Stryker Corporation
SYK · NYSE
Next quarter
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $5.03 EPS for Dec 2026 across 9 estimates, ranging $5.00 to $5.08.
SYK Sep 2026
- 1.12%
- -6.38%
- $3.56
- $3.52
- —
- $6.52B
Reported results
- $6.52B
- 65.15%
- $1.03B
- 15.86%
- $753.00M
- $1.96
Highlights
- EPS and expectations: Adjusted diluted EPS was $3.52, up 10.3% year over year but 1.1% below the $3.56 consensus; GAAP diluted EPS was $1.96, down 11.7%.
- Sales: Revenue rose 7.7% year over year to $6.52 billion, all organic growth, primarily from higher unit volume; revenue was down from $6.59 billion in Q2.
- Orthopaedics slowdown: Organic Orthopaedics sales grew 5.9%, but U.S. knees grew 1.3% and U.S. hips declined 0.6%; management estimated the broader hip-and-knee market at roughly 2.5% growth for 2026 and said it slowed further in Q3.
- Guidance reset: Stryker now expects 2026 organic sales growth of 6.5%–7.0% and adjusted EPS of $14.80–$14.90; Q4 organic growth is expected to be similar to Q3.
- Adjusted margins: Adjusted operating margin rose 60 basis points to 26.2%, while adjusted gross margin increased 40 basis points to 65.4%; reported operating margin fell to 15.9% from 18.7%.
- MedSurg strength: MedSurg and Neurotechnology organic sales grew 9.1%, led by Endoscopy and Ortho Tech, with reported sales growth of 13.9% and 15.8%, respectively.
- Peripheral Vascular impairment: Stryker recorded a $293 million goodwill impairment after lowering cash-flow expectations for the business amid supply constraints and a longer recovery timeline.
- Capital and transactions: Operating cash flow was $3.3 billion year to date, up about 14%; Stryker repurchased $1.0 billion of shares and authorized another $3.0 billion of buybacks. It also agreed to invest about $400 million in CMR Surgical for exclusive U.S. Versius distribution rights and an option to acquire the company.
Analysis
Stryker delivered 7.7% organic sales growth and 10.3% adjusted EPS growth, but the quarter fell short of management’s expectations and adjusted EPS missed the $3.56 consensus by 1.1% at $3.52. Revenue of $6.52 billion was up from $6.06 billion a year ago but 1.1% below Q2’s $6.59 billion. GAAP diluted EPS was $1.96, versus $2.22 a year ago and $3.30 in Q2; the year-over-year decline reflected the quarter’s impairment and other adjustments, while adjusted operating margin expanded 60 basis points to 26.2%.
The central issue was a weaker hip-and-knee environment combined with less consistent commercial execution. Management cited affordability concerns, more pre-authorization denials and softness in Europe and the Middle East, as well as distraction and delayed visibility from the cyber incident and Orthopaedics’ SAP implementation. At the same time, MedSurg and Neurotechnology grew 9.1% organically, and adjusted gross margin improved to 65.4%. Stryker reset its 2026 outlook to 6.5%–7.0% organic sales growth and $14.80–$14.90 adjusted EPS, assuming the current procedure environment persists into Q4. The $293 million Peripheral Vascular goodwill impairment underscored the near-term supply and recovery challenges in that business.
Hip and knee slowdown
- Market softness: Management estimated hip-and-knee market growth at roughly 2.5% for 2026 and said the market slowed further in Q3. In the U.S., knees grew 1.3% while hips declined 0.6%; total Orthopaedics organic sales growth was 5.9%.
- Demand pressures: Stryker attributed softer procedures to higher insurance premiums and deductibles, more pre-authorization denials, and regional disruption, strikes and government funding decisions in Europe and the Middle East.
- Execution challenges: The cyber incident and July SAP implementation distracted Orthopaedics teams and delayed order-entry visibility. Management said it had not maintained its historical pace of share gains and that Mako RPS and Triathlon Gold adoption was behind expectations, despite positive customer feedback.
- Response and outlook: Stryker plans to strengthen competitive conversions and new-product adoption. It expects a power hip impaction solution next year and remains confident in the longer-term market, but is not assuming a quick rebound in its current guidance.
MedSurg growth engines
- Segment growth: MedSurg and Neurotechnology generated $3.66 billion of sales, up 9.2% reported and 9.1% organically. Growth was broad, with the U.S. up 9.6% organically and international markets up 7.2%.
- Endoscopy and Medical: Endoscopy sales grew 13.9% reported, supported by operating-room infrastructure and renovations and Sports Medicine. Medical grew 9.7%, with double-digit growth in the U.S.; management highlighted strong Sage and Smart Care performance.
- Orthopaedic bright spots: Ortho Tech sales rose 15.8% reported, supported by Mako and orthopedic power tools. Trauma and Extremities grew 5.3% reported, with continued strength in upper extremities and early Mako Shoulder contribution.
- Capital demand: Management described the capital-equipment order book as elevated and demand as healthy, while noting that production and delivery execution remain important to converting that demand.
Margins and reported earnings
- Adjusted profitability: Adjusted gross margin was 65.4%, up 40 basis points year over year, reflecting operational efficiencies and a net tariff benefit. Adjusted operating margin rose 60 basis points to 26.2% on gross-margin improvement and expense discipline.
- GAAP results: Operating income fell 8.9% to $1.03 billion and reported operating margin declined to 15.9% from 18.7%. Net earnings decreased 12.3% to $753 million; diluted EPS fell to $1.96 from $2.22.
- Adjustments: Adjusted net earnings were $1.36 billion, up 10.1%, and adjusted EPS increased to $3.52 from $3.19. Reported results included a $293 million goodwill impairment and $153 million of structural optimization and other special charges, among other adjustments.
- Tax and year-to-date context: The quarter’s GAAP effective tax rate was 24.5%, up from 16.5% a year earlier, partly due to the non-deductible impairment. For the first nine months, adjusted EPS was $9.81, up 7.1%.
Peripheral Vascular recovery
Vascular sales were $566 million, up 8.0% reported and 7.4% in constant currency, but the quarter included a one-time China joint-venture milestone payment following regulatory approval. That benefit helped offset lost sales from continuing supply disruption. Management said supply restoration progressed during Q3 and expects product availability and inventory to normalize through year-end. The business also recorded a $293 million goodwill impairment: the filing cited reduced forecast cash flows from near-term operational and supply constraints and a longer expected period to reach growth and market recovery. Stryker expects to begin commercializing AVS’s intravascular lithotripsy platform in 2027, subject to regulatory approval.
Guidance and capital
- 2026 outlook: Stryker updated its full-year outlook to 6.5%–7.0% organic sales growth and $14.80–$14.90 adjusted diluted EPS. Management expects Q4 organic growth to be similar to Q3, assumes the current procedure environment continues, and cited strong capital demand; the sales outlook includes modestly positive pricing.
- Cash generation and repurchases: Operating cash flow reached $3.3 billion in the first nine months, up about 14% year over year. The company repurchased $1.0 billion of shares in Q3 and the board approved a further $3.0 billion authorization in October; management said acquisitions remain its first capital-allocation priority.
- CMR and ZuriMED: Stryker agreed to invest about $400 million in CMR Surgical for preferred equity, exclusive U.S. sales rights to Versius and an option to acquire the remaining equity in the future; closing was expected in Q4, subject to approvals and customary conditions. It also completed its ZuriMED acquisition, adding fiber-locker technology for sports medicine and soft-tissue applications.
- Leadership transition: CEO Kevin Lobo announced Spencer Stiles’ appointment as Stryker’s next CEO.
