Stryker’s Q3 Profits Are Down Nearly 71% Due to Hip Recalls

Q3 Stryker decline in profits attributed to Rejuvenate and ABG II hip recalls

In a press release yesterday, Stryker Corp. reported a 71% decrease in profits in Q3 due to costs associated with the recalls of their Rejuvenate/ABG II hip devices and a surgical waste management system. The company’s gross sales totaled $2.2 billion for Q3, showing a growth of 4.8%. Profits, on the other hand, totaled just $103 million – less than one third of 2012 Q3 profits.

The company admitted that hip and waste management recalls cost the company $313 million in Q3 alone and $700 million total so far.

Stryker president and CEO Kevin A. Lobo released an optimistic statement that focused on the sales growth:

“We are pleased with our strong third quarter sales growth of 6.8% in constant currency, and 6.1% excluding currency and acquisitions…We believe these results not only represent gradual improvement in our key markets but also underscore our commitment to delivering above market growth. We are on track to meet our full year adjusted EPS guidance of $4.20 to $4.26.”

However, the press release gave no indication as to whether the company could see similar hits next quarter.

Back in July, Mass Device reported that Stryker’s Q2 profits plunged nearly 35% due to costs related to the recall of the hip devices.

DePuy ASR Settlement for Plaintiff in New Jersey

Mass Device reported this week that Johnson & Johnson resolved another DePuy ASR hip case, this time in New Jersey Superior Court. The case, MacDonaled et al v. DePuy Orthopaedics Inc. et al, was previously scheduled to go to trial but has been taken off of the trial calendar. While few details are available in the court documents, we know that Judge Brian R. Martinotti concluded that “all pending motions are withdrawn, [and] the complaint will be dismissed with prejudice upon receipt of a fully executed stipulation signed by counsel.”

While we do not know for sure if this means the case was settled, that has been the common interpretation. The vast majority of DePuy ASR cases are still pending in Federal Court, where Judge Katz is overseeing the MDL in the northern district of Ohio. Recently, the first bellwether trial was rescheduled for the 4th time. There has been speculation into whether we will see a global DePuy ASR settlement anytime soon for those cases, and we are still waiting to see. At this point, the plan is for the first bellwether case to commence in the next few months.

DePuy ASR Trial Suspended Until Further Notice

The first DePuy ASR trial of the federal multidistrict litigation (MDL) did not begin on September 24, 2013 as scheduled. Judge Katz, the Ohio district judge presiding over the MDL, signed an order to postpone the bellwether trial a few days prior to its scheduled date. This is the second time this month that the trial has been postponed, and the fourth time overall. This time, Judge Katz did not give a definite starting date. He stated that the trial has been continued to the call of the court and will commence within 90 days.

Judge Katz cited the scheduling of expert witnesses, depositions, and other discovery issues as reasons for the continued delay.

The plaintiff in the DePuy ASR bellwether trial case, Ann McCracken, is just one of more than 8,000 DePuy ASR lawsuits consolidated in the federal court system before Judge Katz.  Several thousand more are pending in state courts. Nevertheless, the results of McCracken’s case will have a remarkable impact on the landscape of the litigation. The purpose of bellwether trials is to establish a point of reference for potential future settlement negotiations.

DePuy ASR Trial In State Court:

Meanwhile, Robert Eugene Ottman’s case in California State Court settled for an undisclosed amount before trial. The trial was supposed to begin later this month in San Francisco Superior Court, but both parties have now filed a request to dismiss.

Global Settlement in Future?

Bloomberg reported earlier this month that there has been talk of a potential global settlement for all U.S. cases. However, until settlement negotiations are reached it is only speculation. As of right now, Ann McCracken’s DePuy ASR bellwether case is still set to start in the next 90 days.