Stryker Q2 Earnings Call Highlights

Key Points

• Stryker reported strong Q2 results, with 9% organic sales growth and adjusted EPS of $3.69, up 17.9% year over year. Both MedSurg and Neurotechnology and Orthopaedics delivered high-single-digit organic growth as operations recovered from the earlier cybersecurity incident.
• The company achieved record second-quarter Mako installations and cited strong hospital capital demand, while launching Mako RPS and advancing several other product rollouts. However, a Peripheral Vascular supply disruption caused a 6.7% decline in U.S. vascular sales, with recovery expected in the second half.
• Stryker narrowed its full-year outlook to 8.3%–9.3% organic sales growth and adjusted EPS of $14.95–$15.10. With $3.5 billion in cash and $1.8 billion in year-to-date operating cash flow, the company plans to resume share repurchases while keeping acquisitions as its top capital-allocation priority.

Stryker NYSE: SYK reported 9% organic sales growth in the second quarter of 2026 and adjusted earnings per share growth of 17.9%, as the medical technology company continued recovering from a cybersecurity incident that disrupted operations earlier in the year.

Chair and CEO Kevin Lobo said the company regained momentum during the quarter as it increased production to meet demand and support patient care. Stryker reported high-single-digit organic sales growth in both its MedSurg and Neurotechnology and Orthopaedics businesses, while U.S. organic sales rose 9% and international organic sales increased 8.9%.

“We exited Q2 with regained momentum and expect a strong second half of the year,” Lobo said, citing demand for capital products, production increases and commercial execution.

Second-Quarter Results and Segment Performance

Adjusted earnings per share totaled $3.69, up $0.56 from a year earlier. CFO Preston Wells said the increase reflected sales growth, operational execution and a net benefit from tariff-related costs. Foreign currency translation provided a $0.01 favorable impact to adjusted EPS.

Adjusted gross margin was 66%, improving 60 basis points from the prior-year quarter, while adjusted operating margin rose 170 basis points to 27.4% of sales. Wells attributed the operating-margin improvement to gross-margin gains and lower adjusted selling, general and administrative expenses as a percentage of sales.

MedSurg and Neurotechnology organic sales increased 9.2%, including 8.9% growth in the U.S. and 10.5% growth internationally. Within the U.S. business:

• Instruments organic sales rose 8.4%, led by interventional spine pain and surgical technologies products.
• Endoscopy organic sales increased 10.2%, supported by operating-room infrastructure and renovations, Oculan Lighting, urology, connected operating-room products and sports medicine.
• Medical organic sales climbed 13.1%, with strong growth in Sage and emergency care. Preoperative skin preparation products, powered cots and the LIFEPAK 35 were among the drivers.

U.S. vascular organic sales declined 6.7% because of an operational disruption in Peripheral Vascular. Growth in the company’s hemorrhagic portfolio, including Surpass Evolve flow-diverting stents, partly offset the decline.

Orthopaedics organic sales grew 8.6%, with U.S. organic growth of 9.1% and international growth of 7.5%. U.S. trauma and extremities sales rose 12.5%, while Ortho Tech organic sales increased 9.2%, supported by Mako installations. U.S. knee sales grew 6.2% and hip sales rose 4.9%.

Capital Demand, Robotics and Product Launches

Nick Mead, Stryker’s vice president of investor relations, said capital delivery was a key contributor to quarterly growth as the company recovered from the cybersecurity incident. Stryker exited the quarter with an elevated backlog and expects hospital capital demand to remain strong through the rest of the year.

The company said it recorded its best-ever second quarter for Mako installations in both the U.S. and international markets, while utilization across the installed base continued to rise. Mako has been used in more than 2.5 million procedures globally and is installed in 47 countries, according to the company.

Stryker recently began the full commercial launch of Mako RPS in the U.S. Lobo said early feedback from the limited launch was strong, particularly around the system’s ease of use and haptic technology. He said the handheld robotic platform could be especially suited to a subset of surgeons performing total knee procedures in ambulatory surgery centers.

Other product activity included the move toward full commercial launches of Triathlon Gold and the Triathlon Medial Stabilized Insert. Stryker also received approval for Prophecy patient-specific planning and guides for its Incompass total ankle replacement system and initiated a limited European launch of its Pangea trauma plating system, with a full commercial launch expected in the fourth quarter.

Peripheral Vascular Disruption and AVS Acquisition

Lobo said a supply disruption at one plant in the Inari business created a significant backorder situation and led to lost sales in the quarter. The company expects backorders to return to a manageable level by the end of the third quarter.

Stryker said it has stabilized its Peripheral Vascular sales force and expects the business to return to growth in the third and fourth quarters, though recovery will take time as the backorder is reduced. Lobo said the company prioritized high-volume and loyal customers during the supply constraint.

The company also closed its acquisition of AVS during the quarter. Lobo said AVS’s intravascular lithotripsy product for above-the-knee use has been submitted for approval and could begin selling before the end of 2026, though the timing remains dependent on the Food and Drug Administration. AVS has also begun a coronary indication trial.

Lobo said Stryker expects the PEERLESS II study, which recently completed enrollment of 1,200 patients, to provide an important data readout around the middle of 2027. He said the results could help expand the Peripheral Vascular market.

Guidance, Cash Flow and Capital Allocation

Stryker narrowed its full-year outlook and now expects organic net sales growth of 8.3% to 9.3%, along with adjusted earnings per share of $14.95 to $15.10. The company said its guidance assumes a modestly positive contribution from pricing and could receive a slightly favorable impact to sales and earnings if currency rates remain near current levels.

Wells said the second-quarter EPS result included tariff refunds, while cybersecurity-related manufacturing loss absorption, idle costs, remediation spending and information technology costs are expected to offset that benefit over the full year. The company also cited pressures related to oil and other raw materials.

Stryker ended the quarter with approximately $3.5 billion in cash and marketable securities and generated $1.8 billion in cash from operations year to date. Wells said acquisitions remain the company’s primary capital-allocation priority, but Stryker plans to resume share repurchases during the current quarter amid elevated cash generation and what it described as valuation compression across the medtech sector.

The company has about $1 billion remaining under a previously authorized repurchase program, although Wells said the amount ultimately deployed will depend on acquisition opportunities, timing and the valuation of Stryker shares.

About Stryker (NYSE:SYK)

Stryker Corporation is a global medical technology company that designs, manufactures and markets a broad range of products and services for use in hospitals, surgeons' offices and other healthcare facilities. Its primary business activities span orthopedics (including joint replacement implants, trauma and extremities products), surgical equipment and operating room technologies (such as visualization, navigation and powered instruments), neurotechnology and spine solutions, and patient-handling and emergency medical equipment.

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