Stryker Corporation, a leading medical technology company, has announced the successful completion of a public offering of Euro and U.S. Dollar-denominated notes, raising a total of $3 billion. The proceeds will be used to repay existing debt, fund strategic acquisitions, and support general corporate purposes.
The offering, which took place on August 30, 2024, involved the issuance of €800 million in 3.375% notes due 2032 and €600 million in 3.625% notes due 2036, collectively known as the "Euro Notes". The Euro Notes were issued under an agreement with several underwriters led by Citigroup Global Markets Limited and Goldman Sachs & Co. LLC. The company expects to receive net proceeds of approximately €1.383 billion (or $1.529 billion based on the exchange rate on August 30, 2024), after accounting for underwriting discounts and estimated offering expenses.
Concurrently, Stryker also completed a U.S. Dollar offering ("USD Offering") of $750 million in 4.250% notes due 2029 and another $750 million in 4.625% notes due 2034, referred to as the "USD Notes". The USD Offering was also executed with a group of underwriters including Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC. The net proceeds from the USD Offering are expected to be around $1.482 billion after deductions.
How the Funds Will Be Used
Stryker intends to use the net proceeds from both offerings to repay existing debts, including €500 million of floating rate notes and €850 million of 0.25% notes both due in 2024, and for general corporate purposes which may encompass working capital, potential acquisitions, and other business opportunities.
Strategic Acquisitions:
Stryker's commitment to acquisitions is evident in its recent moves to expand its portfolio. In August 2024, the company announced a definitive agreement to acquire Vertos Medical Inc., a privately held company that provides minimally invasive solutions for treating chronic lower back pain. Vertos Medical's mild® procedure is a minimally invasive treatment option for lumbar spinal stenosis, a condition that affects millions of people globally and is a leading cause of pain and disability.
Stryker's acquisition of Vertos Medical highlights its focus on expanding its presence in the growing market for minimally invasive treatments. This acquisition will give Stryker access to Vertos Medical's innovative technology and expertise, which will allow them to offer a wider range of products and services to its customers.
Boosting its Healthcare IT and Connected Devices Portfolio
In addition to its acquisition of Vertos Medical, Stryker has also completed the acquisition of MOLLI Surgical Inc., a privately held company specializing in the development of wire-free soft tissue localization technology for breast conserving surgery. The acquisition of MOLLI Surgical is part of Stryker's strategy to expand its portfolio of healthcare IT and connected devices. The MOLLI 2 localization system is designed for ease of use and reliability to support a more efficient surgical workflow.
Expanding its Foot & Ankle Portfolio
Stryker has also announced the addition of two new products to its Foot & Ankle portfolio – the Osteotomy Truss System™ (OTS) and Ankle Truss System™ (ATS), recently acquired from 4WEB Medical. The company will feature both the OTS and ATS, the newly acquired Artelon portfolio, and other products at the American Orthopaedic Foot & Ankle Society (AOFAS) Annual Meeting taking place in Vancouver, Canada from Sept. 11-14, 2024.
Financial Performance and Future Prospects
Stryker has reported strong financial performance in recent quarters. In the second quarter of 2024, the company reported a 9% organic sales growth and a 10.6% increase in adjusted earnings per share. For the full year, Stryker is projecting an organic sales growth between 9% and 10%, and an adjusted EPS ranging from $11.90 to $12.10.
Analysts at Piper Sandler and BTIG have maintained their Overweight and Buy ratings on Stryker, respectively, citing the company's diversified product range and strategic approach to mergers and acquisitions. Stryker's strong financial performance and strategic acquisitions position it well for continued growth in the future.
