UPDATE 2-Stryker to take charge to end US knee-device probe

Tue Jun 5, 2012 5:53pm EDT

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* Sees charge of 9 cents per share in second quarter

* DOJ probe of marketing for OtisKnee device began in 2010

* Shares unchanged in after-hours trading

June 5 (Reuters) - Orthopedic implant maker Stryker Corp said it will take a charge of $33 million in the second quarter for an expected settlement of a U.S. Department of Justice investigation into one of its artificial knee devices.

The charge, which is Stryker's estimate of what it will cost to settle the probe into marketing practices concerning its OtisKnee device, is expected to reduce its reported diluted earnings per share by about 9 cents in the second quarter, Stryker said. The Kalamazoo, Michigan-based company said it will exclude the charge from its adjusted earnings per share.

In 2010, Stryker received a subpoena alleging violations of laws prohibiting sales of a medical device not cleared for marketing by the U.S. Food and Drug Administration.

In 2009, Stryker acquired privately held OtisMed Corp, whose OtisKnee technology was designed to help surgeons custom fit Stryker knee implants.

Stryker said it recently entered into discussions with the Justice Department and offered the $33 million to resolve the matter, but a final agreement has not yet been reached.

Shares of Stryker were unchanged in after-hours trading from a close Tuesday of $50.79 on the New York Stock Exchange. During Tuesday's regular session, the stock gained 95 cents, or 1.9 percent.

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