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Stryker Corp. executives have made progress this year towardputting U.S. Department of Justice matters behind them, but theorthopedic implant maker continues facing uncertainty on otherfronts. With a new CEO at the helm as of February, Stryker mustdeliver on aggressive bets about its recent acquisitions. The DOJ had subpoenaed Stryker in 2010 about its sales andmarketing of OtisKnee, which is a custom-fitted joint replacement.After offering to settle the matter for $33 million on May 31,Stryker said in a regulatory filing on June 5 that it will deductthe amount from its second quarter earnings in its "bestestimate of the minimum of the range of probable loss" itwill experience. The company had already said in January this yearthat its unit Stryker Biotech paid a $15 million fine related toDOJ allegations that it fraudulently marketed medical devices usedduring invasive spinal and long bone surgeries. As part of itssettlement, Stryker plead guilty to one misdemeanor and the DOJdismissed all thirteen felony charges in its 2009 indictment. Despite having all that almost out of the way, interim-CEO and CFOCurt R. Hartman"s hands remain full. He took the extra roleafter then-CEO Stephen P. MacMillan resigned "for familyreasons," the company said February. MacMillan had mishandleda relationship with a former flight attendant for Stryker"scorporate jets while his wife pursued a divorce, the Wall Street Journal reported on May 23. MacMillan had orchestrated some ambitious deals for Stryker. Thespine and orthopedic company Orthovita Inc. in May 2011 announcedits entering a merger agreement in which Stryker would buy all ofOrthovita"s stock at $3.85 per share, representing around$316 million at the time. And in January that year Stryker hadcompleted its $1.5 billion acquisition of Boston Scientific"sneurovascular division, which it sees as a "globalleader" in the approximately $900 million-sized market forstroke treatments. Since Stryker paid more for these assets thanthey were worth in terms of book value, it reported that itsgoodwill and other intangible assets such as brands amounted to$3.51 billion at the year ended December 2011 – upsignificantly from $1.78 billion in 2010. If those investmentsdon"t end up being worth as much as Stryker initiallyestimated, someday the company"s new management might have toadjust its valuations by taking a hit to its earnings. Hartman said in an April 24 meeting with shareholders that hiscompany"s strategy for years has been to invest in its corebusiness while also doing M&A. He sees acquisitions as along-term growth play that benefits shareholders."We"ve been on this journey for a while, and wecontinue to stay on this journey," he said. Fair enough, but it"s an uncertain journey. Due toacquisition activity and other red flags, Stryker"s financialstatements reflect an AGR of 30, indicating more accounting and governance risk than 70% ofcompanies. In September 2010 the AGR was an 8. That doesn"tnecessarily mean Stryker has done anything wrong, but it shows thatinvestors should take the company"s financial statements witha grain of salt when using them to evaluate shares. Stryker is insuch upheaval these days, its earnings numbers have necessarilyderived from guesswork. GMI gives Stryker a D on its corporate governance overall. Region: North America Sector: Healthcare Industry: Medical Equipment / Supplies / Distribution Market Cap: $ 19,768.5mm (Large Cap) ESG Rating: D AGR: Aggressive (30) Read more posts on GMI Ratings » We are high quality suppliers, our products such as Fabao 101D , 101B Formula for oversee buyer. To know more, please visits 101G Hair Tonic.
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