Is anyone left in the upper echelons of DePuy, Stryker, Zimmer, Synthes or Medtronic who doesn’t believe Navigation and Robotics is the future of orthopedic and spine surgery?
If so, then the first half report from Stryker probably sent them to the orthopedic equivalent of Siberia.
For the second quarter of 2019 Stryker reported that sales rose 9.9% (8.5% organic) and, as they’ve done for each of the last 12 quarters, cited Mako robotics as one catalyst for that exceptional growth rate. Not only was that number (9.9%) higher than Zimmer (1.2%), DePuy (0.6%) or Synthes (Trauma +1.7%, Spine -0.9%) but the growth came off a respectably high sales base line—$3.7 billion.
As if that weren’t enough, Stryker’s sales growth rate was higher than Wall Street’s analysts expected.
BMO Capital Market’s Wuensch said: “Stryker revenue of $3.65B (up 8.5% organic) outpaced the Street’s $3.60B estimate, with continued Mako highlights. Operating margins expanded to 25.9% from 25.7% y/y, and EPS of $1.98 (up 12.4%) surpassed the consensus’ $1.94 and management’s $1.90-1.95 guide. Further, management increased 2019 organic revenue guidance to 7.5-8.0% from 6.8-7.5%.”
“Key takeaways: Mako was again in focus, benefitting not just Stryker’s Knee but also its Hip franchise, placing 44 units worldwide including 35 in the U.S. (versus 39 worldwide and 29 in the U.S. in 2Q18), reaching a total worldwide installed base of 700+ and 600+ in the U.S. In 2Q19, 18,000+ Mako procedures were performed, indicating utilization up 80% y/y, including double-digit growth in Hip procedures.”
Wells Fargo’s Biegelsen and Singh said: “SYK placed 44 MAKO systems in the quarter, including 35 in the US that is up from 37 systems, including 30 in the US a year ago. The company now has a global installed base of over 700 systems, including approximately 600 in the US.”
“SYK is seeing strong implant pull through on its MAKO system that is driving share gains in knees. It is interesting to note that SYK is seeing pull through across its recon portfolio, not just in knees. Management explained that customers that purchase MAKO for knee implants are now using it for other procedures such as hips. SYK is seeing strong uptake of its MAKO hips, including its new 3D printed Trident hip cup and noted on the call that utilization for MAKO in hip procedures was up double-digits y/y.”
Needham’s Matson said: “Mako placements and procedures saw strong Y/Y growth. Organic Orthopaedics growth improved to 5.6% from 5.0% in 1Q19; sales of $1.273B met consensus of $1.274B. SYK placed 44 (35 in the US and 9 outside the US) Mako systems during 2Q19, which was up from 35 in 1Q19 and 39 in 2Q18 and below our estimate of 51. There were ~18,000 Mako Total Knee procedures (up >80% Y/Y) and ~27,000 total Mako. SYK noted it is seeing more momentum with Mako Total Hips.”
