Stryker Corp. has reported that its third-quarter sales did not meet expectations, in part because of a decline in its orthopedics business after a recall of two of its hip implant devices.
Sales of reconstructive joints dropped 1 percent overall. Stryker’s international markets turned in the worst performance in the division, with artificial hip sales down 9.6 percent and knee implants down 4.3 percent, according to The Wall Street Journal.
In the United States, the unit had total growth of 5.3 percent. Hip implants, though, only posted an increase of 2 percent, which company officials partially attributed to the recalls. In an Oct. 17 conference call, they said the recalls had a “modest impact” on revenue.
Metal-on-Metal Complications Led to RecallIn July, Stryker recalled its Rejuvenate and ABG II modular-neck stems, which are used in hip replacement systems. The Rejuvenate and ABG II do not share the same defective hip implant design as other recently recalled devices, but they do have a common element. The Stryker components have all-metal conjunctions, which are to blame for complications similar to those seen in DePuy and Zimmer hip implant patients.
The metal parts in all of these hip replacement systems grind against each other, weakening the device and shedding metal particles. The loosening of the implant leads to painful, early failure of the device, and ultimately, a corrective surgery. The metal shavings can poison the bloodstream, causing a condition called metallosis. There is some concern among researchers that the metal debris may also prompt nearby tissues to change and become pre-cancerous.
But it wasn’t just the Rejuvenate and ABG II recalls and subsequent related lawsuits that contributed to the orthopaedic implant sector’s downturn, Reuters reports. Because replacing joints largely is considered elective surgery, the poor economy has played a role in patients putting implants on hold. Patients may not have insurance, have out-of-pocket expenses they cannot afford or fear taking time off work when jobs are scarce.
CEO Separation Package Totals $1.5 MillionStryker, too, recently revealed the costly separation package for its former Chief Financial Officer and Vice President Curt Hartman. He will receive $1.5 million, according to an agreement filed Oct. 17 with the U.S. Securities and Exchange Commission. The payout equals Hartman’s annual salary of $750,000 plus his 2012 bonus.
After 20 years with Stryker, Hartman has served as the interim chief executive officer since February. He will remain with the company through Feb. 28, 2013, as an adviser and continue to draw his salary. Through that time, he will have the choice to become vested in performance stock shares. In return, Hartman signed noncompetition and nonsolicitation agreements.
Stryker recently selected Kevin Lobo, the head of its orthopaedics division, as its new president and chief executive officer.