Stryker reports K2M integration on track, future spine acquisitions possible

Spinal Tech

Stryker completed its $1.4 billion acquisition of K2M last year, and continues to integrate the company into the larger organization.

"With the organizational structure in place, we are building inventory to help support cross training for our combined selling organization," said Katherine Owen, vice president of strategy and investor relations for Stryker, during the first quarter conference call, as transcribed by Seeking Alpha. "On a combined constant currency basis, our sales grew 2 percent in the quarter and we anticipate a continued sequential ramp in sales for the full year, and we are on track to achieve combined spine sales growth in the mid-single digits for 2019."

In the first quarter, the company reported 8.5 percent sales growth, which was driven by the K2M acquisition. "We made significant progress in our integration of K2M, especially on the execution of our planned cost synergies," said Glenn Boehnlein, CFO of Stryker. "Our sales integration is ongoing and we continue to manage through the anticipated sales force disruption, which primarily impacted U.S. growth."

Stryker's international neurotechnology and spine sales grew 14.3 percent for the quarter, driven by Europe, China and emerging markets demand. The company is focused on the integration of K2M now, but hinted there could be further spine acquisitions in the future.

"Every business of Stryker is now on the hunt for new acquisitions," Chairman and CEO Kevin Lobo said. "I think right now we're focused on integration, but at some point I would think that the spine business will come forward with some types of acquisitions to bolster their portfolio…Once we get into a space, we're not going to do one deal and then stop. I can't expect that we'll do a spine deal in the next six months."

Editor's Note: This article was updated at 2:20 p.m. CST to reflect that Stryker may make future acquisitions in spine, but Mr. Lobo doesn't expect a deal in the next six months.

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