Stryker (NYSE: SYK) grows Q1 2026 sales as cyber incident weighs on margins
Filing Impact
Filing Sentiment
Form Type
10-Q
Stryker Corporation reported solid first-quarter 2026 results with net sales of $6.02 billion, up from $5.87 billion a year earlier, driven mainly by MedSurg and Neurotechnology growth. Net earnings rose to $745 million, and diluted EPS increased to $1.93.
Adjusted diluted EPS was $2.60, down 8.5% from 2025 as adjusted operating margin contracted to 21.1%. A March 11, 2026 cybersecurity incident caused idle production time, pressuring gross margin to 63.3% and segment margins, though manufacturing operations and commercial systems have been restored. Cash from operations improved to $581 million, while the company repaid $1.0 billion of maturing notes and ended the quarter with $2.97 billion in cash and marketable securities.
Positive
- None.
Negative
- None.
Insights
Modest revenue growth, cyber-related margin pressure and ongoing M&A keep the story mixed.
Stryker delivered Q1 2026 net sales of $6.02 billion, up 2.6%, with MedSurg and Neurotechnology growing 5.0% and Orthopaedics roughly flat. GAAP diluted EPS improved to $1.93, helped by lower special charges versus 2025 and higher operating income.
However, adjusted diluted EPS fell 8.5% to $2.60 as adjusted operating margin declined to 21.1%. Management attributes gross margin pressure and lower segment margins partly to higher manufacturing and supply chain costs from idle production tied to the March 2026 cybersecurity incident. This introduces operational and reputational risk highlighted in expanded risk disclosures.
On the balance sheet, net debt remains significant with total debt of $14.72 billion, but liquidity is supported by $2.97 billion of cash and marketable securities and $2.91 billion of borrowing capacity. The acquisition strategy continues with the May 2026 AVS deal for approximately $435 million in cash plus up to $400 million in milestones, adding to Vascular. Future filings may clarify the ongoing financial impact of the cyber incident and synergy realization from recent acquisitions.
Key Figures
Net sales: $6.02 billion
Net earnings: $745 million
Diluted EPS (GAAP): $1.93 per share
+5 more
8 metrics
Net sales
$6.02 billion
Three months ended March 31, 2026 vs $5.87 billion in 2025
Net earnings
$745 million
Three months ended March 31, 2026 vs $654 million in 2025
Diluted EPS (GAAP)
$1.93 per share
Three months ended March 31, 2026 vs $1.69 in 2025
Adjusted diluted EPS
$2.60 per share
Three months ended March 31, 2026, down 8.5% from $2.84
Operating income margin
15.5%
GAAP operating income as percentage of net sales in Q1 2026
Cash from operating activities
$581 million
Three months ended March 31, 2026 vs $250 million in 2025
Total debt
$14.72 billion
Total debt outstanding at March 31, 2026
AVS acquisition consideration
$435 million cash + up to $400 million milestones
Amplitude Vascular Systems acquisition announced May 7, 2026
Key Terms
cybersecurity incident, constant currency, adjusted operating income margin, net investment hedges, +2 more
6 terms
cybersecurity incident technical
"In the first quarter 2026 we identified a cybersecurity incident which caused disruptions to our business operations."
A cybersecurity incident is an event where someone's computer systems or data are attacked or broken into without permission. It matters because it can lead to stolen information, financial loss, or disruptions in services, similar to a break-in at a store that damages property or steals valuable items.
constant currency financial
"Excluding the impact of acquisitions and divestitures, sales grew 1.0% in constant currency."
Constant currency is a way of measuring financial results that removes the effects of changes in currency exchange rates. It allows for a clearer comparison of a company's performance over time by showing what the numbers would look like if exchange rates had stayed the same. This helps investors understand whether growth comes from actual business improvements or just currency fluctuations.
adjusted operating income margin financial
"adjusted operating income margin(1) contracted by 180 basis points to 21.1%"
Adjusted operating income margin is the percentage of revenue that a company keeps as profit from its normal, day-to-day business after removing one-time events, restructuring costs, and other unusual or accounting-only items. Investors use it to see how efficiently the core business turns sales into operating profit — like judging a car’s fuel efficiency after ignoring occasional detours — because it gives a clearer view of underlying profitability and comparability over time.
net investment hedges financial
"we had €5.0 billion at March 31, 2026 ... of senior unsecured notes designated as net investment hedges"
A net investment hedge is a financial step a company takes to protect the reported value of its ownership in foreign subsidiaries from swings in exchange rates. By using derivatives or foreign‑currency borrowings to offset translation gains or losses, the company reduces how much its balance sheet and reported equity jump around when currencies move — like locking a price tag on a foreign store so its value in the home currency stays steadier for investors.
contingent consideration financial
"we assumed contingent consideration liabilities with a fair value of $90 related to previous acquisitions"
Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.
structural optimization and other special charges financial
"Structural optimization and other special charges represent the costs associated with employee retention and workforce reductions"
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-13149
(Exact name of registrant as specified in its charter)
(State of incorporation) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices) | (Zip Code) | ||||||
(Registrant’s telephone number, including area code) | |||||||
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).Yes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting
company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Emerging growth company | ||||
Non-accelerated filer | ☐ | Small reporting company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐No ☒
There were 383,360,762 shares of Common Stock, $0.10 par value, on March 31, 2026.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
PART I – FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS |
Stryker Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months | |||
2026 | 2025 | ||
Net sales | $ | $ | |
Cost of sales | |||
Gross profit | $ | $ | |
Research, development and engineering expenses | |||
Selling, general and administrative expenses | |||
Amortization of intangible assets | |||
Goodwill and other impairments | |||
Total operating expenses | $ | $ | |
Operating income | $ | $ | |
Interest expense | ( | ( | |
Other income | |||
Earnings before income taxes | $ | $ | |
Income taxes | |||
Net earnings | $ | $ | |
Net earnings per share of common stock: | |||
Basic | $ | $ | |
Diluted | $ | $ | |
Weighted-average shares outstanding (in millions): | |||
Basic | |||
Effect of dilutive employee stock compensation | |||
Diluted | |||
Cash dividends declared per share of common stock | $ | $ | |
Anti-dilutive shares excluded from the calculation of dilutive employee stock options were de minimis in all periods.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Three Months | |||
2026 | 2025 | ||
Net earnings | $ | $ | |
Other comprehensive income (loss), net of tax: | |||
Marketable securities | |||
Pension plans | ( | ||
Unrealized gains (losses) on designated hedges | ( | ( | |
Financial statement translation | ( | ||
Total other comprehensive income (loss), net of tax | $ | $( | |
Comprehensive income | $ | $ | |
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 2 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
CONSOLIDATED BALANCE SHEETS
March 31 | December 31 | ||
2026 | 2025 | ||
(Unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ | $ | |
Short-term investments | |||
Marketable securities | |||
Accounts receivable, less allowance of $ | |||
Inventories: | |||
Materials and supplies | |||
Work in process | |||
Finished goods | |||
Total inventories | $ | $ | |
Prepaid expenses and other current assets | |||
Total current assets | $ | $ | |
Property, plant and equipment: | |||
Land, buildings and improvements | |||
Machinery and equipment | |||
Total property, plant and equipment | $ | $ | |
Less allowance for depreciation | |||
Property, plant and equipment, net | $ | $ | |
Goodwill | |||
Other intangibles, net | |||
Noncurrent deferred income tax assets | |||
Other noncurrent assets | |||
Total assets | $ | $ | |
Liabilities and shareholders' equity | |||
Current liabilities | |||
Accounts payable | $ | $ | |
Accrued compensation | |||
Income taxes | |||
Dividends payable | |||
Accrued expenses and other liabilities | |||
Current maturities of debt | |||
Total current liabilities | $ | $ | |
Long-term debt, excluding current maturities | |||
Income taxes | |||
Other noncurrent liabilities | |||
Total liabilities | $ | $ | |
Shareholders' equity | |||
Common stock, $ | |||
Additional paid-in capital | |||
Retained earnings | |||
Accumulated other comprehensive loss | ( | ( | |
Total shareholders' equity | $ | $ | |
Total liabilities and shareholders' equity | $ | $ |
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 3 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Three Months | |||
2026 | 2025 | ||
Common stock shares outstanding (in millions) | |||
Beginning | |||
Issuance of common stock under stock compensation and benefit plans | |||
Ending | |||
Common stock | |||
Beginning | $ | $ | |
Issuance of common stock under stock compensation and benefit plans | |||
Ending | $ | $ | |
Additional paid-in capital | |||
Beginning | $ | $ | |
Issuance of common stock under stock compensation and benefit plans | ( | ( | |
Share-based compensation | |||
Ending | $ | $ | |
Retained earnings | |||
Beginning | $ | $ | |
Net earnings | |||
Cash dividends declared | ( | ( | |
Ending | $ | $ | |
Accumulated other comprehensive income (loss) | |||
Beginning | $( | $( | |
Other comprehensive income (loss) | ( | ||
Ending | $( | $( | |
Total shareholders' equity | $ | $ | |
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 4 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months | |||
2026 | 2025 | ||
Operating activities | |||
Net earnings | $ | $ | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation | |||
Amortization of intangible assets | |||
Asset impairments | |||
Share-based compensation | |||
Sale of inventory stepped-up to fair value at acquisition | |||
Deferred income tax (benefit) expense | ( | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | |||
Inventories | ( | ( | |
Accounts payable | ( | ( | |
Accrued expenses and other liabilities | ( | ( | |
Income taxes | |||
Other, net | ( | ( | |
Net cash provided by operating activities | $ | $ | |
Investing activities | |||
Acquisitions, net of cash acquired | ( | ( | |
Purchases of marketable securities | ( | ( | |
Proceeds/(Purchases) of short-term investments | |||
Proceeds from sales of marketable securities | |||
Purchases of property, plant and equipment | ( | ( | |
Other investing, net | ( | ||
Net cash used in investing activities | $( | $( | |
Financing activities | |||
Proceeds from issuance of long-term debt | |||
Payments on long-term debt | ( | ||
Payments of dividends | ( | ( | |
Cash paid for taxes from withheld shares | ( | ( | |
Other financing, net | ( | ( | |
Net cash provided by (used in) financing activities | $( | $ | |
Effect of exchange rate changes on cash and cash equivalents | ( | ||
Change in cash and cash equivalents | $( | $( | |
Cash and cash equivalents at beginning of period | |||
Cash and cash equivalents at end of period | $ | $ | |
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 5 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
General Information
Management believes the accompanying unaudited Consolidated
Financial Statements contain all adjustments, including normal
recurring items, considered necessary to fairly present the
financial position of Stryker Corporation and its consolidated
subsidiaries ("Stryker," the "Company," "we," "us" or "our") on
March 31, 2026 and the results of operations for the three
months 2026. The results of operations included in these
Consolidated Financial Statements may not necessarily be
indicative of our annual results. These statements should be read
in conjunction with our Annual Report on Form 10-K for 2025.
In the first quarter 2026 we announced a change in our
organizational structure. Our new Ortho Tech business combines
the orthopaedic instruments portfolio from our Instruments
business with the Mako and enabling technologies portfolio from
our Other Orthopaedics business. By bringing Mako, power tools,
cutting accessories, enabling technologies and the teams behind
these products together under one business, we are simplifying
the customer experience and striving to increase our speed to
market through focused innovation. We are reporting under this
new structure beginning with this Quarterly Report on Form 10-Q
for the period ended March 31, 2026.
Following this reorganization we will continue to have two
business segments - (i) MedSurg and Neurotechnology and (ii)
Orthopaedics, each of which comprise a reportable segment. All
historical segment financial information has been recast to
conform to this new reporting structure in our financial statements
and accompanying notes.
In September 2025 the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) 2025-07
(Topics 815 and 606): Derivatives and Hedging: Derivatives
Scope Refinements and Revenue from Contracts with
Customers: Scope Clarification for Share-Based Noncash
Consideration from a Customer in a Revenue Contract. This
update expands the scope exception in Topic 815 to certain non-
exchange-traded contracts for which settlement is based on
operations or activities specific to one of the parties to the
contract. The update is effective for fiscal years beginning after
December 15, 2026 including interim periods within those fiscal
years. Early adoption is permitted. We are evaluating if the ASU
will have an impact on our Consolidated Financial Statements.
In September 2025 the FASB issued ASU 2025-06 (Subtopic
350-40): Intangibles - Goodwill and Other - Internal-Use
Software: Targeted Improvements to the Accounting for Internal-
Use Software. This update clarifies and modernizes the
accounting for costs related to internal-use software by removing
all references to project stages and clarifying that the probable-
to-complete threshold is not met if significant development
uncertainty exists. The update is effective for fiscal years
beginning after December 15, 2027 including interim periods
within those fiscal years. Early adoption is permitted. We are
evaluating if the ASU will have an impact on our Consolidated
Financial Statements.
In November 2024 the FASB issued ASU 2024-03 (Subtopic
220-40): Income Statement: Reporting Comprehensive Income -
Expense Disaggregation Disclosures which requires
disaggregation of certain expense captions into specified
categories in disclosures within the Notes to the Consolidated
Financial Statements. The new disclosure requirements are
effective for fiscal years beginning after December 15, 2026 and
interim periods within fiscal years beginning after December 15,
2027. Early adoption is permitted. We are evaluating these new
expanded disclosure requirements.
We evaluate all ASUs issued by the FASB for consideration of
their applicability. ASUs not included in our disclosures were
assessed and determined to be either not applicable or are not
expected to have a material impact on our Consolidated Financial
Statements.
Accounting Pronouncements Recently Adopted
On January 1, 2026 we adopted ASU 2025-05 (Topic 326):
Financial Instruments - Credit Losses: Measurement of Credit
Losses for Accounts Receivable and Contract Assets. This
update provides a practical expedient allowing entities to assume
that current conditions as of the balance sheet date will remain
unchanged for the remaining life of the asset when estimating
expected credit losses for current accounts receivable and
current contract assets arising from transactions accounting for
under Accounting Standards Codification 606, Revenue from
Contracts with Customers. The adoption of this update did not
have a material impact on our Consolidated Financial
Statements.
NOTE 2 - REVENUE RECOGNITION
Our policies for recognizing sales have not changed from those
described in our Annual Report on Form 10-K for 2025.
We disaggregate our net sales by business and geographic
location for each of our segments as we believe it best depicts
how the nature, amount, timing and certainty of our net sales and
cash flows are affected by economic factors.
In the first quarter 2026 we announced a change in our
organizational structure. Our new Ortho Tech business combines
the orthopaedic instruments portfolio (Orthopaedic Instruments)
from Instruments with Other Orthopaedics. In addition, Neuro
Cranial and the spine enabling technologies portfolio (Enabling
Technologies) from Other Orthopaedics was combined with the
remaining Instruments business to align with our internal
reporting structure. Ortho Tech includes sales related to
Orthopaedic Instruments of $489 and $484 and Other
Orthopaedics of $157 and $133 . Instruments includes sales
related to Neuro Cranial of $606 and $563 and Enabling
Technologies of $26 and $29 for the three months 2026 and
2025. We have reflected these changes in all historical periods
presented.
Net Sales by Business | |||
Three Months | |||
2026 | 2025 | ||
MedSurg and Neurotechnology: | |||
Instruments | $ | $ | |
Endoscopy | |||
Medical | |||
Vascular | |||
$ | $ | ||
Orthopaedics: | |||
Knees | $ | $ | |
Hips | |||
Trauma and Extremities | |||
Ortho Tech | |||
Spinal Implants | |||
$ | $ | ||
Total | $ | $ | |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 6 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Net Sales by Geography | |||||
Three Months 2026 | Three Months 2025 | ||||
United States | International | United States | International | ||
MedSurg and Neurotechnology: | |||||
Instruments | $ | $ | $ | $ | |
Endoscopy | |||||
Medical | |||||
Vascular | |||||
$ | $ | $ | $ | ||
Orthopaedics: | |||||
Knees | $ | $ | $ | $ | |
Hips | |||||
Trauma and Extremities | |||||
Ortho Tech | |||||
Spinal Implants | |||||
$ | $ | $ | $ | ||
Total | $ | $ | $ | $ | |
We typically do not incur costs to fulfill a contract before a
product or service is provided to a customer due to the nature of
our products and services. Our costs to obtain contracts are
typically in the form of sales commissions paid to employees or
third-party agents. Certain sales commissions paid to employees
prior to recognition of sales are recorded as deferred contract
costs. We expense sales commissions associated with obtaining
a contract at the time of the sale or as incurred as the
amortization period is generally less than one year. These costs
have been presented within selling, general and administrative
expenses. On March 31, 2026 and December 31, 2025 deferred
contracts costs recorded in our Consolidated Balance Sheets
were not significant.
Contract Assets and Liabilities
Our contract assets primarily relate to conditional rights to
consideration for work completed but not billed at the reporting
date. On March 31, 2026 and December 31, 2025 contract
assets recorded in our Consolidated Balance Sheets were not
significant.
Our contract liabilities arise as a result of consideration received
from customers at inception of contracts for certain businesses or
where the timing of billing for services precedes satisfaction of
our performance obligations. This occurs primarily when payment
is received upfront for certain multi-period extended service
contracts. Our contract liabilities of $1,035 and $1,024 on
March 31, 2026 and December 31, 2025 are classified within
accrued expenses and other liabilities and other noncurrent
liabilities in our Consolidated Balance Sheets based on the timing
of when we expect to complete our performance obligations.
as follows:
March 31 | |
2026 | |
Beginning contract liabilities | $ |
Revenue recognized from beginning of year contract liabilities | ( |
Net advance consideration received during the period | |
Ending contract liabilities | $ |
Transfers and Servicing of Financial Assets
We sell certain customer lease agreements and the related
leased assets to third-party financial institutions to accelerate our
cash collection cycle. The lease receivables are sold without
recourse and are derecognized from our Consolidated Balance
Sheets at the time of sale. Under the terms of our arrangements,
we collect lease payments on behalf of the financial institutions
but maintain no other form of continuing involvement. Sales of
these lease agreements are classified as operating activities in
our Consolidated Statements of Cash Flows. Fees earned for our
servicing activities are immaterial. Revenue related to customer
lease agreements sold under these arrangements represented
less than 4
2025.
NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS)
INCOME (AOCI)
Three Months 2026 | Pension Plans | Hedges | Financial Statement Translation | Total |
Beginning | $ | $ | $( | $( |
OCI | ( | ( | ||
Income taxes | ( | ( | ||
Reclassifications to: | ||||
Cost of sales | ( | ( | ||
Interest expense | ( | ( | ||
Other income | ( | ( | ( | |
Income taxes | ||||
Net OCI | $( | $( | $ | $ |
Ending | $ | $ | $( | $( |
Three Months 2025 | Pension Plans | Hedges | Financial Statement Translation | Total |
Beginning | $ | $ | $( | $( |
OCI | ( | ( | ( | |
Income taxes | ||||
Reclassifications to: | ||||
Cost of sales | ( | ( | ||
Interest expense | ( | ( | ||
Other income | ( | ( | ||
Income taxes | ||||
Net OCI | $ | $( | $( | $( |
Ending | $ | $ | $( | $( |
NOTE 4 - DERIVATIVE INSTRUMENTS
We use operational and economic hedges, foreign currency
exchange forward contracts, net investment hedges (both
derivative and non-derivative financial instruments) and interest
rate derivative instruments to manage the impact of currency
exchange and interest rate fluctuations on earnings, cash flow
and equity. We do not enter into derivative instruments for
speculative purposes. We are exposed to potential credit loss in
the event of nonperformance by counterparties on our
outstanding derivative instruments but do not anticipate
nonperformance by any of our counterparties. Should a
counterparty default, our maximum loss exposure is the asset
balance of the instrument. We have not changed our hedging
strategies, accounting practices or objectives from those
disclosed in our Annual Report on Form 10-K for 2025.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Foreign Currency Hedges | ||||
March 2026 | Cash Flow | Net Investment | Non- Designated | Total |
Gross notional amount | $ | $ | $ | $ |
Maximum term in years | ||||
Fair value: | ||||
Other current assets | $ | $ | $ | $ |
Other noncurrent assets | ||||
Other current liabilities | ( | ( | ( | ( |
Other noncurrent liabilities | ( | ( | ( | |
Total fair value | $ | $( | $ | $( |
December 2025 | Cash Flow | Net Investment | Non- Designated | Total |
Gross notional amount | $ | $ | $ | $ |
Maximum term in years | ||||
Fair value: | ||||
Other current assets | $ | $ | $ | $ |
Other noncurrent assets | ||||
Other current liabilities | ( | ( | ( | ( |
Other noncurrent liabilities | ( | ( | ( | |
Total fair value | $ | $( | $( | $( |
We had €2.3
certain forward currency contracts designated as net investment
hedges, for which the maximum term is 8.5 years, to hedge a
portion of our investments in certain of our entities with functional
currencies denominated in Euros. In addition to these derivative
financial instruments designated as net investment hedges, we
had €5.0
senior unsecured notes designated as net investment hedges to
selectively hedge portions of our investment in certain
international subsidiaries. The currency effects of our Euro-
denominated senior unsecured notes are reflected in AOCI within
shareholders' equity where they offset gains and losses recorded
on our net investment in international subsidiaries.
The total after-tax gain (loss) recognized in OCI related to
designated net investment hedges was $154 in the three months
2026.
Currency Exchange Rate Gains (Losses) Recognized in Net
Earnings
Three Months | ||||
Derivative Instrument | Recognized in: | 2026 | 2025 | |
Cash Flow | Cost of sales | $ | $ | |
Net Investment | Other income | |||
Non-Designated | Other income | ( | ||
Total | $ | $ | ||
Pretax gains (losses) on derivatives designated as cash flow
hedges of $23 and net investment hedges of $34 recorded in
AOCI are expected to be reclassified to cost of sales and other
income in earnings within 12 months of March 31, 2026. This
cash flow hedge reclassification is primarily due to the sale of
inventory that includes previously hedged purchases. A
component of the AOCI amounts related to net investment
hedges is reclassified over the life of the hedge instruments as
we elected to exclude the initial value of the component related to
the spot-forward difference from the effectiveness assessment.
Interest Rate Hedges
Pretax gains of $6 recorded in AOCI related to interest rate
hedges closed in conjunction with debt issuances are expected to
be reclassified to interest expense in earnings within 12 months
of March 31, 2026. The cash flow effect of interest rate hedges is
recorded in cash flow from operations.
NOTE 5 - FAIR VALUE MEASUREMENTS
Our policies for managing risk related to foreign currency, interest
rates, credit and markets and our process for determining fair
value have not changed from those described in our Annual
Report on Form 10-K for 2025.
In 2025 we assumed contingent consideration liabilities with a fair
value of $90 related to previous acquisitions made by Inari
Medical, Inc. (Inari). Refer to Note 7 for further information on the
acquisition of Inari.
There were no significant transfers into or out of any level of the
fair value hierarchy in 2026.
Assets Measured at Fair Value | |||
March 31 | December 31 | ||
2026 | 2025 | ||
Cash and cash equivalents | $ | $ | |
Short-term investments | |||
Trading marketable securities | |||
Level 1 - Assets | $ | $ | |
Available-for-sale marketable securities: | |||
Corporate and asset-backed debt securities | $ | $ | |
United States treasury debt securities | |||
Total available-for-sale marketable securities | $ | $ | |
Foreign currency exchange forward contracts | |||
Level 2 - Assets | $ | $ | |
Total assets measured at fair value | $ | $ |
Liabilities Measured at Fair Value | |||
March 31 | December 31 | ||
2026 | 2025 | ||
Deferred compensation arrangements | $ | $ | |
Level 1 - Liabilities | $ | $ | |
Foreign currency exchange forward contracts | $ | $ | |
Level 2 - Liabilities | $ | $ | |
Contingent consideration: | |||
Beginning | $ | $ | |
Additions | |||
Change in estimate and foreign exchange | |||
Settlements | ( | ( | |
Ending | $ | $ | |
Level 3 - Liabilities | $ | $ | |
Total liabilities measured at fair value | $ | $ |
Fair Value of Available for Sale Securities by Maturity | |||
March 31 | December 31 | ||
2026 | 2025 | ||
Due in one year or less | $ | $ | |
Due after one year through three years | $ | $ | |
On March 31, 2026 and December 31, 2025 the aggregate
difference between the cost and fair value of available-for-sale
marketable securities was nominal. Interest income on cash and
cash equivalents and short-term investments and income from
marketable securities was $34 and $38 in the three months 2026
and 2025, which was recorded in other income.
Our investments in available-for-sale marketable securities had a
minimum credit quality rating of A2 (Moody's), A (Standard &
Poor's) and A (Fitch). We do not plan to sell the investments, and
it is not more likely than not that we will be required to sell the
investments before recovery of their amortized cost basis, which
NOTE 6 - CONTINGENCIES AND COMMITMENTS
We are involved in various ongoing proceedings, legal actions
and claims arising in the normal course of business, including
proceedings related to product, labor, tax, intellectual property
Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
and other matters. The outcomes of these matters will generally
not be known for prolonged periods of time. In certain of the legal
proceedings the claimants seek damages as well as other
compensatory and equitable relief that could result in the
payment of significant claims and settlements and/or the
imposition of injunctions or other equitable relief. For legal
matters for which management had sufficient information to
reasonably estimate our future obligations, a liability representing
management's best estimate of the probable loss, or the
minimum of the range of probable losses when a best estimate
within the range is not known, is recorded. The estimates are
based on consultation with legal counsel, previous settlement
experience and settlement strategies. If actual outcomes are less
favorable than those estimated by management, additional
expense may be incurred, which could unfavorably affect future
operating results. We are self-insured for certain claims and
expenses. The ultimate cost to us with respect to product liability
claims could be materially different than the amount of the current
estimates and accruals and could have a material adverse effect
on our financial position, results of operations and cash flows.
Leases | |||
March 31 | December 31 | ||
2026 | 2025 | ||
Right-of-use assets | $ | $ | |
Lease liabilities, current | $ | $ | |
Lease liabilities, non-current | $ | $ | |
Other information: | |||
Weighted-average remaining lease term (years) | |||
Weighted-average discount rate |
Three Months | |||
2026 | 2025 | ||
Operating lease cost | $ | $ | |
Other Contractual Obligations and Commitments
Our outstanding balances of confirmed invoices in the supplier
financing program were $70 and $75 at March 31, 2026 and
December 31, 2025 and are included within accounts payable in
our Consolidated Balance Sheets.
NOTE 7 - ACQUISITIONS
We acquire stock in companies and various assets that continue
to support our capital deployment and product development
strategies. In the three months 2026 and 2025 cash paid for
acquisitions, net of cash acquired was $22 and $4,749 .
In February 2025 we completed the acquisition of Inari for $80
per share, or an aggregate purchase price of $4,810 , net of cash
acquired. Inari's product portfolio includes minimally invasive
products for the treatment of venous thromboembolism. Inari is
part of our Peripheral Vascular business within MedSurg and
Neurotechnology. Goodwill attributable to the acquisition reflects
the strategic benefits of expanding our market presence,
diversifying our product portfolio and advancing innovations. This
goodwill is not deductible for tax purposes. Share-based awards
for Inari employees vested upon our acquisition and a charge of
$139 was recorded in selling, general and administrative
expenses in the three months 2025.
Purchase Price Allocation of Acquired Net Assets | ||
2025 | ||
Inari | ||
Tangible assets acquired: | ||
Accounts receivable | $ | |
Inventory | ||
Deferred income tax assets | ||
Other assets | ||
Deferred income tax liabilities | ( | |
Other liabilities | ( | |
Intangible assets: | ||
Developed technologies | ||
Customer relationships | ||
Other intangibles | ||
Goodwill | ||
Purchase price, net of cash acquired of $ | $ | |
Weighted average amortization period at acquisition (years): | ||
Developed technologies | ||
Customer relationships | ||
Other intangibles | ||
On May 7, 2026 we acquired Amplitude Vascular Systems, Inc.
(AVS) for approximately $435 in cash and up to $400 in future
milestone payments. AVS is developing a next-generation
intravascular lithotripsy platform designed to treat complex
peripheral arterial disease. We plan to integrate AVS into our
Vascular business within MedSurg and Neurotechnology.
Consolidated Estimated Amortization Expense | ||||
Remainder of 2026 | 2027 | 2028 | 2029 | 2030 |
$ | $ | $ | $ | $ |
NOTE 8 - DEBT AND CREDIT FACILITIES
We have lines of credit issued by various financial institutions that
are available to fund our day-to-day operating needs. Certain of
our credit facilities require us to comply with financial and other
covenants. We were in compliance with all covenants on
March 31, 2026.
On March 31, 2026 there were no borrowings outstanding under
our revolving credit facility or our commercial paper program
which allows for maturities up to 397 days from the date of
issuance. The maximum amount of our commercial paper that
can be outstanding at any time is $3,000 .
In March 2026 we repaid $1,000 of 3.500 % senior unsecured
notes. The following table summarizes our total debt at March 31:
Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Summary of Total Debt | ||||||
March 31 | December 31 | |||||
Rate | Due | 2026 | 2025 | |||
Senior unsecured notes: | ||||||
March 15, 2026 | ||||||
February 10, 2027 | ||||||
November 30, 2027 | ||||||
February 10, 2028 | ||||||
March 7, 2028 | ||||||
December 8, 2028 | ||||||
December 11, 2028 | ||||||
March 1, 2029 | ||||||
September 11, 2029 | ||||||
February 10, 2030 | ||||||
June 15, 2030 | ||||||
November 30, 2030 | ||||||
December 3, 2031 | ||||||
September 11, 2032 | ||||||
September 11, 2034 | ||||||
February 10, 2035 | ||||||
September 11, 2036 | ||||||
April 1, 2043 | ||||||
May 15, 2044 | ||||||
March 15, 2046 | ||||||
June 15, 2050 | ||||||
Other | ||||||
Total debt | $ | $ | ||||
Less current maturities | ||||||
Total long-term debt | $ | $ | ||||
March 31 | December 31 | |||||
2026 | 2025 | |||||
Unamortized debt issuance costs | $ | $ | ||||
Borrowing capacity on existing facilities | $ | $ | ||||
Fair value of senior unsecured notes | $ | $ | ||||
The fair value of the senior unsecured notes was estimated using
quoted interest rates, maturities and amounts of borrowings
based on quoted active market prices and yields that took into
account the underlying terms of the debt instruments.
Substantially all of our debt is classified within Level 2 of the fair
value hierarchy.
Interest expense on outstanding debt and credit facilities,
including required fees incurred totaled $142 and $132 for the
NOTE 9 - INCOME TAXES
Our effective tax rates were 12.4 % and 14.4 % in the three
months 2026 and 2025. The effective tax rates for the three
months 2026 and 2025 reflect the continued lower effective
income tax rates as a result of our European operations and
Income tax authorities in various jurisdictions globally conduct
routine audits of our income tax returns to determine if they agree
with our interpretations of income tax regulations. Any audit
assessment, draft audit assessment, or final audit report received
is reviewed for new information and evaluated for proper financial
statement treatment.
NOTE 10 - SEGMENT INFORMATION
We segregate our operations into two reportable business
segments: (i) MedSurg and Neurotechnology and (ii)
Orthopaedics which aligns to our internal reporting structure and
how our Chief Operating Decision Maker (CODM) assesses the
performance and allocates resources. The CODM is the Chief
Executive Officer. The CODM makes decisions on resource
allocation, assesses performance of the business, and monitors
budget versus actual results using segment operating income.
Information about total assets by segment is not disclosed
because such information is not regularly provided to, or used by,
our CODM.
Segment Results | |||
Three Months | |||
2026 | 2025 | ||
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Net sales | $ | $ | |
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Cost of sales | $ | $ | |
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Segment research, development and engineering expenses | $ | $ | |
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Segment selling, general and administrative expenses | $ | $ | |
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Segment depreciation and amortization | $ | $ | |
Corporate and Other | $ | $ | |
Amortization of intangible assets | |||
Total depreciation and amortization | $ | $ | |
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Segment operating income | $ | $ | |
Items not allocated to segments: | |||
Corporate and Other | $( | $( | |
Inventory stepped up to fair value | ( | ||
Acquisition and integration-related charges | ( | ( | |
Amortization of intangible assets | ( | ( | |
Structural optimization and other special charges | ( | ( | |
Goodwill and other impairments | ( | ||
Medical device regulation | ( | ( | |
Recall-related matters | ( | ( | |
Regulatory and legal matters | ( | ||
Consolidated operating income | $ | $ | |
Segment Capital Spending | Three Months | ||
2026 | 2025 | ||
Purchases of property, plant and equipment: | |||
MedSurg and Neurotechnology | $ | $ | |
Orthopaedics | |||
Total segment purchases of property, plant and equipment | $ | $ | |
Corporate and Other | |||
Total purchases of property, plant and equipment | $ | $ | |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 10 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
NOTE 11 - SALE OF SPINAL IMPLANTS BUSINESS
In April 2025 we completed the sale of the disposal group to the
Viscogliosi Brothers, LLC. The fair value of the consideration
received of $245 was measured using a discounted cash flow
analysis based upon the selling price and unobservable inputs,
such as market conditions and the rate used to discount the
estimated future cash flows to their present value based on
factors including the disposal group’s cost of equity and market
yield rates, which are Level 3 inputs.
Deferred consideration receivable was $269 at March 31, 2026.
Other amounts due from Viscogliosi Brothers, LLC are not
material.
Amounts due from purchasers in connection with divestitures,
including deferred consideration, are assessed periodically for
collectability. This assessment involves significant judgment and
considers, among other factors, the purchaser’s financial
condition, operating performance and ability to meet its
contractual obligations. The carrying value of such amounts may
be adjusted if, based on the facts and circumstances available,
collection is no longer considered probable.
NOTE 12 - GOODWILL AND OTHER INTANGIBLE ASSETS
We test goodwill annually for impairment at October 31 or
whenever events or circumstances indicate that goodwill may be
impaired. When it is unlikely that goodwill of a reporting unit is
impaired, we perform a qualitative assessment that may be
periodically supplemented with a corroborative quantitative
analysis.
In the first quarter 2026 we changed our organizational structure.
Our new Ortho Tech business combines the orthopaedic
instruments portfolio from our Instruments business with the
Mako and enabling technologies portfolios from our Other
Orthopaedics business.
Following this reorganization we will continue to have two
reportable segments, MedSurg and Neurotechnology and
Orthopaedics. The reorganization impacts the composition of the
Instruments and Joint Replacement reporting units and results in
a new reporting unit representing the Ortho Tech business.
We assessed goodwill for impairment for the impacted reporting
units immediately before and after the reorganization and
concluded that there was no impairment of goodwill for any of the
reporting units impacted by the reorganization.
In connection with this reorganization we reallocated the goodwill
associated with the impacted businesses using the relative fair
value approach, resulting in a reallocation of $518
from the MedSurg and Neurotechnology segment to the
Orthopaedics segment.
Changes in the Net Carrying Value of Goodwill by Segment | |||
MedSurg and Neurotechnology | Orthopaedics | Total | |
December 31, 2025 | $ | $ | $ |
Reallocation of goodwill | ( | ||
Additions and adjustments | ( | ( | |
Foreign exchange and other | ( | ( | ( |
March 31, 2026 | $ | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ABOUT STRYKER
Stryker Corporation ("we" or the "Company") is a global leader in
medical technologies and, together with our customers, we are
driven to make healthcare better. We offer innovative products
and services in MedSurg, Neurotechnology, and Orthopaedics
that help improve patient and healthcare outcomes. Alongside
our customers around the world, we impact more than 150 million
patients annually. Our goal is to achieve sales growth at the high-
end of the medical technology (MedTech) industry and maintain
our long-term capital allocation strategy that prioritizes: (1)
Acquisitions, (2) Dividends and (3) Share repurchases.
In the first quarter 2026 we announced a change in our
organizational structure. Our new Ortho Tech business combines
the orthopaedic instruments portfolio from our Instruments
business with our Mako and enabling technologies portfolio from
our Other Orthopaedics business. By bringing Mako, power tools,
cutting accessories, enabling technologies and the teams behind
these products together under one business, we are simplifying
the customer experience and striving to increase our speed to
market through focused innovation.
Following this reorganization we will continue to have two
business segments - (i) MedSurg and Neurotechnology and (ii)
Orthopaedics, each of which comprise a reportable segment. All
historical financial segment information has been recast to
conform to this new presentation.
MedSurg and Neurotechnology products include surgical
equipment, patient and caregiver safety technologies, and a
comprehensive line of products for traditional brain and open
skull-based surgical procedures orthobiologic and biosurgery
products, including synthetic bone grafts and vertebral
augmentation (Instruments), endoscopic and communications
systems (Endoscopy), patient handling, emergency medical
equipment, intensive care disposable products, clinical
communication and artificial intelligence-assisted virtual care
platform technology (Medical), and minimally invasive products
for the treatment of acute ischemic and hemorrhagic stroke and
venous thromboembolism (Vascular). Orthopaedics products
include implants and surgical equipment such as navigation
systems and robotics used in total joint replacements, such as
hip, knee and shoulder, ankle and trauma and extremities
surgeries. We bring patients and physicians advanced implant
designs and specialized instrumentation that make orthopaedic
surgery and recovery simpler, faster and more effective. We
support surgeons with technologies, products and services they
need to support each patient’s clinical challenge.
Macroeconomic Environment
In 2025 the United States government announced new tariffs on
goods imported into the United States from dozens of countries,
including China and the European Union member states. In 2026
the United States Supreme Court issued a ruling in Learning
Resources, Inc. v. Trump striking down certain tariffs previously
imposed under the International Emergency Economic Powers
Act. While this ruling may lead to potential refunds for tariffs paid
during 2025, and the United States government subsequently
announced a process for seeking such refunds, the availability,
timing, and amount of such refunds remain uncertain and subject
to further legal and administrative developments. Following this
decision the United States administration announced the
invocation of alternative authorities, including Section 122 of the
Trade Act of 1974, to impose new tariffs on imports. These further
actions may increase costs and impact our operational results.
We continue to monitor and evaluate the situation. The overall
macroeconomic and geopolitical environment, including tariffs or
changes in trade policies, slower economic growth or recession,
market volatility and inflation, and uncertainty regarding all of the
foregoing, pose risks that could impact our business and results
of operations. For more information about these risks, see Item
1A. "Risk Factors" in our Annual Report on Form 10-K for 2025.
Overview of the Three Months
In the three months 2026 we achieved sales growth of 2.6% from
2025. Excluding the impact of acquisitions and divestitures, sales
grew 1.0% in constant currency. We reported operating income
margin of 15.5%, net earnings of $745 and net earnings per
diluted share of $1.93. Excluding the impact of certain items,
adjusted operating income margin(1) contracted by 180 basis
points to 21.1%, with adjusted net earnings(1) of $1,004 and
adjusted net earnings per diluted share(1) of $2.60, a decrease of
8.5% from 2025.
Recent Developments
In the first quarter 2026 we identified a cybersecurity incident
which caused disruptions to our business operations. We worked
diligently, together with third-party experts and law enforcement,
to contain and neutralize the impact of the incident and restore
operations. Our investigation of the incident remains ongoing. For
more information about risks relating to the impact of the
cybersecurity incident to our business, financial condition and
results of operations, see Item 1A. “Risk Factors” in Part II of this
Form 10-Q.
(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-
GAAP financial measures used in this report and a reconciliation to the
most directly comparable GAAP financial measure.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 12 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
CONSOLIDATED RESULTS OF OPERATIONS | |||||||||
Three Months | |||||||||
Percent Net Sales | Percentage | ||||||||
2026 | 2025 | 2026 | 2025 | Change | |||||
Net sales | $6,020 | $5,866 | 100.0% | 100.0% | 2.6% | ||||
Gross profit | 3,810 | 3,744 | 63.3 | 63.8 | 1.8 | ||||
Research, development and engineering expenses | 413 | 405 | 6.9 | 6.9 | 2.0 | ||||
Selling, general and administrative expenses | 2,281 | 2,300 | 37.9 | 39.2 | (0.8) | ||||
Amortization of intangible assets | 180 | 167 | 3.0 | 2.8 | 7.8 | ||||
Goodwill and other impairments | — | 35 | — | 0.6 | nm | ||||
Interest expense | (148) | (137) | (2.5) | (2.3) | 8.0 | ||||
Other income | 62 | 64 | 1.0 | 1.1 | (3.1) | ||||
Income taxes | 105 | 110 | nm | nm | (4.5) | ||||
Net earnings | $745 | $654 | 12.4% | 11.1% | 13.9% | ||||
Net earnings per diluted share | $1.93 | $1.69 | 14.2% | ||||||
Adjusted net earnings per diluted share(1) | $2.60 | $2.84 | (8.5)% | ||||||
nm - not meaningful
Geographic and Segment Net Sales | ||||||
Three Months | ||||||
Percentage Change | ||||||
2026 | 2025 | As Reported | Constant Currency | |||
Geographic: | ||||||
United States | $4,476 | $4,440 | 0.8% | 0.8% | ||
International | 1,544 | 1,426 | 8.3 | 1.5 | ||
Total | $6,020 | $5,866 | 2.6% | 1.0% | ||
Segment: | ||||||
MedSurg and Neurotechnology | $3,207 | $3,056 | 5.0% | 3.6% | ||
Orthopaedics | 2,813 | 2,810 | 0.1 | (1.8) | ||
Total | $6,020 | $5,866 | 2.6% | 1.0% | ||
Supplemental Net Sales Growth Information | |||||||||||
Three Months | |||||||||||
Percentage Change | |||||||||||
United States | International | ||||||||||
2026 | 2025 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | |||||
MedSurg and Neurotechnology: | |||||||||||
Instruments | $920 | $838 | 9.9% | 8.7% | 9.1% | 14.0% | 7.0% | ||||
Endoscopy | 868 | 867 | 0.1 | (1.0) | (1.2) | 6.0 | — | ||||
Medical | 902 | 945 | (4.6) | (5.6) | (6.9) | 8.3 | 1.1 | ||||
Vascular | 517 | 406 | 27.5 | 24.0 | 37.9 | 17.0 | 10.5 | ||||
$3,207 | $3,056 | 5.0% | 3.6% | 3.2% | 11.7% | 5.1% | |||||
Orthopaedics: | |||||||||||
Knees | $670 | $639 | 4.7% | 2.8% | 1.4% | 13.5% | 6.1% | ||||
Hips | 460 | 443 | 3.7 | 1.2 | 2.3 | 6.0 | (0.3) | ||||
Trauma and Extremities | 1,035 | 945 | 9.5 | 7.4 | 7.6 | 15.3 | 6.8 | ||||
Ortho Tech | 646 | 617 | 4.8 | 3.2 | 2.0 | 12.9 | 6.5 | ||||
$2,811 | $2,644 | 6.3% | 4.3% | 4.0% | 12.2% | 4.9% | |||||
Spinal Implants | 2 | 166 | (98.9) | (99.0) | (100.0) | (96.2) | (96.6) | ||||
$2,813 | $2,810 | 0.1% | (1.8)% | (2.0)% | 5.5% | (1.3)% | |||||
Total | $6,020 | $5,866 | 2.6% | 1.0% | 0.8% | 8.3% | 1.5% | ||||
Note: In the first quarter 2026 we announced a change in our organizational structure. Our new Ortho Tech business combines the
orthopaedic instruments portfolio (Orthopaedic Instruments) from Instruments with Other Orthopaedics. In addition, Neuro Cranial and
the spine enabling technologies portfolio (Enabling Technologies) from Other Orthopaedics was combined with the remaining
Instruments business to align with our internal reporting structure. Ortho Tech includes sales related to Orthopaedic Instruments of $489
and $484 and Other Orthopaedics of $157 and $133. Instruments includes sales related to Neuro Cranial of $606 and $563 and
Enabling Technologies of $26 and $29 for the three months 2026 and 2025. We have reflected these changes in all historical periods
presented.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 13 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Consolidated Net Sales
Consolidated net sales increased 2.6% in the three months 2026
as reported and 1.0% in constant currency, as foreign currency
exchange rates positively impacted net sales by 1.6%. Excluding
the 1.4% impact of acquisitions and divestitures, net sales in
constant currency increased by 2.1% from increased unit volume
and 0.3% due to higher prices. The unit volume increase was due
to higher product shipments across most MedSurg and
Neurotechnology businesses and all Orthopaedics businesses.
MedSurg and Neurotechnology Net Sales
MedSurg and Neurotechnology net sales increased 5.0% in the
three months 2026 as reported and 3.6% in constant currency, as
foreign currency exchange rates positively impacted net sales by
1.4%. Excluding the 2.7% impact of acquisitions and divestitures,
net sales in constant currency increased by 0.3% from increased
unit volume and 0.6% from higher prices. The unit volume
increase was due to higher shipments across the Instruments
and Vascular businesses.
Orthopaedics Net Sales
Orthopaedics net sales increased 0.1% in the three months 2026
as reported but decreased 1.8% in constant currency, as foreign
currency exchange rates positively impacted net sales by 1.9%.
Excluding the 5.9% impact of acquisitions and divestitures, net
sales in constant currency increased 4.1% from increased unit
volume. The unit volume increase was due to higher shipments
across all Orthopaedics businesses.
Gross Profit
Gross profit was $3,810 and $3,744 in the three months 2026
and 2025. The key components of the change were:
Gross Profit Percent Net Sales | |
Three Months 2025 | 63.8% |
Sales pricing | 10 bps |
Volume and mix | 10 bps |
Manufacturing and supply chain costs | (200) bps |
Structural optimization and other special charges | 70 bps |
Inventory stepped up to fair value | 60 bps |
Three Months 2026 | 63.3% |
Gross profit as a percentage of net sales in the three months
2026 decreased to 63.3% from 63.8% in 2025 driven by higher
manufacturing and supply chain costs primarily due to idle
production time related to the cybersecurity incident.
Research, Development and Engineering Expenses
Research, development and engineering expenses increased $8
or 2.0% in the three months 2026. Expenses as a percentage of
net sales of 6.9% in the three months 2026 remained flat with
2025.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $19 or
0.8% in the three months 2026. As a percentage of net sales,
expenses decreased to 37.9% from 39.2% in 2025, primarily due
to continued spend discipline and lower acquisition and
integration-related charges. Expenses in the three months 2025
included a charge of $139 for share-based awards for Inari
employees that vested upon our acquisition.
Amortization of Intangible Assets
Amortization of intangible assets was $180 and $167 in the three
months 2026 and 2025. Refer to Note 7 to our Consolidated
Financial Statements for further information.
Goodwill and other impairments
Goodwill and other impairments was $35 in the three months
2025.
Operating Income
Operating income was $936 and $837 in the three months 2026
and 2025. Operating income as a percentage of net sales in the
three months 2026 increased to 15.5% from 14.3% in 2025.
Refer to the discussion above for the primary drivers of the
change.
MedSurg and Neurotechnology operating income as a
percentage of net sales decreased to 21.8% in the three months
2026 from 24.8% in 2025. Orthopaedics operating income as a
percentage of net sales decreased to 30.1% in the three months
2026 from 30.4% in 2025. The key components of the change
were:
Operating Income Percent Net Sales | ||
MedSurg and Neurotechnology | Orthopaedics | |
Three Months 2025 | 24.8% | 30.4% |
Sales pricing | 20 bps | 0 bps |
Volume | 20 bps | (10) bps |
Manufacturing and supply chain costs | (220) bps | (190) bps |
Research, development and engineering expenses | (40) bps | 40 bps |
Selling, general and administrative expenses | (80) bps | 130 bps |
Three Months 2026 | 21.8% | 30.1% |
The decrease in MedSurg and Neurotechnology operating
income as a percentage of net sales for the three months was
primarily driven by higher manufacturing and supply chain costs
due to idle production time related to the cybersecurity incident,
higher selling, general and administrative expenses, and higher
research, development and engineering expenses partially offset
by higher unit volumes and prices.
The decrease in Orthopaedics operating income as a percentage
of net sales for the three months was primarily driven by higher
manufacturing and supply chain costs due to idle production time
related to the cybersecurity incident and lower unit volumes
partially offset by lower selling, general and administrative
expenses and research, development and engineering expenses.
Interest Expense
Interest expense was $148 and $137 in the three months 2026
and 2025. The increase in interest expense in the three months
2026 from 2025 was primarily due to 2025 debt issuances.
Other Income
Other income was $62 and $64 in the three months 2026 and
2025. The decrease in other income in the three months 2026
from 2025 was primarily due to lower interest income in 2026.
Income Taxes
Our effective tax rates were 12.4% and 14.4% in the three
months 2026 and 2025. The effective tax rates for the three
months 2026 and 2025 reflect the continued lower effective
income tax rates as a result of our European operations and
certain discrete tax items.
Our future results of operations could be affected by changes in
the effective tax rate as a result of changes in tax laws,
regulations and judicial rulings. We are continuing to evaluate the
impact of tax reform in the countries in which we operate as new
guidance is published and new regulations are adopted.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Net Earnings
Net earnings increased to $745 or $1.93 per diluted share in the
three months 2026 from $654 or $1.69 per diluted share in 2025.
Refer to the discussion above for the primary drivers of the
change.
Non-GAAP Financial Measures
We supplement the reporting of our financial information
determined under accounting principles generally accepted in the
United States (GAAP) with certain non-GAAP financial measures,
including percentage sales growth in constant currency;
percentage organic sales growth; adjusted gross profit; adjusted
selling, general and administrative expenses; adjusted research,
development and engineering expenses; adjusted operating
income; adjusted other income (expense), net; adjusted income
taxes; adjusted effective income tax rate; adjusted net earnings;
and adjusted net earnings per diluted share (Diluted EPS). We
believe these non-GAAP financial measures provide meaningful
information to assist investors and shareholders in understanding
our financial results and assessing our prospects for future
performance. Management believes percentage sales growth in
constant currency and the other adjusted measures described
above are important indicators of our operations because they
exclude items that may not be indicative of or are unrelated to our
core operating results and provide a baseline for analyzing trends
in our underlying businesses. Management uses these non-
GAAP financial measures for reviewing the operating results of
reportable business segments and analyzing potential future
business trends in connection with our budget process and bases
certain management incentive compensation on these non-GAAP
financial measures. To measure percentage sales growth in
constant currency, we remove the impact of changes in foreign
currency exchange rates that affect the comparability and trend
of sales. Percentage sales growth in constant currency is
calculated by translating current and prior year results at the
same foreign currency exchange rate. To measure percentage
organic sales growth, we remove the impact of changes in
foreign currency exchange rates, acquisitions and divestitures,
which affect the comparability and trend of sales. Percentage
organic sales growth is calculated by translating current year and
prior year results at the same foreign currency exchange rates
excluding the impact of acquisitions and divestitures. To measure
earnings performance on a consistent and comparable basis, we
exclude certain items that affect the comparability of operating
results and the trend of earnings. The income tax effect of each
adjustment was determined based on the tax effect of the
jurisdiction in which the related pre-tax adjustment was recorded.
These adjustments are irregular in timing and may not be
indicative of our past and future performance. The following are
examples of the types of adjustments that may be included in a
period:
1.Acquisition and integration-related costs. Costs related to
integrating recently acquired businesses (e.g., costs
associated with the termination of sales relationships,
employee retention and workforce reductions, manufacturing
integration costs and other integration-related activities),
changes in the fair value of contingent consideration,
amortization of inventory stepped-up to fair value, specific
costs (e.g., deal costs and costs associated with legal entity
rationalization) related to the consummation of the
acquisition process and legal entity rationalization and
acquisition-related tax items.
2.Amortization of purchased intangible assets. Periodic
amortization expense related to purchased intangible assets.
3.Structural optimization and other special charges. Costs
associated with employee retention and workforce
reductions, the closure or transfer of manufacturing and
other facilities (e.g., site closure costs, contract termination
costs and redundant employee costs during the work
transfers), product line exits (primarily inventory, long-lived
asset and specifically-identified intangible asset write-offs),
certain long-lived and intangible asset write-offs and
impairments and other charges.
4.Medical device regulations. Costs specific to updating our
quality system, product labeling, asset write-offs and product
remanufacturing to comply with the new medical device
reporting regulations and other requirements of the
European Union.
5.Recall-related matters. Changes in our best estimate of the
probable loss, or the minimum of the range of probable
losses when a best estimate within a range is not known, to
resolve the Rejuvenate, LFIT V40, Wright legacy hip
products and other product recalls.
6.Regulatory and legal matters. Changes in our best estimate
of the probable loss, or the minimum of the range of
probable losses when a best estimate within a range is not
known, to resolve certain regulatory or other legal matters
and the amount of favorable awards from settlements.
7.Tax matters. Impact of accounting for certain significant and
discrete tax items.
Because non-GAAP financial measures are not standardized, it
may not be possible to compare these financial measures with
other companies' non-GAAP financial measures having the same
or similar names. These adjusted financial measures should not
be considered in isolation or as a substitute for reported sales
growth, gross profit, selling, general and administrative expenses,
research, development and engineering expenses, operating
income, other income (expense), net, income taxes, effective
income tax rate, net earnings and net earnings per diluted share,
the most directly comparable GAAP financial measures. These
non-GAAP financial measures are an additional way of viewing
aspects of our operations when viewed with our GAAP results
and the reconciliations to corresponding GAAP financial
measures at the end of the discussion of Consolidated Results of
Operations below. We strongly encourage investors and
shareholders to review our financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure.
The weighted-average diluted shares outstanding used in the
calculation of adjusted net earnings per diluted share are the
same as those used in the calculation of reported net earnings
per diluted share for the respective period.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||
Three Months 2026 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS |
Reported | $3,810 | $2,281 | $413 | $936 | $(86) | $105 | $745 | 12.4% | $1.93 |
Reported percent net sales | 63.3% | 37.9% | 6.9% | 15.5% | (1.4)% | nm | 12.4% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — |
Other acquisition and integration-related (a) | 2 | (13) | (4) | 19 | — | 4 | 15 | 0.1 | 0.04 |
Amortization of purchased intangible assets | — | — | — | 180 | — | 30 | 150 | 0.6 | 0.38 |
Structural optimization and other special charges (b) | 14 | (104) | — | 118 | (11) | 25 | 82 | 1.1 | 0.21 |
Goodwill and other impairments (c) | — | — | — | — | — | — | — | — | — |
Medical device regulations (d) | — | — | (5) | 5 | — | 1 | 4 | — | 0.01 |
Recall-related matters (e) | 1 | (9) | — | 10 | — | 2 | 8 | 0.1 | 0.02 |
Regulatory and legal matters (f) | — | (3) | — | 3 | — | 1 | 2 | — | 0.01 |
Tax matters (g) | — | — | — | — | — | 2 | (2) | 0.2 | — |
Adjusted | $3,827 | $2,152 | $404 | $1,271 | $(97) | $170 | $1,004 | 14.5% | $2.60 |
Adjusted percent net sales | 63.6% | 35.8% | 6.7% | 21.1% | (1.6)% | nm | 16.7% | ||
Three Months 2025 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS |
Reported | $3,744 | $2,300 | $405 | $837 | $(73) | $110 | $654 | 14.4% | $1.69 |
Reported percent net sales | 63.8% | 39.2% | 6.9% | 14.3% | (1.2)% | nm | 11.1% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | 34 | — | — | 34 | — | 8 | 26 | 0.5 | 0.07 |
Other acquisition and integration-related (a) | 13 | (171) | (1) | 185 | — | 6 | 179 | (2.5) | 0.47 |
Amortization of purchased intangible assets | — | — | — | 167 | — | 34 | 133 | 1.4 | 0.35 |
Structural optimization and other special charges (b) | 22 | (19) | — | 41 | — | 14 | 27 | 1.0 | 0.07 |
Goodwill and other impairments (c) | — | — | — | 35 | — | 9 | 26 | 0.7 | 0.06 |
Medical device regulations (d) | 1 | — | (11) | 12 | — | 3 | 9 | 0.1 | 0.02 |
Recall-related matters (e) | 31 | (2) | — | 33 | — | 8 | 25 | 0.5 | 0.06 |
Regulatory and legal matters (f) | — | — | — | — | — | 1 | (1) | — | — |
Tax matters (g) | — | — | — | — | — | (19) | 19 | (2.4) | 0.05 |
Adjusted | $3,845 | $2,108 | $393 | $1,344 | $(73) | $174 | $1,097 | 13.7% | $2.84 |
Adjusted percent net sales | 65.5% | 35.9% | 6.7% | 22.9% | (1.2)% | nm | 18.7% |
nm - not meaningful
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
Three Months | |||
2026 | 2025 | ||
Employee retention and workforce reductions | $3 | $16 | |
Changes in the fair value of contingent consideration | 3 | (2) | |
Manufacturing integration costs | 5 | 4 | |
Stock compensation payments upon a change in control | — | 139 | |
Other integration-related activities | 8 | 28 | |
Adjustments to Operating Income | $19 | $185 | |
Other income taxes related to acquisition and integration-related costs | 4 | 6 | |
Adjustments to Income Taxes | $4 | $6 | |
Adjustments to Net Earnings | $15 | $179 | |
(b) Structural optimization and other special charges represent the costs associated with:
Three Months | |||
2026 | 2025 | ||
Employee retention and workforce reductions | $7 | $32 | |
Closure/transfer of manufacturing and other facilities | 5 | 5 | |
Product line exits | 2 | 3 | |
Termination of sales relationships in certain countries | 81 | — | |
Other charges | 23 | 1 | |
Adjustments to Operating Income | $118 | $41 | |
Adjustments to Other Income (Expense), Net | $(11) | $— | |
Adjustments to Income Taxes | $25 | $14 | |
Adjustments to Net Earnings | $82 | $27 | |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 16 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
(c) Goodwill and other impairments represent the costs associated with:
Three Months | |||
2026 | 2025 | ||
Certain long-lived and intangible asset write-offs and impairments | $— | $34 | |
Product line exits (e.g., long-lived asset and specifically-identified intangible asset write-offs) | — | 1 | |
Adjustments to Operating Income | $— | $35 | |
Adjustments to Income Taxes | $— | $9 | |
Adjustments to Net Earnings | $— | $26 | |
(d) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device
reporting regulations and other requirements of the new medical device regulations in the European Union.
(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to
resolve certain recall-related matters.
(f) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to
resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(g) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
Three Months | |||
2026 | 2025 | ||
Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $(20) | $(47) | |
Other tax matters | 22 | 28 | |
Adjustments to Income Taxes | $2 | $(19) | |
Adjustments to Other Income (Expense), Net | $— | $— | |
Adjustments to Net Earnings | $(2) | $19 | |
FINANCIAL CONDITION AND LIQUIDITY
Three Months | |||
Net cash provided by (used in): | 2026 | 2025 | |
Operating activities | $581 | $250 | |
Investing activities | (185) | (4,136) | |
Financing activities | (1,510) | 2,534 | |
Effect of exchange rate changes | (19) | 20 | |
Change in cash and cash equivalents | $(1,133) | $(1,332) | |
Operating Activities
Cash provided by operating activities was $581 and $250 in the
three months 2026 and 2025. The increase was primarily due to
changes in working capital accounts.
Investing Activities
Cash used in investing activities was $185 and $4,136 in the
three months 2026 and 2025. The three months 2026 included
cash paid for purchases of property, plant and equipment. The
three months 2025 included cash paid to acquire Inari and
purchases of property, plant and equipment partially offset by
proceeds from the sale of short-term investments. Refer to Note
7 to our Consolidated Financial Statements for further information
on acquisitions.
Financing Activities
Cash used in financing activities was $1,510 in the three months
2026 and cash provided by financing activities was $2,534 in the
three months 2025. In 2026, cash used was primarily driven by
repayments of $1,000 to pay off maturing unsecured notes as
described in Note 8 to our Consolidated Financial Statements
and dividend payments. Cash provided by 2025 was primarily
driven by proceeds from the issuance of various senior
unsecured notes which was partially offset by dividend payments.
Liquidity
Cash, cash equivalents, short-term investments and marketable
securities were $2,965 and $4,100 on March 31, 2026 and
December 31, 2025. Current assets exceeded current liabilities
by $7,023 and $6,961 on March 31, 2026 and December 31,
2025. We anticipate being able to support our short-term liquidity
and operating needs from a variety of sources including cash
from operations, commercial paper and existing credit lines.
We have raised funds in the capital markets and have accessed
the credit markets in the past and may continue to do so from
time-to-time. We continue to have strong investment-grade short-
term and long-term debt ratings that we believe should enable us
to refinance our debt as needed.
Our cash, cash equivalents, short-term investments and
marketable securities held in locations outside the United States
was 32% on March 31, 2026 compared to 20% on December 31,
2025.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There were no changes to our critical accounting policies and
estimates from those disclosed in our Annual Report on Form 10-
K for 2025, except as follows:
Following the reorganization discussed in Note 12 we will
continue to have two reportable segments, MedSurg and
Neurotechnology and Orthopaedics. The reorganization impacts
the composition of the Instruments and Joint Replacement
reporting units and results in a new reporting unit representing
the Ortho Tech business.
We assessed goodwill for impairment for the impacted reporting
units immediately before and after the reorganization and
concluded that there was no impairment of goodwill for any of the
reporting units impacted by the reorganization.
In connection with this reorganization we reallocated the goodwill
associated with the impacted businesses using the relative fair
value approach, resulting in a reallocation of $518 of goodwill
from the MedSurg and Neurotechnology segment to the
Orthopaedics segment.
Historical impairment assessments for our other reporting units
have indicated that their implied fair values exceed their
respective carrying amounts. We have not identified any factors
in 2026 that would lead us to believe that those reporting units
are at risk of a goodwill impairment.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing
arrangements, including variable interest entities, of a magnitude
that we believe could have a material impact on our financial
condition or liquidity.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 17 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
OTHER MATTERS
Legal and Regulatory Matters
We are involved in various ongoing proceedings, legal actions
and claims arising in the normal course of our business, including
proceedings related to product, labor, tax, intellectual property
and other matters. Refer to Note 6 to our Consolidated Financial
Statements for further information.
FORWARD-LOOKING STATEMENTS
This report contains statements that are not historical facts and
are considered "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements are based on current projections about operations,
industry conditions, financial condition and liquidity. Words that
identify forward-looking statements include, without limitation,
words such as "may," "could," "will," "should," "possible," "plan,"
"predict," "forecast," "potential," "anticipate," "estimate," "expect,"
"project," "intend," "believe," "may impact," "on track," "goal,"
"strategy" and words and terms of similar substance used in
connection with any discussion of future operating or financial
performance, an acquisition or our businesses. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. Those
statements are not guarantees and are subject to risks,
uncertainties and assumptions that are difficult to predict,
including uncertainties related to the impact of the cybersecurity
incident first reported on March 11, 2026 on our operations and
financial results. Therefore, actual results could differ materially
and adversely from these forward-looking statements, historical
experience or our present expectations. Some important factors
that could cause our actual results to differ from our expectations
in any forward-looking statements include the risks discussed in
Item 1A. "Risk Factors" of our Annual Report on Form 10-K for
2025. This Form 10-Q should be read in conjunction with our
Consolidated Financial Statements and accompanying notes to
our Consolidated Financial Statements in our Annual Report on
Form 10-K for 2025. While we believe that the assumptions
underlying such forward-looking statements are reasonable,
there can be no assurance that future events or developments
will not cause such statements to be inaccurate. All forward-
looking statements contained in this report are qualified in their
entirety by this cautionary statement. We expressly disclaim any
intention or obligation to publicly update or revise any forward-
looking statement to reflect any change in our expectations or in
events, conditions or circumstances on which those expectations
may be based, or that affect the likelihood that actual results will
differ from those contained in the forward-looking statements.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We consider our greatest potential area of market risk exposure
to be exchange rate risk on our operating results. Quantitative
and qualitative disclosures about exchange rate risk are included
in Item 7A "Quantitative and Qualitative Disclosures About Market
Risk" of our Annual Report on Form 10-K for 2025. There were
no material changes from the information provided therein.
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Chief Executive
Officer and Chief Financial Officer (the Certifying Officers),
evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) or 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as
amended) on March 31, 2026. Based on that evaluation, the
Certifying Officers concluded the Company's disclosure controls
and procedures were effective as of March 31, 2026.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial
reporting during the three months 2026 that materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.
PART II – OTHER INFORMATION
ITEM 1A. | RISK FACTORS |
We are not aware of any material changes to the risk factors
included in Item 1A. "Risk Factors" in our Annual Report on Form
10-K for 2025, except for updates to the following risk factors:
BUSINESS AND OPERATIONAL RISKS
We have experienced, and in the future we, our business
partners or our third-party vendors could experience a
material failure or breach of a key information technology
system, network, process or site: We rely extensively on
information technology (IT) systems to conduct business. In
addition, we rely on networks and services, including internet
sites, cloud and software-as-a-service solutions, data hosting and
processing facilities and tools and other hardware, software
(including open-source software) and technical applications and
platforms, some of which are managed, hosted, provided and/or
used by third parties or their vendors, to assist in conducting our
business. Furthermore, numerous and evolving cybersecurity
threats have posed, and will continue to pose, risks to the
security of our IT systems, networks and product offerings, as
well as the confidentiality, availability and integrity of our data.
Emerging technologies such as generative AI may be used by
malicious actors to create more targeted phishing narratives,
spread disinformation about us or our products or otherwise
strengthen social engineering capabilities. An increasing risk of
civil unrest, political tensions, wars, or other military conflicts or
actions, such as the United States’ ongoing combat operations in
Iran, can also impact the cybersecurity threat risk landscape.
Some of our products, services, and IT systems contain or use
open-source software which poses particular risks, including
potential security vulnerabilities, licensing compliance issues and
quality issues. We, our customers and third-party hosting
services have experienced, and expect to continue to experience,
security breaches of, unauthorized access to, and disruptions of,
products or systems. For example, on March 11, 2026, we
identified and reported a cybersecurity incident affecting certain
IT systems that resulted in a disruption to our corporate network
environment and caused disruption to our business operations.
As disclosed in our Current Report on Form 8-K/A, dated April 9,
2026, filed under Item 1.05, we subsequently determined that this
incident had a material impact on our operations, with resulting
impact to our financial results for the first quarter of 2026. While
we are fully operational across our global manufacturing network
and our commercial, ordering and distribution systems have been
restored, our investigation of the incident remains ongoing and
we may experience further adverse impacts, including financially,
Dollar amounts are in millions except per share amounts or as otherwise specified. | 18 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
reputationally or otherwise. In addition, any future breaches,
unauthorized access or disruptions could have a material
adverse effect on our business, financial condition and results of
operations, including through business interruption, loss of
revenue, regulatory fines, litigation costs, reputational harm and
increased cybersecurity expenditures. Although we have made
investments and expect to continue to make investments seeking
to address these threats, including monitoring of networks and
systems, use of AI, hiring of experts, employee training, security
policies for employees and third-party providers and designing,
developing and maintaining processes and procedures to come
into compliance with regulatory and legal enactments such as
Section 524B of the Federal Food, Drug, and Cosmetic Act in the
United States, the techniques used in these attacks change
frequently and may be difficult to detect for periods of time and
we may face difficulties in anticipating and implementing
adequate preventative measures.
When cybersecurity or other technology related incidents occur,
we follow our incident response protocols and address them in
accordance with applicable governmental regulations and other
legal requirements. For example, in connection with the March
11, 2026 cybersecurity incident, we activated our incident
response protocols, engaged external cybersecurity experts to
assist in investigation, containment and remediation, notified
applicable regulatory authorities and kept our customers and
vendors informed through a number of communication channels.
Notwithstanding these efforts, our response to these incidents
and our investments to protect our product offerings and
information technology infrastructure and data may not shield us
from significant losses and potential liability nor prevent any
future interruption or breach of our systems. Moreover, given the
increasing complexity and sophistication of the techniques used
by threat actors to obtain unauthorized access or disable or
degrade systems, a cyberattack could occur and persist for an
extended period of time before being detected, and we may not
anticipate these acts or mitigate them adequately or timely, which
may compound damages before the incident is discovered or
remediated. The extent of the March 11, 2026 cyber incident and
any future cyber incident, and the steps that we may need to take
to further investigate any such incident, may not be immediately
clear, and it may take a significant amount of time before such
investigation can be completed and full and reliable information
about the incident is known. Additionally, as threats continue to
evolve and increase, and as the regulatory environment and
customer requirements related to information security, data
collection and use, and privacy become increasingly rigorous, we
may be required to devote significant additional resources to
modify and enhance our security controls and to identify and
remediate any security vulnerabilities, which could adversely
impact our net income. In addition, a significant number of our
employees work remotely, which has exposed us, and may
continue to expose us, to greater risks related to cybersecurity
and cyber-liability.
In responding to a cybersecurity incident or other disruption to
our IT systems, we have been required and in the future may be
required to use manual processes or other alternatives to our
normal systems for a period of time. These workarounds may be
less efficient, may not be sustainable for extended periods, and
may increase the risk of errors, delays or data integrity issues
(including with respect to information collected or processed
during the disruption). For example, during the March 11, 2026
cybersecurity incident, certain of our employees were unable to
access our IT systems. Any such issues could adversely affect
our ability to maintain effective processes and controls, including
processes supporting financial and operational reporting, and
could result in additional costs, remediation efforts, regulatory
scrutiny or litigation.
Hardware and software failures or delays in our key IT systems,
networks, processes or sites have disrupted and could in the
future disrupt our operations, cause the loss of confidential
information or otherwise adversely impact our business. Our
systems, networks, processes and sites may be vulnerable to
damage, disruptions and shutdown from a variety of sources,
including malfunctions in maintenance updates or security
patches, design defects, the age of the technology, network
failures, modernization or other initiatives, human acts and
natural disasters. For example, some of our IT systems contain
legacy third-party software components for which we depend on
a layered security approach to protect against exploitation, which
may not be effective. The March 11, 2026 cybersecurity incident
demonstrates that such damage or disruptions can compromise
the security of our information systems and networks with
material consequences. These issues can also arise as a result
of failures by, or in the software or hardware of, third parties,
including networks or service providers, with whom we do
business and over whom we have limited or no control.
Disruptions or failures of our systems, networks, processes or
sites have had, and could in the future have, a material impact on
our business and operations.
If our IT systems, networks or processes are damaged or cease
to function properly for any reason, the networks, service
providers, hardware or software we rely upon fail to function
properly, or we or one of our third-party providers suffer a loss or
disclosure of our business or stakeholder information due to any
number of causes ranging from catastrophic events or power
outages to improper data handling or security breaches or
unauthorized access, and our business continuity plans do not
effectively address these failures on a timely basis, we may be
exposed to reputational, competitive and business harm as well
as litigation and regulatory action and fines, penalties and
expenses related thereto.
Interruption of manufacturing operations has adversely
affected, and could in the future adversely affect, our
business: We and our suppliers have manufacturing and supply
sites all over the world. However, the manufacturing of certain of
our product lines is concentrated in one or more plants or
geographic regions. We have principal manufacturing and
distribution facilities in the United States in Arizona, California,
Florida, Illinois, Indiana, Michigan, Minnesota, New Jersey,
Puerto Rico, Tennessee, Texas, Utah and Washington, and
outside the United States in China, France, Germany, Ireland,
Mexico, the Netherlands, Poland, Switzerland and Turkey.
Damage to our facilities, to our suppliers’ or service providers’
facilities, or to our central distribution centers as a result of
natural disasters, fires, explosions or otherwise, as well as issues
in our manufacturing arising from a failure to follow specific
internal protocols and procedures, compliance concerns relating
to the quality systems regulation, equipment breakdown or
malfunction, IT system failures or cybersecurity incidents,
environmental hazard incidents or changes to environmental
regulations or other factors, could adversely affect the availability
of our products. For example, the March 11, 2026 cybersecurity
incident, which we determined to be material as disclosed in our
Current Report on Form 8-K/A, dated April 9, 2026, filed under
Item 1.05, affected certain IT systems that resulted in a disruption
to our corporate network environment and caused disruption to
our business operations. While we resumed our manufacturing
operations shortly after the March 11, 2026 incident, in the event
Dollar amounts are in millions except per share amounts or as otherwise specified. | 19 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
of a future interruption in manufacturing, we may be unable to
move quickly to alternate means of producing and distributing
affected products to meet customer demand. In the event of a
significant interruption, we may experience lengthy delays in
resuming production or distribution of affected products due to
the need for regulatory approvals, and we may experience loss of
market share, additional expense and harm to our reputation.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
We issued 12,757 shares of our common stock in the three
months 2026 as performance incentive awards to employees.
These shares are not registered under the Securities Act of 1933
based on the conclusion that the awards would not be events of
sale within the meaning of Section 2(a)(3) of the Act.
In March 2015 we announced that our Board of Directors had
authorized us to purchase up to $2,000 of our common stock.
The manner, timing and amount of repurchases are determined
by management based on an evaluation of market conditions,
stock price, and other factors and are subject to regulatory
considerations. Purchases are made from time-to-time in the
open market, in privately negotiated transactions or otherwise.
In the three months 2026 we did not repurchase any shares of
our common stock under our authorized repurchase program.
The total dollar value of shares of our common stock that could
be acquired under our authorized repurchase program was
$1,033 as of March 31, 2026.
ITEM 5. |
Certain of our officers or directors have made elections to
participate in, and are participating in, our employee stock
purchase plan and 401(k) plan and have made, and may from
time to time make, elections to have shares withheld to cover
withholding taxes due or pay the exercise price of stock options,
restricted stock units and performance stock units, which may
constitute non-Rule 10b5–1 trading arrangements (as defined in
Item 408(c) of Regulation S-K).
affirmative defense conditions of Rule 10b5-1(c) under the
Exchange Act for the sale of shares of Stryker common stock.
The plan terminates on the earlier of the close of trading on April
to be sold under the plan is sold, subject to early termination for
certain specified events set forth in the plan. The maximum
aggregate number of shares to be sold under the plan is 7,849
shares.
affirmative defense conditions of Rule 10b5-1(c) under the
Exchange Act for the sale of shares of Stryker common stock.
The plan terminates on the earlier of the close of trading on April
to be sold under the plan is sold, subject to early termination for
certain specified events set forth in the plan. The maximum
aggregate number of shares to be sold under the plan is 15,952
shares, representing the maximum number of shares underlying
certain previously granted PSUs, excluding any dividend
equivalents, which cannot be determined until the applicable
vesting dates. Under the terms of the plan, only the net shares
remaining after satisfaction of applicable tax withholding
obligations upon vesting of the awards will be sold.
ITEM 6. | EXHIBITS |
31(i)† | Certification of Principal Executive Officer of Stryker Corporation pursuant to Rule 13a-14(a). |
31(ii)† | Certification of Principal Financial Officer of Stryker Corporation pursuant to Rule 13a-14(a). |
32(i)†† | Certification by Principal Executive Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350. |
32(ii)†† | Certification by Principal Financial Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350. |
101.INS | iXBRL Instance Document |
101.SCH | iXBRL Schema Document |
101.CAL | iXBRL Calculation Linkbase Document |
101.DEF | iXBRL Definition Linkbase Document |
101.LAB | iXBRL Label Linkbase Document |
101.PRE | iXBRL Presentation Linkbase Document |
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
* Compensation arrangement | |
† Filed with this Form 10-Q | |
†† Furnished with this Form 10-Q |
20 |
STRYKER CORPORATION | 2026 First Quarter Form 10-Q |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STRYKER CORPORATION | |||
(Registrant) | |||
Date: | May 11, 2026 | /s/ KEVIN A. LOBO | |
Kevin A. Lobo | |||
Chair and Chief Executive Officer | |||
Date: | May 11, 2026 | /s/ PRESTON W. WELLS | |
Preston W. Wells | |||
Vice President, Chief Financial Officer |
FAQ
How did Stryker (SYK) perform financially in Q1 2026?
Stryker reported Q1 2026 net sales of $6.02 billion, up 2.6% from 2025, and net earnings of $745 million. Diluted EPS increased to $1.93, while adjusted diluted EPS was $2.60 as margins softened versus the prior year.
What were Stryker (SYK) segment results for MedSurg and Orthopaedics in Q1 2026?
In Q1 2026, MedSurg and Neurotechnology net sales were $3.21 billion, up 5.0%, while Orthopaedics net sales were $2.81 billion, essentially flat. MedSurg operating margin declined to 21.8% and Orthopaedics margin to 30.1%, partly due to higher manufacturing costs.
How did the March 2026 cybersecurity incident impact Stryker (SYK)?
Stryker disclosed a March 11, 2026 cybersecurity incident that disrupted its corporate network and operations. The company cites idle production time from this event as a driver of higher manufacturing and supply chain costs and lower margins, with the investigation still ongoing.
What is Stryker’s (SYK) earnings and margin trend on an adjusted basis?
Adjusted operating margin in Q1 2026 was 21.1%, down 180 basis points, and adjusted diluted EPS was $2.60, an 8.5% decline from 2025. Adjustments mainly remove acquisition, restructuring, recall-related and regulatory charges to show underlying performance.
What were Stryker’s (SYK) cash flow and debt levels in Q1 2026?
Stryker generated $581 million of operating cash flow in Q1 2026 and used $185 million for investing activities. Total debt was $14.72 billion, including long-term senior unsecured notes, and the company repaid $1.0 billion of notes maturing March 2026.
What acquisitions did Stryker (SYK) highlight around Q1 2026?
Stryker referenced its February 2025 acquisition of Inari for $4.81 billion and noted the May 7, 2026 acquisition of AVS for approximately $435 million in cash plus up to $400 million in milestones, to be integrated into the Vascular business.
How is Stryker (SYK) changing its organizational and reporting structure?
In Q1 2026, Stryker formed a new Ortho Tech business by combining orthopaedic instruments with Mako and enabling technologies. It still reports two segments—MedSurg and Neurotechnology and Orthopaedics—and reallocated $518 million of goodwill between segments under this new structure.