Stryker Corporation earnings

Management highlights

- Cyber incident occurred late in Q1, caused global disruption, but teams reacted quickly to restore operations. - Organic sales growth despite cyber incident impact. - Maintaining full year guidance. - Announced acquisition of amplitude vascular systems. - Established new orthotech business. - Underlying demand across businesses healthy in Q1. - Procedural volumes solid with favorable demographics and robotic assisted surgery adoption. - Hospital CapEx environment steady and capital order book elevated. - Best ever Q1 for Mako installations with high utilization rates. - Updated segment disclosures with launch of OrthoTech business.

Guidance

Maintaining full-year guidance. Organic net sales growth expected in range of 8% - 9.5%, adjusted net earnings per share in range of $14.90 - $15.10. Most Q1 lost sales expected to be realized throughout rest of year. Sales guidance reflects modestly positive pricing impact. Slight favorable impact to sales and earnings per share if rates hold near current levels. Full-year adjusted other income and expense expected to be approximately $420 million. Full-year effective tax rate expected in range of 15% - 16%.

Segment performance

Organic sales growth was 2.4% worldwide, 1.9% in the U.S., and 3.9% internationally. Adjusted gross margin was 63.6%, 190 basis points lower than Q1 2025. Adjusted operating margin was 21.1% of sales, 180 basis points lower than Q1 2025. Adjusted other income and expense was $97 million, $24 million higher than 2025. Adjusted effective tax rate was 14.5% in Q1. Year-to-date cash from operations was $581 million. The cyber incident affected businesses differently based on operating models, go-to-market strategies, inventory levels, etc. The new orthotech business was established by combining Mako and enabling technologies with orthopedic instruments portfolio. The acquisition of amplitude vascular systems is expected to close in Q2.

Risks & headwinds

Cyber incident caused global disruption to business operations, affecting revenue recognition and shipments. Geopolitical risks in the Middle East had modest effect on international growth but limited impact on overall results. Higher input costs due to inflation and oil costs could pressure margins. Uncertainty around the timing and magnitude of sales recovery from the cyber incident.

Analyst Q&A

• Q: Robbie Marcus on cadence through rest of year and updated guidance,

  A: Recovery in Q2 with some bleeding into Q3 and Q4, no exact quarterly guidance.

• Q: Larry Beagleson on margins and mitigating higher input costs,

  A: Full-year margin expectations unchanged, procurement team working to mitigate input cost pressure.

• Q: Joanne Wunsch on competitive market,

  A: Strong position in orthopedic marketplace with momentum from product launches.

• Q: Ryan Zimmerman on hospital market dynamics,

  A: No pause in orders, healthy order book.

• Q: Travis Speed on amplitude acquisition and early stage deals,

  A: Related to business nature, excited about deal as close to approval.

• Q: David Roman on Inari and international,

  A: Excited about space, international growth from innovation and commercial model.

• Q: Matthew O'Brien on cyber attack impact on med-surg vs ortho,

  A: Different impacts based on business models.

• Q: Matt Mixick on orthotech consolidation and recurring revenue,

  A: Not breaking out specific components.

• Q: Mike Mattson on amplitude acquisition sales team,

  A: Initially run through existing sales force.

• Q: Vijay Kumar on M&A and soft tissue robotics,

  A: Evaluating companies in soft tissue robotics.

• Q: Matt Taylor on cyber incident manufacturing restock and NACO shoulders,

  A: Recovery on different timelines for different products.

• Q: Steve Lichtman on customer relationships post cyber incident,

  A: Positive customer response.

• Q: Jason Bedford on Smart Hospital,

  A: Seamless integration and positive feedback.

• Q: Shagun Singh on cyber incident guidance and learnings,

  A: No exact breakout of deferred vs production delays, lessons learned for future.

• Q: Mike Kraske on April volumes and GLP-1 impact,

  A: No GLP-1 impact, underlying demand strong.

• Q: Matt Blackman on neurocranial and Mako 4,

  A: Aligning to company structure, positive feedback on Mako 4.

• Q: Caitlin Roberts on foot and ankle and Encompass Total Ankle,

  A: Foot and ankle market soft, Encompass Total Ankle launched, awaiting cut guide approval.