Stryker — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net sales increased 7.7% year-over-year to $6.52 billion for the quarter, with organic net sales also rising 7.7%.
• Reported net earnings decreased 12.3% to $753 million, and reported diluted EPS fell 11.7% to $1.96.
• Reported operating income margin was 15.9%, while adjusted operating income margin increased 60 basis points to 26.2%.
• Adjusted net earnings increased 10.1% to $1.4 billion, and adjusted diluted EPS rose 10.3% to $3.52.
• Reported gross profit margin was 65.2%, compared to an adjusted gross profit margin of 65.4%.
• For the nine months ended September 30, 2026, net sales were $19.129 billion (up 6.6%), and net earnings were $2.774 billion (up 15.7%).
• Cash and cash equivalents were $3.271 billion as of September 30, 2026, down from $4.011 billion at December 31, 2025.
• Long-term debt, excluding current maturities, stood at $14.176 billion as of September 30, 2026, compared to $14.859 billion at December 31, 2025.
• Net cash provided by operating activities for the nine months was $3.303 billion.
• Net cash used in investing activities for the nine months was $1.011 billion, including $481 million in acquisitions.
• Net cash used in financing activities for the nine months was $2.998 billion, driven by $1.0 billion in stock repurchases and $1.012 billion in dividends.

Guidance and Future Outlook:

• Full-year 2026 organic net sales growth guidance is updated to a range of 6.5% to 7.0%.
• Full-year 2026 adjusted net earnings per diluted share guidance is updated to a range of $14.80 to $14.90.
• Management expects a modestly positive pricing impact and a slightly favorable foreign exchange impact on sales and adjusted EPS for the full year, assuming rates hold near current levels.
• CEO Kevin A. Lobo stated that while Q3 performance fell short of expectations, underlying fundamentals remain strong, with expectations for solid Q4 performance and good momentum heading into 2027.

Business Segments and Product Lines:

• MedSurg and Neurotechnology net sales reached $3.7 billion, increasing 9.2% reported and 9.1% organically, driven by increased unit volume.
• Orthopaedics net sales reached $2.9 billion, increasing 5.7% reported and 5.9% organically, driven by increased unit volume.
• Within Orthopaedics, Ortho Tech sales grew 15.8% reported (16.0% constant currency) for the quarter, while Knees grew 1.1% and Hips declined 1.0%.
• Trauma and Extremities sales increased 5.3% reported (5.5% constant currency) for the quarter.
• Spinal Implants sales declined 43.9% reported (45.4% constant currency) for the quarter, with a $9 million total for the nine months compared to $177 million in the prior year period.
• Geographic sales growth for the quarter was 8.3% in the United States and 5.7% internationally.

Market and Competitive Landscape:

• The press release does not provide specific market share data or direct competitor comparisons.
• Sales growth was primarily driven by increased unit volume across segments.
• Foreign currency exchange rates had no impact on reported organic sales growth for the quarter.

Risks and Challenges:

• Reported earnings include charges for acquisition and integration activities, amortization of intangible assets, structural optimization, goodwill impairments, regulatory compliance costs, recall-related matters, and legal/tax matters.
• Goodwill impairment of $293 million was recorded in the third quarter of 2026.
• Structural optimization and other special charges totaled $153 million in the quarter, including $77 million related to the Spinal Implants sale and $37 million for termination of sales relationships in certain countries.
• Forward-looking statements are subject to risks including weakening economic conditions, geopolitical risks, tariffs, pricing pressures, regulatory actions, cybersecurity incidents, supply chain disruptions, and changes in reimbursement levels.

Management Commentary and Tone:

• CEO Kevin A. Lobo noted that the quarter delivered 7.7% organic sales growth and double-digit adjusted earnings growth, though performance fell short of internal expectations.
• Management expressed confidence in the underlying business fundamentals and anticipated solid performance in Q4 and momentum into 2027.

Other Key Points:

• The company repurchased $1.0 billion of common stock in the third quarter of 2026.
• In October 2026, the Board of Directors approved an additional $3.0 billion to the existing share repurchase program.
• A conference call to discuss results was held on October 29, 2026.
• The company reported a reversal of 2025 tariffs impacting the nine-month adjusted operating income by $158 million.
• The organizational structure changed in Q1 2026, combining Orthopaedic Instruments with Other Orthopaedics to form the new Ortho Tech business.