November 2, 2026·41 min read
Stryker Corporation (SYK), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Net sales Q3 2026
$6.52bn
+7.7% year on year (Q3 2025 $6.06bn)
Costs and expenses Q3 2026
$5.49bn
+11.5% year on year (Q3 2025 $4.92bn)
Operating margin Q3 2026
15.9%
(2.9 pts) year on year (Q3 2025 18.7%)
Key findings
- Q3 2026 net sales $6.52bn, +7.7%, organic +7.7%. MedSurg and Neurotechnology +9.2% (organic +9.1%) and Orthopaedics +5.7% (organic +5.9%); adjusted operating margin 26.2% against 25.6%, adjusted EPS $3.52, +10.3%.
- FY2026 organic growth guidance cut to 6.5% to 7.0% from 8.3% to 9.3% (Jul 2026) and 8.0% to 9.5% (Jan 2026); adjusted EPS $14.80 to $14.90 from $14.95 to $15.10. 9M 2026 organic growth 6.4%; management guides Q4 near the Q3 rate.
- Hips and knees slow, Mako grows. Knees +1.1% to $635m and Hips (1.0%) to $453m in Q3 2026, while Ortho Tech rose +15.8% to $754m; management put 2026 US hip and knee market growth at about 2.5%.
- MedSurg recovered from the March 2026 cyber incident: Endoscopy +13.9%, Medical +9.7% and Vascular +8.0% in Q3 2026 after Q1 2026 organic growth of 2.4%; MedSurg and Neurotechnology segment margin 28.7% against 26.1%.
- One off items separate GAAP from adjusted results: a $293m Peripheral Vascular (Inari) goodwill impairment cut Q3 2026 GAAP EPS to $1.96, (11.7%), and operating margin to 15.9%; Q2 2026 included a $158m tariff reversal credit and Q4 2025 a $565m tax charge.
- First buyback since at least FY2021: $1.0bn in Q3 2026, plus $3.0bn of new authorization; net debt $11.66bn. Shares at $296.81 trade at 31.6x TTM GAAP EPS and 20.8x TTM adjusted EPS; three year scenarios $251 (worst), $404 (base) and $561 (best).
Figures are read from the Forms 10-K for FY2022 to FY2025, the Forms 10-Q for Q1 to Q3 2026, the Forms 8-K with all their exhibits, incl. the quarterly earnings releases (Ex 99.1), the recast financial statements for the 2026 segment structure (Ex 99.1, 23.1), the cyber incident letter and customer update (Ex 99.1, 99.2) and the amended 8-K under Item 1.05, the officer succession releases and letter agreements (Ex 99.1 to 99.3, 10.1, 10.2), the CFO commentary given on the Q1 and Q2 2026 earnings calls (Stryker files no separate CFO commentary exhibit), the proxy statement of 2026 and the Form 8-K Item 5.07 vote results, Schedules 13D and 13G and Forms 4 for central index key 310764, together with the filings of seven peers used in chapters 2 to 4 and 7. Accession numbers appear in the Sources appendix. Market price is the intraday trade of 2 November 2026.
1 Revenue & Business Model
- Storyline: growth slows in joint replacement while surgical equipment and Mako carry the company. Chapters 2 to 4 cover the three revenue drivers: Orthopaedics, MedSurg equipment (Instruments, Endoscopy, Medical) and Vascular, which includes Inari.
- Two segments on the 2026 structure: MedSurg and Neurotechnology $13.69bn of FY2025 net sales (54.5%), segment margin 27.0%; Orthopaedics $11.42bn (45.5%), margin 33.2%. Products are sold in about 61 countries.
- Segment reorganization in Q1 2026: the new Ortho Tech business (Mako, orthopaedic instruments and power tools, enabling technology) moved from MedSurg and Neurotechnology to Orthopaedics. An 8-K of 26 Jun 2026 recast FY2023 to FY2025; the FY2025 10-K as filed showed MedSurg and Neurotechnology at $15.65bn and Orthopaedics at $9.47bn. FY2021 and FY2022 are only available on the old basis, so the segment chart starts in FY2023.
- Net sales FY2021 $17.11bn to FY2025 $25.12bn, a 10.1% CAGR, helped by acquisitions (Inari in Feb 2025 for $4.81bn net) and reduced by the Spinal Implants sale in Apr 2025; FY2025 organic growth 10.3%; TTM Q3 2026 $26.30bn.
- Regions FY2025: United States $19.01bn (75.7%), Europe, Middle East and Africa $3.18bn, Asia Pacific $2.16bn, other countries $765m. Q3 2026: US +8.3%, international +5.7%.
- About 56,000 employees at Dec 2025, about 28,000 in the US. Capital equipment sales are generally higher in Q4.
Table 1.1 Segments and businesses on the 2026 structure, FY2023 to FY2025
| Line | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| MedSurg and Neurotechnology net sales ($bn) | 10.56 | 11.75 | 13.69 |
| MedSurg and Neurotechnology operating income ($bn) | 2.70 | 3.14 | 3.70 |
| MedSurg and Neurotechnology operating margin (%) | 25.5 | 26.7 | 27.0 |
| Orthopaedics net sales ($bn) | 9.94 | 10.84 | 11.42 |
| Orthopaedics operating income ($bn) | 3.04 | 3.45 | 3.79 |
| Orthopaedics operating margin (%) | 30.6 | 31.8 | 33.2 |
| Instruments incl. Neuro Cranial ($bn) | 2.81 | 3.21 | 3.71 |
| Endoscopy ($bn) | 3.07 | 3.39 | 3.81 |
| Medical ($bn) | 3.46 | 3.85 | 4.20 |
| Vascular ($bn) | 1.23 | 1.31 | 1.97 |
| Knees ($bn) | 2.27 | 2.45 | 2.66 |
| Hips ($bn) | 1.54 | 1.70 | 1.87 |
| Trauma and Extremities ($bn) | 3.15 | 3.51 | 3.95 |
| Ortho Tech ($bn) | 2.26 | 2.48 | 2.77 |
| Spinal Implants ($bn) | 0.71 | 0.71 | 0.19 |
Recast in the 8-K of 26 Jun 2026. Instruments includes Neuro Cranial as in the 2026 Forms 10-Q. Segment operating income excludes amortization, acquisition, restructuring, impairment, recall and legal items; FY2025 segment total $7.49bn against GAAP operating income $4.89bn.
Table 1.2 Segments on the old basis, as first reported, FY2021 to FY2023
| Line | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| MedSurg and Neurotechnology ($bn) | 9.54 | 10.61 | 11.84 |
| Orthopaedics and Spine ($bn) | 7.57 | 7.84 | 8.66 |
| Instruments ($bn) | 2.11 | 2.28 | 2.57 |
| Endoscopy ($bn) | 2.42 | 2.73 | 3.03 |
| Medical ($bn) | 2.61 | 3.03 | 3.46 |
| Neurovascular ($bn) | 1.19 | 1.20 | 1.23 |
| Neuro Cranial ($bn) | 1.21 | 1.38 | 1.55 |
| Knees ($bn) | 1.85 | 2.00 | 2.27 |
| Hips ($bn) | 1.34 | 1.41 | 1.54 |
| Trauma and Extremities ($bn) | 2.66 | 2.81 | 3.15 |
| Spine ($bn) | 1.17 | 1.15 | 1.19 |
| Other ($bn) | 0.55 | 0.48 | 0.51 |
Not comparable with Table 1.1: Spine sat in Orthopaedics and Spine until FY2023; from FY2024 spine enabling technology moved to MedSurg and Neurotechnology, and from Q1 2026 orthopaedic instruments and Mako moved to Orthopaedics.
Table 1.3 Segment net sales as filed in the FY2025 Form 10-K, before the 2026 recast
| Segment | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| MedSurg and Neurotechnology ($bn) | 12.16 | 13.52 | 15.65 |
| Orthopaedics ($bn) | 8.34 | 9.08 | 9.47 |
Table 1.4 Segment and business net sales, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| MedSurg and Neurotechnology ($m) | 3,355 | 3,976 | 3,207 | 3,625 | 3,664 |
| Orthopaedics ($m) | 2,702 | 3,195 | 2,813 | 2,964 | 2,856 |
| Instruments ($m) | 949 | 1,008 | 920 | 1,003 | 996 |
| Endoscopy ($m) | 896 | 1,145 | 868 | 1,004 | 1,021 |
| Medical ($m) | 985 | 1,284 | 902 | 1,122 | 1,081 |
| Vascular ($m) | 525 | 539 | 517 | 496 | 566 |
| Knees ($m) | 628 | 749 | 670 | 693 | 635 |
| Hips ($m) | 457 | 499 | 460 | 479 | 453 |
| Trauma and Extremities ($m) | 960 | 1,086 | 1,035 | 1,072 | 1,010 |
| Ortho Tech ($m) | 651 | 853 | 646 | 717 | 754 |
| Spinal Implants ($m) | 6 | 8 | 2 | 3 | 4 |
| MedSurg and Neurotechnology segment operating margin (%) | 26.1 | 30.7 | 21.8 | 28.1 | 28.7 |
| Orthopaedics segment operating margin (%) | 32.4 | 36.4 | 30.1 | 34.0 | 31.2 |
2026 structure. Q4 2025 equals recast FY2025 less recast 9M 2025.
Table 1.5 Organic growth, margins and EPS, last five quarters
| Metric | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Organic net sales growth (%) | 9.5 | 11.0 | 2.4 | 9.0 | 7.7 |
| MedSurg and Neurotechnology (%) | 8.4 | 12.6 | 0.9 | 9.2 | 9.1 |
| Orthopaedics (%) | 11.4 | 8.4 | 4.1 | 8.6 | 5.9 |
| Adjusted operating margin (%) | 25.6 | 30.2 | 21.1 | 27.4 | 26.2 |
| GAAP operating margin (%) | 18.7 | 25.2 | 15.5 | 25.2 | 15.9 |
| Adjusted diluted EPS ($) | 3.19 | 4.47 | 2.60 | 3.69 | 3.52 |
| GAAP diluted EPS ($) | 2.22 | 2.20 | 1.93 | 3.30 | 1.96 |
Organic growth and adjusted figures are company measures from the 8-K Ex 99.1 releases; 2025 segment organic growth is on the pre 2026 segment structure.
2 Orthopaedics: Mako Grows, Hips and Knees Slow
- Orthopaedics net sales $2.86bn in Q3 2026, +5.7%, organic +5.9%; 9M 2026 $8.63bn, +4.9%. Segment operating margin 31.2% against 32.4%; pricing slightly negative in 2026.
- Knees $635m, +1.1% (US +1.3%); Hips $453m, (1.0%) (US (0.6%)). In Q2 2026 Knees had grown +8.4% and Hips +2.9%.
- Trauma and Extremities $1.01bn, +5.3%, after +11.9% in Q2 2026; US growth +4.5% against a +13.2% comparison.
- Ortho Tech $754m, +15.8% (Mako, power tools and enabling technology; US +18.1%). Mako has more than 2.5m procedures in 47 countries; Mako 4 launched in 2025 and Mako Shoulder had its full US launch planned for Q1 2026.
- Spinal Implants was sold in Apr 2025: $177m of sales in 9M 2025 against $9m in 9M 2026, which lowers reported against organic growth.
How the orthopaedics market is changing
- Procedure growth slows: management put 2026 US hip and knee market growth at about 2.5%, below the prior five to six years, citing higher insurance deductibles, more pre authorization denials and softer Europe and the Middle East.
- Peers report mixed results: Smith+Nephew cut its FY2026 revenue growth guidance to about 4% from about 6% on softer US Orthopaedics (Q2 2026 underlying growth 1.6%); Zimmer Biomet grew Q2 2026 net sales 4.8% (organic 4.0%) and raised its FY2026 guidance; J&J MedTech sales grew 2.5% in Q3 2026, with orthopaedics growth led by trauma.
- Robotics and enabling technology: Stryker Ortho Tech grew 15.8% in Q3 2026; Zimmer Biomet received FDA clearance for its next generation ROSA Shoulder; Stryker is adding soft tissue robotics through the CMR Surgical investment (Versius, over 50,000 procedures).
Table 2.1 Orthopaedics against competitors ($m)
| Company and line | Period | Filed detail | Sales | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| Stryker Orthopaedics | Q3 2026 | organic 5.9% | 2,856 | 5.7 | 31.2 |
| Knees | Q3 2026 | US +1.3% | 635 | 1.1 | n/a |
| Hips | Q3 2026 | US (0.6%) | 453 | (1.0) | n/a |
| Trauma and Extremities | Q3 2026 | US +4.5% against +13.2% a year earlier | 1,010 | 5.3 | n/a |
| Ortho Tech (Mako, power tools) | Q3 2026 | US +18.1% | 754 | 15.8 | n/a |
| Zimmer Biomet: Net sales | Q2 2026 | Organic constant currency +4.0%; adjusted EPS $2.07 | 2,177 | 4.8 | n/a |
| Smith+Nephew: Revenue (total company) | Q2 2026 | Underlying +1.6%; margin shown is H1 2026 trading margin; FY2026 growth guidance cut to about 4% | 1,597 | 2.8 | 18.3 |
| Johnson & Johnson: MedTech sales | Q3 2026 | Orthopaedics not split in the release read; growth led by electrophysiology, Shockwave and trauma | 8,642 | 2.5 | n/a |
| Medtronic: Neuroscience revenue (includes Cranial & Spinal Technologies) | Jul 2026 quarter | Cranial & Spinal low double digit growth; quarter had an extra fiscal week | 2,678 | 10.3 | n/a |
Stryker margin is segment operating margin. Smith+Nephew margin is H1 2026 trading margin. Zimmer Biomet and Smith+Nephew had not filed Q3 2026 at the time of writing; J&J does not split orthopaedics in the release read.
3 MedSurg Equipment: Endoscopy and Medical After the Cyber Incident
- MedSurg and Neurotechnology net sales $3.66bn in Q3 2026, +9.2%, organic +9.1%; segment operating margin 28.7% against 26.1%. The segment includes Vascular (Chapter 4).
- Endoscopy $1.02bn, +13.9%; Medical $1.08bn, +9.7%; Instruments $996m, +5.1%, where neurosurgery capital orders were deferred ahead of the Sonopet 3 launch.
- Q1 2026 cyber incident: segment organic growth fell to 0.9% and Medical sales to $902m, (4.6%); Q2 2026 Medical +13.4% and Endoscopy +11.7% as delayed orders shipped.
- Capital equipment: management described the order book as elevated; capital sales are generally highest in Q4; next generation Neptune is planned for H1 2027.
- Mix: MedSurg and Neurotechnology grows faster than Orthopaedics at a lower gross margin, which management expects to weigh on gross margin; Q3 2026 segment margins 28.7% against 31.2% for Orthopaedics.
How the surgical equipment market is changing
- Cyber incidents reach medtech: Boston Scientific disclosed a material cybersecurity incident under Item 1.05 on 8 Sep 2026; its MedSurg sales rose 0.6% in Q3 2026, with Endoscopy (0.8%).
- Robotic surgery grows: Intuitive placed 546 da Vinci systems in Q3 2026 against 427 a year earlier; worldwide procedures grew about 15% and revenue 21.5%; it recorded a $450m antitrust settlement charge.
- Medtronic Medical Surgical revenue rose 10.0% (organic 10.2%) in the quarter to 31 Jul 2026, which included an extra fiscal week worth about $570m to group revenue.
- Tariffs: Stryker reversed $158m of 2025 tariffs in Q2 2026; Intuitive booked $22m net of IEEPA tariff refunds in Q3 2026.
Table 3.1 MedSurg equipment against competitors ($m)
| Company and line | Period | Filed detail | Sales | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| Stryker MedSurg and Neurotechnology | Q3 2026 | organic 9.1%; incl. Vascular | 3,664 | 9.2 | 28.7 |
| Instruments | Q3 2026 | US +4.8% against +15.3% a year earlier | 996 | 5.1 | n/a |
| Endoscopy | Q3 2026 | US +13% | 1,021 | 13.9 | n/a |
| Medical | Q3 2026 | US +10% | 1,081 | 9.7 | n/a |
| Boston Scientific: MedSurg net sales | Q3 2026 | Endoscopy $741m (0.8%); Neuromodulation $331m (+13.1%) | 1,733 | 0.6 | n/a |
| Medtronic: Medical Surgical revenue | Jul 2026 quarter | Organic +10.2%; group non GAAP operating margin 23.7%; includes extra week | 2,279 | 10.0 | n/a |
| Intuitive Surgical: Revenue | Q3 2026 | Margin is non GAAP operating income $1.27bn over revenue; da Vinci installed base 12,094 (+12%) | 3,050 | 21.5 | 41.6 |
| Johnson & Johnson: MedTech sales | Q3 2026 | Includes surgery, orthopaedics, cardiovascular and vision | 8,642 | 2.5 | n/a |
Stryker margin is segment operating margin; Intuitive margin is non GAAP operating income over revenue. J&J MedTech includes surgery, orthopaedics, cardiovascular and vision.
4 Vascular and Inari: Thrombectomy Consolidates
- Vascular net sales $566m in Q3 2026, +8.0%: US $320m, +13.0%, incl. a one time China joint venture milestone not quantified in the filings; international $246m, +2.1%. 9M 2026 $1.58bn, +10.5%.
- Inari supply: an Inari plant issue created backorders in Q2 2026, when Vascular sales were $496m, (0.7%), and US Vascular fell 6.7%; management expects supply to normalize by year end 2026.
- Write down: Inari was bought in Feb 2025 for $4.81bn net with goodwill of $3.12bn; Q3 2026 brought a $293m Peripheral Vascular goodwill impairment on supply constraints and a slower expected recovery; $3.26bn of goodwill remains.
- Additions: Amplitude Vascular Systems (May 2026, $434m net cash plus up to $400m of milestones) adds intravascular lithotripsy, expected in 2027 pending FDA approval by end 2026.
How the vascular market is changing
- Thrombectomy consolidates: Boston Scientific agreed on 15 Jan 2026 to acquire Penumbra for $374 per share, an enterprise value of about $14.5bn; Penumbra grew Q3 2026 revenue 15.6% to $410.1m, thrombectomy 18.1% to $279.2m and US VTE revenue 26.0%.
- Medtronic reported low double digit organic growth in Peripheral Vascular Health and closed the Scientia Vascular acquisition on 12 Jun 2026; its Cardiovascular revenue rose 19.5% in the quarter to 31 Jul 2026, incl. an extra week.
- Boston Scientific Cardiovascular sales rose 1.9% to $3.41bn in Q3 2026, after its Sep 2026 cybersecurity incident.
Table 4.1 Vascular against competitors ($m)
| Company and line | Period | Filed detail | Sales | Growth (%) | Margin (%) |
|---|---|---|---|---|---|
| Stryker Vascular | Q3 2026 | 9M 2026 $1.58bn, +10.5% | 566 | 8.0 | n/a |
| US Vascular | Q3 2026 | incl. a one time China joint venture milestone | 320 | 13.0 | n/a |
| International Vascular | Q3 2026 | 246 | 2.1 | n/a | |
| Penumbra: Revenue | Q3 2026 | Thrombectomy $279.2m (+18.1%); margin is income from operations over revenue; acquisition by Boston Scientific pending | 410.1 | 15.6 | 12.4 |
| Boston Scientific: Cardiovascular net sales | Q3 2026 | Group adjusted EPS $0.73 | 3,406 | 1.9 | n/a |
| Medtronic: Cardiovascular revenue | Jul 2026 quarter | organic +18.9%; Peripheral Vascular Health low double digit organic growth; includes extra week | 3,927 | 19.5 | n/a |
| Medtronic: Neuroscience revenue | Jul 2026 quarter | Specialty Therapies (includes neurovascular) high single digit organic growth | 2,678 | 10.3 | n/a |
Penumbra margin is income from operations over revenue. Medtronic periods end 31 Jul 2026 and include an extra fiscal week.
5 Financial Analysis & Ratios
- GAAP operating margin rose from 15.1% in FY2021 to 19.5% in FY2025 and 20.7% TTM; gross margin 64.0% in FY2025 and 65.3% TTM. Company adjusted operating margin was 26.3% in FY2025, a gap of $1.71bn (6.8% of net sales) to GAAP, mainly amortization ($732m), corporate costs, acquisition charges, restructuring and impairments.
- Net income FY2025 $3.25bn, 12.9% of net sales, after a 28.1% tax rate incl. the $565m Q4 2025 intellectual property transfer charge; TTM $3.62bn, diluted EPS $9.39.
- Free cash flow FY2025 $4.28bn (17.1%), TTM $4.57bn (17.4%); capex 3.3% of TTM net sales. 9M 2026 operating cash flow $3.30bn, +13.9%.
- Balance sheet at 30 Sep 2026: cash $3.27bn (44% outside the US against 20% at Dec 2025), debt $14.93bn incl. $250m of commercial paper, net debt $11.66bn; goodwill $19.33bn, 40.9% of total assets. Inventory days 230 TTM against 197 in FY2021.
- Capital returns: dividends $1.28bn in FY2025 and $1.01bn in 9M 2026 ($0.88 a quarter, from $0.84); no buybacks FY2021 to FY2025; $1.0bn repurchased in Q3 2026; authorization $3.03bn after the Oct 2026 increase. Acquisitions used $4.96bn of cash in FY2025.
Table 5.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Revenue | 17.1 | 18.4 | 20.5 | 22.6 | 25.1 | 26.3 |
| Gross profit | 11.0 | 11.6 | 13.1 | 14.4 | 16.1 | 17.2 |
| Research and development | 1.2 | 1.5 | 1.4 | 1.5 | 1.6 | 1.7 |
| Selling, general and administrative | 6.4 | 6.5 | 7.1 | 7.7 | 8.7 | 9.1 |
| Operating income | 2.6 | 2.8 | 3.9 | 3.7 | 4.9 | 5.4 |
| Net income | 2.0 | 2.4 | 3.2 | 3.0 | 3.2 | 3.6 |
| Diluted EPS ($) | 5.21 | 6.17 | 8.25 | 7.76 | 8.40 | 9.39 |
| Operating cash flow | 3.3 | 2.6 | 3.7 | 4.2 | 5.0 | 5.4 |
| Capital expenditure | (0.5) | (0.6) | (0.6) | (0.8) | (0.8) | (0.9) |
| Free cash flow | 2.7 | 2.0 | 3.1 | 3.5 | 4.3 | 4.6 |
| Stock based compensation | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 |
| Cash and investments | 3.0 | 1.9 | 3.1 | 4.5 | 4.1 | 3.3 |
| Total debt | 12.5 | 13.0 | 13.0 | 13.6 | 15.9 | 14.9 |
| Total equity | 14.9 | 16.6 | 18.6 | 20.6 | 22.4 | 23.5 |
TTM equals Q4 2025 plus Q1 to Q3 2026. Cash and investments FY2024 include $750m of other short term investments. Total debt is current and long term debt incl. commercial paper. Capital expenditure is purchases of property, plant and equipment.
Table 5.2 What changed, Q3 2026 against Q3 2025
| Metric | Q3 2025 | Q3 2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 6.06 | 6.52 | 7.6% |
| Gross profit ($bn) | 3.85 | 4.25 | 10.3% |
| Operating income ($bn) | 1.14 | 1.03 | (8.9%) |
| Net income ($bn) | 0.86 | 0.75 | (12.3%) |
| Diluted EPS ($) | 2.22 | 1.96 | (11.7%) |
| Operating cash flow ($bn) | 1.54 | 1.46 | (5.1%) |
| Free cash flow ($bn) | 1.35 | 1.22 | (9.5%) |
| Operating margin (%) | 18.7 | 15.9 | (2.9 pts) |
| Net margin (%) | 14.2 | 11.5 | (2.6 pts) |
Table 5.3 Ratio analysis
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Growth and margins | ||||||
| Revenue growth (%) | n/a | 7.8 | 11.1 | 10.2 | 11.2 | n/a |
| Gross margin (%) | 64.1 | 62.8 | 63.7 | 63.9 | 64.0 | 65.3 |
| Operating margin (%) | 15.1 | 15.4 | 19.0 | 16.3 | 19.5 | 20.7 |
| Net margin (%) | 11.7 | 12.8 | 15.4 | 13.2 | 12.9 | 13.8 |
| FCF margin (%) | 16.0 | 11.0 | 15.3 | 15.4 | 17.1 | 17.4 |
| Cost and investment intensity | ||||||
| R&D (%) revenue | 7.2 | 7.9 | 6.8 | 6.5 | 6.5 | 6.4 |
| SBC (%) revenue | 1.0 | 0.9 | 1.0 | 1.0 | 1.0 | 1.0 |
| Capex (%) revenue | 3.1 | 3.2 | 2.8 | 3.3 | 3.0 | 3.3 |
| Effective tax rate (%) | 12.6 | 12.1 | 13.8 | 14.3 | 28.1 | 29.2 |
| Returns | ||||||
| ROE (%) | 13.4 | 15.0 | 18.0 | 15.3 | 15.1 | 15.4 |
| ROA (%) | 5.8 | 6.6 | 8.2 | 7.2 | 7.1 | 7.7 |
| ROIC (%) | 9.3 | 9.0 | 11.7 | 10.6 | 10.3 | 11.0 |
| Asset turnover (x) | 0.49 | 0.50 | 0.51 | 0.53 | 0.52 | 0.56 |
| Liquidity and leverage | ||||||
| Current ratio (x) | 2.20 | 1.63 | 1.58 | 1.95 | 1.89 | 2.18 |
| Debt to equity (x) | 0.84 | 0.79 | 0.70 | 0.66 | 0.71 | 0.64 |
| Net cash ($bn) | (9.5) | (11.1) | (9.9) | (9.1) | (11.8) | (11.7) |
| Efficiency and cash quality | ||||||
| Days sales outstanding | 64 | 71 | 67 | 64 | 59 | 51 |
| Inventory days | 197 | 212 | 238 | 214 | 214 | 230 |
| FCF to net income (x) | 1.37 | 0.86 | 0.99 | 1.17 | 1.32 | 1.26 |
| Shareholder returns (%) FCF | 35 | 52 | 36 | 35 | 30 | 51 |
TTM effective tax rate includes the $565m Q4 2025 tax charge. ROE and ROA use average balances for FY2022 to FY2025 and period end balances for FY2021 and TTM. Inventory days use cost of sales.
Table 5.4 Valuation snapshot at $296.81 per share, 2 Nov 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 113.0 |
| Enterprise value (net debt at 30 Sep 2026) ($bn) | 124.7 |
| P/E on TTM Q3 2026 GAAP EPS (x) | 31.6 |
| P/E on TTM Q3 2026 adjusted EPS (x) | 20.8 |
| P/E on FY2026 adjusted EPS guidance midpoint (x) | 20.0 |
| EV/Sales TTM Q3 2026 (x) | 4.7 |
| EV/EBITDA TTM Q3 2026 (x) | 18.8 |
| FCF yield TTM (%) | 4.0 |
| Dividend yield (%) | 1.2 |
Cost structure and one off items
- Gross margin 65.2% in Q3 2026 against 63.6%; adjusted gross margin 65.4%. 9M 2026 gross margin 65.6% includes +90 bps from the $158m reversal of 2025 tariffs and (80 bps) of idle time and other manufacturing costs after the cyber incident.
- SG&A $2.31bn, +13.1%, 35.5% of net sales against 33.8%; research, development and engineering $433m, 6.6% of net sales.
- Costs and expenses (net sales less operating income) $5.49bn, +11.5%, against net sales +7.7%: GAAP operating margin 15.9% against 18.7%; before impairments 20.4% against 19.9%.
- Cyber incident (Q1 2026): production stopped for almost three weeks; organic growth 2.4%, adjusted operating margin 21.1% against 22.9%, adjusted EPS $2.60 against $2.84. Stryker did not state a dollar sales impact; the CFO described delayed revenue recognition and lost manufacturing absorption.
- Tax: Q4 2025 tax expense $856m (50.2% rate) included a $565m charge for a transfer of intellectual property between tax jurisdictions; Q3 2026 rate 24.5% because the $293m impairment is not tax deductible.
- Cash: 9M 2026 operating cash flow $3.30bn, capex $605m, free cash flow $2.70bn; dividends $1.01bn and the $1.0bn buyback in Q3 2026.
Table 5.5 Costs as % of net sales, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Cost of sales (% of net sales) | 36.4 | 35.5 | 36.7 | 31.7 | 34.8 |
| Research, development and engineering (% of net sales) | 6.8 | 5.6 | 6.9 | 6.6 | 6.6 |
| Selling, general and administrative (% of net sales) | 33.8 | 31.1 | 37.9 | 33.8 | 35.5 |
| Goodwill and other impairments (% of net sales) | 1.2 | 0.1 | 0.0 | 0.0 | 4.5 |
| Operating income (% of net sales) | 18.7 | 25.2 | 15.5 | 25.2 | 15.9 |
| Effective tax rate (%) | 16.5 | 50.2 | 12.4 | 18.4 | 24.5 |
| Capex (% of net sales) | 3.1 | 3.7 | 2.8 | 3.1 | 3.6 |
Table 5.6 One off items in reported results
| Period | Item | Amount | Effect | Source |
|---|---|---|---|---|
| FY2024 | Spinal Implants loss on assets held for sale | $362m | Within $977m of FY2024 impairments; business sold to Viscogliosi Brothers in Apr 2025 | 10-K FY2025 |
| Q4 2025 | Tax charge on transfer of intellectual property between tax jurisdictions | $565m | Q4 2025 tax expense $856m, rate 50.2%; FY2025 rate 28.1% against 15.1% adjusted | 10-K FY2025 |
| Q1 2026 | Cyber incident of 11 Mar 2026 in the Microsoft environment | not quantified | Organic growth 2.4%; adjusted operating margin 21.1% against 22.9%; idle manufacturing time cost about 80 bps of 9M 2026 gross margin | 8-K/A 9 Apr 2026; 10-Q Q3 2026 |
| Q2 2026 | Reversal of 2025 tariffs in gross profit | $158m credit | $0.34 per share, excluded from adjusted EPS; added 90 bps to 9M 2026 gross margin | 8-K Ex 99.1 30 Jul 2026; 10-Q Q3 2026 |
| Q3 2026 | Peripheral Vascular (Inari) goodwill impairment | $293m | Not tax deductible; Q3 rate 24.5%; GAAP operating margin 15.9%, 20.4% before impairments (19.9% in Q3 2025) | 10-Q Q3 2026 |
6 MD&A & Management Commentary
Q3 2026 earnings call and results release
- Q3 2026 (29 Oct 2026): net sales $6.52bn, +7.7%, organic +7.7% with pricing +0.1% and no currency effect; adjusted gross margin 65.4% (+40 bps), adjusted operating margin 26.2% (+60 bps), adjusted tax rate 16.0%, adjusted EPS $3.52; GAAP EPS $1.96.
- MedSurg and Neurotechnology organic +9.1% (US 9.6%, international 7.2%): US Endoscopy +13%, US Medical +10%, US Vascular +13% incl. a one time China joint venture milestone, US Instruments +4.8% against +15.3% a year earlier as neurosurgery capital orders were deferred ahead of the Sonopet 3 launch.
- Orthopaedics organic +5.9% (US 6.4%, international 4.4%): US knees +1.3%, US hips (0.6%), US Trauma and Extremities +4.5% against +13.2% a year earlier, US Ortho Tech +18.1%.
- Reasons given on the call: hip and knee market growth of about 2.5% in 2026, below the prior five to six years, with higher deductibles, more pre authorization denials and softer Europe and Middle East; the CEO also named the March cyber incident, the July 2026 SAP go live in Orthopaedics and slow uptake of new products.
- Outlook items: capital equipment order book described as elevated, with year end delivery named as a guidance risk; Peripheral Vascular supply expected to normalize by year end 2026; no 2027 guidance, with growth expected at the high end of its markets and weighted average market growth below the prior level of about 6%.
- Pipeline named on the call: Sonopet 3 cleared; AVS intravascular lithotripsy expected in 2027, pending FDA approval by end 2026; next generation Neptune in H1 2027; power hip impactor in 2027; Pangea full launch expected in Q4 2026.
- Q2 2026 call (30 Jul 2026): net sales $6.59bn, +9.4%, organic +9.0%; adjusted operating margin 27.4%; an Inari plant issue created backorders and cut US Vascular by 6.7%, a drag of 70 to 80 bps on company growth; guidance narrowed to 8.3% to 9.3%.
Table 6.1 FY2026 guidance and every 2026 revision
| Item | Outlook | Source |
|---|---|---|
| Organic net sales growth | 29 Jan 2026: 8.0% to 9.5%; 30 Apr 2026: kept after the cyber incident; 30 Jul 2026: 8.3% to 9.3%; 29 Oct 2026: 6.5% to 7.0% | 8-K Ex 99.1 of each date |
| Adjusted diluted EPS | 29 Jan: $14.90 to $15.10; 30 Apr: kept; 30 Jul: $14.95 to $15.10; 29 Oct: $14.80 to $14.90. 9M 2026 actual $9.81 implies Q4 2026 $4.99 to $5.09 against $4.47 in Q4 2025 | 8-K Ex 99.1; implied Q4 computed |
| Organic growth, actual | 9M 2026 6.4%; Q1 2.4%, Q2 9.0%, Q3 7.7%; Q4 guided similar to Q3 | 10-Q Q3 2026 MD&A; Q3 2026 call |
| Adjusted effective tax rate | 15% to 16% (Apr 2026); 15.5% to 16% (Oct 2026) | Q1 and Q3 2026 calls |
| Adjusted other income (expense) | about $420m of expense (Apr 2026); about $400m (Oct 2026) | Q1 and Q3 2026 calls |
| Free cash flow conversion | 70% to 80% | Q1 2026 call (CFO) |
| Pricing and currency | pricing modestly positive (positive in MedSurg and Neurotechnology, slightly negative in Orthopaedics); currency slightly favorable if rates hold | 8-K Ex 99.1, 29 Oct 2026 |
| Margin target | 150 bps of adjusted operating margin expansion over three years through 2027 | Q2 2026 call |
| FY2027 | no formal guidance until early 2027 | Q3 2026 call |
Management and CFO commentary
- CEO Kevin Lobo, Q3 2026 call: organic growth of 7.7% fell short of company expectations; he named a market slowdown and said Stryker has not been winning at its historical rate, citing the cyber incident, the SAP rollout and slower uptake of new products; he expects momentum heading into 2027.
- CFO Preston Wells, Q3 2026 call: said the hip and knee market slowed further in Q3; Q4 organic growth guided near the Q3 rate; adjusted tax rate 15.5% to 16% and other expense about $400m for FY2026.
- CFO, Q2 2026 call: guidance narrowed on better visibility; acquisitions remain the first priority for capital; buybacks to resume in H2 2026 under the $1bn authorization; cyber remediation costs continue through 2026.
- CFO, Q1 2026 call: adjusted EPS $2.60, down $0.24, on limited sales growth, lost manufacturing absorption, tariffs and higher interest; pricing +0.3% and currency +1.6%; free cash flow conversion 70% to 80%.
- CEO, Q1 2026 call: production stopped for almost three weeks after 11 Mar 2026; hospital environment stable; gross debt to EBITDA about 2.1x; Inari sales force attrition mostly behind the company.
- CEO, Q2 2026 call: Mako had its best Q2, with more than 2.5m procedures in 47 countries; Inari plant backorders expected to be manageable by end of Q3.
Table 6.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Kevin Lobo, Chair and CEO | 29 Oct 2026, Q3 2026 earnings call | “we have not been winning at our historical rate” |
| Kevin Lobo, Chair and CEO | 29 Oct 2026, Q3 2026 earnings call | “It's really the hip and knee market where we're seeing the slowdown.” |
| Kevin Lobo, Chair and CEO | 30 Apr 2026, Q1 2026 earnings call | “couldn't make product for almost three weeks” |
| Preston Wells, CFO | 30 Apr 2026, Q1 2026 earnings call | “outsized impact on sales due to delays in revenue recognition” |
Table 6.3 Key disclosures in the Forms 10-Q and 10-K
| Item | Disclosure |
|---|---|
| 10-Q Q3 2026, gross margin | 9M 2026 gross margin 65.6% against 63.7%: reversal of 2025 tariffs ($158m) +90 bps and lower inventory step up +90 bps, offset by (80 bps) of manufacturing costs incl. idle time after the cyber incident. Management expects segment mix to weigh on gross margin. |
| 10-Q Q3 2026, impairment | $293m Peripheral Vascular goodwill impairment from supply constraints and a slower expected recovery; $3.26bn of goodwill left in the reporting unit. Further impairment for +100 bps discount rate $823m, (100 bps) revenue growth $145m, (100 bps) operating margin $497m. |
| 10-Q Q3 2026, tax | Effective tax rate 24.5% in Q3 and 18.7% in 9M 2026 (16.5% and 14.7% in 2025), on the non deductible goodwill impairment and a 2025 Spinal Implants tax benefit. |
| 10-Q Q3 2026, liquidity | Cash $3.27bn, 44% held outside the US; $1.00bn of 3.5% notes repaid Mar 2026; $2.66bn of borrowing capacity; other income rose to $106m in Q3 2026 from $51m on intellectual property licensing income. |
| 10-Q Q3 2026, acquisitions | AVS acquired May 2026 for $434m net cash plus up to $400m of milestones (fair value $271m); IPR&D $402m, goodwill $398m. Inari purchase price $4.81bn, goodwill $3.12bn. |
| 10-Q Q3 2026, subsequent events | Oct 2026: about $400m of CMR Surgical preferred equity with US Versius rights and a purchase option, close expected Q4 2026; $3.00bn added to the buyback, total $3.03bn. |
| 10-Q Q1 2026, reorganization | Ortho Tech business formed; $518m of goodwill reallocated from MedSurg and Neurotechnology to Orthopaedics; history recast. |
| 10-K FY2025, segments | Segment operating income $7.49bn against GAAP operating income $4.89bn; the difference incl. amortization $732m, corporate $889m, acquisition charges $335m, inventory step up $173m, restructuring $191m, impairments $170m. |
| 10-K FY2025, debt and legal | Debt $15.86bn at Dec 2025; $3.0bn of notes issued Feb 2025 (4.55% 2027 to 5.20% 2035); $3.0bn revolver to Feb 2030 undrawn. SEC and DOJ closed FCPA inquiries in 2025; recall and Wright legacy hip claim accrual $144m. |
7 Peer Valuation & Sector Summary
- Sector: medical technology across orthopaedics, surgical equipment, neurotechnology and vascular; peers are Medtronic, Boston Scientific, Zimmer Biomet and Intuitive Surgical. J&J MedTech and Smith+Nephew file no standalone 10-Q and are covered in Chapters 2 to 4.
- Growth, latest quarter: ISRG 21.7%, MDT 13.7% (14 week quarter), SYK 7.7%, BSX 7.5%, ZBH 4.8%.
- Operating margin TTM: ISRG 28.4%, SYK 20.7%, BSX 19.8%, MDT 18.1%, ZBH 14.2%; SYK FCF margin 17.4% against ISRG 31.1% and MDT 16.3%.
- Valuation: SYK 4.7x EV/Sales and 31.6x GAAP P/E against ISRG 12.6x and 53.1x, MDT 3.8x and 24.0x, BSX 3.5x and 17.3x, ZBH 3.0x and 23.0x.
- Leverage: net debt SYK $11.7bn, MDT $19.3bn, BSX $12.1bn, ZBH $7.1bn; ISRG net cash $6.8bn.
Table 7.1 Peer comparison, latest reported trailing twelve months
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | ROE (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| SYK | 26.3 | 7.7 | 65.3 | 20.7 | 13.8 | 17.4 | 15.4 | (11.7) | 113 | 4.7 | 31.6 |
| MDT | 37.5 | 13.7 | 65.0 | 18.1 | 13.9 | 16.3 | 10.4 | (19.3) | 125 | 3.8 | 24.0 |
| BSX | 21.0 | 7.5 | 69.9 | 19.8 | 17.5 | 17.3 | 14.7 | (12.1) | 62 | 3.5 | 17.3 |
| ZBH | 8.5 | 4.8 | 69.9 | 14.2 | 9.5 | 17.9 | 6.4 | (7.1) | 18 | 3.0 | 23.0 |
| ISRG | 11.6 | 21.7 | 67.2 | 28.4 | 25.5 | 31.1 | 18.5 | 6.8 | 152 | 12.6 | 53.1 |
SYK and ISRG TTM to Sep 2026; MDT TTM to Jul 2026 (its latest quarter had 14 weeks against 13, so growth is overstated); BSX and ZBH TTM to Jun 2026. Growth is the latest quarter year on year. ZBH gross margin excludes intangible amortization. P/E on GAAP diluted EPS. Prices intraday 2 Nov 2026. FCF is operating cash flow less capex.
8 Material Events & Contracts
- 13 Forms 8-K in twelve months (12 plus one amendment): three earnings releases and the Q4 2025 release, four filings on the March 2026 cyber incident, the 26 Jun 2026 segment recast, three officer changes incl. the CEO succession, and the annual meeting results.
- Cyber incident: detected 11 Mar 2026 in the Microsoft environment; order processing, manufacturing and shipping disrupted, production stopped for almost three weeks; an outside forensic letter of 20 Mar 2026 found no persistent unauthorized access; the amended 8-K of 9 Apr 2026 states a material impact on Q1 2026 results but not on FY2026 guidance.
- CEO succession (6 Oct 2026): Spencer Stiles, President and COO since 1 Jan 2026, becomes CEO on 1 Jan 2027; Kevin Lobo, CEO since Oct 2012, becomes Executive Chair. Under Lobo net sales rose from $8.7bn in 2012 to more than $26bn in 2026 with more than 60 acquisitions (Ex 99.1).
Table 8.1 Forms 8-K filed in the last twelve months
| Date | Items | Event |
|---|---|---|
| 4 Dec 2025 | 5.02, 7.01, 9.01 | Spencer Stiles named President and COO from Jan 1 2026 (salary $1.0m, target LTI about $6.0m); Dylan Crotty promoted to Group President, Orthopaedics (salary $0.7m). |
| 29 Jan 2026 | 2.02, 9.01 | Q4 2025 results: net sales $7.2bn (+11.4%, organic +11.0%); adjusted EPS $4.47; FY2025 net sales $25.1bn (+11.2%, organic +10.3%), adjusted EPS $13.63 (+11.8%). 2026 outlook: organic growth 8.0% to 9.5%, adjusted EPS $14.90 to $15.10. |
| 11 Mar 2026 | 8.01 | Disclosed cybersecurity incident identified Mar 11 2026 that caused global disruption to the Microsoft environment; no indication of ransomware; timeline for full restoration not known. |
| 12 Mar 2026 | 7.01 | Update: order processing, manufacturing and shipping disrupted; patient services and connected products not believed affected. |
| 23 Mar 2026 | 7.01, 9.01 | Furnished Palo Alto Networks Unit 42 letter dated Mar 20 2026: no evidence of persistent unauthorized access; known indicators of compromise addressed; impacted systems being rebuilt. |
| 9 Apr 2026 | 1.05, 7.01 (8-K/A) | Determined the cyber incident had a material impact on operations and Q1 2026 results; not expected to materially affect 2026 guidance; manufacturing, ordering and distribution restored. |
| 30 Apr 2026 | 2.02, 9.01 | Q1 2026 results: net sales $6.0bn (+2.6%, organic +2.4%); adjusted operating margin 21.1% (180 bps); adjusted EPS $2.60 (8.5%); GAAP EPS $1.93. Guidance kept at organic 8.0% to 9.5% and adjusted EPS $14.90 to $15.10. Announced Ortho Tech reorganization. |
| 8 May 2026 | 5.07 | Annual meeting May 6 2026: all 10 directors elected; EY ratified (284.7m for, 35.3m against); say on pay approved (269.4m for, 18.6m against). |
| 20 May 2026 | 5.02, 9.01 | Chief Accounting Officer William Berry to retire Sep 1 2026; Emily Baculik (Corporate Controller) to add CAO role (salary $420k). |
| 26 Jun 2026 | 8.01, 9.01 | Recast 2023 to 2025 financial statements for the Ortho Tech segment change: FY2025 MedSurg and Neurotechnology $13.69bn and Orthopaedics $11.42bn (previously $15.65bn and $9.47bn); no restatement. |
| 30 Jul 2026 | 2.02, 9.01 | Q2 2026 results: net sales $6.6bn (+9.4%, organic +9.0%); adjusted operating margin 27.4% (+170 bps); adjusted EPS $3.69 (+17.9%); GAAP EPS $3.30. Guidance narrowed to organic 8.3% to 9.3% and adjusted EPS $14.95 to $15.10. |
| 6 Oct 2026 | 5.02, 7.01, 9.01 | CEO succession: Kevin Lobo to become Executive Chair and Spencer Stiles CEO from Jan 1 2027; Stiles salary $1.32m, bonus target 150%, planned Feb 2027 LTI grant $14.2m; Board expands to 11. |
| 29 Oct 2026 | 2.02, 9.01 | Q3 2026 results: net sales $6.5bn (+7.7%, organic +7.7%); adjusted operating margin 26.2% (+60 bps); adjusted EPS $3.52 (+10.3%); GAAP EPS $1.96 (11.7%) after $293m goodwill impairment. Repurchased $1.0bn; $3.0bn added to buyback. Guidance cut to organic 6.5% to 7.0% and adjusted EPS $14.80 to $14.90. |
Table 8.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| Senior notes and commercial paper | Debt $14.93bn at 30 Sep 2026 incl. $250m of commercial paper and $754m current; $3.0bn of notes issued Feb 2025 to fund Inari; $1.00bn 3.5% notes repaid Mar 2026. |
| Revolving credit facility | $3.0bn, to Feb 2030, undrawn at Dec 2025; $2.66bn of borrowing capacity at 30 Sep 2026. |
| Inari Medical acquisition (Feb 2025) | $4.81bn net of cash; goodwill $3.12bn; reporting unit goodwill $3.26bn after the $293m Q3 2026 impairment. |
| Amplitude Vascular Systems (May 2026) | $434m net cash plus up to $400m of milestones (fair value $271m); intravascular lithotripsy, US launch expected 2027. |
| CMR Surgical (signed Oct 2026) | About $400m for preferred equity, exclusive US distribution of the Versius soft tissue robot and an option to acquire 100%; close expected Q4 2026. |
| Spinal Implants sale (Apr 2025) | Sold to Viscogliosi Brothers; $362m loss on assets held for sale in 2024; consideration may rise $57m or fall $245m. |
| Officer letter agreements | Stiles as CEO: salary $1.32m, bonus target 150%, Feb 2027 long term award $14.2m (40% options, 60% PSUs); Lobo as Executive Chair keeps salary and bonus target with no new stock awards. |
| Share repurchase authorization | $1.0bn used in Q3 2026; $3.0bn added in Oct 2026; $3.03bn available. |
9 Ownership, Voting Power & Annual Meeting
- One share class, one vote per share; no controlling holder. 382.98m shares at the 2026 record date. Directors and executive officers hold 4.6% incl. options, mainly director Ronda E. Stryker (4.0% per her Schedule 13D/A).
- 2026 annual meeting (6 May 2026, virtual): all 10 directors elected; Emmanuel Maceda received the lowest support at 81.9% of votes for and against; say on pay 93.5%; Ernst & Young ratified with 89.0%; no shareholder proposals.
- Insiders, 12 months to 2 Nov 2026: no open market purchases; open market sales about $586.1m, of which Ronda E. Stryker sold 1.68m shares for about $580.9m in four blocks between Nov 2025 and Aug 2026 and gifted 655,800 shares; executive sales about $5m in total.
- CEO pay 2025: total $21.4m (salary $1.49m, stock $9.76m, options $6.92m, bonus plan $2.25m) per the 2026 proxy.
- 13F holder trend: a four quarter 13F series was not compiled for this report; the holder table relies on Schedules 13G and 13D and the proxy.
Table 9.1 Annual meeting vote results, 6 May 2026
| Proposal | For (bn votes) | Against (bn votes) | Abstain (bn votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Elect Mary K. Brainerd | 0.281 | 0.009 | 0.000 | 96.9 | Elected |
| Elect Giovanni Caforio | 0.281 | 0.009 | 0.000 | 96.9 | Elected |
| Elect Kevin A. Lobo | 0.274 | 0.016 | 0.000 | 94.5 | Elected |
| Elect Emmanuel P. Maceda | 0.237 | 0.052 | 0.001 | 81.9 | Elected |
| Elect Sherilyn S. McCoy | 0.286 | 0.004 | 0.000 | 98.7 | Elected |
| Elect Rachel Ruggeri | 0.286 | 0.004 | 0.000 | 98.7 | Elected |
| Elect Andrew K. Silvernail | 0.274 | 0.016 | 0.000 | 94.4 | Elected |
| Elect Lisa M. Skeete Tatum | 0.286 | 0.004 | 0.000 | 98.7 | Elected |
| Elect Ronda E. Stryker | 0.280 | 0.010 | 0.000 | 96.6 | Elected |
| Elect Rajeev Suri | 0.286 | 0.004 | 0.000 | 98.7 | Elected |
| Ratify Ernst & Young LLP for 2026 | 0.285 | 0.035 | 0.000 | 89.0 | Ratified |
| Advisory vote on named executive officer compensation | 0.269 | 0.019 | 0.002 | 93.5 | Approved |
Broker non votes 30.15m on each item except the auditor ratification. % of votes cast uses for and against only.
2026 annual meeting
- Virtual meeting of 6 May 2026 with three management proposals and no shareholder proposals; no transcript or management remarks were filed.
- Directors: Kevin Lobo 94.5% of votes for and against; Emmanuel Maceda lowest at 81.9%; the other eight directors between 94.4% and 98.7%.
Table 9.2 Largest holders
| Holder | Shares (m) | % of shares | Source |
|---|---|---|---|
| Vanguard Capital Management | 25.8 | 6.7 | 13G Apr 30 2026 |
| BlackRock | 24.9 | 6.5 | proxy, 13G/A Jan 2024 |
| John W. Brown | 20.1 | 5.2 | proxy, 13G/A Feb 2021 |
| Greenleaf Trust | 16.8 | 4.4 | 13G/A Feb 11 2026 |
| Ronda E. Stryker | 15.2 | 4.0 | 13D/A Apr 14 2026 |
| Directors and executive officers (21 persons) | 17.8 | 4.6 | proxy, 28 Feb 2026, incl. 1.9m options |
Vanguard Group reported 0 shares in a Mar 2026 Schedule 13G/A after a reorganization; Vanguard Capital Management reported 6.73% in Apr 2026. Greenleaf Trust and Ronda E. Stryker holdings overlap in part.
10 Risk Factors
- Item 1A of the FY2025 Form 10-K holds 28 risk factors, as in FY2024 (7,674 words against 7,360); none added or removed, four materially reworded. The Q1 2026 Form 10-Q updated two factors after the cyber incident; the Q2 and Q3 2026 Forms 10-Q report no further change.
Table 10.1 Risk factors and legal matters with filed figures
| Risk | Disclosure and change |
|---|---|
| Joint replacement market and share | US knees +1.3% and US hips (0.6%) in Q3 2026; management put 2026 US hip and knee market growth at about 2.5% and said Stryker has not been winning at its historical rate. |
| Peripheral Vascular goodwill | $3.26bn left after the $293m Q3 2026 impairment; +100 bps discount rate would add $823m of impairment, (100 bps) operating margin $497m, (100 bps) revenue growth $145m. |
| Cybersecurity and IT systems | Q1 2026 10-Q states a material breach (11 Mar 2026) handled with manual workarounds, and names US combat operations in Iran as a threat factor; SAP went live in Orthopaedics in Jul 2026. |
| Tariffs and trade | Tariff named 7 times in the FY2025 Item 1A against once a year earlier; $158m of 2025 tariffs reversed in Q2 2026. |
| Tax | German Federal Central Tax Office assessments for 2010 to 2017 that Stryker plans to contest; OECD Pillar 2 safe harbors from Jan 2026; $565m Q4 2025 charge on an intellectual property transfer. |
| Product liability and recalls | Accrual for Rejuvenate, ABG II, LFIT V40 recalls and Wright legacy hip claims $144m at Dec 2025. |
| Regulation | EU MDR transition periods run to Dec 2028; PFAS rules cited under manufacturing and sterilization. |
| Leadership transition and leverage | CEO change on 1 Jan 2027; net debt $11.66bn and goodwill $19.33bn at 30 Sep 2026; acquisitions remain the first use of capital. |
How risk factors changed
- Comparison: 10-K FY2025 filed 11 Feb 2026 acc 0000310764-26-000010 against 10-K FY2024 filed 12 Feb 2025 acc 0000310764-25-000023.
- Tariff is named 7 times in 2 risk factors in the FY2025 10-K against once in 1 factor a year earlier, covering supply chain costs and global trade.
- AI is named 15 times in 4 risk factors against 11 times in 2 factors a year earlier.
- The 11 Mar 2026 cyber incident turned the IT breach factor from a statement that breaches had not been material to date into a disclosed material incident in the Q1 2026 10-Q.
- Two tax factors carry new specifics: OECD Pillar 2 safe harbors from Jan 2026 and German assessments for 2010 to 2017; the FCPA factor records that the DOJ (1 Apr 2025) and SEC (16 Dec 2025) closed their inquiries.
- Climate language is cut back: the climate factor is renamed around physical weather events and shortened by 49 words; Item 1A overall grows 4.3% to 7,674 words.
Table 10.2 Size of the risk factor section
| Measure | 10-K FY2024 | 10-K FY2025 |
|---|---|---|
| Risk factors (count) | 28 | 28 |
| Words in Item 1A | 7,360 | 7,674 |
Table 10.3 Risk factors added, removed and materially reworded
| Change | Risk factor | What changed |
|---|---|---|
| Reworded | Tax rules subject to change | Drops the 2022 EU agreement on a 15% global minimum tax and adds the OECD Side by Side system and two new Pillar 2 safe harbors released in Jan 2026 for groups headquartered in the US. |
| Reworded | Allocation of income across tax jurisdictions | Adds a final audit report and assessments from the German Federal Central Tax Office for tax years 2010 to 2017, which Stryker plans to contest; text grows from 88 to 221 words. |
| Reworded | Corporate responsibility requirements and expectations | Heading reframed around evolving and diverging stakeholder expectations; drops references to diversity, equity and inclusion within its framework; text shortened from 267 to 228 words. |
| Reworded | Physical weather events and environmental measures | Heading changes from 'Physical effects of climate change' to 'Physical weather events'; removes language attributing weather shifts to climate change and lists hurricanes, wildfires, droughts and flooding; text shortened from 199 to 150 words. |
Table 10.4 Risk factor updates in quarterly reports since the annual filing
| Filing | Change disclosed |
|---|---|
| 10-Q Q1 2026 filed 11 May 2026 | Updates two factors: the IT failure or breach factor now states Stryker has experienced a material breach, citing the 11 Mar 2026 incident found material under Item 1.05 and the use of manual workarounds, and names US combat operations in Iran as a cyber threat factor; the manufacturing interruption factor now cites the same incident. |
| 10-Q Q2 2026 filed 31 Jul 2026 | No material changes to the FY2025 10-K risk factors as updated in the Q1 2026 10-Q. |
| 10-Q Q3 2026 filed 30 Oct 2026 | No material changes to the FY2025 10-K risk factors as updated in the Q1 2026 10-Q. |
11 Stock Price, Scenarios & Sensitivity
- SYK traded at $296.81 on 2 Nov 2026 (intraday), (15.6%) year to date, 11.2% above the 52 week low of $267.00 (11 Sep 2026) and 23.8% below the 52 week high of $389.33 (2 Mar 2026). Shares fell 6.4% on 30 Oct 2026, the day after the results, from $311.75 to $291.86.
- Valuation: 31.6x TTM GAAP EPS of $9.39; 20.8x TTM adjusted EPS of $14.28; 20.0x the FY2026 adjusted EPS guidance midpoint of $14.85; EV/Sales 4.7x; free cash flow yield 4.0%; dividend yield 1.19%.
- Scenario model: net sales grow from TTM Q3 2026 for three years; operating margin on the company adjusted basis, since GAAP results carry amortization and one off charges; adjusted other expense $400m a year; 16% tax rate; price equals TTM Q3 2029 adjusted EPS times exit P/E.
Critical factors and core assumptions
Table 11.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| Joint replacement market growth | About 2.5% US hip and knee market in 2026; Stryker Q3 2026 US knees +1.3%, hips (0.6%) | Market back to 4% to 5% and Stryker growing above market | Q3 2026 call; 8-K Ex 99.1 |
| Peripheral Vascular (Inari) supply and recovery | Supply constrained since Q1 2026 cyber incident; 70 to 80 bps drag on company growth in Q2 and Q3; $293m goodwill impairment; $3.26bn goodwill left | Normal supply by end 2026 and return to growth in 2027 with AVS IVL launch | Q3 2026 10-Q; Q2 2026 call |
| Adjusted operating margin | 26.3% FY2025; 25.0% 9M 2026; 26.2% Q3 2026 | 29% by FY2029 | 8-K Ex 99.1; 150 bps three year target |
| Capital equipment demand and Mako adoption | Order book described as elevated; US Ortho Tech +18.1% Q3 2026; more than 2.5m Mako procedures | Sustained double digit Ortho Tech growth and Mako 4, Shoulder, Versius uptake | Q3 2026 call; Q2 2026 call |
| Execution after cyber, SAP and CEO change | Q1 2026 organic +2.4%; SAP live in Ortho Jul 2026; Stiles CEO from Jan 1 2027 | Share regained in 2027 with no further system disruption | 8-K/A Apr 9 2026; 8-K Oct 6 2026; Q3 call |
| Capital deployment | Net debt $11.7bn; $3.03bn buyback authority; CMR about $400m | Accretive M&A plus buybacks lifting EPS growth above revenue growth | Q3 2026 10-Q |
- Base: TTM Q3 2026 net sales $26.30bn; GAAP operating margin 20.7%; company adjusted operating margin 26.3% in FY2025 and 25.0% in 9M 2026; TTM adjusted EPS $14.28.
- Best case: 9% CAGR as the hip and knee market returns to 4% to 5%, Peripheral Vascular supply normalizes and Mako, Versius and AVS add growth; 29% adjusted margin; 26x P/E; share count (3%).
- Base case: 7% CAGR, near 2026 organic guidance plus small acquisitions; 27.5% adjusted margin, about 50 bps a year of expansion; 21x P/E, near the current adjusted multiple; share count (3%) from buybacks.
- Worst case: 4.5% CAGR with joint replacement near 2.5% and continued share loss; 25% adjusted margin as faster growing MedSurg carries lower gross margin; 16x P/E; share count unchanged.
- Tax rate 16% (adjusted guidance 15.5% to 16%); adjusted other expense $400m a year (FY2026 guidance); further impairments and amortization are outside the adjusted basis.
Scenarios, three years forward
Table 11.2 Scenario analysis, TTM Q3 2026 to TTM Q3 2029
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 4.5 | 7.0 | 9.0 |
| Revenue, TTM Q3 2029 ($bn) | 30.0 | 32.2 | 34.1 |
| Operating margin, TTM Q3 2029 (%) | 25.0 | 27.5 | 29.0 |
| Net income, TTM Q3 2029 ($bn) | 6.0 | 7.1 | 8.0 |
| EPS, TTM Q3 2029 ($) | 15.67 | 19.24 | 21.56 |
| Exit P/E (x) | 16.0 | 21.0 | 26.0 |
| Implied price ($) | 251 | 404 | 561 |
| Change against $296.81 (%) | (16) | 36 | 89 |
| Implied annual return (%) | (5.5) | 10.8 | 23.6 |
Implied annual return excludes dividends ($3.52 a year at the $0.88 quarterly rate). Margins and EPS are on the company adjusted basis; the FY2025 gap between adjusted and GAAP operating income was $1.71bn.
Sensitivity analysis
Table 11.3 Sensitivity of implied price to revenue CAGR and operating margin at 21x P/E
| Revenue CAGR \ Operating margin | 24% | 25% | 27% | 28% | 29% |
|---|---|---|---|---|---|
| 4% | $320 | $334 | $362 | $377 | $391 |
| 5% | $330 | $344 | $374 | $388 | $403 |
| 7% | $350 | $366 | $396 | $412 | $427 |
| 8% | $361 | $377 | $408 | $424 | $440 |
| 9% | $371 | $388 | $420 | $436 | $453 |
Cells show implied share price in year 3. Current price $296.81. Blue cells sit above it, red cells below. Margins are on the company adjusted basis.
Table 11.4 Sensitivity of implied price to exit P/E and operating margin at 7% revenue CAGR
| Exit P/E \ Operating margin | 24% | 25% | 27% | 28% | 29% |
|---|---|---|---|---|---|
| 16x | $267 | $279 | $302 | $314 | $326 |
| 18x | $300 | $313 | $340 | $353 | $366 |
| 21x | $350 | $366 | $396 | $412 | $427 |
| 24x | $400 | $418 | $453 | $471 | $488 |
| 26x | $434 | $453 | $491 | $510 | $529 |
Cells show implied share price in year 3. Current price $296.81. Blue cells sit above it, red cells below. Margins are on the company adjusted basis.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 2 November 2026.
Sources
All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Call statements are taken from the Q1, Q2 and Q3 2026 earnings calls held by the company.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-Q | Q3 2026 | 30 Oct 2026 | 0000310764-26-000061 |
| 8-K (2.02) Ex 99.1 | Q3 2026 | 29 Oct 2026 | 0000310764-26-000059 |
| 10-Q | Q2 2026 | 31 Jul 2026 | 0000310764-26-000050 |
| 8-K (2.02) Ex 99.1 | Q2 2026 | 30 Jul 2026 | 0000310764-26-000048 |
| 8-K (8.01) recast | FY2023 to FY2025 | 26 Jun 2026 | 0000310764-26-000041 |
| 10-Q | Q1 2026 | 11 May 2026 | 0000310764-26-000031 |
| 8-K (2.02) Ex 99.1 | Q1 2026 | 30 Apr 2026 | 0000310764-26-000025 |
| DEF 14A | 2026 meeting | 23 Mar 2026 | 0000310764-26-000013 |
| 10-K | FY2025 | 11 Feb 2026 | 0000310764-26-000010 |
| 8-K (2.02) Ex 99.1 | Q4 2025 | 29 Jan 2026 | 0000310764-26-000006 |
| 8-K (2.02) Ex 99.1 | Q3 2025 | 30 Oct 2025 | 0000310764-25-000126 |
| 8-K (2.02) Ex 99.1 | Q2 2025 | 31 Jul 2025 | 0000310764-25-000103 |
| 8-K (2.02) Ex 99.1 | Q1 2025 | 1 May 2025 | 0000310764-25-000072 |
| 10-K | FY2024 | 12 Feb 2025 | 0000310764-25-000023 |
| 10-K | FY2023 | 14 Feb 2024 | 0000310764-24-000024 |
| 10-K | FY2022 | 10 Feb 2023 | 0000310764-23-000017 |
| 8-K/A (1.05) | cyber incident | 9 Apr 2026 | 0001193125-26-149607 |
| 8-K (5.02) | CEO succession | 6 Oct 2026 | 0001193125-26-414956 |
| 8-K (5.07) | annual meeting | 8 May 2026 | 0000310764-26-000029 |
| SC 13D/A | Ronda E. Stryker | 14 Apr 2026 | 0001242914-26-000005 |
| Schedule 13G | Vanguard Capital Management | 30 Apr 2026 | 0002100119-26-001114 |
Table A.2 Further Stryker filings and peer filings used
| Company | Form | Filed | Accession number |
|---|---|---|---|
| Stryker | 10-K FY2024 (risk factor comparison, old) | 12 Feb 2025 | 0000310764-25-000023 |
| Stryker | 8-K (Items 5.02, 7.01, 9.01) | 4 Dec 2025 | 0001193125-25-308097 |
| Stryker | 10-K FY2025 (risk factor comparison, new) | 11 Feb 2026 | 0000310764-26-000010 |
| Stryker | 8-K (Items 8.01) | 11 Mar 2026 | 0001193125-26-102460 |
| Stryker | 8-K (Items 7.01) | 12 Mar 2026 | 0001193125-26-104431 |
| Stryker | 8-K (Items 7.01, 9.01) | 23 Mar 2026 | 0001193125-26-118634 |
| Stryker | 8-K (Items 5.02, 9.01) | 20 May 2026 | 0001193125-26-232643 |
| Boston Scientific | 8-K Ex 99.1 | 28 Oct 2026 | 0000885725-26-000066 |
| Boston Scientific (peer table) | 10-Q or 10-K | 2026 | 0000885725-26-000053 |
| Boston Scientific (peer table) | 10-Q or 10-K | 2026 | 0000885725-26-000010 |
| Intuitive Surgical | 8-K Ex 99.1 | 20 Oct 2026 | 0001035267-26-000067 |
| Intuitive Surgical (peer table) | 10-Q or 10-K | 2026 | 0001035267-26-000071 |
| Intuitive Surgical (peer table) | 10-Q or 10-K | 2026 | 0001035267-26-000010 |
| Johnson & Johnson | 8-K Ex 99.1 | 13 Oct 2026 | 0000200406-26-000189 |
| Medtronic | 8-K Ex 99.1 | 1 Sep 2026 | 0001628280-26-059697 |
| Medtronic (peer table) | 10-Q or 10-K | 2026 | 0001628280-26-060473 |
| Medtronic (peer table) | 10-Q or 10-K | 2026 | 0001628280-26-044354 |
| Penumbra | 8-K Ex 99.1 | 29 Oct 2026 | 0001321732-26-000042 |
| Smith+Nephew | 6-K | 4 Aug 2026 | 0001654954-26-007206 |
| Zimmer Biomet | 8-K Ex 99.1 | 5 Aug 2026 | 0001193125-26-333761 |
| Zimmer Biomet (peer table) | 10-Q or 10-K | 2026 | 0001193125-26-335044 |
| Zimmer Biomet (peer table) | 10-Q or 10-K | 2026 | 0001193125-26-059853 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 4 Dec 2025 | EX-99.1 | Spencer Stiles named President and COO | Stiles, Group President Orthopaedics since 2019, becomes President and COO from 1 Jan 2026, leading global businesses, strategy and M&A; Dylan Crotty, President Instruments, promoted to Group President Orthopaedics |
| 4 Dec 2025 | EX-10.1 / EX-10.2 | Letter agreements with Stiles and Crotty (summarised from Item 5.02) | Stiles: base salary $1.0m, bonus target 100%, LTI award of about $6.0m (40% options, 60% PSUs); Crotty: base salary $700,000, bonus target 85%, LTI award of about $3.0m |
| 29 Jan 2026 | EX-99.1 | Q4 and FY2025 results; FY2026 outlook | FY2025 net sales $25.1bn (+11.2%); organic +10.3% with volume +9.9% and price +0.4%; Q4 2025 net sales $7.2bn (+11.4%); organic +11.0%; MedSurg and Neurotechnology organic +12.6%, Orthopaedics +8.4% |
| 23 Mar 2026 | EX-99.1 | Palo Alto Networks Unit 42 assurance letter on cyber incident | Letter dated 20 Mar 2026 covers a compromise of Stryker's Entra ID environment, servers and workstations; No evidence of active, uncontained or persistent unauthorized access as of 20 Mar 2026 |
| 23 Mar 2026 | EX-99.2 | Customer update on network disruption | Incident described as contained; restoration prioritised for customer, ordering and shipping systems; Threat actor used a malicious file to run commands and hide activity; file not capable of spreading |
| 30 Apr 2026 | EX-99.1 | Q1 2026 results, hit by the cyber incident | Net sales $6.0bn (+2.6%); organic +2.4%; MedSurg and Neurotechnology organic +0.9%, Orthopaedics +4.1%; Adjusted operating margin 21.1% (180 bp); adjusted EPS $2.60 (8.5%) |
| 20 May 2026 | EX-10.1 / EX-10.2 | Chief accounting officer transition (summarised from Item 5.02) | William Berry retires as CAO on 1 Sep 2026 and advises the CFO until 15 Aug 2027 at $510,000 salary; Emily Baculik, Corporate Controller, adds CAO role at $420,000 salary and 45% bonus target |
| 26 Jun 2026 | EX-99.1 / EX-23.1 | FY2023 to FY2025 financial statements recast for new segment structure | Recast reflects the Ortho Tech reorganisation; two reportable segments kept: MedSurg and Neurotechnology, and Orthopaedics; Not a restatement; EX-23.1 is the auditor consent |
| 30 Jul 2026 | EX-99.1 | Q2 2026 results; guidance narrowed | Net sales $6.6bn (+9.4%); organic +9.0% on volume; MedSurg and Neurotechnology organic +9.2%, Orthopaedics +8.6%; Adjusted operating margin 27.4% (+170 bp); adjusted EPS $3.69 (+17.9%); reported EPS $3.30 (+44.1%) |
| 6 Oct 2026 | EX-99.1 / EX-99.2 / EX-99.3 | CEO succession: Stiles to succeed Lobo on 1 Jan 2027 | Kevin Lobo, CEO since Oct 2012, becomes Executive Chair on 1 Jan 2027; Spencer Stiles becomes CEO and joins the board, expanded to 11; Under Lobo net sales rose from $8.7bn in 2012 to more than $26bn in 2026 with more than 60 acquisitions |
| 6 Oct 2026 | EX-10.1 / EX-10.2 | Lobo transition and Stiles CEO letter agreements (summarised from Item 5.02) | Lobo keeps salary and bonus target as Executive Chair, with no new stock awards; Stiles as CEO: base salary $1.32m, bonus target 150%, Feb 2027 LTI grant of $14.2m (40% options, 60% PSUs) |
| 29 Oct 2026 | EX-99.1 | Q3 2026 results; guidance cut; $3.0bn buyback increase | Net sales $6.52bn (+7.7%); organic +7.7%; MedSurg and Neurotechnology +9.2%, Orthopaedics +5.7%; Knees $635m (+1.1%), Hips $453m (1.0%), Ortho Tech $754m (+15.8%), Endoscopy $1.02bn (+13.9%) |
