Stryker Corporation
SYK · NYSE
Next quarter
Expected to report Oct 29, 2026 — estimated from last year’s reporting date.
Consensus is $3.63 EPS for Sep 2026 across 9 estimates, ranging $3.50 to $3.81.
SYK Jun 2026
- 6.65%
- -6.42%
- $3.46
- $3.69
- —
- $6.59B
Reported results
- $6.59B
- 68.27%
- $1.66B
- 25.18%
- $1.28B
- $3.30
Highlights
- Sales recovery: Second-quarter net sales rose 9.4% year over year to $6.59 billion, with organic growth of 9.0% driven entirely by higher unit volume.
- Earnings beat: Adjusted diluted EPS was $3.69, 6.65% above the $3.46 consensus and up 17.9% from $3.13 a year ago.
- Cyber incident progress: Management said it made “significant progress” recovering from the March cybersecurity incident; second-quarter growth accelerated from 6.1% reported sales growth in the first half.
- Margin expansion: Adjusted operating margin increased 170 basis points year over year to 27.4%, while reported operating margin reached 25.2% versus 18.5% a year ago.
- Balanced segments: MedSurg and Neurotechnology sales grew 9.7% to $3.63 billion, while Orthopaedics grew 9.1% to $2.96 billion; both gains were principally volume-driven.
- Guidance narrowed: Stryker now expects 2026 organic sales growth of 8.3%-9.3% and adjusted EPS of $14.95-$15.10, with modestly positive pricing and slightly favorable foreign exchange.
- Cash and capital deployment: Six-month operating cash flow increased to $1.84 billion from $1.36 billion, while acquisition spending fell to $459 million from $4.81 billion after the prior-year Inari deal.
Analysis
Stryker’s second quarter was a recovery quarter that exceeded expectations and restored momentum after the first-quarter cybersecurity disruption. Adjusted EPS of $3.69 beat the $3.46 consensus by 6.65% and increased 17.9% from $3.13 a year ago. Revenue reached $6.59 billion, up 9.4% year over year and 9.5% from $6.02 billion in the prior quarter. Adjusted operating margin expanded to 27.4% from 25.7% a year ago, and adjusted net earnings rose to $1.42 billion from $1.21 billion. GAAP diluted EPS was $3.30, versus $2.29 a year ago and $1.93 in the first quarter.
The print was defined by broad, volume-led demand and substantial operational leverage. MedSurg and Neurotechnology grew 9.7% and Orthopaedics 9.1%, with particularly strong performance in Medical, Endoscopy, Trauma and Extremities, and Ortho Tech. Margin comparisons benefited from the reversal of 2025 tariffs, which added $158 million to operating income, so the underlying improvement warrants some normalization. Stryker narrowed rather than materially reset its outlook, targeting 8.3%-9.3% organic sales growth and $14.95-$15.10 of adjusted EPS for 2026. Six-month operating cash flow rose 35% to $1.84 billion, supporting dividends and debt repayment while acquisition activity shifted toward the $435 million AVS transaction.
Growth and recovery
Stryker presented the quarter as evidence that operations were recovering from the cybersecurity incident first reported on March 11. Revenue growth accelerated to 9.4% from 6.1% for the first six months, while organic growth was 9.0% versus 5.8% in the first half. Management attributed the quarter’s increase to higher shipments across most MedSurg and Neurotechnology businesses and all Orthopaedics businesses. Pricing contributed little: consolidated organic growth came from unit volume, with only a 0.1% pricing contribution in MedSurg and none in Orthopaedics.
- United States: Sales increased 8.9% to $4.96 billion, while international sales rose 11.0% to $1.63 billion, or 9.2% in constant currency.
- MedSurg and Neurotechnology: Sales grew 9.7% to $3.63 billion, led by Medical at 13.4%, Endoscopy at 11.7%, and Instruments at 9.3%; Vascular declined 0.7%.
- Orthopaedics: Sales increased 9.1% to $2.96 billion, led by Trauma and Extremities at 11.9% and Ortho Tech at 10.3%; Hips grew 2.9%.
Margin and earnings
The quarter produced significant earnings leverage. Gross margin expanded to 68.3% from 63.8%, and adjusted operating margin rose to 27.4% from 25.7%. The improvement reflected volume, lower selling and administrative expense as a percentage of sales, and better manufacturing and supply-chain performance. However, the comparison includes a $158 million reversal of 2025 tariff costs, which contributed 260 basis points to gross-margin expansion and reduced adjusted EPS by $0.34 because the item was excluded from adjusted results.
- Reported results: Operating income increased 49.1% to $1.66 billion, net earnings rose 44.3% to $1.28 billion, and GAAP diluted EPS increased 44.1% to $3.30.
- Adjusted results: Adjusted operating income was $1.81 billion, adjusted net earnings were $1.42 billion, and adjusted EPS was $3.69 versus $3.13 a year ago.
- Cost discipline: SG&A rose 7.2% to $2.23 billion, slower than sales growth, reducing SG&A to 33.8% of revenue from 34.5%; R&D increased 6.6% to $434 million.
2026 outlook
Stryker narrowed its full-year guidance while maintaining a strong growth profile. The updated range calls for organic net sales growth of 8.3%-9.3% and adjusted diluted EPS of $14.95-$15.10. The outlook includes a modestly positive pricing contribution and slightly favorable foreign exchange if rates remain near current levels. The guidance implies management views the second-half recovery as durable, but it does not quantify a further benefit from the cybersecurity normalization.
- Sales framework: The new organic growth range is measured against first-half organic growth of 5.8%, requiring a stronger second half.
- Margin context: First-half adjusted operating margin was 24.4%, only 10 basis points above the prior year, compared with the second-quarter margin improvement of 170 basis points.
- Risk factors: The filing continues to identify the cybersecurity incident, tariffs and trade policy, supply-chain disruption, reimbursement, regulatory matters, and litigation as potential sources of volatility.
Cash and acquisitions
Cash generation improved as the business recovered, although cash balances declined because Stryker paid dividends and reduced debt. Six-month operating cash flow rose to $1.84 billion from $1.36 billion, while capital spending increased to $368 million from $306 million. Stryker ended June with $3.39 billion of cash and $14.94 billion of total debt, down from $15.86 billion at year-end.
- Acquisition spending: Cash used for acquisitions was $459 million, primarily reflecting the AVS acquisition, versus $4.81 billion in the first half of 2025 for Inari.
- AVS transaction: Stryker paid $435 million in net cash for AVS and recorded fair value of $271 million for potential milestone payments, expanding its peripheral vascular platform.
- Shareholder returns: Six-month dividend payments were $674 million, and no shares were repurchased under the $2.0 billion authorization; $1.03 billion remained available at June 30.
Operating structure
The quarter was reported under Stryker’s recast two-segment structure. The company combined orthopaedic instruments with other enabling technologies in Ortho Tech and moved Neuro Cranial and spine enabling technologies into the remaining Instruments business. The reorganization is intended to simplify the customer experience and speed innovation, while historical periods were recast for comparability. Segment operating income margins improved in both businesses in the quarter: MedSurg and Neurotechnology reached 28.1% from 25.6%, and Orthopaedics reached 34.0% from 33.1%.
