Stryker Corporation Q4 FY2025 earnings call

Key Points

• 2025 results were outstanding with organic sales growth of 11% in Q4 and 10.3% for the full year, surpassing $25B in sales. Globally, neurocranial endoscopy instruments, trauma and extremities businesses had double-digit organic growth. U.S. organic sales growth was 11.2%, international was 7.5%.
• Excellent earnings and cash flow performance, with adjusted operating margin expansion for the second consecutive year. Structural components include exceptional talent, active M&A, product launches, and sales force specialization.
• Procedural volumes healthy in Q4, markets expected strong in 2026. Mako installations had record quarter, installed base over 3,000 worldwide. Inari (peripheral business) had strong finish with high teens procedural growth.
• Fourth-quarter financial results: organic sales growth 11% vs 10.2% in 2024, adjusted EPS $4.47 up 11.5%, full-year adjusted EPS $13.63 up 11.8% with operating margin expansion.

In the fourth quarter, MedSurg and Neurotechnology had an exceptional organic sales growth of 12.6%, including 13% U.S. organic growth and 10.9% international organic growth. Instruments had 19.1% U.S. organic sales growth, fueled by strong capital demand in power tools, etc. Endoscopy had 11.1% U.S. organic sales growth, led by sustainability and sports medicine. Medical had 13.6% U.S. organic sales growth, driven by 35, Procuity, Oceara, and Sage products. Vascular had 4.3% U.S. organic sales growth, with hemorrhagic business strong but ischemic facing competitive pressures. Neurocranial had 9.9% U.S. organic sales growth. Orthopaedics had 8.4% organic sales growth, with U.S. Knee at 7.6%, Hips at 5.6%, Trauma and Extremities at 8.5%, Other ortho at 28.7%, and international orthopaedics at 5.4% growth.

Guidance

• Expect 2026 organic net sales growth to be in the range of 8% to 9.5% and adjusted net earnings per share to be in the range of $14.90 to $15.10.
• Full-year 2026 sales guidance includes modestly positive price impact. If foreign exchange rates hold, slightly favorable impact on sales and adjusted earnings per share.
• Same number of selling days in each quarter in 2026 as 2025, seasonality similar to 2025. Full-year tariff impacts expected at ~$400M, with incremental $200M in first half of 2026.

Risks

• Tariff headwinds, with full-year tariff impacts expected at $400M in 2026, including incremental $200M in first half.
• Competitive landscape changes, such as Boston Scientific's acquisitions and J&J's ortho spinout.
• Challenges with European MDR (Medical Device Regulation) affecting product approvals and market entry in Europe, impacting med surg business in the region.

Q: Larry Biegelsen asked about confidence in 2026 organic growth starting slightly higher and if 10% is still possible.

A: Kevin Lobo said given strong order book and Mako performance, more positive this year, 10% is possible depending on macro environment.

Q: Larry Biegelsen followed up on Spencer Stiles becoming president and COO.

A: Kevin Lobo said Spencer is ready, provides platform for global commercial organization, enables other promotions and cascade of leadership.

Q: Robbie Marcus asked about pricing and capital environment in 2026.

A: Preston Wells said pricing gains expected to continue, Jason Beach said capital environment healthy with elevated backlog.

Q: Robbie Marcus asked about specific businesses like trauma, extremities, vascular.

A: Kevin Lobo said trauma/extremities had strong comps, foot and ankle business to improve with new Encompass total ankle; vascular ischemic sector tough, but new Broadway catheter launched.

Q: Joanne Wuensch asked about competitive landscape changes like Boston Scientific's acquisitions and J&J's ortho spinout.

A: Jason Beach said no change in strategy, confident in 2026.

Q: Joanne Wuensch asked about patient volumes and ACA coverage.

A: Jason Beach said volumes robust at start of 2026, expect mid-single-digit growth in ortho markets and outperform.