Stryker anticipates 6.5% to 7% organic net sales growth in 2026 as it plans to scale Versius in the U.S.

• "Organic sales growth for the quarter was 7.7% with 9.1% growth in MedSurg and Neurotechnology and 5.9% growth in Orthopaedics." (Chairman & CEO Kevin Lobo) "While we delivered solid growth in several businesses, our overall results fell short of our expectations." (Chairman & CEO Lobo)
• "Beginning with Hips and Knees, it is now clear that there is a market slowdown." (Chairman & CEO Lobo) "In the U.S., we are seeing slower procedural growth amid affordability concerns from higher insurance premiums and deductibles." (Chairman & CEO Lobo) "We are also observing increased pre-authorization denials, creating additional friction and delaying patient access to treatment." (Chairman & CEO Lobo)
• "The third quarter included onetime revenue from our Peripheral Vascular joint venture in China, as a result of achieving a regulatory approval milestone in September." (Chairman & CEO Lobo) "Our teams made meaningful progress restoring supply throughout the quarter, and we now expect inventory levels and product availability to continue normalizing through the end of the year." (Chairman & CEO Lobo)
• "As announced earlier this week, we have completed our acquisition of ZuriMED." (Vice President of Investor Relations Nick Mead) "We recently announced an investment in CMR Surgical, an agreement to act as the exclusive U.S. sales agent for the Versius platform." (Vice President of Investor Relations Mead)
• "Adjusted earnings per share were $3.52, up 10.3% from the same quarter last year." (VP & CFO Preston Wells) "Adjusted gross margin was 65.4%, up 40 basis points from the third quarter of 2025." (VP & CFO Wells)
• "During the quarter, we repurchased $1 billion of shares under our previously existing share repurchase program." (VP & CFO Wells) "Additionally, we received Board authorization for another $3 billion towards future share repurchases." (VP & CFO Wells)

Outlook

• "Our updated organic sales guidance anticipates a similar overall organic growth rate for the company in Q4 as we achieved in Q3." (Chairman & CEO Kevin Lobo) "This assumes a continuation of the procedure environment we observed this quarter as well as continued strong capital demand where we continue to maintain an elevated order book." (Chairman & CEO Lobo)
• "We now expect full year organic net sales growth of 6.5% to 7% and adjusted net earnings per share of $14.80 to $14.90." (VP & CFO Preston Wells) "Based on our year-to-date results, we are revising our full year guidance to reflect softer hip and knee procedure trends, lingering supply constraints in peripheral vascular and mitigation of operational execution risk related to capital equipment sales." (VP & CFO Wells)
• Compared with the prior quarter’s guidance, management previously said, "we are narrowing our full year guidance and now expect organic net sales growth to be in the range of 8.3% to 9.3% and adjusted net earnings per share to be in the range of $14.95 to $15.10." (VP & CFO Wells, Q2)

Financial results

• "Pricing contributed 0.1% to growth, while foreign currency had no impact on sales." (VP & CFO Preston Wells) "Adjusted operating margin was 26.2% of sales, up 60 basis points from the third quarter of 2025." (VP & CFO Wells)
• "Adjusted other income and expense was $91 million, down $25 million from the same quarter last year, reflecting lower debt levels." (VP & CFO Wells) "We now expect adjusted other income and expense to be approximately $400 million for the full year." (VP & CFO Wells)
• "We ended the third quarter with approximately $3.3 billion of cash and cash equivalents and year-to-date cash from operations of $3.3 billion, an increase of approximately 14% compared to the prior year." (VP & CFO Wells)

Q&A

• Robert Marcus, JPMorgan: "Where do you think market growth is now?" (Chairman & CEO Kevin Lobo) "I would say market growth is kind of in the 2.5% range this year." (Chairman & CEO Lobo)
• Larry Biegelsen, Wells Fargo: "Why is CMR the right partner for you?" (Chairman & CEO Kevin Lobo) "Our hope and our plan is that we will eventually purchase this." (Chairman & CEO Lobo)
• Joanne Wuensch, Citi: "Can you give us some parameters" for 2027 growth? (VP & CFO Preston Wells) "we will not provide formal guidance until early next year, we do expect to deliver growth at the high end of our markets." (VP & CFO Wells)
• Ryan Zimmerman, BTIG: "help us think about what's accretive" in Q4 growth? (VP & CFO Preston Wells) "we expect" strength from "trauma and extremities" and "medical" and "instruments." (VP & CFO Wells)
• Travis Steed, BofA: "what data points" separate market slowdown vs. win rate? (Chairman & CEO Kevin Lobo) "it's mostly market related, but we have been gaining share at a higher rate" historically and "our teams were distracted." (Chairman & CEO Lobo)
• Christopher Pasquale, Barclays: capital execution risk? (VP & CFO Preston Wells) "it's a bit of just a more conservative view" on "our ability" to match "production and supply" with demand. (VP & CFO Wells)
• Patrick Andrew Wood, UBS: Smart Care update? (Chairman & CEO Kevin Lobo) "Smart Care had its best quarter in our history this past quarter" and "Orders are picking up." (Chairman & CEO Lobo)
• Andrew Ranieri, TD Cowen: quantify China JV benefit? (VP & CFO Preston Wells) "We aren't calling it out specifically." (VP & CFO Wells)

Sentiment analysis

• Analyst sentiment was slightly negative, pressing on orthopaedics demand and visibility, including "clearly disappointing" (Robert Marcus, JPMorgan) and questions probing whether the slowdown is "a very short-term blip." (Matthew O'Brien, Piper Sandler)
• Management sentiment was neutral to slightly defensive on orthopaedics, with "it was a surprise for us, and that is reflected in our guidance" (Chairman & CEO Kevin Lobo) and "we're not setting guidance right now" for 2027. (VP & CFO Preston Wells)
• Versus the prior quarter’s more upbeat stance ("We exited Q2 with regained momentum and expect a strong second half of the year" (Chairman & CEO Lobo, Q2)), the current call carried more caution on procedures and commercial execution ("our overall results fell short of our expectations" (Chairman & CEO Lobo)).

Quarter-over-quarter comparison

• The orthopaedics narrative shifted from Q2 stability ("we have not observed meaningful changes in volume trends" (Vice President of Investor Relations Nick Mead, Q2)) to Q3 market slowdown ("it is now clear that there is a market slowdown" (Chairman & CEO Kevin Lobo)).
• Guidance language tightened materially quarter-over-quarter, moving from Q2’s "8.3% to 9.3%" organic net sales growth to Q3’s "6.5% to 7%" range, alongside a lower adjusted EPS range. (VP & CFO Preston Wells, Q2 and Q3)
• Strategic emphasis expanded in Q3 with soft tissue robotics, highlighted by "exclusive U.S. sales agent for the Versius platform" and management framing it as "our bet in the soft tissue robotic place." (Vice President of Investor Relations Nick Mead; Chairman & CEO Kevin Lobo)

Risks and concerns

• "we are seeing slower procedural growth amid affordability concerns" and "increased pre-authorization denials" in hips and knees. (Chairman & CEO Kevin Lobo)
• "2026 has been an unusual year, marked by the cyber incident in the first quarter and an SAP implementation" that "impacted our commercial execution." (Chairman & CEO Lobo)
• "lingering supply constraints in peripheral vascular" and execution risk in fulfilling capital demand remained embedded in the revised outlook. (VP & CFO Preston Wells)

Final takeaway

Management framed Q3 as a quarter of solid companywide growth but a notable orthopaedics surprise, citing a hip-and-knee procedure slowdown and internal disruptions (cyber and SAP) that weighed on conversions and new product adoption. Leadership updated full-year guidance to 6.5% to 7% organic net sales growth and $14.80 to $14.90 in adjusted EPS, while emphasizing margin expansion, cash generation, $1B in quarterly buybacks, and a new $3B authorization. Strategically, the company pointed to an expanded M&A and adjacency agenda—closing ZuriMED and investing in CMR Surgical with plans to scale Versius in the U.S.—as it works through large-joint softness and peripheral vascular supply normalization into year-end.

Read the full Earnings Call Transcript

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