Stryker ($SYK) delivered positive second quarter numbers buoyed by acquisitions in domestic and foreign markets, but the company remains tepid on the subject of corporate inversions as a way to boost profit.
Revenue for the quarter grew 6.8% to $2.4 billion during Q2 2014, exceeding Wall Street estimates by $2.35 billion, CEO Kevin Lobo said in an earnings call on Thursday. But when asked about the devicemaker’s plans to invert, Lobo did not reveal specific details,Reuters reports.
“We’re always scouring the market and looking at targets,” Lobo told investors during the call. “So we are continually focused and obviously minimizing our tax rate within that area and operating our business as effectively as we can. We think we still have good opportunities in the future.”
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One of those opportunities could be acquiring orthopedics rival Smith & Nephew ($SNN). In May, the Kalamazoo, MI-based company readied itself to make a bid for British device outfit, but then stated that it did not intend to make an offer. Smith & Nephew’s stock price rose as a result, and the U.K. Takeover Panel asked Stryker to make a statement about its intentions. Lobo said the company was putting the deal on the backburner for the time being, but did not rule out a future acquisition. U.K. rules prevent the company from making another bid for 6 months, unless Smith & Nephew’s board recommends the deal.
Stryker is not the only company eyeing tax inversion as a way to boost profits. In June, Medtronic ($MDT) packed up its bags for a new Irish domicile with its $42.9 purchase of Covidien ($COV). The Minneapolis-based company would enjoy a lower overall tax rate and more overseas cash in its pocket to spend in the U.S. as a result of the acquisition, but said recently that the deal was not purely motivated by tax-inversion purposes.
Meanwhile, Stryker continues to cast its net wider to boost sales and capitalize on innovation. Last year, the company bought Chinese orthopedics giantTrauson Holdings for $764 million and shelled out $1.7 billion for robot-assisted surgery outfit Mako ($MAKO). The Mako deal reflected an 86% premium on Stryker’s stock price, a move that confused investors. But Lobo defended the acquisition as conducive to the company’s bottom line, emphasizing that Mako’s robotic-assisted surgery devices for joint reconstruction would help simplify the procedure for patients.
Stryker expects full-year sales growth of 5% to 6% and adjusted earnings of $4.75 to $4.80 per share, lowering the high end of its previously issued EPS forecast range by 10 cents, the company said on Thursday’s earnings call.