Stryker (SYK) Q3 2026: Hip and Knee Slowdown Drives Guidance Cut

Stryker (SYK) cut its 2026 growth outlook after third-quarter 2026 results showed a sharp slowdown in hip and knee implant sales. In an 8-K earnings release dated October 29, 2026, covering the quarter ended September 30, the company reported organic sales growth of 7.7%, which it said fell short of its expectations, and lowered both its full-year sales and earnings guidance [1]. In July, Stryker had guided to 8.3%-9.3% organic growth and adjusted earnings per share of $14.95-$15.10, and management said the second half needed roughly 11% organic growth [2][3].

Before this report, four questions framed the company: whether the capital equipment backlog left by the cyberattack would ship faster, whether the hip slowdown reflected weaker demand, whether margins could keep expanding, and whether the peripheral vascular supply disruption would end. The quarter answered them as follows. Capital equipment shipments did not accelerate, hips and knees weakened clearly, margins kept expanding, and US vascular sales returned to growth with help from a one-time item. The main growth question has shifted from catching up after the cyberattack to when hip and knee procedure demand recovers, while profit conversion and cash generation have not deteriorated.

Stryker sells surgical equipment, implants and disposables to hospitals, ambulatory surgery centers and physicians, and it sells most products directly [4]. Capital equipment such as hospital beds, surgical equipment and the Mako surgical robot ships against orders, while hip and knee implants and disposables are consumed with procedure volumes.

Hip and knee sales nearly stalled in Q3 2026

Hip and knee sales slowed sharply in the third quarter. Hip sales were $453 million, down 0.7% in constant currency after 2.6% growth in the second quarter; knee sales were $635 million, up only 1.2% in constant currency after 8.0% in the second quarter [1][5]. Orthopaedics organic growth was 5.9%, compared with 8.6% in the second quarter [1][6].

Management attributed most of the slowdown to a weaker procedure market [7]. In the US, patients are delaying surgery because of deductibles and premiums, while Europe and the Middle East were affected by strikes and healthcare funding; the cyberattack and the July SAP system rollout also distracted the sales force and caused a minor loss of share [7]. The split between market weakness and share loss rests only on management's qualitative description. Over the same period, Ortho Tech, which includes Mako, grew sales 16.0%, which shows hospitals are still buying robots and that the pressure is concentrated in implant volumes [1].

Hips and knees account for about 18% of company sales, and their combined third-quarter sales were roughly flat year over year, making them the main reason for the guidance cut [8][1]. The quarter no longer supports the view that the second-quarter hip slowdown was only a short-term effect of the cyberattack. Management believes patients are delaying treatment rather than abandoning it, but it cannot predict the timing of a recovery, and its guidance assumes current conditions persist [7].

Capital equipment catch-up did not accelerate, and guidance was lowered

Company-wide organic growth was 7.7%, below 9.0% in the second quarter, while the MedSurg and Neurotechnology segment, where capital equipment is concentrated, grew 9.1% organically, roughly level with the second quarter [1][6]. US Medical sales rose 10.0%, compared with 12.6% in the second quarter [1][9]. US Instruments sales rose 4.8%, and management said customers delayed purchases ahead of a new product launch [1][7]. In the same segment, US Vascular sales were $320 million, up 13.0% after a 6.7% decline in the second quarter [1][9]. Management said peripheral vascular supply is recovering, but the quarter included one-time milestone revenue from a China joint venture of an undisclosed amount, and inventory is not expected to normalize until year-end [7].

Stryker lowered its full-year organic growth guidance to 6.5%-7.0%, said it anticipates fourth-quarter growth similar to the third quarter, and said its equipment order book remains elevated [1][7]. The company has never disclosed the size of its backlog, so the remaining backlog cannot be quantified. The second-half catch-up to about 11% did not happen, but MedSurg growth of about 9% indicates equipment demand has not weakened.

Margins expanded and cash generation held up

Adjusted operating margin expanded 60 basis points to 26.2%, and adjusted earnings per share were $3.52, up 10.3% year over year [1]. The margin gain came from a 40-basis-point improvement in gross margin and a lower R&D expense ratio [1]. Adjusted pretax income grew about 12.6%, but the adjusted effective tax rate rose from 14.0% to 16.0%; together with the sales shortfall, this kept EPS growth below the roughly 13% that the earlier guidance implied [1].

Stryker lowered its full-year adjusted EPS guidance to $14.80-$14.90. Based on nine-month adjusted EPS of $9.81, the new range implies fourth-quarter growth of roughly 12%-14% year over year [1]. Operating cash flow for the first nine months was $3.303 billion, compared with $2.901 billion a year earlier; the company repurchased $1.0 billion of stock in the third quarter, and in October its board approved an additional $3.0 billion repurchase authorization [1].

Conclusion

This report lowers expectations for Stryker's 2026 growth but does not undermine its profit and cash foundation. The growth shortfall comes mainly from hip and knee procedure demand, while margins and operating cash flow continue to improve. How long the effect lasts depends on when hip and knee procedures recover, and management has given no timeline. Whether fourth-quarter organic growth holds near 7.7%, whether hip and knee sales stop declining, and whether US Vascular keeps growing without one-time revenue will determine whether this assessment strengthens or weakens.

Sources

[1] SYK 8-K filed 2026-10-29 · Q3 2026 earnings release (October 29, 2026; Stryker Form 8-K, Exhibit 99.1 earnings release, https://www.sec.gov/Archives/edgar/data/310764/000031076426000059/sykex991earningsq32026.htm) [2] SYK 8-K filed 2026-07-30 · FY2026 guidance (July 30, 2026; Stryker Form 8-K earnings release, https://www.sec.gov/Archives/edgar/data/310764/000031076426000048/sykex991earningsq22026.htm) [3] SYK Q2 2026 earnings call 2026-07-30 · guidance and second-half cadence (July 30, 2026; Stryker second-quarter earnings call (Drillr structured summary)) [4] SYK 10-K filed 2026-02-11 · business, products and segments (February 11, 2026; Stryker Form 10-K annual report, https://www.sec.gov/Archives/edgar/data/310764/000031076426000010/syk-20251231.htm) [5] SYK 8-K filed 2026-07-30 · Q2 2026 Orthopaedics sales by business (July 30, 2026; Stryker Form 8-K earnings release, https://www.sec.gov/Archives/edgar/data/310764/000031076426000048/sykex991earningsq22026.htm) [6] SYK 8-K filed 2026-07-30 · Q2 2026 results headline (July 30, 2026; Stryker Form 8-K earnings release, https://www.sec.gov/Archives/edgar/data/310764/000031076426000048/sykex991earningsq22026.htm) [7] SYK Q3 2026 earnings call 2026-10-29 (October 29, 2026; Stryker third-quarter earnings call (Drillr structured summary)) [8] SYK 10-K filed 2026-02-11 · 2025 net sales by segment and business (February 11, 2026; Stryker Form 10-K annual report, https://www.sec.gov/Archives/edgar/data/310764/000031076426000010/syk-20251231.htm) [9] SYK 8-K filed 2026-07-30 · Q2 2026 MedSurg and Neurotechnology sales by business (July 30, 2026; Stryker Form 8-K earnings release, https://www.sec.gov/Archives/edgar/data/310764/000031076426000048/sykex991earningsq22026.htm)