Key Takeaways
- Q1 net income rose to $745 million from $654 million in the prior-year period
- Quarterly revenue totaled $6.02 billion, below Wall Street’s $6.35 billion projection
- Adjusted earnings per share of $2.60 trailed consensus expectations of $2.98
- March cyberattack linked to Iranian hackers hampered business operations and financial performance
- Shares of SYK declined approximately 2% to $308.75 in extended trading; company reaffirmed annual projections
The medical technology company delivered a complicated first-quarter performance, surpassing last year’s earnings while falling short of analyst projections for both revenue and earnings per share. A significant cybersecurity incident in March added complexity to the quarter’s outcome.
Shares tumbled roughly 2% to $308.75 in after-hours trading once the financial results were released.
The medical device manufacturer recorded net earnings of $745 million, translating to $1.93 per share, compared to $654 million, or $1.69 per share, during the same quarter last year. When adjusted for one-time items, the company posted earnings of $2.60 per share, undershooting the Street’s $2.98 forecast.
Quarterly sales registered at $6.02 billion for the three-month period ending March 31. While this represented a 2.6% uptick from the year-ago quarter, it lagged the $6.35 billion Wall Street consensus.
Cyber Breach Impacted Quarterly Performance
During March, a hacking collective known as Handala, allegedly connected to Iran, took credit for launching a damaging cyberattack against the company. The breach triggered extensive disruptions across the organization’s Microsoft infrastructure and allegedly postponed certain surgical operations.
Multiple employees and contractors shared on social platforms that the hacking group’s emblem displayed on their computer login interfaces, although Reuters could not independently confirm these accounts.
The company had previously disclosed in April that the security incident would negatively affect first-quarter financial performance. Management confirmed those expectations in Thursday’s announcement.
According to reporting by the Wall Street Journal, the cybercriminals stated their actions were motivated by retaliatory intentions related to heightened tensions between the United States and Iran.
Division Performance Varied
Stryker’s MedSurg and Neurotechnology division, representing the company’s largest business unit, generated a 5% revenue increase to $3.21 billion. However, this figure came in below analyst projections of $3.83 billion.
The Orthopaedics division delivered stronger results and emerged as a highlight. Revenue climbed 6.3% to $2.81 billion, exceeding analyst expectations of $2.51 billion.
Weaker market demand for implants and medical devices utilized in sophisticated procedures — such as spinal surgeries and orthopedic operations — created headwinds for overall performance.
The company faces direct competition from Zimmer Biomet (ZBH) and Johnson & Johnson (JNJ) within the orthopaedics marketplace, spanning categories including hip and knee reconstruction, trauma care, and sports medicine products.
Notwithstanding the quarter’s disappointing results, the company maintained its full-year financial outlook. Management confirmed its previous expectations for adjusted annual earnings between $14.90 and $15.10 per share.
The unchanged forecast suggests leadership believes the cybersecurity incident’s financial consequences are limited to the first quarter and will not materially affect full-year performance.
With adjusted earnings of $2.60 for Q1 against full-year guidance of $14.90–$15.10 per share, the company is projecting accelerated earnings momentum throughout the remaining nine months.
Management reconfirmed its full-year adjusted earnings per share guidance spanning $14.90 to $15.10 per share.
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