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Stryker Recall Costly for the Orthopedic Manufacturer

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Stryker Corporation said on Wednesday that a hip implant recall that began in June of 2012 will cost up to $390 million for treatment, new surgeries, lawsuits and insurance payments.

The company said that is has raised the low end of its expectations for these unforeseen costs and have also raised their related financial reserves. This will result in a 35 cent charge per share for shareholders or an estimated $174 million before taxes.

Stryker, a manufacturer of power tools, surgical accessories, and hospital beds, recalled its ABG II and Rejuvenate modular-neck hip devices in June after discovering there was a risk of corrosion, which may result in local tissue damage as well as pain and swelling. The recall came after other orthopedic device manufacturers, including Johnson & Johnson, took similar action sparking the largest hip replacement recall ever. Stryker provided the new cost information early January after projecting their finances for the next quarter and full year.

Broadspire Services was hired as a third-party claims administrator to help the company deal with patients who need to have their recalled hip implants replaced.

The final price tag for the recall depends on the number of patients who require testing and follow-up procedures as well as the cost of lawsuits.

Stryker has released a statement advising anybody who currently has either the Rejuvenate or ABG II modular-neck hip implants to consult a doctor.

The company said that blood tests, X-rays, MRIs or ultrasound evaluations may be needed to examine the device. Replacements that are made of exclusively metal, known as metal on metal, are particularly troublesome. In addition to high failure rates, these models may release metals into the blood stream over time.

Researchers are unsure of the long term effects of high levels of metal in the blood stream.

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