Chief Executive Olivier Bohuon said the so-called Syncera service,
designed to strengthen S&N's position in a highly competitive
market, would appeal to between 5 and 10 percent of U.S. hospitals
that cannot afford its full-service offering.
By stripping away some traditional costs, such as sending a company
technician to attend procedures, he told reporters U.S. customers
using Syncera could cut costs by 40 to 50 percent.
S&N said on Friday it expected to start shipping the first product
under the new system shortly, adding that its profit margins would
remain broadly similar since operating costs under Syncera would be
The British company unveiled Syncera alongside second-quarter
results, which showed a 10 percent rise in trading profit as the
group regained momentum after a weak start to the year, despite
problems in its wound management division.
Bohuon, who has eschewed a wave of mergers sweeping the medical
technology sector, said he remained confident in the company's
prospects this year, although the wound management business was
expected to grow more slowly than the wider market.
S&N's share price has been fueled by takeover speculation recently
as the $45 billion global orthopedics market undergoes a wave of
consolidation, including Zimmer's agreed deal to buy Biomet for more
than $13 billion in April.
The British company is no stranger to bid talk: in fact, it has been
touted as a target, on and off, ever since receiving an approach
from Unilever in 1968.
But the deal rumors have grown louder in the wake of the Zimmer-Biomet
tie-up and a mounting desire by U.S. healthcare companies to move
their tax bases abroad in a tactic known as "inversion".
Stryker was reported to be considering a move on the British company
in May, sending S&N shares surging, only for the U.S. rival to rule
out bidding for six months.
While Bohuon saw no strategic case for getting bigger in orthopedics
for the sake of it, he acknowledged that such inversion deals were
likely to continue.
[to top of second column]
"Inversion is legal and I think U.S. companies will continue to play
that," he said.
"Are we going to remain independent? It is not up to me to tell you
that - I don't have the answer. But I believe we have a good future,
we have great growth in front of us, we have a number of new
programs and I believe success is here."
S&N posted a quarterly trading profit of $255 million on revenue of
$1.15 billion, up 7 percent from a year earlier.
A company-supplied survey of analysts had forecast trading profit of
$250 million on revenue of $1.14 billion. Adjusted earnings per
share of 20.4 cents, up from 18.0 cents a year, also came in above
an expected 19.4 cents.
S&N took a $25 million provision for problems associated with its
Renasys negative pressure wound therapy product and said it expected
a $30 million hit to revenue this year.
"This should be a temporary issue, so is not significant to the
longer term, in our view, and should not detract from what were
otherwise reasonably strong results," said Tom Jones, an analyst at
Berenberg Bank, which has a "hold" rating on S&N shares.
The stock was 1.7 percent higher by 4:10 a.m. EDT (0810 GMT).
(Editing by James Davey and Tom Pfeiffer)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.