.9 percent increase over the prior year.

Outside of the product and company acquisitions, Stryker reported organic growth of approximately 6 percent over 2015. While much of that was from already established products the company provided, some of the growth may have originated from several of the new offerings announced in fiscal 2016. In March, the OEM formally introduced two new products at the American Academy of Orthopaedic Surgeons annual meeting—the Aero-C Cervical Stability System and the Xia 4.5 Cortical Trajectory Implants and Instruments.

ANALYST INSIGHTS: Never a shy company, watch for Stryker to continue its aggressive growth through both acquisition and its international expansion efforts. Stryker is a dangerous competitor as it wakes up “unafraid” to challenge itself each and every day!

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

The company claims the Spine division’s Aero-C is the only straight-forward ACDF device that offers uniform compression across the interbody space. The technology received FDA 510(k) clearance in December 2015. Also out of the Spine division, the Xia products are used in less invasive LITe LIF posterior lumbar interbody fusion procedures for patients with degenerative disc disease, spondylolisthesis, and trauma. According to the company, it is also intended to be more muscle-sparing than standard open procedures that require lateral dissection.

Keeping busy with product launches, the Spine division also debuted a 3D-printed Tritanium posterior lumbar cage at the 2016 American Association of Neurological Surgeons annual meeting. According to Stryker, Tritanium is a novel, highly porous titanium alloy material designed for bone in-growth and biological fixation.

Perhaps addressing the potential challenge associated with the company’s international sales figures, in November 2016, Stryker announced a 20-year partnership with Indo UK Institute of Health’s (IUIH) Medicity Program. Under terms of the agreement, the OEM would serve as a “preferred partner” in the orthopedic areas of hip, knee, and trauma products and services. The deal also includes a sponsorship by Stryker of a post-graduate training education center on the campus of one of IUIH’s medicities and R&D collaboration with Stryker’s Global Technology Center in India.

“The partnership with Stryker is set to redefine the existing paradigms in [the] healthcare industry,” said Ajay Rajan Gupta, managing director and group CEO, IUIH. “With predictable orthopedic spend, improved cash flow, and optimized use of technology resources, the agreement with Stryker will enhance IUIH’s value in healthcare space in years to come.”

$9.9 Billion
NUMBER OF EMPLOYEES: 27,000

Beth Roche always considered herself a “mover.”

“I’m a person who likes to get up and get it done,” she told a Chicago Tribune reporter several years ago.

Imagine her level of frustration, then, as she struggled to recover from injuries she sustained in the 2013 Boston Marathon bombing. The Highland, Ind., mother and avid runner was among hundreds wounded in the terrorist attack, suffering a compound fracture of her left tibia and a shattered kneecap.

Roche was in Beantown on the day of the blast to watch her daughter Rebecca run the marathon. The first of two homemade bombs exploded shortly after Rebecca crossed the finish line, spraying a leg-level pattern of shrapnel that killed three spectators and peeled back the skin on Roche’s knee “like a sardine can,” leaving the bones exposed.

Oddly, Roche felt no pain. Panic ensued as bystanders stampeded toward a nearby sports store; the wail of emergency sirens filled the air, mixing with piercing screams from the injured and frightened. “Run!” someone yelled to Roche.

“I can’t run,” she thought, unable even to stand.

Within minutes, public safety and rescue personnel covered Roche with a blanket and treated her bleeding wound with a tourniquet. Paramedics rushed her to Tufts Medical Center, where orthopedic trauma surgeons cleaned her wounds of debris (fishing out bits of the black canvas backpack that housed one of the bombs) and reconstructed her left knee in a four-hour surgery.

Although Roche lost a significant amount of skin, muscle, bone, and tendon in the attack, blood flowed to her lower leg and foot, enabling surgeons to save the limb. Dr. Scott Ryan, orthopedic trauma chief at Tufts, stabilized Roche’s damaged bones with rods and screws, and held her newly repaired (but still fragile) knee firmly in place with an external frame from Stryker Corp.

Composed of lightweight carbon-based materials, the Hoffmann II MRI External Fixation System is designed to provide patient comfort and facilitate fracture management and stabilization.

Cleared for magnetic resonance imaging use under prescribed conditions, the Hoffmann frame employs “snap-fit” technology, allowing doctors to conduct postoperative corrections and treatments with the device in place. Clinicians also can build the frame to treat fractures close to a joint (as in Roche’s case) or stay clear of damaged soft-tissue areas.

After undergoing three surgeries to remove scar tissue and replace lost ligaments, as well as months of grueling physical therapy, Roche has finally regained flexibility in her knee. She’s exceeded her doctors’ expectations for a modest recovery, reclaiming the ability to bend her knee 145 degrees (Ryan had predicted 90-degree flexibility). But chronic pain forces Roche to rethink stairs and occasionally doubt her ability to resume an active lifestyle.

Nevertheless, she refuses to give up hope.

“My life is a race now,” Roche said last fall. “It’s a physical, mental race to get back to normal. What my normal was before the bomb.”

Nora Kasapligil, 21, has already won that race. Her life returned to normal remarkably quickly—within a day of suffering an ischemic stroke in her Sonoma State University dorm room. Kasapligil awoke on June 5, 2015, with a severe headache, and after getting out of bed, walked straight into a wall. Luckily, her roommate noticed Kasapligil’s odd speech and movements and quickly summoned help, suspecting a stroke.

“I think I tried saying, ‘I have to go to work,’ and instead of it coming out like that, I said, ‘I have to go, go, go, go to work,’ ” the young woman recently recounted to a Northern California television station.

Medical scans at a local hospital eventually confirmed the roommate’s suspicions: a clot was blocking the blood supply to the right side of Kasapligil’s brain. But since it formed in her sleep, doctors weren’t sure they could use tissue plasminogen activator, or tPA, the U.S. Food and Drug Administration (FDA)-approved clot-busting drug that must be given intravenously with 4.5 hours to be effective. “After four and a half hours, the data tell us the risk of bleeding in the brain is greater than providing any benefit of opening the [blood] vessel,” explained Joey D. English, M.D., director of Neurointerventional Services at California Pacific Medical Center in San Francisco.

After confirming the affected brain tissue was still surviving, English and his colleagues treated Kasapligil’s stroke by removing her blood clot with a device developed by Stryker. The company’s Trevo XP ProVue Retriever clears blocked vessels using an expandable wire mesh stent that snares the clot and drags it out of the body (via catheters) through the femoral artery. The FDA-cleared device is billed as the world’s first stent retriever with full-length visibility, giving surgeons greater control and real-time information during placement, integration, and clot removal.

Within an hour of treatment with the Trevo XP device, Kasapligil’s left-side paralysis began to dissipate; her facial weakness and slurred speech disappeared a day later.

“The new stent retrieval devices for treating large-vessel occlusions are pretty remarkable advances,” English said. “I hate to think what Nora’s outcome would have been without this new technology. She’s living proof that Trevo has changed the way we treat stroke.”

Indeed, stent retrievers like the Trevo are rewriting the rules of ischemic stroke treatment. Last summer, the American Heart Association (AHA) and American Stroke Association issued guidelines recommending the use of stent retrievers in concert with tPA after five studies published in the New England Journal of Medicine found the devices reduced disability, improved neurological function, shortened recovery time, and increased the rate at which stroke survivors regain function. The guidelines advised the stent retrieval procedure be performed on adult patients within six hours of acute stroke symptoms, and only after imaging proves the affected cranial area is not permanently damaged. The endorsement was the AHA’s first in two decades.

Though stent retrievers are available at more than 1,000 U.S. stroke centers and hospitals, only about 13,000 procedures are performed annually—mostly at comprehensive stroke centers—because they require specialized training. The devices are now so technically sophisticated that properly trained interventional neuroradiologists could regularly remove clots within an hour, with the best treatment time of just under 20 minutes from the initial computed tomography scan.

Despite their promise, however, retrievers like the ProVue will most likely remain on the periphery of standardized treatment without significant market evolution. “…an impressive amount of strong clinical data has been released supporting the use of device-based treatment of acute ischemic stroke,” Katherine Owen, Stryker’s vice president of strategy and investor relations, noted to analysts during a first-quarter earnings conference call last spring. “We have pioneered this space in our unique and differentiated products. We expect the market will take time to evolve, which will require the automation of EMS transport and inter-hospital transfers, establishment of clinical guidelines, position incentives, and investment in new human and physical capital to absorb new patient volume. Clearly as the data comes out, it reinforces our excitement from the ischemic stroke market and its longer-term revenue potential.”

The market’s short-term potential isn’t too shabby, either: Neurovascular product sales were integral to the company-best gains experienced by Stryker’s Neurotechnology and Spine segment last year. Revenue climbed 5 percent (9.5 percent in constant currency) to $1.82 billion, driven largely by higher volume, product mix changes, and greater demand for neurotechnology devices, according to Stryker’s 2015 annual report.

That demand pumped up Neurotechnology proceeds 8.6 percent (14.2 percent in constant currency) to $1.08 billion—the second-largest product-specific increase within Stryker. Spinal sales, conversely, remained flat at $740 million, lagging behind the company’s broader portfolio due to pricing pressures, industry-wide efficacy concerns, and pure-play competition. The division could soon catch up to its brethren, however, as the company unveiled nearly a dozen new products at the North American Spine Society annual meeting last October. Potential cash cows include the Aero-LL, a lateral lumbar interbody and fixation system for use with autogenous bone graft in degenerative disc disease treatment; Tempus, an anterior cervical plating system featuring a secondary locking mechanism offering visual and tactile confirmation, large graft windows, and a low-profile design; BIO4, a next-generation viable bone matrix; BIOExpand demineralized cancellous sponge; and additions to the LITe (less invasive technologies) platform, including a decompression system and anterior and midline retractors, as well as anterior and lateral plates.

Stryker’s MedSurg segment welcomed some new additions as well in 2015. The Instruments division launched the 1588 AIM platform, a new camera system that enhances visualization of patient anatomy across six surgical specialties. The platform’s five key elements include IRIS (Infrared Illumination System), a visualization technology that aims to reduce the risk of ureteral damage; ENV (Endoscopic Near Infrared Visualization), designed to reduce the risk of common bile duct injury during laparoscopy; Clarity, intended to improve anatomy visualization by enhancing tissue level detail and intrabody structures, which can improve image quality up to 48 percent; DRE (Dynamic Range Enhancement), aimed at improving visualization in the surgical field by creating a brighter image in dark and posterior compartments; and Desaturation, the ability to decrease image color saturation.

“The reality is that this technology brings a lot to the table,” Santiago Horgan, M.D., chief of minimally invasive surgery at the University of California-San Diego, said when the 1588 system debuted in mid-December.

It brings a lot to imaging, really. But Stryker did literally bring some new technology to its line of hospital tables, beds, and patient furniture with its acquisitions of Turkish medical equipment manufacturer Muka Metal A.S. and Canadian low-weight hospital bed maker CHG Hospital Beds Inc. The Muka takeover significantly expanded Stryker’s presence in Turkey and Latin America, while the CHG purchase added to the company’s offerings an expandable low-height bariatric bed for acute care patients.

The purchases also boosted Medical revenue 7.5 percent (10.4 percent in constant currency) to $823 million. The accretion helped boost total MedSurg segment sales 3 percent (6.2 percent in constant currency) to $3.89 billion, though the unit’s overall performance also benefited from a 2.9 percent hike in Instruments proceeds ($1.46 billion) and a 3.4 percent increase in Sustainability revenue ($216 million). The gains, however, were slightly hampered by stagnating Endoscopy revenue, which crept up a mere $8 million to $1.39 billion.

Stryker’s Orthopaedics segment, which accounts for 43 percent of total company sales, posted the weakest growth in 2015 (year ended Dec. 31)—proceeds improved 1.7 percent (6.7 percent in constant currency) to $4.23 billion, driven mainly by a 13 percent surge in “Other” revenue ($266 million) and 4.9 percent jump in Trauma and Extremities sales ($1.29 billion). The increase, however, was offset by flatlining knee revenue ($1.4 billion) and a 2.1 percent decline in hip proceeds ($1.26 billion).

Hip sales remained hobbled by the company’s $1.43 billion Rejuvenate lawsuit settlement, announced in late 2014 and implemented last year. Stryker awarded victims of its faulty metal-on-metal Rejuvenate Modular Neck and ABG II Modular Neck implants roughly $300,000 each for the pain, problems, and injuries associated with the recalled hips. The majority of those payments were completed by the end of 2015.

Yet large joints weren’t a total drain on the Orthopaedics segment. The FDA gave the company permission to use its Mako robotic surgery system for total hip and knee replacements, expanding its indication for use with Stryker’s Triathlon Total Knee as well as the Accolade II, Secur-Fit Advanced, Anato, and Exeter femoral implants coupled with the Trident Acetabular system and engineered X3 polyethylene.

The broadened indications are a significant advance of Stryker’s strategy to differentiate itself through the Mako platform, which reportedly improves accuracy and surgical outcomes. The company already uses the Mako system to perform partial knee resurfacing.

Stryker is planning a limited market release of its new robotics offerings as it seeks to capitalize on the $1.65 billion acquisition of Mako Surgical in 2013. Adoption of the Mako system has been slower than expected due to concerns about the device’s cost and clinical benefits, but a four-prong approach to convince customers to invest in such a large capital investment (more than $1 million per surgical unit) has begun to pay off. The company sold 72 Mako units in 2015, with 43 percent of those systems (31) peddled in the fourth quarter alone.

The late-year surge in Mako sales helped lift Stryker’s 2015 revenue 2.8 percent to $9.94 billion. Gross profit rose 3.8 percent to $6.6 billion and net earnings nearly tripled, going from $515 million in 2014 to $1.43 billion last year, and net earnings per diluted share more than doubled, ending the year at $3.78.

Domestic sales outpaced the market, swelling 8.5 percent to $7.11 billion, but a second-half slowdown in China and Brazil contributed to a 9.2 percent decline in international sales ($2.83 billion). The trouble in those markets, however, was offset by solid growth in Europe, Japan, and Australia. Management realigned the company’s European businesses under the new Trans-Atlantic Operating Model in an effort to improve oversight and bring foreign sales more in line with the domestic business. Additionally, European Union headquarters relocated to Amsterdam, which produced a permanent tax benefit of more than 2 percent.

$9.67 Billion
NO. of EMPLOYEES: 26,000

Never let it be said that medical technology is uninspiring.

Meet Tadashi Kikuchi, M.D., and Galina Gheihman, two rather ordinary individuals driven to magnificence by Stryker Corp. innovations. Kikuchi, a surgeon at Bange Kosei General Hospital in Fukushima, Japan, is the company’s 6,000-knee-man, having reached that procedural milestone in January with the help of sales representative Toshikazu Shimazu (and Stryker’s lineup of artificial joints, of course).

Gheihman is a Harvard Medical School student inspired to pursue her dream career after suffering from a debilitating childhood spinal condition. The Toronto, Canada, native was an active youngster, participating in basketball, springboard diving and ballroom dancing, but developed lower back pain at 14—an age of tremendous physical change. The pain eventually affected her ability to play youth sports.

“What had been a dull, aching pain stretching across my lower back was soon joined by shooting, sharp nerve pain running down the backs of my legs and a tingling numbness in my calves,” Gheihman recalled in Stryker’s 2014 annual report.

In 2008, Gheihman was diagnosed with spondylolisthesis, a condition in which a vertebra in the spine moves forward out of its proper position onto the bone below. In children, spondylolisthesis usually occurs between the fifth bone in the lower back (lumbar vertebra) and the first bone in the pelvis area; the condition often can be traced to a birth defect in that area of the spine or  a sudden injury.

Two years after her diagnosis, Gheihman underwent surgery at Toronto Hospital for Sick Children, receiving Stryker’s Xia 3 implant to correct the vertebral misplacement and stabilize her lower back. The spinal system, used in more than 500,000 cases globally, features a buttress thread blocker that helps eliminate cross-threading, prevents screw head splaying and ensures secure closure.

Gheihman resumed her active lifestyle several months after the surgery with hikes and camping trips, and she put Stryker’s hardware to the test in 2011 by completing a 50-mile sea kayaking trip in Vancouver, British Columbia. Her back problems are now a distant memory.

“It’s been a dream come true,” Gheihman said, “and I have my surgeon, Dr. [Stephen] Lewis; the Toronto Hospital for Sick Children; and Stryker’s products, technology and physician technical support team to thank for it—not only for inspiring me to pursue medicine, but also for making it physically possible for me to do so.”

Perhaps even more inspiring than Stryker’s Xia 3 system is the Customized Mandible Reconstruction Plate, used last year to rebuild the lower jaw of a Kazakhstanian woman grievously disfigured by a misdiagnosis of terminal cancer. Based on anatomical data and a clinical analysis, the customized plate is designed specifically for the patient (indeed, the number and position of its screw holes vary by case). It’s also manufactured according to planned patient outcome, which eliminates the need for intraopertive adaptation.

The plate was implanted in Lessya Kotelevskaya, a 31-year-old former business owner with a hole in her cheek and no jawbone. Kotelevskaya lost her ability to eat and talk a decade ago after undergoing grueling radiation treatments for a bone malignancy she never had. The experience left her jobless, abandoned, homeless and dangerously thin—a fate she passively accepted until an older cousin brought her to the United States for medical treatment. Last year, she underwent reconstructive surgery at the University of Louisville Hospital in Kentucky, and was so moved by the generosity of her doctors and the success of the surgery that she currently is considering becoming a nurse.

Spiritual rebirths like Kotelevskaya’s abounded last year as Stryker diversified its product portfolio and enhanced its global regulatory training and patient education efforts. The company expanded its offerings mostly through acquisition, spending $916 million to augment its lineup of foot/ankle solutions, hips, spinal implants, surgical sponges, endoscopy instruments, operating room equipment (including lights), and surgical tables.

Stryker got the most bang for its buck with the $285 million acquisition of Small Bone Innovations Inc., the Morrisville, Pa.-based developer of the Scandinavian Total Ankle Replacement (S.T.A.R.) system. First designed as an anatomic non-constrained resurfacing prosthesis in 1978, the S.T.A.R. system—now available in more than 40 countries—is touted as “the only U.S. Food and Drug Administration-approved total ankle replacement for uncemented use.”

Besides the S.T.A.R. ankle system, Stryker inherited a bounty of other extremity products from Small Bone Innovations, including its silicone PIP finger joint implants, carpal fusion plate, distal radial volar plate (wrist), distal ulnar head replacement, proximal radial head (elbow) and extended stem. The additional merchandise will likely help Stryker better compete in the fast-growing U.S. extremities market, a segment estimated to be worth $4.2 billion next year.

Stryker found another good bargain with the $120 million purchase of Patient Safety Technologies Inc., a seller of bar-coded sponges and electronic counters through its wholly owned subsidiary, SurgiCount Medical.

Based in Irvine, Calif., SurgiCount began operating in 2006 and currently serves more hospitals (376) than its competitors, mainly, RF Surgical Systems Inc. and ClearCount Medical Solutions. SurgiCount’s bar-coded surgical sponges and towels, barcode scanner and compliance tracking software—all of which fall under the Safety Sponge System brand umbrella—are used in operating rooms to improve patient safety and quality, and reduce medical costs by preventing retained foreign objects after surgery. Roughly 2,300 such incidents (mostly abandoned sponges) are reported annually, burdening the U.S. healthcare system with $920 million in additional expenses.

Stryker also took steps to improve overall operating room safety and efficiency by snagging Bechtold Holding AG for $172 million last winter. The German company’s product suite includes surgical tables, equipment booms and surgical lighting systems—complimentary solutions that likely will strengthen Stryker’s presence in the global operating-room equipment market, which is expected to top $4 billion by 2019.

Expanding its gamut of sports medicine technology proved considerably more difficult for Stryker after longtime rival Smith & Nephew plc purchased ArthroCare in early February for $1.7 billion. Stryker quickly responded with an all-cash offer for privately held Pivot Medical Inc., maker of instruments and implants that treat femoroacetabular impingement syndrome. Pivot’s product platform provides efficient access to and restores hip mobility with minimal incisions.

Stryker executives said they expect Pivot’s offerings to enhance the company’s existing sports medicine lineup in knees and shoulders, and improve overall portfolio performance.

“We’ve done five acquisitions in the last year,” Chairman/CEO Kevin A. Lobo told CNBC “Mad Money” host Jim Cramer last fall. “Every one of those acquisitions strengthened our presence in orthopedics, strengthened our presence in specialty surgery and strengthened our presence in neuro[technology].”

All that fortification pumped up revenue considerably last year: Net sales swelled 7.2 percent to $9.6 billion and gross profit climbed 5.6 percent to $6.4 billion due to higher shipments of orthopedic instruments, trauma and extremity devices, endoscopy products, neurotechnology equipment, and other medical paraphernalia. Nearly 8 percent of sales growth was attributable to increased unit volume and product mix changes, while 2.5 percent was derived from acquisitions.

Operating income remained relatively flat at $1.2 billion but the company’s 2014 net earnings took a nosedive, plummeting 48.8 percent to $515 million, according to annual report data. Basic and diluted earnings per share suffered the same fate, succumbing to volatile foreign currency rates with respective 48.9 percent and 49 percent year-over-year losses.

Global macroeconomic volatility affected profits as well—particularly in Russia, Turkey, Brazil and Mexico—though Stryker’s weak performance in those countries partially was offset by double-digit gains in emerging markets. Japanese orthopedic sales also tumbled, as the company implemented an enterprise resource planning system there in the first quarter.

Overall growth was best in the United States, where net sales jumped 9.6 percent to $6.5 billion (representing 68 percent of 2014 total revenue). Europe, Middle East and Africa proceeds rose 4.2 percent to $1.37 billion, and Asia-Pacific sales climbed 3.7 percent to $1.36 billion. Canada and South America, however, spoiled Stryker’s otherwise spotless global growth spurt with its 5.9 percent revenue dropoff.

The company reconciled that sole earnings blemish with a flawless internal record, achieving solid gains in its three business segments and almost all product divisions. The MedSurg unit led in growth, expanding sales 10.7 percent to $3.7 billion due to the comeback of its Neptune Waste Management system, a device recalled in 2012 over improper use and lack of U.S. Food and Drug Administration (FDA) approval. The system, designed to eliminate exposure to fluids and/or smoke in the operating room, reappeared on the market with several improvements, including suction power codes, updated software to make the unit’s operation more interactive and responsive, and safety warning labels on the top, front and back of the device. A warning flag also was added to the IV (intravenous) pole for visibility.

The Neptune system homecoming mostly benefitted the MedSurg unit’s Instruments division, which posted a 12.2 percent spike in net sales in the year ended Dec. 31, 2014, to $1.4 billion. Endoscopy was close behind, surging 13 percent to $1.3 billion, while Medical grew 7.8 percent to $766 million. Sustainability products (reprocessed and remanufactured devices) fell out of favor as sales slid 1.8 percent to $209 million.

Stryker’s Orthopaedics segment (formerly its Reconstructive unit) ended the year with a perfect growth record, boosting total revenue 5.1 percent to $4.1 billion. All four product divisions contributed to the upswing, with orthobiologics, biosurgery and performance solution products leading the charge by way of a 24.2 percent revenue hike (to $236 million). Trauma and Extremities  pitched in with a 10.2 percent sales increase ($1.23 billion), followed by Knees with a 1.8 percent gain ($1.4 billion) and Hips with a 1.5 percent spike ($1.29 billion).

Hip sales likely were stunted to some extent by Stryker’s decision last fall to settle thousands of patient lawsuits over its recalled metal-on-metal Rejuvenate Modular-Neck and ABG II Modular Neck hip implants for $1.42 billion. Cleared by the FDA in 2008 and 2009 respectively, the devices were pulled from the market in July 2012 after dozens of patients reported problems with the artificial implants (among them: pain, inflammation, infection, loosening, compromised mobility, and in extreme cases, failure). Stryker executives expected the settlement to have a minimal impact on 2014 earnings since most of the payments would be dispersed in 2015.

Likewise, fiscal fallout from the company’s OtisKnee settlement had a minimal impact on Knee revenue. In early December, Stryker agreed to pay the U.S. government $79.5 million to settle criminal and civil charges that its OtisMed Corp. subsidiary sold devices used in knee replacement surgery without approval from the FDA.

Such legal drama was lacking in Stryker’s Neurotechnology and Spine segment, which posted an overall 5 percent sales increase to $1.7 billion. Neurotechnology product proceeds climbed 9.4 percent to $1 billion, bolstered undoubtedly by the February launch of the Trevo XP ProVue Retriever, an expansion of the firm’s ProVue Retriever line for acute ischemic stroke treatment. The addition provides additional size and shape options for doctors. Spine sales slipped 0.4 percent to $740 million despite (or perhaps on account of) the March acquisition of CoAlign Innovations Inc., a manufacturer of implants for lower lumbar procedures, and the November debuts of the LITe TLIF Procedural Solution and Aero-AL anchor-based ALIF technology.

The LITe (less-invasive technology) TLIF system combines several innovations, including the LITe Pedical Based Refractor, the ES2 Percutaneous Spinal System, and the AccuLIF Expandable Lumbar Interbody Fusion technology. The LITe Pedical Based Refractor allows for direct visualization and a less invasive working corridor, the ES2 system features an integrated blade screw with built-in reduction, and the AccuLIF technology is designed to help restore segmental lordosis and sagittal balance.

The Aero-AL system compresses across the interbody space. It features patented compression technology designed to draw the vertebral bodies toward the implant to create compressive forces at the implant-to-endplate interface, offering clinicians a more streamlined, less disruptive approach compared with traditional screw-based ALIF technologies.

$9 Billion
NO. OF EMPLOYEES: 25,000

Michael J. Mauboussin never really considered himself a lucky person. Like millions of other rational thinkers, he deemed luck to largely be a self-created fate rather than random and esoteric.

But a chance brush with Dame Fortune forever changed his outlook.

During his final interview with a top director at the now- long-defunct Wall Street investment banking firm Drexel Burnham Lambert Inc., Mauboussin spotted a trash can emblazoned with the Washington Redskins logo underneath the executive’s desk.

A die-hard football fan, Mauboussin spent his entire interview discussing the pair’s shared passion for the all-American sport, never once broaching the subject of banking.

Within days, he had scored a job offer. Months later, Mauboussin learned the Redskins fan vetoed reviews from other interviewers to hire him.

“My career,” Mauboussin wrote in his 2012 book, “The Success Equation,” “was launched by a trash can.”

Drawing from his more than 25 years of financial experience at investment firms such as Legg Mason Capital Management and Credit Suisse—where he currently is managing director and head of global financial strategies—Mauboussin’s book explores the ways in which luck and skill collide in business, investing and sports (naturally). Business decisions like CEO pay or mutual fund investments often disregard the element of luck, assuming that prior successes solely are linked to skill.

But good fortune plays a more critical role in professional success nowadays, Mauboussin contends. The reason? Globalization and improved skill sets among the planet’s populace are causing luck to increasingly become the deciding element separating outcomes, he theorizes.

In his book, Mauboussin fittingly supports his hypothesis (dubbed the “Paradox of Skill”) with a baseball analogy involving Hall of Fame slugger Ted Williams, the last player to eclipse a .400 batting average for an entire season. While the game’s current players are just as talented as Williams, none have been able to achieve his feat because the profession as a whole has improved, thus narrowing the standard deviation of skill, Mauboussin explains.

“If you think about batting average for your season and your player, some level of skill plus some level of luck gives you your outcome. What’s happened generally is that the standard deviation of skill has gone down,” he noted in a March 2013 interview with Wharton School management professor Adam M. Grant. “Why? Because you’re recruiting players from the world now, versus from just parts of the United States. You’re training better. You’re coaching better…The point is this paradox of skill. We’ve seen the differential skill narrowing. We see it really all over the place. We see it in the world of investing. We see it in the world of business. I think it is very interesting. As skill improves, especially in competitive markets, luck becomes more important [in] determining outcomes.”

Indeed, luck may have had a bigger role in determining outcomes at Stryker Corp. last year, though President/CEO Kevin A. Lobo likely would argue otherwise. Yet the stark reversal of fiscal fortunes in 2013 is a bit puzzling, particularly since Lobo was still getting his feet wet leading the company (he assumed the top job on Oct. 1, 2012) and the various market challenges remained unchanged.

Two years ago, Stryker seemed trapped in a downward spiral. Its hip sales were flat, international sales were down 1.3 percent, Medical division revenue fell 4.3 percent, and exorbitant Rejuvenate and ABG II modular neck-hip stems recall charges stymied third-quarter Reconstructive sales and cut fourth-quarter net income by 37 percent. In addition, the company paid the federal government $33 million to close an investigation into its sales and marketing practices for the OtisKnee implant.

Last year, that downward slide came to an abrupt halt as revenues increased throughout Stryker’s three business segments and various product divisions. Whether the turnaround is attributable to self-made luck or Fors Fortis has yet to be determined, but Lobo takes partial credit in a letter he penned to shareholders, outlining the steps the firm took to shore up profits.

“In 2013, we met our primary objectives—achieved strong top-line growth, delivered solid operational earnings, expanded globally, and invested through R&D and acquisitions to strengthen our product and service offerings,” he reminded investors at the start of Stryker’s 2013 annual report. “After completing my first full year as CEO, I am excited about our company’s achievements and the progress we have made in strengthening our leadership in the medical technology industry.”

That progress was attained through a mix of acquisitions, product releases, and perhaps, a little luck.

Stryker bookended the year with two major purchases, acquiring Trauson Holdings Company Limited in March for $764 million and MAKO Surgical Corp. in late December for $1.65 billion. The company also announced its intent in December to purchase Patient Safety Technologies Inc. for $120 million, adding to its portfolio a device that reduces the risk of surgical sponges being left in patients after surgery.

The Trauson deal gave Stryker an immediate leading foothold in China’s growing orthopedics market, a sector that will nearly double in size to $2.7 billion next year, according to Frost & Sullivan experts. Trauson, which posted $60 million in sales in 2011, is China’s largest manufacturer of trauma devices, specializing in reconstructive devices like pelvic plates and artificial joints. Boasting a network of more than 663 distributors covering 3,840 Chinese hospitals, Trauson leads the Middle Kingdom’s orthopedic market with a 5 percent sales share, ahead of China Kanghui Holdings Inc.(purchased by Medtronic Inc.) with 4 percent and a unit of Shandong Weigao Group Medical Polymer Co. at 3 percent.

Similarly, the MAKO purchase provided Stryker with instant access to the robotic surgery market. And while the premium was hefty ($30/share), analysts claim the deal can give the company a competitive advantage over rival orthopedic implant manufacturers. The product is complementary to Stryker’s existing line of replacement hip and knee joints and could appeal to hospitals looking to improve procedural efficiency.

Founded in 2004, MAKO develops orthopedic surgical systems as well as knee and hip implants for treating early to mid-stage osteoarthritis. Its Rio surgical system includes a robotic arm that improves the exact placement of artificial joints.

“Robot-assisted procedures have the potential to aid hospitals, third-party payers and patients as they may reduce costs by shortening hospital stays and recovery periods and may reduce the amount of rehabilitation and medication,” Stryker spokeswoman Yin Becker told The Wall Street Journal in an email. “We believe orthopedic surgical robotics provides an opportunity to expand and grow significantly from its position today and has the potential to become a game-changing technology longer term.”

Having closed the MAKO deal in mid-December and disclosed its purchase of Patient Safety Technologies on New Year’s Eve, Stryker’s acquisitions added little to the company’s bottom line last year, boosting overall sales only 0.8 percent. The Trauson purchase, however, likely contributed to double-digit gains in emerging market sales, which constituted more than 7 percent of the company’s 2013 total revenues.

Surprisingly, respective geographic market growth was best in the United States, where proceeds jumped 5.7 percent to $5.9 billion, annual report data show. Europe, Middle East and Africa sales increased 3.9 percent to $1.3 billion, while “other” foreign markets (Canada and much of Latin America) offset the 1.2 percent slide in Asia-Pacific revenue with a matching sales haul.

Overall, international revenue rose 1.3 percent in the year ended Dec. 31, 2013, helping Stryker boost net sales 4.2 percent to $9 billion and increase its net profit 2.9 percent to $6 billion. The company’s cash flow was up 14 percent compared with 2012, and its adjusted gross margin expanded by 30 basis points, excluding the impact of the Affordable Care Act’s 2.3 percent medical device tax.

“We delivered consistent results throughout 2013,” Lobo said in the annual report. “Our organic growth (excluding acquisitions and foreign exchange) of 5 percent was at the high end of medical technology. As I travel the world and see our progress, it is clear to me that we are well-positioned for the future.”

The main architects of Lobo’s rosy outlook are Stryker’s three business units, all of which posted solid gains last year. Neurotechnology and Spine spearheaded the growth, surging 5.6 percent as reported to $1.6 billion due to improved product diversification and increased demand for Stryker’s neurotechnology devices. Such global desire propelled Neurotechnology division sales 8.7 percent to $915 million—the second-highest increase in the company. Spine, which has faced its fair share of challenges in recent years, climbed an impressive 2.1 percent to $743 million.

Likewise, hip and knee sales shed past woes to help buoy Reconstructive unit revenues 4.8 percent to $4 billion, annual report statistics indicate. Sales drivers included the Tritanium Cementless Baseplate for the company’s Triathlon Knee System, which combines biologic fixation with Triathlon’s kinematics to provide surgeons with an additional option for cementless knee arthroplasty; and the Secur-Fit Advanced Femoral Hip Stem, designed to accurately restore biomechanics by leveraging the company’s Orthopaedics Modeling and Analytics systems. Consequently, knee proceeds rose 1.1 percent to $1.3 billion and hip sales jumped 3.2 percent to $1.2 billion.

Stryker’s Trauma and Extremities division posted the best year-on-year growth, surging 12.8 percent to $1.1 billion. Executives attributed the gain to the March launch of the Universal SmartLock Hybrid MMF (maxillomandibular fixation) system, an innovation that combines the strength and rigidity of arch bars with the safety and efficiency of MMF screws. The self-drilling, locking technology of the SmartLock system’s screws allows for purchase into both the bone and the plate for additional stability and also eliminates the need for interdental wiring that is required with arch bars.

The MedSurg unit trailed behind its sister segments in sales, garnering an additional 2.9 percent in revenue ($3.3 billion) compared with 2012 figures. Overall unit growth was down slightly from the 3.3 percent recorded in 2012, as a little misfortune (or misstep) led to flat revenue in the Instruments division. The bad luck took the form of a second U.S. Food and Drug Administration (FDA) warning letter over quality issues at a Portage, Mich., facility that manufactures its Neptune waste management system. The warning letter referenced quality system observations made during a November 2012 inspection and cited Stryker for failing to notify the FDA about a product recall and for marketing the Neptune waste management system without 510(k) clearance.

Fortuitously, the company received such clearance in December for its Neptune 2 waste management system, a device that eliminates harmful exposure to fluids and smoke in the operating room. The closed system collects and disposes of surgical waste without operator assistance to prevent contact with infectious fluids and surgical plumes.

Fortunately for Stryker, Lady Luck stepped in to offset flat Instrument revenues with a 2.8 percent increase in Medical sales ($710 million) and a 5 percent expansion in Endoscopy proceeds ($1.1 billion).

$8.7 Billion
NO. OF EMPLOYEES: 22,010

Stryker Corp.’s 2012 narrative reads like a fairy tale without the happy ending: The company triumphed over a tough economy and still-stagnant joint replacement market to grow sales, profit and adjusted net earnings by respectable margins, but it was blindsided in the year’s final quarter by exorbitant recall charges that dragged down income.

The cost of last summer’s Rejuvenate and ABG II modular neck-hip stems recall, along with various restructuring efforts, cut fourth-quarter net income by 32.7 percent to $270 million. On the quarter, Stryker spent about $133 million to handle the repercussions of its global retraction, but that price tag could nearly triple as the manufacturing behemoth covers the cost of possible replacement surgeries and settles lawsuits with disgruntled customers.

Stryker halted worldwide production of the all-metal implants in June 2012 amid concerns of fretting, corrosion and failure in some cases. At least 45 patients have claimed the modular neck-hip stems—which attach to artificial hips—caused pain and/or tissue swelling.

Freshman President and CEO Kevin A. Lobo ignored the recall blemish in his annual letter to investors, preferring instead to focus on the more enchanted aspects of his company’s performance last year, specifically, double-digit growth in emerging markets and neurovascular products.

“Our tradition of high performance continued in 2012, a year of significant achievements,” Lobo told shareholders in his first literary lecture for the company’s 48-page annual report (he assumed the top job on Oct. 1). “Despite the challenging marketplace…most of our U.S. businesses accelerated, with particular strength in reconstructive, instruments and sustainability solutions. Internationally, we achieved strong double-digit growth in emerging markets and [we] are pleased with our neurovascular business, which also had double-digit growth.”

The Neurovascular unit cast its spell over the company (and Lobo) through the Trevo Pro Retriever and Trevo ProVue Retriever blood clot removal devices. The stent-based products—designed for use in acute ischemic stroke (AIS) patients—are only the fourth mechanical thrombectomy devices to receive U.S. Food and Drug Administration (FDA) approval for AIS. Clearance for the Trevo Pro came on the heels of clinical trial results that showed significantly greater revascularization rates for the product compared with Stryker’s Merci Retriever system (86.4 percent vs. 60 percent). Functional outcomes also improved, with 40 percent of Trevo Pro patients achieving a modified Rankin score of two or less compared with 21.8 percent of Merci patients. Other measures that favored the Trevo Pro included National Institutes of Health Stroke Scale scores and hospital length of stay.

“In this patient population, rapidly restoring blood flow to the brain is critical,” said neurologist Wade Smith, M.D., of the University of California San Francisco Medical Center. “This technology advances our ability to help many patients avoid the devastating effects from a large stroke if they can get to a comprehensive stroke center quickly for treatment.”

Likewise, the Trevo ProVue Retriever—launched worldwide in November—can help minimize AIS damage, but it also potentially can identify underlying stenoses because the tool is fully visible during the clot removal procedure (previous iterations only have provided visibility to the device’s edges).

“Trevo ProVue sets a new standard in stent retrieval technology,” Mark Paul, president of Stryker’s neurovascular division, said when the product debuted. “It’s the first fully visible device allowing physicians to visualize placement, clot interaction and retrieval—that can make a big difference in patient treatment.”

Both Trevo Pro devices certainly made a big difference in the company’s neurovascular net sales last year—revenue jumped 12.3 percent to $842 million, according to the annual report. The growth helped boost total Neurovascular and Spine segment sales by 9.2 percent to $1.56 billion. Spinal product sales climbed 5.8 percent to $727 million.

The Neurovascular and Spine unit was Stryker’s top-performing business in 2012, outpacing growth in both the MedSurg and Reconstructive segments by nearly a 3-1 margin. The MedSurg unit posted a 3.3 percent gain in total net sales, due mostly to a 6.2 percent surge in medical instrument revenue while the Reconstructive division generated a 3.1 percent net sales increase.

The likely driver of Stryker’s $1.26 billion in net instrument revenue was the System 7 surgical power tools launched in early spring. Used in joint replacement procedures, the System 7 family includes a less noisy saggital saw; a dual trigger rotary with substantially increased torque; a recipricating saw; longer-lasting batteries (the small battery lasts 220 percent longer than previous versions, while the large battery lasts 183 percent longer); a sternum saw; sealed sterilization containers; a preventative maintenance program; and a remote device management system that transfers device usage data to remote Stryker support teams to help monitor and recommend ongoing tool maintenance.

Another boon to MedSurg’s bottom line was the 1488 HD 3-Chip Endoscopic Camera System, which features complementary metal oxide semiconductor technology (used to build integrated circuits) and premium optics to provide doctors with a clear, bright image. The device also standardizes video systems to one platform.

In the Medical division, Stryker launched its Power-LOAD cot fastener system for lifting and lowering ambulance beds. Executives claim the system improves patient safety by reducing spinal loads and consequently, the risk of cumulative trauma injuries.

Despite its advantages to the trauma patient, however, the Power-LOAD cot fastener system failed to keep total Medical sales out of the red last year. Revenue tumbled 4.3 percent to $691 million, offsetting the 2.9 percent rise in endovascular product sales ($1.1 billion). Yet the loss—the sole spoiler of a flawless financial record—had little effect on total MedSurg sales of $3.26 billion.

Still, there were other foibles along Stryker’s path to fiscal perfection, such as the Rejuvenate and ABG II recalls (which stymied third-quarter Reconstructive sales and fourth-quarter diluted net earnings) and a $33 million payoff to close a federal investigation into the sales and marketing of the company’s OtisKnee implant. The U.S. Department of Justice subpoenaed Stryker in 2010, alleging that it violated federal laws by selling a device the FDA hadn’t cleared for marketing.

Nevertheless, the Reconstructive unit held up well last year, posting an overall 3.1 percent gain on $3.82 billion in sales. Trauma and extremity devices were the top revenue-generators for the division, collecting $989 million, a 6.2 percent increase compared with 2011 and a 17 percent rise compared with the products’ 2010 total of $845 million.

The Accolade II Femoral Hip System launched by Stryker last year features a femoral stem designed for cementless, press-fit application. The proximal region of the stem is coated with PureFix HA over a commercially pure titanium plasma spray substrate, according to the company. The morphometric wedge—an evolution of the tapered wedge—is characterized by its variable size-specific medial curvature. Image courtesy of Stryker.

Hip and knee sales performed surprisingly well for the company, considering the ongoing fluctuations in demand for elective procedures and continuing brouhaha over metal-on-metal implants. A study funded by the National Joint Registry and published last spring in The Lancet found that patients with all-metal hip implants are nearly three times as likely to need their artificial joints repaired or replaced after five years (6 percent vs. 1.7-2.3 percent for ceramic or partially plastic joints).

“If I were a patient, I would not choose a metal-on-metal hip,” study author Ashley Blom warned when the findings were released.

A growing number of convalescents no longer are choosing them, either: Industry estimates indicate metal-on-metal hip sales in the U.S. and Europe plunged from 20 percent of the market in 2007 to less than 2 percent in 2012.

The staggering loss in market share helps explain Stryker’s flat hip sales ($1.23 billion) in the year ended Dec. 31, 2012, despite the launch of a computer-assisted surgery system for its Gamma3 Locking Nail System and a hip stem with a morphometric wedge design (the Accolade II).

Knee sales, conversely, grew 3 percent to $1.35 billion, thanks largely to the success of Stryker’s GetAroundKnee direct-to-consumer advertising campaign. The savvy scheme not only publicized the benefits of the company’s 5-year-old Triathlon Knee System, it also represented a change in the way executives approach innovation and market share.

“There is this feeling that innovation is the enemy of good, cost-efficient healthcare,” Lobo said at Cleveland Clinic’s 2012 Innovation Summit. “Innovation doesn’t mean a more expensive implant. The freshness index isn’t as important as it used to be. We have a very fast-growing knee business, and it’s not all new knees.”

Such a novel approach to innovation is just one facet of Lobo’s long-term growth strategy for Stryker. Other components of his plan include building scale in emerging markets and other unchartered lands; shifting innovation teams from groups of R&D engineers to groups of engineers, IT technicians, supply chain personnel and health economists; cost cutting; and restructuring (Lobo already reshuffled his executive team’s roles, adding Spine to Orthopaedics Group President David K. Floyd’s responsibilities and tacking on the Neurotechnology business to MedSurg Group President Timothy J. Scannell’s duties).

Lobo’s plan also could entail more M&A. Over the last few years, Stryker has gone on quite a spending spree, snatching up such companies as Concentric Medical, specialty spine company Orthovita Inc., Ascent Health and the neurovascular division of Boston Scientific Corp. The company cut back on its M&A spending last year, shelling out a mere $100 million in cash for Israeli stent technology developer Surpass Medical Ltd. The company’s key product, the CE Marked NeuroEndoGraft family of flow diverters, is designed to redirect blood flow away from an aneurysm, allowing a stable clot to be formed within the aneurysm pouch.

“The strategy is going to continue to evolve…” Lobo told analysts last fall.

His strategy may still be evolving, but it already has shown promise: Overall sales jumped 4.2 percent in 2012 to $8.65 billion Net income fell 3.5 percent to $1.29 billion , according to Stryker’s annual report. U.S. sales rose 7.3 percent to $5.65 billion but foreign currency exchange rates stymied international sales by 1.3 percent ($2.9 billion). Revenue, however, was up 4 percent in the Asia/Pacific region ($1.33 billion) and 7 percent in “other foreign countries” (Canada and Latin America).

­­$8.3 Billion
NO. OF EMPLOYEES: 21,241

If that famous 19th century idiom is true—the one proclaiming imitation to be the most sincere form of flattery—then former Stryker Corp. Board Chairman John W. Brown should be tickled pink. Brown, now retired from the Kalamazoo, Mich.-based orthopedic manufacturer, was quoted by executive management in the company’s most recent annual report.

“Since Dr. Stryker’s first invention, we have been a company of inventors, experimenters and achievers—all united behind the single goal of improving the delivery of healthcare in ways that positively affect the work of caregivers and the lives of patients,” Interim CEO, Vice President and Chief Financial Officer Curt R. Hartman wrote in a four-page letter to shareholders at the start of Stryker’s 2011 annual report. (Hartman assumed the post after former Chairman/President/CEO Stephen P. MacMillan resigned abruptly in February 2012). “I am excited about our future and our prospects for continued growth. To borrow a quote from John W. Brown, Chairman Emeritus, which graced these pages several years ago, ‘I am still long on Stryker.’ ”

Hartman has good reason to be “long” on his company: Revenue grew by $1 billion, or 13.5 percent last year (to $8.3 billion) and adjusted net earnings ballooned 12 percent to $3.72, finishing near the high end of executives’ original guidance.

Further cementing Hartman’s rosy outlook on Stryker most likely was the 9.1 percent jump in gross profit and the 5.6 percent rise in net earnings to $1.34 billion in the year ended Dec. 31, 2011. Solid growth in both domestic and international sales indubitably contributed as well—U.S. revenue swelled 9.9 percent to $5.2 billion while international proceeds totaled $3 billion, a 13.4 percent increase in constant currency compared with 2010.

Indeed, Stryker’s financial health was nearly picture-perfect last year, save for a 3.7 percent decrease in operating income (a mere hiccup for all intents and purposes) and a $38 million severance outlay to cover the pensions and health benefits of employees affected by a restructuring that will reduce the company’s global workforce 5 percent by the end of 2012. Stryker initiated the restructuring to realign resources and potentially minimize the impact of the 2.3 percent medical device excise tax that is set to take effect next year.

Stryker also incurred an additional $38 million in asset impairments and other contractual obligations in 2011, but the company recouped that expense (and the severance charge) by negotiating a $99 million settlement with the U.S. Internal Revenue Service (IRS) over the firm’s cost-sharing arrangement with two wholly owned Irish entities.

While notable, the IRS settlement was mere pocket change compared with the additional revenue generated by each of Stryker’s three business segments last year. The most impressive gains came from the Reconstructive unit, which surmounted dramatic changes in the global healthcare environment and lower surgical procedural volume to achieve a 4.5 percent rise in sales.

“Our reconstructive implant business was affected as high unemployment and fears about job security drove down the number of elective surgical procedures,” Hartman told shareholders in the annual report. “For the first time ever, visits to doctors’ offices in the U.S. declined. At the same time, pricing pressures from hospitals and Europe’s debt crisis further curtailed our revenues. Conversely, providers in emerging economies such as India and China are struggling with how to meet soaring healthcare demands. Despite these headwinds, we managed to post a year of solid growth…”

The Neurotechnology and Spine segment was the biggest contributor to that growth, generating an additional 48.4 percent in revenue last year. Executives attributed much of that increase to torrid sales of neurotechnology products throughout the year and the rollout of the company’s next-generation Target detachable coils (manufactured by Boston Scientific Corp., the devices are designed to occlude blood flow in vascular abnormalities).

Neurotechnology product sales more than doubled last year, reaching $750 million, or nearly half of the $1.4 billion in total segment revenue, according to Stryker’s annual report. Spinal product sales climbed 6 percent to $687 million.

The MedSurg segment turned in a solid performance as well, surpassing $3 billion in global revenue (ending the year with $3.1 billion in net sales) for the first time in company history. Patient handling and medical equipment devices recorded the highest sales volume increase (23.8 percent) but the lowest sales total ($722 million). Instruments, conversely, generated the most revenue for the segment—$1.2 billion—but experienced the smallest change in sales volume (9.4 percent compared with 2010 data). Endoscopy devices filled in the financial middle gap, falling behind Medical in sales volume change (9.6 percent) and trailing Instruments in net proceeds ($1 billion).

Stryker’s Reconstructive segment posted some imposing gains in 2011, considering the challenges it has faced since the start of the Great Recession. Hip and knee sales comprised the lion’s share of revenue for the unit, earning $1.2 billion and $1.3 billion respectively. Hip implant sales grew 6.4 percent compared with 2010 while knee replacement sales remained basically flat, rising a negligible 0.7 percent. Trauma and extremities product sales jumped 10.1 percent to $931 million in 2011, helping the unit to accrue $3.7 billion in total proceeds.

While much of Stryker’s growth last year can directly be linked to product portfolio changes and higher demand for its implants, the company also benefited from a spate of savvy acquisitions as well as healthy investments in research and development.

R&D spending, in fact, grew 17.3 percent to $462 million in 2011—the largest increase since the carefree days of extravagance in the early 2000s. “Our research and development spending…is driving our internal innovation pipeline as well as fueling additional innovations in our acquired businesses,” Hartman noted in his shareholder letter. “By optimizing our cash flow capabilities to pursue both focused M&A and investing in internally driven innovation, we believe we are well-positioned to outpace our competitors.”

Stryker certainly outpaced its competitors in acquisitions last year. It kicked off 2011 by closing its $1.5 billion acquisition of Boston Scientific’s neurovascular business, a move that immediately made the company a leader in the increasingly competitive $900 million global neurovascular market.

Other conquests included the $316 million purchase of Malvern, Pa.-based Orthovita Inc., and the $150 million acquisition of French metal alloy manufacturer Memometal Technologies. The Orthovita purchase enables Stryker to complement its existing orthobiologics offering through Orthovita’s signature products, including Vitoss (a bone graft substitute), Cortoss (a bone augmentation material) and the Vitagel surgical hemostat. The purchase also is likely to help Stryker better compete with rivals Medtronic Inc. and Johnson & Johnson in the $5 billion orthobiologics market.

Taking Memometal under its wing, on the other hand, is expected to strengthen Stryker’s presence in the fast-growing market for foot and hand products. It also is likely to help the company capture a greater share of the podiatric surgery sector, analysts said.

Executives targeted privately held Concentric Medical Inc. of Mountain View, Calif., specifically for its array of products that treat acute ischemic stroke (AIS), a “brain attack” that cuts off blood flow and oxygen to the human body’s most complex organ. Ischemic strokes are the most common (comprising approximately 87 percent of all “brain attacks”) and generally are caused by blocked arteries in the brain.

Stroke is the fourth-leading cause of death in the United States, killing more than 133,000 Americans annually, according to data from the Centennial, Colo.-based National Stroke Association. About 795,000 U.S. residents suffer a stroke each year.

“The Neurovascular and Concentric acquisitions created what we think of as one of the most exciting stories in medical technology today,” Hartman said in the annual report. “This is a story about Stryker and how we can bring together technologies and treatment capabilities not just to improve lives, but also to help save them. By coupling the hemorrhagic stroke treatment capabilities with Concentric’s devices to treat AIS, Stryker is now a world leader in complete stroke care and is able to bring life-saving technologies to patients.”

Those technologies include the Merci Retrieval System, a minimally invasive catheter-based system designed to retrieve and remove clots in patients who experience AIS; and the DAC family of catheters, which help improve distal neurovascular access and provide additional microcatheter stability closer to the treatment site.

Stryker also rolled out some innovative new non-life-saving technologies last year. Among the standouts was the MDM X3 Modular Dual Mobility Mobile Bearing Hip System, a third-generation device designed to enhance stability and jump distance, which could lead to increased range of motion in certain patients. The MDM X3 system also is applicable to a broader patient population.

Other products that made their market debuts in 2011 included the ShapeMatch Cutting Guides (for use with Stryker’s Triathlon Total Knee System) and the VersiTomic G-Lok implant. The cutting guides, according to executives, use 3-D imaging software to develop a customized pre-operative surgical plan for patients undergoing knee procedures; studies have shown these guides to improve procedural efficiency and reduce recovery times.

The G-Lok is designed to provide suspension fixation of soft tissue to bone during reconstruction procedures. The G-Lok’s rod-shaped design creates a spring-like action that allows the device to automatically deploy on the cortical surface. G-Lok’s loop material is made from high performance medical-grade fiber and was created specifically to increase creep resistance as well as enhance strength. The product also comes in a larger size (the G-Lok XL), tacking on an additional 5 millimeters in length and 1 millimeter in width.

$7.3 Billion
NO. OF EMPLOYEES: 20,036
According to American journalist David Brinkley, “A successful man is one who can lay a firm foundation with the bricks others have thrown at him.”

The economy has thrown plenty of bricks at industry over the past few years. Add some regulatory and reimbursement challenges to the stones being hurled and it became (is) quite a pelting. It seems, however, that Stryker Corp.’s foundation is pretty firm. Talk to the company’s leadership, and they’ll tell a story that’s close to the perfect medtech win-win scenario: clinical success and a healthy (and growing) profit picture.

Net sales for the fiscal year (ended Dec. 31) were $7.3 billion, an 8.9 percent increase compared with 2009. Domestic sales totaled $4.8 billion for the year, up 11 percent, and international sales hit $2.5 billion, an increase of 5.1 percent. Increased sales of hips, knees and trauma implants helped to push worldwide revenue from orthopedic implants to $4.3 billion, up 4.6 percent. According to Stryker, it claimed approximately 19 percent of the worldwide reconstruction market in 2010 (hips, knees, extremities and bone cement), behind Zimmer Holdings Inc. and Johnson & Johnson. Global sales from the company’s MedSurg division (surgical equipment and navigation systems, endoscopic and communications systems, and patient handling and emergency medical equipment) were $3 billion, up 15.7 percent. Net earnings were approximately $1.3 billion, representing a 15 percent increase compared with 2009.

Net earnings per share increased 13 percent to $3.33 in 2010, exceeding the company’s early projections. But, according to Stephen P. MacMillan, chairman, president and CEO of the Kalamazoo, Mich.-based company, it was his firm’s ongoing focus on operational cash flow—which exceeded $1.5 billion for the first time—that fueled Stryker’s progress in 2010.

MacMillan also noted that acquisitions boosted top-line growth.

“In 2010 we augmented our unique sales footprint by leveraging our balance sheet through several key acquisitions that both strengthen our core product offering while also allowing us to expand into fast growing adjacent medical technology markets,” he said. “Combined with the continued double-digit increase in our annual dividend and ongoing share repurchases, we believe these moves optimized shareholder return and position our company for long-term growth.”

The company’s purchases in 2010 varied in size and product line.

By far, the blockbuster buy—though not purely orthopedic—was for Boston Scientific Corp.’s neurovascular business for $1.5 billion (including $100 million in milestone payments). Boston Scientific was competing with—and was starting to lag a little behind, according to some analysts—other medtech titans such as St. Jude Medical Inc., Medtronic Inc. and Johnson & Johnson (with its recent purchase of Synthes Inc.) in the in the billion-dollar neurovascular market. The neurovascular business of BSX had 2009 sales of $348 million. The unit manufactures devices for the treatment of neurovascular disease, including detachable coils, stents, microcatheters and guidewires.

“The acquisition of Boston Scientific Neurovascular is an important strategic move as it positions us as a leader in the highly attractive neurovascular space, which we believe is well positioned to remain one of the fastest growing and most innovative sectors in medical technology,” MacMillan said at the time of the announcement. “Today, through our Instruments, Orthopaedics and Spine divisions, Stryker offers complementary neurosurgery products to many of the same customers called on by Boston Scientific Neurovascular. Going forward, the proposed acquisition allows us to substantially broaden our product offerings and relevance to these customers and over time, we believe will afford us with a unique competitive advantage. We are highly enthusiastic regarding the prospects for Boston Scientific Neurovascular’s next generation portfolio of coils and other diagnostic and therapeutic devices, which are expected to provide the opportunity to regain momentum and return to market leading growth.”

The company also acquired privately held Gaymar Industries Inc. for $150 million cash and Porex Surgical, a division of Fairburn, Ga.-based Porex Corp., for an undisclosed sum. Orchard Park, N.Y.-based Gaymar specializes in support surface and pressure ulcer management solutions as well temperature management technology, while Porex Surgical makes bioimplantable porous polyethylene products for use primarily in reconstructive surgery of the head and face. The purchase of Porex complements Stryker’s product offerings in the craniomaxillofacial (CMF) market. In 2010, Stryker estimated that it held 16 percent of the $6.2 billion trauma and CMF market behind Synthes (now J&J), which claimed a solid 38 percent.

On the divestiture side, Stryker inked a $60 million deal to sell its bone growth products unit to Japan-based Olympus Corp. at the end of the 2010 fiscal year. The OP-1 product family, made by Hopkinton, Mass.-based Stryker Biotech, includes the OP-1 Implant, OP-1 Putty, Opgenra and Osigraft, for use in orthopedic bone applications. The companies’ agreement includes the transfer of Stryker’s Lebanon, N.H., manufacturing facility.

While new purchases mean new products and profits, the fiscal year also offered a little closure. In March, the company settled several ongoing issues with the U.S. Food and Drug Administration (FDA). Quality system compliance issues finally were resolved at its Mahwah, N.J., manufacturing facility after a re-inspection by the FDA in 2009 and following the implementation of corrective actions. The company initially received a warning letter from the agency in 2007.

“The resolution of the warning letter is another important step in demonstrating our firm commitment to significantly transforming our quality systems throughout our organization,” MacMillan noted. “The investments we have made, and will continue to make, are resulting in solid progress toward our goals.”

The company also had received a warning letter from the FDA regarding compliance with certain quality system requirements at its reconstructive implant manufacturing facility in Cork, Ireland, in 2007, and yet another in 2009 related to compliance issues for one of its CMF implant products that previously was sold through its CMF distribution facility in Portage, Mich. Following FDA re-inspection of the Ireland facility and additional corrective actions at both the Ireland and CMF facilities, the company got the green light from the FDA in 2010.

Since receiving its first letter in 2007, Stryker has been working to transform and streamline its quality systems. Where it once had 23 different quality systems across 23 different manufacturing locations, the company took steps to implement a single organization-wide process for quality and compliance.

The effort was a $200 million project that, according to MacMillan “added deep technical expertise, regulatory insight and individual ownership of specific quality processes.” He said that rather than focusing solely on correcting deficiencies in quality processes, Stryker focused on driving systemic improvements. The company’s chief executive noted that the firm’s quality work is “far from done” but that “intensity and focus” will continue. He pointed to the lifting of the company’s three remaining warning letters that the program was working.

So far, for fiscal 2011, Stryker continues to build upon is solid foundation brick by brick.

In April, the company named former Johnson & Johnson executive Kevin Lobo as group president of the company’s newly formed Neurotechnology and Spine sector (combining the recently purchased neurovascular division of Boston Scientific and Stryker’s existing spine unit). Lobo joined Stryker after nearly a decade at J&J, most recently as worldwide president of Ethicon Endo-Surgery, a $4 billion division with more than 5,000 employees. His time with the Neurotechnology and Spine division didn’t last long, however. At the end of May, Lobo was named group president of Orthopaedics. He replaced Mike Mogul, who joined DJO Global Inc. as CEO.

In May, Stryker continued in acquisition mode (taking advantage of its strong cash position,) adding to its newly formed Neurotechnology and Spine unit with the acquisition of Orthovita Inc. for about $316 million. Orthovita makes biologics used in spine surgery. Stryker paid $3.85 a share for Orthovita, a 41 percent premium above the company’s closing price when the deal was announced. Orthovita competes in the $5 billion market for orthobiologics, which are proteins and other agents designed to boost the body’s healing process. It is a leader in synthetic bone grafts. The deal should help Stryker better compete against larger rivals Medtronic and Johnson & Johnson, while Stryker’s marketing machine should bolster sales of Orthovita’s product lines, analysts said. Orthovita, which generated sales of $95 million in 2010, also makes biosurgery products such as Vitagel, which are designed to control intra-operative and post-operative bleeding. In 2010, Stryker claimed only 9 percent of the $7.2 billion worldwide spinal market dominated by Medtronic. It clearly is pushing for a bigger slice of that pie.

Net sales for the second quarter (most recent at press time; ended June 30) reflect the company’s forward momentum. Net sales were almost $2.1 billion, representing a 16.3 percent increase compared with the second quarter of last year. Net sales grew by 7.2 percent (6.2 percent thanks to acquisitions). Worldwide sales of orthopedic reconstructive products were $916 million, representing an increase of 7.4 percent. Higher shipments of hip, trauma and extremities implant systems were offset by lower shipments of knee and other implant systems, the company reported. Sales of medical/surgical products were $773 million, a bump of 15 percent. Neurotechnology and spine product sales were $356 million, an increase of 52.6 percent. Excluding the impact of acquisitions, sales increased 7.4 percent.

$6.7 Billion
NO. OF EMPLOYEES: 18,582

There’s a reason marathon running is so appealing to corporate CEOs—the sport has a lot in common with business management. Corporate executives who regularly compete in marathons claim their top two passions share the same ingredients for success: stamina, discipline and a steady, unrelenting pace.

The runners’ approach to business management certainly has become part of the corporate culture at many large companies, but it is not the only way to grow profits and maximize operational efficiencies. Stephen P. MacMillan, chairman, president and CEO of orthopedic manufacturing behemoth Stryker, turned to the boxing world last year for lessons on successfully leading a company through severe economic doldrums.

“…2009 felt more like a boxing match,” MacMillan said in a letter to shareholders in the company’s 2009 annual review.“We went toe-to-toe with a volatile global economy, rolled with some marketplace punches, moved quickly and battled back. By the close of the year, we felt encouraged by where we [were] headed.”

That encouragement was inspired by a 4 percent rise in diluted net earnings per share to $2.95 and an increase (albeit a feeble one) in net sales of 0.1 percent to $6.7 billion. Significant gains in working capital and operating cash flow also helped, as did a 4 percent jump in orthopedic implant sales to $4.1 billion. Working capital totaled $4.4 billion in fiscal 2009 (ended Dec. 31), a 25.3 percent increase compared with the $3.5 billion in working capital the company reported in 2008. Operating cash flow totaled more than $1 billion for the third consecutive year, up 24 percent compared with 2008.

Though MacMillan admitted that Stryker’s growth rate last year was not up to the company’s typical high standards—the firm averaged an annual 24.4 percent growth rate between 2000 and 2008—he reminded shareholders of the firm’s proven survival instinct and its ability to emerge from economic tempests a stronger, more capable enterprise.

“While the [0.1 percent] growth rate is anemic by our usual standards, the sheer fact of generating any growth in 2009 was a notable victory. Clearly, this is not the kind of revenue and earnings growth our shareholders have historically expected from us, and we will never be satisfied with delivering results like these,” MacMillan’s letter noted. “But we are proud of how agile and resilient our company proved to be in 2009.”

Agility and resiliency, of course, are relative terms. Perhaps the best example of Stryker’s resiliency last year was, as MacMillan noted, the 0.1 percent increase in net sales in the midst of the worst economic downturn since the Great Depression. Or maybe it was the way the firm countered the 1 percent decrease in gross profit (going from $4.58 billion in 2008 to $4.53 billion in 2009) and 3.5 percent drop in net earnings with a 5 percent increase in operating income. The argument for resiliency also can be made by comparing Stryker’s product line sales last year: The 5 percent decline in the MedSurg Equipment segment was offset by robust sales in the Orthopedic Implant segment.

On a constant currency basis, orthopedic implant sales jumped 6 percent due to higher shipments of hips, knees, trauma, craniomaxillofacial (CMF) and spinal implant systems. Hip implant sales climbed 2 percent in 2009, driven mainly by the popularity of the company’s Trident, X3 Polyethylene and Accolade cementless hip product lines and the Restoration Modular Hip System. Sales growth in several hip systems, including the X3 Polyethylene and Accolade products in Europe, Canada, Latin America and the Pacific region, as well as the Trident line in Japan, also contributed to Stryker’s constant currency sales growth last year.

Spinal implant sales recorded the highest growth in 2009, swelling 10 percent on the appeal of thoracolumbar implants, interbody devices and cervical products in the United States, Europe, Latin America and the Pacific region. The various products within this franchise have proven to be reliable growth engines for the company over the last several years.

Almost as alluring as spinal devices were CMF implants, which grew 8 percent due to strong sales of the company’s HydroSet injectable bone substitute in the United States, Europe, Canada and the Pacific region. Neurological devices also contributed to the growth in this franchise.

The company’s bone substitute product also contributed significantly to sales of trauma implants. The material—a self-setting calcium phosphate used to fill gaps in bones—as well as the Gamma 3 Hip Fracture System and the SPS Calcaneal Foot Plating System, helped boost sales in this franchise by 5 percent last year.

Capping a perfect growth record within Stryker’s Orthopedic Implant segment, knee implant sales rose 4 percent (6 percent on a constant currency basis) due to strong demand for the Triathlon system in the United States, Europe, Japan, Canada and the Pacific region. Solid sales of the Scorpio system in Latin America also added to the growth.

On the surface, it seems that orthopedic implant sales were not impacted much by the economic slump that forced many patients to postpone their hip and knee implant procedures. But a closer look at the data Stryker provided in its 2009 annual review reveals that growth shrank considerably in most of the franchises. Trauma implant sales growth, for example, plummeted 13 percent last year (compared with 2008), while increases in knee implants fell 10 percent; spinal implant growth slipped 9 percent; and CMF growth was cut in half (8 percent).

The global recession had a more harsh (and noticeable) impact on Stryker’s MedSurg Equipment segment. Sales in this segment last year totaled $2.6 billion, a 5 percent decrease compared with the $2.75 billion the company reported in 2008. Executives attributed the decline to a sharp drop in demand from hospitals for medical equipment. “The severe weakening of the economy caused the company’s hospital customers to reduce capital purchases, which generate about 60 percent of sales within the MedSurg Equipment segment, to a degree not previously experienced in prior recessionary periods,” the company’s 2009 annual review stated.

Patient handling and emergency medical equipment was the most critically wounded MedSurg victim, posting a 22 percent drop in sales (compared with an 18 percent increase in 2008). Executives blamed the decrease on lower sales of hospital beds and stretchers in the United States, Europe, Canada, Latin America and the Pacific region, though the decline was partially offset by higher sales of stretchers in Japan and emergency medical equipment in the United States.

Sales of endoscopic and communications systems also took a hit, falling 9 percent last year. This franchise was affected by lower demand for medical video imaging equipment and image portal products in the United States, though the weak demand was offset somewhat by higher sales in Latin America, Japan and the Pacific region for communications devices and arthroscopy and general surgery products. Growth in medical video imaging equipment sales in Europe, Japan, Latin America and the Pacific region also kept the losses to a virtual minimum.

Surgical equipment and surgical navigation systems sales actually posted an increase, though it was only 1 percent (2 percent on a constant currency basis). The sales growth in this franchise was attributed to higher sales of operating room equipment, powered surgical devices, and interventional pain products.

Despite the considerable declines in sales revenue (or perhaps because of those decreases), Stryker made two noteworthy investments in its future last year. In a span of just three weeks, the firm spent nearly $600 million to purchase Ascent Healthcare Solutions, a Phoenix, Ariz.-based company that reprocesses and remanufactures medical devices, and OtisMed Corp., a privately held software technology firm in Alameda, Calif. Executives said the Ascent acquisition will enable Stryker to take advantage of two emerging market trends: cost containment and environmental responsibility. The OtisMed deal, on the other hand, will enable the firm to customize instruments that complement its Triathlon Knee System.

In addition to the Ascent and OtisMed acquisitions, Stryker also signed deals with Japan’s Mutoh Co. Ltd. and Synergetics USA Inc. to acquire the assets used to produce the Sonopet Ultrasonic Aspirator control consoles, hand pieces and accessories.

Stryker’s ongoing effort to transform its quality systems took a major step forward last fall with the creation of a new position—group president, global quality and operations. Managers named 20-year Stryker veteran Lonny Carpenter to the position and charged him with making the company’s quality systems the best in the industry, and reducing overall operating costs and inventory levels. Carpenter reports directly to MacMillan.

Executives’ focus on improving the company’s quality systems also helped to settle several outstanding warning letters it received from the U.S. Food and Drug Administration (FDA), and led the company to team with federal law enforcement officials to resolve an investigation into its Biotech division. In October, a federal grand jury in Massachusetts indicted the company’s Biotech arm, its former president and three sales managers on charges of wire fraud, conspiracy to defraud the FDA, distribution of a misbranded device and false statements to the FDA. The indictment stems from an investigation of alleged improper promotion of bone growth products.

$6.7 Billion
NO. OF EMPLOYEES: 17,594

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

“By all measures, 2008 was a momentous year,” John W. Brown, Stryker’s board chairman, told shareholders in the 2008 annual report. “The world economy tumbled into a deep recession. Fear gripped Wall Street…Credit sources shut down…Stryker’s market cap was cut almost in half, and it appears that it may take some time for the economies and our stock to completely recover. Yet, we believe there is cause for optimism for the world, the medical device industry and, importantly, for [the] company. Why? We see tremendous desire for change and improvement…”

Stryker took advantage of that desire for change and improvement to achieve double-digit revenue growth for the eighth consecutive year. This accomplishment makes Stryker one of only a dozen Fortune 500 companies to achieve such growth for eight consecutive years.

In 2008, Stryker’s revenue rose 12 percent to $6.71 billion. Its gross profit climbed 11 percent to $4.58 billion, while its operating income jumped 16.2 percent to $1.58 billion. Net earnings totaled $1.14 billion, a 12.7 percent increase compared with the $1 billion the company posted in 2007.

Domestic sales accounted for 64 percent of total revenue in 2008 (ended Dec. 31), while international sales made up 36 percent of annual revenue. Executives attributed the sales increase to higher shipments of orthopedic implants and MedSurg equipment, which includes surgical tools and navigation systems, endoscopic, communications and digital imaging systems, and emergency medical equipment.

Domestic sales totaled $4.28 billion last year, an 11 percent increase compared with the $3.85 billion Stryker reported in 2007.

Despite the challenges posed by last year’s economic meltdown, Stryker posted industry-leading growth rates in six of its eight main franchises last year. “Our commitment to globalization and innovation has been driving our knee, spine, trauma, CMF, instruments and medical franchises to industry-leading levels,” Stephen P. MacMillan, Stryker president and CEO, noted in the company’s 2008 annual report.

Worldwide orthopedic implant sales totaled $3.96 billion in 2008, an 11 percent increase compared with the $3.57 billion in net sales the company generated in 2007. On a constant currency basis, sales of orthopedic implants rose 9 percent due to higher shipments of reconstructive, spinal and craniomaxillofacial (CMF) implant systems and bone cement.

The biggest revenue-generator within Stryker’s Ortho-paedic segment was spinal implant systems, where sales grew 19 percent. Executives attributed the increase to solid global sales growth of thoracolumbar implant systems, interbody devices and cervical implants.

Trauma implant system sales came next with sales growing 18 percent (14 percent on a constant currency basis). The growth came from strong global sales of the Gamma3 Hip Fracture System and the SPS Calcaneal Foot Plating System, as well as solid demand for the company’s T2 Nailing System in the United States, Canada and the Pacific region. Significant growth in the HydroSet injectable bone substitute product in the United States and Pacific region also contributed to Stryker’s constant currency sales growth in 2008. CMF implant system sales jumped 16 percent (15 percent on a constant currency basis) due mainly to higher sales of products for neurological indications and CMF implants, and the HydroSet injectable bone substitute product in the United States and Pacific region.

Stryker’s growth in hip and knee implants was impressive, considering many patients postponed such surgeries as the economy deteriorated last fall. Knee implant sales grew 14 percent (13 percent on a constant currency basis), fueled by solid sales of the Triathlon Knee System in the United States, Europe, Canada and the Pacific region, and strong demand for the Scorpio Knee System in Japan and Latin America.

Sales of hip implant systems increased 3 percent in 2008 (1 percent on a constant currency basis). U.S. sales growth was driven primarily by increased sales of the Cormet Hip Resurfacing product and increased demand for X3 Polyethylene and Accolade cementless hip products. Sales growth in several hip systems, including Accolade, X3 Polyethylene and ABG II, in Europe and Secur-Fit in Japan and the Pacific region also contributed to the company’s constant currency sales growth in 2008.

Worldwide sales of MedSurg Equipment were $2.75 billion last year, a 14 percent increase compared with the $2.43 billion Stryker posted in 2007. Executives attributed the growth to higher shipments of surgical equipment and surgical navigation systems; endoscopic, communications and digital imaging systems; and patient handling and emergency medical equipment.

The largest revenue-generator within this segment was patient handling and emergency medical equipment, where sales grew 18 percent (17 percent on a constant currency basis). Strong sales of hospital bed products in the United States and Latin America as well as robust sales of stretchers and emergency medical equipment in the United States and Europe contributed to the franchise’s growth.

Sales of surgical equipment and surgical navigation systems increased 17 percent in 2008 (15 percent on a constant currency basis) due to strong worldwide sales of powered surgical and operating room equipment as well as solid sales of interventional pain products in the United States and the Pacific region.

Sales of endoscopic, communications and digital imaging systems jumped 9 percent (8 percent on a constant currency basis) due to strong worldwide sales in arthroscopy and general surgery as well as strong international sales of medical video imaging equipment, led by the 1188 HD camera and complimentary products.

The growth was partially offset by lower sales of medical video imaging equipment in the United States. Strong sales of communication products in the United States and Canada, led by the SwitchPoint Infinity 2, contributed to the company’s constant currency sales growth.

$6 Billion
NO. OF EMPLOYEES: 18,800

Joining an elite few, Stryker has managed to achieve a best-in-class track record for the seventh consecutive year: For 2007, the company recorded double-digit sales growth of 16.6%. Given that the company was one of only 19 Fortune 500 companies to achieve double-digit growth for six consecutive years through 2006, and the number of firms able to continue this heady gain for 2007 most likely dwindled as the US economy tumbled, the latest feat is quite an achievement.

Net sales totaled $6 billion for the fiscal year ended Dec. 31, compared with $5.1 billion for 2006. With such financial strength, the company managed to increase operating cash flow in excess of $1 billion, an 18.6% increase. Double-digit growth was apparent in various areas of Stryker’s financial recordings for the year.

Domestic sales (64% of total revenues) were nearly $3.9 billion, a 17% increase from $3.3 billion in 2006. International sales (36% of total revenues) grew 16%, from $1.8 billion in 2006 to nearly $2.2 billion in 2007.

In terms of product lines, Stryker operates with two major segments including Orthopedic Implants and MedSurg Equipment.

The Orthopedic segment recorded net sales of $3.57 billion, representing 15% growth from $3.11 billion in 2006. Within this segment, sales of hip, knee, trauma, spinal and craniomaxillo-facial (CMF) implant systems grew 9%, 16%, 19%, 25% and 17%, respectively. Hip sales were driven by sales of X3 polyethylene and Accolade cementless hip products in the United States, as well as solid sales for the Exeter, Trident, X3 polyethylene and Accolate products in Europe, the Pacific region and Latin America. Knees had strong growth due to strong sales of the Triathlon Knee System in the United States, Europe, Canada and the Pacific region, along with growth of the Scorpio Knee System in Europe, the Pacific region and Latin America. Trauma saw sales gains with its Gamma3 Hip Fracture System in the United States, Europe, Canada and the Pacific region, as well as sales growth for the T2 Nailing System in the United States and Europe. Spine grew mostly as a result of strong product demand for thoracolumbar implant systems, interbody devices and cervical implants. CMF implant sales were aided by growth of products for neurological indications and CMF implants in the United States, Europe and the Pacific region.

MedSurg Equipment had net sales of $2.43 billion, a 19% increase from $2.04 billion in 2007. Sales of surgical equipment and surgical navigation systems increased 20% due to strong sales in powered surgical and operating room equipment in the United States, Europe and the Pacific region; another contributor was constant currency sales growth of interventional pain products in Europe. Sales of endoscopic, communications and digital imaging systems grew 20% in 2007, aided by strong growth in medical video imaging equipment (particularly the 1188 HD Camera) and complementary products such as the X8000 Lightsource and Vision Elect Monitor; arthroscopy and communication products also achieved strong sales in the United States, Europe and the Pacific region. Finally, sales growth of 16% for patient handling and emergency medical equipment was attributed to increased sales of stretchers and emergency medical equipment in the United States and Europe, as well as hospital beds in the United States and maternity beds in the United States, Canada, Europe and Latin America.

One of the company’s top goals has been to invest in R&D to propel future growth and, as such, Stryker increased its expenditures in this area 16% to $375 million. As a result of increased spending for R&D activities over the years, Stryker was able to introduce several new products in 2007. The Orthopedic Implants segment rolled out the condylar stabilizing ultra-congruent insert for the Triathlon Knee System, the Scorpio NRG with X3 advanced bearing technology and the Omega 3 Compression Hip Screw System. The MedSurg equipment segment also launched InTouch, a high-acuity care bed; the SDC Ultra, an all-in-one medical imaging information management system; the CORE Sumex drill for use in ear/nose/throat procedures; and the 45L PneumoSure insufflator.

One of Stryker’s top achievements, in terms of product approvals, was US clearance for the Cormet Hip Resurfacing System, making the company the second to offer this type of technology in the United States (Smith & Nephew was first with its Birmingham system).

To better hone its core competencies, in 2007 Stryker divested its outpatient physical therapy business, Physiotherapy Associates, to Water Street Healthcare Partners, for $150 million. On the other hand, a celebration was on hand that year for the opening of the Homer Stryker Center, a clinical research and surgeon education center that was the brainchild of former Executive Vice President Ron Lawson, who retired at the end of the year.

Clearly, Stryker’s results for the year showed that it could remain focused on business as usual, even when problems cropped up. The company received two FDA warning letters in 2007 targeting quality systems at its Cork, Ireland facility and its Mahwah, NJ facility.

For 2008, Stryker is looking to carry on as a double-digit gainer in the industry, though its net sales target increase is lower than 2007’s final gain. The company is forecasting net sales growth of 11% to 13%.

$5.4 Billion
No. of Employees: 18,800

Stryker experienced double-digit increases in earnings and sales for fiscal 2006, which ended on Dec. 31, leading the company to its No. 1 spot (by sales for 2006) in a market worth almost $30 billion.

The double-digit climb is nothing new for this company; Stryker has grown its sales in this range for six consecutive years. Net sales increased by 11% to $5.4 billion in fiscal 2006, while net earnings increased almost 21% to $778 million, up from $644 million in 2005.

At the beginning of 2006, Stryker changed its business segment reporting to include the financial results of certain products within its MedSurg equipment segment rather than within its Orthopedic implants category because, according to the company, the products “are better aggregated with its other MedSurg equipment products based on similarities in manufacturing and marketing practices and customer base.”

Many products within the MedSurg category—such as implant-specific surgical instruments—serve the orthopedic industry. According to the company’s Web site, approximately 82% of its total sales come from the orthopedic implant and equipment market, making for roughly $4.4 billion in orthopedic-related revenue, though that’s not official. A precise breakdown of individual product sales and the sectors served was not available.

Domestic sales were $3.6 billion for the year, increasing 12.4%, while international sales hit $1.8 billion, increasing 8.4%. Worldwide sales of orthopedic implants were $3.1 billion, an increase of 9.1%, based on higher shipments of reconstructive implants (hip, knee and shoulder), trauma, spinal and craniomaxillofacial implant systems; bone cement; and the bone growth factor OP-1, the company said. Roughly 66% of Stryker’s total sales are based in the United States.

MedSurg equipment also experienced significant growth—15.8%—reaching $2 billion for the year, driven by strong sales of surgical equipment; surgical navigation systems; endoscopic, communications and digital imaging systems; as well as patient handling and emergency medical equipment, according to Stryker.

One bleak spot in the company’s otherwise positive financial picture was its Physical Therapy Services division, which reported revenues of $258.4 million for the year, a 1.6% decrease. Net earnings were only $6.3 million for the year, a 43% drop. In June this year, Stryker announced that it was selling its outpatient physical therapy business, Physiotherapy Associates, to Water Street Healthcare Partners, a Chicago, IL-based private equity firm, for $150 million in cash. Stryker said the business, ultimately, wasn’t close enough to its core device business.

New product rollouts continue to play a role in the company’s ongoing success. For example, in August 2006, the company received FDA 510(k) clearance for its advanced hip bearing system, LFIT Anatomic Femoral Heads with X3 Polyethylene liners. The system combines Stryker’s Low Friction Ion Treatment technology with X3 advanced bearing technology and is anatomically sized for more natural hip performance, according to the company. The result is total hip replacement designed to help minimize dislocation and its associated healthcare costs, while providing an attractive alternative to metal-on-metal bearings, Stryker said.

Despite pricing pressures in certain orthopedic sectors, company officials remain optimistic about 2007 due to underlying growth rates in orthopedic procedures and the company’s broad range of products in orthopedics and other specialties. Stryker expects a net sales increase in the range of 11% to 13%. Positive currency gains also are expected to have minimal impact. For the first quarter of 2007 (ended March 31), Stryker reported net sales of $1.5 billion, up 12.7%. Net earnings jumped 65% to $243 million. The majority of the company’s sectors experienced double-digit growth.