Stryker (NYSE: SYK) lifts Q2 2026 earnings and margins on higher sales
Stryker Corporation reported strong Q2 2026 results, with net sales of $ 6,589 versus $ 6,022 in 2025 and net earnings of $ 1,276, or $ 3.30 per diluted share. Gross profit margin improved to 68.3% and operating margin to 25.2%, helped by lower import tariffs and reduced inventory step-up amortization.
For the first six months of 2026, net sales were $ 12,609 and net earnings were $ 2,021, or $ 5.23 per diluted share. Adjusted net earnings per diluted share were $ 3.69 in Q2 and $ 6.29 year to date. Operating cash flow increased to $ 1,842, while total debt decreased to $ 14,942 after repaying $ 1,000 of senior notes. Stryker also completed the AVS acquisition for $ 435 in cash plus up to $ 400 in contingent milestone payments, adding a next-generation intravascular lithotripsy platform to its Peripheral Vascular business.
Positive
- Profitability improved sharply, with Q2 2026 net earnings of $ 1,276 up 44.3% year over year and diluted EPS rising to $ 3.30, while adjusted diluted EPS reached $ 3.69.
- Margins expanded meaningfully, as gross profit margin increased from 63.8% to 68.3% and operating margin rose to 25.2%, aided by tariff reductions and lower inventory step-up amortization.
- Cash generation strengthened, with net cash provided by operating activities rising to $ 1,842 in the first six months of 2026 and total debt reduced to $ 14,942 after repayment of $ 1,000 of notes.
Negative
- None.
Filing Explained
By June 30, Stryker had issued 1.0 million shares under plans and made no program repurchases, increasing common-share supply without an offset.
A Form 10-Q is an unaudited quarterly report covering interim financial statements, risks, and liquidity; this filing reports Stryker’s position as of
The company reorganized its reporting structure by creating Ortho Tech and continues to report two segments, with prior-period segment information recast to match the new structure. This changes how segment results are presented and compared, rather than recording a new acquisition or disposal in this filing.
At
Common shares issued under stock compensation and benefit plans totaled 1.0 million during the first six months of 2026; issuing additional shares reduces an existing holder’s percentage ownership absent offsetting changes. No shares were repurchased under the authorized program during that period, although
Key Figures
Q2 2026 Net sales: $ 6,589
Q2 2026 Net earnings: $ 1,276
Q2 2026 Diluted EPS: $ 3.30
+5 more
8 metrics
Q2 2026 Net sales
$ 6,589
Three months ended June 30, 2026 net sales
Q2 2026 Net earnings
$ 1,276
Three months ended June 30, 2026 net earnings attributable to shareholders
Q2 2026 Diluted EPS
$ 3.30
Net earnings per diluted share of common stock for Q2 2026
Q2 2026 Adjusted diluted EPS
$ 3.69
Adjusted net earnings per diluted share for the three months 2026
Q2 2026 Gross profit margin
68.3 %
Gross profit as a percentage of net sales in the three months 2026
Operating cash flow, six months 2026
$ 1,842
Net cash provided by operating activities for the six months 2026
Total debt at June 30, 2026
$ 14,942
Total debt including commercial paper and senior unsecured notes
AVS acquisition consideration
$ 435 cash + up to $ 400 milestones
Net cash consideration and maximum future milestone payments for AVS in 2026
Key Terms
constant currency, in-process research and development, net investment hedges, structural optimization and other special charges, +2 more
6 terms
constant currency financial
"Excluding the impact of acquisitions and divestitures, sales grew 9.0% 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.
in-process research and development financial
"Acquired in-process research and development intangible assets represent projects where the related product has not yet received regulatory approval."
Unfinished research and development work—such as drug candidates, prototypes, or process designs—that a company is actively developing but has not yet completed or commercialized. Investors care because it represents potential future products or technologies (like a half-built prototype) whose value is uncertain; it affects how acquisitions are priced, how future profits and costs are forecast, and can be written down if the project fails.
net investment hedges financial
"We had €2.3 billion in certain forward currency contracts 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.
structural optimization and other special charges financial
"Structural optimization and other special charges represent the costs associated with employee retention and workforce reductions."
contingent consideration financial
"we recorded $271 of contingent consideration related to the acquisition of Amplitude Vascular Systems, Inc."
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.
commercial paper financial
"we had $250 outstanding under our commercial paper programs which allows for maturities up to 397 days."
Short-term IOUs issued by companies to raise cash quickly, sold to investors for a fixed, brief period (usually up to a few months) and repaid with interest at maturity. Think of it as a business borrowing from the public without putting up collateral, like a friend asking to borrow money for a few weeks with a promise to pay back a bit more. Investors watch commercial paper to gauge a company’s short-term funding health and credit risk; difficulty issuing it or rising yields can signal liquidity stress or higher perceived risk.
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FAQ
How did Stryker (SYK) perform financially in Q2 2026?
Stryker generated Q2 2026 net sales of $ 6,589 and net earnings of $ 1,276, or $ 3.30 diluted EPS. This compared favorably to 2025, with higher sales, stronger margins, and a 44.3% increase in net earnings year over year.
What were Stryker (SYK)’s results for the first six months of 2026?
For the first six months of 2026, Stryker reported net sales of $ 12,609 and net earnings of $ 2,021, or $ 5.23 diluted EPS. Adjusted net earnings per diluted share were $ 6.29, reflecting improved profitability versus the prior year period.
How did Stryker (SYK)’s margins change in Q2 2026?
In Q2 2026, Stryker’s gross profit margin rose to 68.3% from 63.8% and operating margin increased to 25.2% from 18.5%. Management attributes the improvement mainly to reduced import tariffs and lower amortization of inventory stepped up to fair value.
What were Stryker (SYK)’s cash flow and liquidity metrics in 2026 year to date?
Net cash provided by operating activities was $ 1,842 in the first six months of 2026. Cash, cash equivalents, short-term investments and marketable securities totaled $ 3,476 at June 30, 2026, and current assets exceeded current liabilities by $ 7,734.
What is notable about Stryker (SYK)’s debt position as of June 30, 2026?
Total debt was $ 14,942 at June 30, 2026, down from $ 15,859 at year-end 2025. The change reflects repayment of $ 1,000 of 3.500% senior unsecured notes in March 2026 and $ 250 outstanding under commercial paper programs.
What are the key terms of Stryker (SYK)’s acquisition of AVS in 2026?
In May 2026, Stryker acquired AVS for net cash consideration of $ 435 plus up to $ 400 in future milestone payments, with a fair value of $ 271 at acquisition. The $ 706 purchase price included $ 404 of in-process R&D and $ 398 of goodwill.
How did Stryker (SYK)’s MedSurg and Orthopaedics segments perform in Q2 2026?
Q2 2026 net sales were $ 3,625 for MedSurg and Neurotechnology and $ 2,964 for Orthopaedics, both up about 9% year over year. Segment operating income margins were 28.1% for MedSurg and 34.0% for Orthopaedics.
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 June 30, 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 | ☐ | Smaller 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 383,573,046 shares of Common Stock, $0.10 par value, on June 30, 2026.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
PART I – FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS |
Stryker Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months | Six Months | ||||||
2026 | 2025 | 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 | Six Months | ||||||
2026 | 2025 | 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 Second Quarter Form 10-Q |
CONSOLIDATED BALANCE SHEETS
June 30 | December 31 | ||
2026 | 2025 | ||
(Unaudited) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ | $ | |
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 Second Quarter Form 10-Q |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Three Months | Six Months | ||||||
2026 | 2025 | 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 Second Quarter Form 10-Q |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six 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 | ( | ( | |
Proceeds from the sale of the Spinal Implants business | |||
Other investing, net | ( | ( | |
Net cash used in investing activities | $( | $( | |
Financing activities | |||
Proceeds (payments) on short-term borrowings, net | |||
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 Second 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
June 30, 2026 and the results of operations for the three and six
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.
Following this reorganization we 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 were combined with the
remaining Instruments business to align with our internal
reporting structure. Ortho Tech includes sales related to
Orthopaedic Instruments of $523 and $501 and Other
Orthopaedics of $194 and $148 for the three months 2026 and
2025. For the six months 2026 and 2025 Ortho Tech includes
sales related to Orthopaedic Instruments of $1,012 and $985 and
Other Orthopaedics of $351 and $281 . Instruments includes
sales related to Neuro Cranial of $681 and $616 and Enabling
Technologies of $28 and $34 for the three months 2026 and
2025. For the six months 2026 and 2025 Instruments includes
sales related to Neuro Cranial of $1,287 and $1,179 and
Enabling Technologies of $54 and $63 . We have reflected these
changes in all historical periods presented.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 6 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
Net Sales by Business | |||||||
Three Months | Six Months | ||||||
2026 | 2025 | 2026 | 2025 | ||||
MedSurg and Neurotechnology: | |||||||
Instruments | $ | $ | $ | $ | |||
Endoscopy | |||||||
Medical | |||||||
Vascular | |||||||
$ | $ | $ | $ | ||||
Orthopaedics: | |||||||
Knees | $ | $ | $ | $ | |||
Hips | |||||||
Trauma and Extremities | |||||||
Ortho Tech | |||||||
Spinal Implants | $ | ||||||
$ | $ | $ | $ | ||||
Total | $ | $ | $ | $ | |||
Net Sales by Geography | |||||||
Three Months | Six Months | ||||||
2026 | 2025 | 2026 | 2025 | ||||
United States | $ | $ | $ | $ | |||
International | |||||||
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 June 30, 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 June 30, 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 $997 and $1,024 on June 30,
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.
follows:
June 30 | |
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
2026 and 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 | $ | $ | $( | $( |
Six 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 | $ | $ | $( | $( |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
Six 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.
Foreign Currency Hedges | ||||
June 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 8.2 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 $180 in the six months
2026.
Currency Exchange Rate Gains (Losses) Recognized in Net
Earnings
Three Months | Six Months | |||||||
Derivative Instrument | Recognized in: | 2026 | 2025 | 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 $8 and net investment hedges of $30 recorded in
AOCI are expected to be reclassified to cost of sales and other
income in earnings within 12 months of June 30, 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 June 30, 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 the six months 2026 we recorded $271 of contingent
consideration related to the acquisition of Amplitude Vascular
Systems, Inc. (AVS) described in Note 7.
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 | |||
June 30 | December 31 | ||
2026 | 2025 | ||
Cash and cash equivalents | $ | $ | |
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 | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
Liabilities Measured at Fair Value | |||
June 30 | 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 | |||
June 30 | December 31 | ||
2026 | 2025 | ||
Due in one year or less | $ | $ | |
Due after one year through three years | $ | $ | |
On June 30, 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, short-term investments and income from
marketable securities was $26 and $24 in the three months 2026
and 2025, and $60 and $62 in the six 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
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 | |||
June 30 | 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 | Six Months | ||||||
2026 | 2025 | 2026 | 2025 | ||||
Operating lease cost | $ | $ | $ | $ | |||
Other Contractual Obligations and Commitments
Our outstanding balances of confirmed invoices in the supplier
financing program were $78 and $75 at June 30, 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 six months 2026 and 2025 cash paid for
acquisitions, net of cash acquired was $459 and $4,814 .
In May 2026 we completed the acquisition of AVS for net cash
consideration of $435 and up to $400 in future milestone
payments that had a fair value of $271 at the acquisition date.
AVS is developing a next-generation intravascular lithotripsy
platform designed to treat complex peripheral arterial disease.
AVS is part of our Peripheral Vascular business within MedSurg
and Neurotechnology. Acquired in-process research and
development intangible assets represent projects where the
related product has not yet received regulatory approval. The
purchase price allocation for AVS is based on preliminary
valuations, primarily related to in-process research and
development. Goodwill attributable to the acquisition reflects the
strategic benefits of expanding our peripheral vascular portfolio.
This goodwill is not deductible for tax purposes.
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 six months 2025.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
Purchase Price Allocation of Acquired Net Assets | |||
2026 | 2025 | ||
AVS | Inari | ||
Tangible assets acquired: | |||
Accounts receivable | $ | $ | |
Inventory | |||
Deferred income tax assets | |||
Other assets | |||
Deferred income tax liabilities | ( | ( | |
Other liabilities | ( | ( | |
Intangible assets: | |||
Developed technologies | |||
In-process research and development | |||
Customer relationships | |||
Other intangibles | |||
Goodwill | |||
Purchase price, net of cash acquired of $ and $ | $ | $ | |
Weighted average amortization period at acquisition (years): | |||
Developed technologies | — | ||
Customer relationships | — | ||
Other intangibles | — | ||
Consolidated estimated annual amortization expense for definite-
lived intangible assets is:
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
June 30, 2026.
On June 30, 2026 we had $250 outstanding under our
commercial paper programs 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 June 30:
Summary of Total Debt | ||||||
June 30 | 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 | ||||||
Commercial paper | ||||||
Other | ||||||
Total debt | $ | $ | ||||
Less current maturities | ||||||
Total long-term debt | $ | $ | ||||
June 30 | 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 $136 and $159 for the
three months 2026 and 2025 and $278 and $296 for the six
NOTE 9 - INCOME TAXES
Our effective tax rates were 18.4 % and 16.3 % in the three and
six months 2026 and 13.0 % and 13.6 % in the three and six
months 2025. The effective tax rates for the three and six months
2026 increased from the three and six months 2025 due to the
2025 tax benefit related to the sale of the Spinal Implants
business. The effective tax rates for the three and six months
2026 and 2025 reflect the continued lower effective income tax
rates as a result of our European operations and certain discrete
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.
Dollar amounts are in millions except per share amounts or as otherwise specified. | 10 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
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 | Six Months | ||||||
2026 | 2025 | 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 | ( | ( | ( | ( | |||
Reversal of 2025 tariffs | |||||||
Consolidated operating income | $ | $ | $ | $ | |||
Segment Capital Spending | Six 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 | $ | $ | |
NOTE 11 - GOODWILL AND OTHER INTANGIBLE ASSETS
In the first quarter 2026 we changed our organizational structure
as further described in Note 1.
Following this reorganization we 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.
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
Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 |
STRYKER CORPORATION | 2026 Second 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.
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.
Overview of the Three and Six Months
In the three months 2026 we achieved sales growth of 9.4% from
2025. Excluding the impact of acquisitions and divestitures, sales
grew 9.0% in constant currency. We reported operating income
margin of 25.2%, net earnings of $1,276 and net earnings per
diluted share of $3.30. Excluding the impact of certain items,
adjusted operating income margin(1) increased by 170 basis
points to 27.4%, with adjusted net earnings(1) of $1,424 and
adjusted net earnings per diluted share(1) of $3.69, an increase of
17.9% from 2025.
In the six months 2026 we achieved sales growth of 6.1% from
2025. Excluding the impact of acquisitions and divestitures, sales
grew 5.8% in constant currency. We reported operating income
margin of 20.6%, net earnings of $2,021 and net earnings per
diluted share of $5.23. Excluding the impact of certain items,
adjusted operating income margin(1) increased by 10 basis points
to 24.4%, with adjusted net earnings(1) of $2,428 and adjusted
net earnings per diluted share(1) of $6.29, an increase of 5.4%
from 2025.
(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.
CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||||
Three Months | Six Months | ||||||||||||||||||
Percent Net Sales | Percentage | Percent Net Sales | Percentage | ||||||||||||||||
2026 | 2025 | 2026 | 2025 | Change | 2026 | 2025 | 2026 | 2025 | Change | ||||||||||
Net sales | $6,589 | $6,022 | 100.0% | 100.0% | 9.4% | $12,609 | $11,888 | 100.0% | 100.0% | 6.1% | |||||||||
Gross profit | 4,498 | 3,841 | 68.3 | 63.8 | 17.1 | 8,308 | 7,585 | 65.9 | 63.8 | 9.5 | |||||||||
Research, development and engineering expenses | 434 | 407 | 6.6 | 6.8 | 6.6 | 847 | 812 | 6.7 | 6.8 | 4.3 | |||||||||
Selling, general and administrative expenses | 2,229 | 2,079 | 33.8 | 34.5 | 7.2 | 4,510 | 4,379 | 35.8 | 36.8 | 3.0 | |||||||||
Amortization of intangible assets | 175 | 187 | 2.7 | 3.1 | (6.4) | 355 | 354 | 2.8 | 3.0 | 0.3 | |||||||||
Goodwill and other impairments | 1 | 55 | — | 0.9 | nm | 1 | 90 | — | 0.8 | nm | |||||||||
Interest expense | (141) | (159) | (2.1) | (2.6) | (11.3) | (289) | (296) | (2.3) | (2.5) | (2.4) | |||||||||
Other income | 46 | 62 | 0.7 | 1.0 | (25.8) | 108 | 126 | 0.9 | 1.1 | (14.3) | |||||||||
Income taxes | 288 | 132 | nm | nm | 118.2 | 393 | 242 | nm | nm | 62.4 | |||||||||
Net earnings | $1,276 | $884 | 19.4% | 14.7% | 44.3% | $2,021 | $1,538 | 16.0% | 12.9% | 31.4% | |||||||||
Net earnings per diluted share | $3.30 | $2.29 | 44.1% | $5.23 | $3.98 | 31.4% | |||||||||||||
Adjusted net earnings per diluted share(1) | $3.69 | $3.13 | 17.9% | $6.29 | $5.97 | 5.4% | |||||||||||||
nm - not meaningful
Dollar amounts are in millions except per share amounts or as otherwise specified. | 12 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
SALES GROWTH ANALYSIS | |||||||||||||
Three Months | Six Months | ||||||||||||
Percentage Change | Percentage Change | ||||||||||||
2026 | 2025 | As Reported | Constant Currency | 2026 | 2025 | As Reported | Constant Currency | ||||||
MedSurg and Neurotechnology: | |||||||||||||
Instruments | |||||||||||||
United States | $840 | $776 | 8.4% | 8.4% | $1,606 | $1,478 | 8.7% | 8.7% | |||||
International | 163 | 142 | 13.9 | 12.3 | 317 | 278 | 13.9 | 9.6 | |||||
Total | $1,003 | $918 | 9.3% | 9.0% | $1,923 | $1,756 | 9.6% | 8.9% | |||||
Endoscopy | |||||||||||||
United States | $819 | $742 | 10.2% | 10.2% | $1,520 | $1,452 | 4.6% | 4.6% | |||||
International | 185 | 157 | 18.8 | 16.5 | 352 | 314 | 12.4 | 8.1 | |||||
Total | $1,004 | $899 | 11.7% | 11.3% | $1,872 | $1,766 | 6.0% | 5.3% | |||||
Medical | |||||||||||||
United States | $945 | $840 | 12.6% | 12.6% | $1,692 | $1,642 | 3.1% | 3.1% | |||||
International | 177 | 150 | 17.9 | 15.0 | 332 | 293 | 13.2 | 8.1 | |||||
Total | $1,122 | $990 | 13.4% | 13.0% | $2,024 | $1,935 | 4.6% | 3.9% | |||||
Vascular | |||||||||||||
United States | $250 | $268 | (6.7)% | (6.7)% | $530 | $471 | 12.5% | 12.5% | |||||
International | 246 | 230 | 6.3 | 4.0 | 483 | 433 | 11.3 | 7.1 | |||||
Total | $496 | $498 | (0.7)% | (1.8)% | $1,013 | $904 | 11.9% | 9.9% | |||||
MedSurg and Neurotechnology | |||||||||||||
United States | $2,854 | $2,626 | 8.7% | 8.7% | $5,348 | $5,043 | 6.1% | 6.1% | |||||
International | 771 | 679 | 13.3 | 11.1 | 1,484 | 1,318 | 12.5 | 8.1 | |||||
Total | $3,625 | $3,305 | 9.7% | 9.2% | $6,832 | $6,361 | 7.4% | 6.5% | |||||
Orthopaedics: | |||||||||||||
Knees | |||||||||||||
United States | $488 | $460 | 6.2% | 6.2% | $960 | $924 | 3.8% | 3.8% | |||||
International | 205 | 180 | 14.0 | 12.4 | 403 | 355 | 13.7 | 9.2 | |||||
Total | $693 | $640 | 8.4% | 8.0% | $1,363 | $1,279 | 6.6% | 5.3% | |||||
Hips | |||||||||||||
United States | $296 | $283 | 4.9% | 4.9% | $572 | $552 | 3.6% | 3.6% | |||||
International | 183 | 183 | — | (0.8) | 367 | 357 | 2.9 | (0.6) | |||||
Total | $479 | $466 | 2.9% | 2.6% | $939 | $909 | 3.3% | 1.9% | |||||
Trauma and Extremities | |||||||||||||
United States | $791 | $702 | 12.5% | 12.5% | $1,558 | $1,415 | 10.1% | 10.1% | |||||
International | 281 | 255 | 10.3 | 8.5 | 549 | 487 | 12.7 | 7.7 | |||||
Total | $1,072 | $957 | 11.9% | 11.5% | $2,107 | $1,902 | 10.7% | 9.4% | |||||
Ortho Tech | |||||||||||||
United States | $530 | $483 | 9.5% | 9.5% | $997 | $942 | 5.8% | 5.8% | |||||
International | 187 | 166 | 12.8 | 11.8 | 366 | 324 | 12.9 | 9.2 | |||||
Total | $717 | $649 | 10.3% | 10.0% | $1,363 | $1,266 | 7.6% | 6.7% | |||||
$2,961 | $2,712 | 9.2% | 8.8% | $5,772 | $5,356 | 7.7% | 6.5% | ||||||
Spinal Implants | |||||||||||||
United States | $— | $— | (100.0)% | (100.0)% | $— | $118 | (100.0)% | (100.0)% | |||||
International | 3 | 5 | (36.7) | (40.9) | 5 | 53 | (90.2) | (91.2) | |||||
Total | $3 | $5 | (36.7)% | (40.9)% | $5 | $171 | (96.9)% | (97.1)% | |||||
Orthopaedics | |||||||||||||
United States | $2,105 | $1,928 | 9.1% | 9.1% | $4,087 | $3,951 | 3.4% | 3.4% | |||||
International | 859 | 789 | 8.9 | 7.6 | 1,690 | 1,576 | 7.2 | 3.0 | |||||
Total | $2,964 | $2,717 | 9.1% | 8.7% | $5,777 | $5,527 | 4.5% | 3.3% | |||||
Geographic: | |||||||||||||
United States | $4,959 | $4,554 | 8.9% | 8.9% | $9,435 | $8,994 | 4.9% | 4.9% | |||||
International | 1,630 | 1,468 | 11.0 | 9.2 | 3,174 | 2,894 | 9.7 | 5.3 | |||||
Total | $6,589 | $6,022 | 9.4% | 9.0% | $12,609 | $11,888 | 6.1% | 5.0% | |||||
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 were combined with the remaining
Instruments business to align with our internal reporting structure. Ortho Tech includes sales related to Orthopaedic Instruments of $523
and $501 and Other Orthopaedics of $194 and $148 for the three months 2026 and 2025. For the six months 2026 and 2025 Ortho
Tech includes sales related to Orthopaedic Instruments of $1,012 and $985 and Other Orthopaedics of $351 and $281. Instruments
includes sales related to Neuro Cranial of $681 and $616 and Enabling Technologies of $28 and $34 for the three months 2026 and
2025. For the six months 2026 and 2025 Instruments includes sales related to Neuro Cranial of $1,287 and $1,179 and Enabling
Technologies of $54 and $63. 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 Second Quarter Form 10-Q |
Consolidated Net Sales
Consolidated net sales increased 9.4% in the three months 2026
as reported and 9.0% in constant currency, as foreign currency
exchange rates positively impacted net sales by 0.4%. Net sales
in constant currency increased by 9.0% from increased unit
volume. The unit volume increase was due to higher product
shipments across most MedSurg and Neurotechnology
businesses and all Orthopaedics businesses.
Consolidated net sales increased 6.1% in the six months 2026 as
reported and 5.0% in constant currency as foreign currency
exchange rates positively impacted net sales by 1.1%. Excluding
the (0.8)% impact of acquisitions and divestitures, net sales in
constant currency increased by 5.6% from increased unit volume
and 0.2% due to higher prices. The unit volume increase was due
to higher product shipments across all MedSurg and
Neurotechnology businesses and all Orthopaedics businesses.
MedSurg and Neurotechnology Net Sales
MedSurg and Neurotechnology net sales increased 9.7% in the
three months 2026 as reported and 9.2% in constant currency, as
foreign currency exchange rates positively impacted net sales by
0.5%. Net sales in constant currency increased by 9.1% from
increased unit volume and 0.1% from higher prices. The unit
volume increase was due to higher shipments across most
Medsurg and Neurotechnology businesses.
MedSurg and Neurotechnology net sales increased 7.4% in the
six months 2026 as reported and 6.5% in constant currency, as
foreign currency exchange rates positively impacted net sales by
0.9%. Excluding the 1.3% impact of acquisitions and divestitures,
net sales in constant currency increased by 4.9% from increased
unit volume and 0.3% from higher prices. The unit volume
increase was due to higher shipments across all MedSurg and
Neurotechnology businesses.
Orthopaedics Net Sales
Orthopaedics net sales increased 9.1% in the three months 2026
as reported and 8.7% in constant currency, as foreign currency
exchange rates positively impacted net sales by 0.4%. Excluding
the 0.1% impact of acquisitions and divestitures, net sales in
constant currency increased 8.6% from increased unit volume.
The unit volume increase was due to higher shipments across all
Orthopaedics businesses.
Orthopaedics net sales increased 4.5% in the six months 2026 as
reported and 3.3% in constant currency, as foreign currency
exchange rates positively impacted net sales by 1.2%. Excluding
the (3.1)% impact of acquisitions and divestitures, net sales in
constant currency increased 6.4% from increased unit volume.
The unit volume increase was due to higher shipments across all
Orthopaedics businesses.
Gross Profit
Gross profit was $4,498 and $3,841 in the three months 2026
and 2025. The key components of the change were:
Gross Profit Percent Net Sales | |
Three Months 2025 | 63.8% |
Volume and mix | 70 bps |
Manufacturing and supply chain costs | (30) bps |
Structural optimization and other special charges | 40 bps |
Inventory stepped up to fair value | 110 bps |
Reversal of 2025 tariffs | 260 bps |
Three Months 2026 | 68.3% |
Gross profit as a percentage of net sales in the three months
2026 increased to 68.3% from 63.8% in 2025 primarily driven by
a reduction of certain import tariffs and lower amortization of
inventory stepped up to fair value.
Gross profit was $8,308 and $7,585 in the six months 2026 and
2025. The key components of the change were:
Gross Profit Percent Net Sales | |
Six Months 2025 | 63.8% |
Sales pricing | 10 bps |
Volume and mix | 40 bps |
Manufacturing and supply chain costs | (100) bps |
Structural optimization and other special charges | 50 bps |
Inventory stepped up to fair value | 80 bps |
Reversal of 2025 tariffs | 130 bps |
Six Months 2026 | 65.9% |
Gross profit as a percentage of net sales in the six months 2026
increased to 65.9% from 63.8% in 2025 driven by a reduction of
certain import tariffs and lower amortization of inventory stepped
up to fair value partially offset by higher manufacturing and
supply chain costs primarily due to idle production time related to
the cybersecurity incident in the first quarter 2026.
While segment mix was not a significant driver of the change in
gross profit as a percent of net sales between the six months
2026 and 2025, we generally expect segment mix to have an
unfavorable impact for the foreseeable future as we anticipate
more rapid sales growth in our lower gross margin MedSurg and
Neurotechnology segment than our Orthopaedics segment.
Research, Development and Engineering Expenses
Research, development and engineering expenses increased
$27 or 6.6% in the three months 2026 and $35 or 4.3% in the six
months 2026. Expenses as a percentage of net sales of 6.6% in
the three months and 6.7% in the six months 2026 remained
relatively flat with 6.8% in the three and six months 2025.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $150 or
7.2% in the three months 2026. As a percentage of net sales,
expenses decreased to 33.8% from 34.5% in 2025, primarily due
to continued spend discipline and lower acquisition and
integration-related charges partially offset by higher structural
optimization and other special charges.
Selling, general and administrative expenses increased $131 or
3.0% in the six months 2026. As a percentage of net sales,
expenses decreased to 35.8% from 36.8% in 2025, primarily due
to lower acquisition-related costs and continued spend discipline
partially offset by higher structural optimization and other special
charges. Expenses in the six 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 $175 and $187 in the three
months and $355 and $354 in the six 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 $1 and $55 in the three
months and $1 and $90 in the six months 2026 and 2025.
Operating Income
Operating income was $1,659 and $1,113 in the three months
2026 and 2025. Operating income as a percentage of net sales in
the three months 2026 increased to 25.2% from 18.5% in 2025.
Refer to the discussion above for the primary drivers of the
Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
change.
Operating income was $2,595 and $1,950 in the six months 2026
and 2025. Operating income as a percentage of net sales in the
six months 2026 increased to 20.6% from 16.4% 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 increased to 28.1% in the three months
2026 from 25.6% in 2025. Orthopaedics operating income as a
percentage of net sales increased to 34.0% in the three months
2026 from 33.1% in 2025. The key components of the change
were:
Operating Income Percent Net Sales | ||
MedSurg and Neurotechnology | Orthopaedics | |
Three Months 2025 | 25.6% | 33.1% |
Volume | 60 bps | 50 bps |
Manufacturing and supply chain costs | 60 bps | (20) bps |
Research, development and engineering expenses | (10) bps | 40 bps |
Selling, general and administrative expenses | 140 bps | 20 bps |
Three Months 2026 | 28.1% | 34.0% |
The increase in MedSurg and Neurotechnology operating income
as a percentage of net sales for the three months was primarily
driven by lower selling, general and administrative expenses,
lower manufacturing and supply chain costs and higher unit
volumes, partially offset by higher research, development and
engineering expenses.
The increase in Orthopaedics operating income as a percentage
of net sales for the three months was primarily driven by higher
unit volumes, lower research, development and engineering
expenses and lower selling, general and administrative
expenses, partially offset by higher manufacturing and supply
chain costs.
MedSurg and Neurotechnology operating income as a
percentage of net sales of 25.2% in the six months 2026
remained flat with 2025. Orthopaedics operating income as a
percentage of net sales increased to 32.1% in the six months
2026 from 31.7% in 2025. The key components of the change
were:
Operating Income Percent Net Sales | ||
MedSurg and Neurotechnology | Orthopaedics | |
Six Months 2025 | 25.2% | 31.7% |
Sales pricing | 10 bps | 0 bps |
Volume | 40 bps | 20 bps |
Manufacturing and supply chain costs | (70) bps | (100) bps |
Research, development and engineering expenses | (20) bps | 40 bps |
Selling, general and administrative expenses | 40 bps | 80 bps |
Six Months 2026 | 25.2% | 32.1% |
MedSurg and Neurotechnology operating income as a
percentage of net sales for the six months remained flat and was
primarily driven by lower selling, general and administrative
expenses and higher unit volumes and prices, offset by higher
manufacturing and supply chain costs and research,
development and engineering expenses.
The increase in Orthopaedics operating income as a percentage
of net sales for the six months was primarily driven by lower
selling, general and administrative expenses, lower research,
development and engineering expenses and higher unit volumes,
partially offset by higher manufacturing and supply chain costs.
Interest Expense
Interest expense was $141 and $159 in the three months and
$289 and $296 in the six months 2026 and 2025. The decrease
in interest expense in the three months and six months 2026 from
2025 was due to lower outstanding debt and credit facilities
partially offset by higher average interest rates.
Other Income
Other income was $46 and $62 in the three months and $108
and $126 in the six months 2026 and 2025. The decrease in
other income in the three and six months 2026 from 2025 was
primarily due to lower interest income in 2026.
Income Taxes
Our effective tax rates were 18.4% and 16.3% in the three and
six months 2026 and 13.0% and 13.6% in the three and six
months 2025. The effective tax rate for the three and six months
2026 increased from the three and six months 2025 due to the
2025 tax benefit related to the sale of the Spinal Implants
business. The effective tax rates for the three and six 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.
Net Earnings
Net earnings increased to $1,276 or $3.30 per diluted share in
the three months 2026 from $884 or $2.29 per diluted share in
2025. Net earnings increased to $2,021 or $5.23 per diluted
share in six months 2026 from $1,538 or $3.98 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
Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
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.
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 | $4,498 | $2,229 | $434 | $1,659 | $(95) | $288 | $1,276 | 18.4% | $3.30 |
Reported percent net sales | 68.3% | 33.8% | 6.6% | 25.2% | (1.4)% | nm | 19.4% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — |
Other acquisition and integration-related (a) | 7 | (14) | (4) | 25 | — | 3 | 22 | — | 0.06 |
Amortization of purchased intangible assets | — | — | — | 175 | — | 33 | 142 | 0.3 | 0.37 |
Structural optimization and other special charges (b) | 5 | (89) | (1) | 95 | (6) | 20 | 69 | 0.3 | 0.18 |
Goodwill and other impairments (c) | — | — | — | 1 | — | — | 1 | — | — |
Medical device regulations (d) | — | — | (5) | 5 | — | 1 | 4 | — | 0.01 |
Recall-related matters (e) | (1) | (3) | — | 2 | — | 1 | 1 | — | — |
Regulatory and legal matters (f) | — | (3) | — | 3 | — | — | 3 | — | — |
Tax matters (g) | — | — | — | — | — | (39) | 39 | (2.5) | 0.11 |
Reversal of 2025 tariffs | (158) | — | — | (158) | — | (25) | (133) | — | (0.34) |
Adjusted | $4,351 | $2,120 | $424 | $1,807 | $(101) | $282 | $1,424 | 16.5% | $3.69 |
Adjusted percent net sales | 66.0% | 32.2% | 6.4% | 27.4% | (1.5)% | nm | 21.6% | ||
Dollar amounts are in millions except per share amounts or as otherwise specified. | 16 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
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 | $3,841 | $2,079 | $407 | $1,113 | $(97) | $132 | $884 | 13.0% | $2.29 |
Reported percent net sales | 63.8% | 34.5% | 6.8% | 18.5% | (1.6)% | nm | 14.7% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | 65 | — | — | 65 | — | 16 | 49 | 0.5 | 0.12 |
Other acquisition and integration-related (a) | 1 | (76) | (1) | 78 | — | 20 | 58 | 0.7 | 0.15 |
Amortization of purchased intangible assets | — | — | — | 187 | — | 39 | 148 | 1.0 | 0.37 |
Structural optimization and other special charges (b) | 6 | (2) | (3) | 11 | (9) | (2) | 4 | (0.2) | 0.01 |
Goodwill and other impairments (c) | — | — | — | 55 | — | 22 | 33 | 1.2 | 0.10 |
Medical device regulations (d) | — | — | (7) | 7 | — | 1 | 6 | 0.1 | 0.02 |
Recall-related matters (e) | 21 | (1) | — | 22 | — | 1 | 21 | (0.3) | 0.06 |
Regulatory and legal matters (f) | — | (7) | — | 7 | — | 1 | 6 | 0.1 | 0.01 |
Tax matters (g) | — | — | — | — | — | (2) | 2 | (0.2) | — |
Adjusted | $3,934 | $1,993 | $396 | $1,545 | $(106) | $228 | $1,211 | 15.9% | $3.13 |
Adjusted percent net sales | 65.4% | 33.1% | 6.6% | 25.7% | (1.8)% | nm | 20.1% |
nm - not meaningful
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
Three Months | |||
2026 | 2025 | ||
Termination of sales relationships | $6 | $— | |
Employee retention and workforce reductions | (3) | 29 | |
Changes in the fair value of contingent consideration | 6 | 3 | |
Manufacturing integration costs | 5 | 3 | |
Other integration-related activities | 11 | 43 | |
Adjustments to Operating Income | $25 | $78 | |
Adjustments to Income Taxes | $3 | $20 | |
Adjustments to Net Earnings | $22 | $58 | |
(b) Structural optimization and other special charges represent the costs associated with:
Three Months | |||
2026 | 2025 | ||
Employee retention and workforce reductions | $6 | $5 | |
Closure/transfer of manufacturing and other facilities | 4 | 7 | |
Product line exits | 9 | (10) | |
Termination of sales relationships in certain countries | 6 | (3) | |
Other charges | 70 | 12 | |
Adjustments to Operating Income | $95 | $11 | |
Adjustments to Other Income (Expense), Net | $(6) | $(9) | |
Adjustments to Income Taxes | $20 | $(2) | |
Adjustments to Net Earnings | $69 | $4 | |
(c) Goodwill and other impairments represent the costs associated with:
Three Months | |||
2026 | 2025 | ||
Certain long-lived and intangible asset write-offs and impairments | $— | $52 | |
Product line exits (e.g., long-lived asset and specifically-identified intangible asset write-offs) | 1 | 3 | |
Adjustments to Operating Income | $1 | $55 | |
Adjustments to Income Taxes | $— | $22 | |
Adjustments to Net Earnings | $1 | $33 | |
(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 | $(55) | $(45) | |
Other tax matters | 16 | 43 | |
Adjustments to Income Taxes | $(39) | $(2) | |
Adjustments to Other Income (Expense), Net | $— | $— | |
Adjustments to Net Earnings | $39 | $2 | |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 17 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||
Six 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 | $8,308 | $4,510 | $847 | $2,595 | $(181) | $393 | $2,021 | 16.3% | $5.23 |
Reported percent net sales | 65.9% | 35.8% | 6.7% | 20.6% | (1.4)% | nm | 16.0% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — |
Other acquisition and integration-related (a) | 9 | (27) | (8) | 44 | — | 7 | 37 | — | 0.10 |
Amortization of purchased intangible assets | — | — | — | 355 | — | 63 | 292 | 0.3 | 0.75 |
Structural optimization and other special charges (b) | 19 | (193) | (1) | 213 | (17) | 45 | 151 | 0.6 | 0.39 |
Goodwill and other impairments (c) | — | — | — | 1 | — | — | 1 | — | — |
Medical device regulations (d) | — | — | (10) | 10 | — | 2 | 8 | — | 0.02 |
Recall-related matters (e) | — | (12) | — | 12 | — | 3 | 9 | — | 0.02 |
Regulatory and legal matters (f) | — | (6) | — | 6 | — | 1 | 5 | — | 0.01 |
Tax matters (g) | — | — | — | — | — | (37) | 37 | (1.5) | 0.11 |
Reversal of 2025 tariffs | (158) | — | — | (158) | — | (25) | (133) | — | (0.34) |
Adjusted | $8,178 | $4,272 | $828 | $3,078 | $(198) | $452 | $2,428 | 15.7% | $6.29 |
Adjusted percent net sales | 64.9% | 33.9% | 6.6% | 24.4% | (1.6)% | nm | 19.3% | ||
Six 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 | $7,585 | $4,379 | $812 | $1,950 | $(170) | $242 | $1,538 | 13.6% | $3.98 |
Reported percent net sales | 63.8% | 36.8% | 6.8% | 16.4% | (1.4)% | nm | 12.9% | ||
Acquisition and integration-related costs: | |||||||||
Inventory stepped-up to fair value | 99 | — | — | 99 | — | 24 | 75 | 0.5 | 0.19 |
Other acquisition and integration-related (a) | 14 | (247) | (2) | 263 | — | 26 | 237 | (0.7) | 0.62 |
Amortization of purchased intangible assets | — | — | — | 354 | — | 73 | 281 | 1.1 | 0.72 |
Structural optimization and other special charges (b) | 28 | (21) | (3) | 52 | (9) | 12 | 31 | 0.3 | 0.08 |
Goodwill and other impairments (c) | — | — | — | 90 | — | 31 | 59 | 1.0 | 0.16 |
Medical device regulations (d) | 1 | — | (18) | 19 | — | 4 | 15 | 0.1 | 0.04 |
Recall-related matters (e) | 52 | (3) | — | 55 | — | 9 | 46 | 0.1 | 0.12 |
Regulatory and legal matters (f) | — | (7) | — | 7 | — | 2 | 5 | 0.1 | 0.01 |
Tax matters (g) | — | — | — | — | — | (21) | 21 | (1.2) | 0.05 |
Adjusted | $7,779 | $4,101 | $789 | $2,889 | $(179) | $402 | $2,308 | 14.9% | $5.97 |
Adjusted percent net sales | 65.4% | 34.5% | 6.6% | 24.3% | (1.5)% | nm | 19.4% |
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
Six Months | |||
2026 | 2025 | ||
Termination of sales relationships | $6 | $— | |
Employee retention and workforce reductions | — | 45 | |
Changes in the fair value of contingent consideration | 9 | 1 | |
Manufacturing integration costs | 10 | 7 | |
Stock compensation payments upon a change in control | — | 139 | |
Other integration-related activities | 19 | 71 | |
Adjustments to Operating Income | $44 | $263 | |
Adjustments to Income Taxes | $7 | $26 | |
Adjustments to Net Earnings | $37 | $237 | |
(b) Structural optimization and other special charges represent the costs associated with:
Six Months | |||
2026 | 2025 | ||
Employee retention and workforce reductions | $13 | $38 | |
Closure/transfer of manufacturing and other facilities (e.g., site closure, contract termination and redundant employee costs) | 9 | 12 | |
Product line exits (e.g., inventory, long-lived asset and specifically-identified intangible asset write-offs) | 11 | (7) | |
Termination of sales relationships in certain countries | 87 | (4) | |
Other charges | 93 | 13 | |
Adjustments to Operating Income | $213 | $52 | |
Adjustments to Other Income (Expense), Net | $(17) | $(9) | |
Adjustments to Income Taxes | $45 | $12 | |
Adjustments to Net Earnings | $151 | $31 | |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 18 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
(c) Goodwill and other impairments represent the costs associated with:
Six Months | |||
2026 | 2025 | ||
Certain long-lived and intangible asset write-offs and impairments | $— | $86 | |
Product line exits (e.g., long-lived asset and specifically-identified intangible asset write-offs) | 1 | 4 | |
Adjustments to Operating Income | $1 | $90 | |
Adjustments to Income Taxes | $— | $31 | |
Adjustments to Net Earnings | $1 | $59 | |
(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:
Six Months | |||
2026 | 2025 | ||
Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $(75) | $(92) | |
Other tax matters | 38 | 71 | |
Adjustments to Income Taxes | $(37) | $(21) | |
Adjustments to Other Income (Expense), Net | $— | $— | |
Adjustments to Net Earnings | $37 | $21 | |
FINANCIAL CONDITION AND LIQUIDITY
Six Months | |||
Net cash provided by (used in): | 2026 | 2025 | |
Operating activities | $1,842 | $1,361 | |
Investing activities | (824) | (4,240) | |
Financing activities | (1,605) | 1,545 | |
Effect of exchange rate changes | (33) | 57 | |
Change in cash and cash equivalents | $(620) | $(1,277) | |
Operating Activities
Cash provided by operating activities was $1,842 and $1,361 in
the six months 2026 and 2025. The increase was primarily due to
changes in working capital accounts.
Investing Activities
Cash used in investing activities was $824 and $4,240 in the six
months 2026 and 2025. The six months 2026 included cash paid
for purchases of property, plant and equipment. The six 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 $1,605 in the six months
2026 and cash provided by financing activities was $1,545 in the
six 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 financing activities in
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 $3,476 and $4,100 on June 30, 2026 and
December 31, 2025. Current assets exceeded current liabilities
by $7,734 and $6,961 on June 30, 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 51% on June 30, 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:
Refer to Note 11 for discussion on the impact of changes to our
organizational structure in the first quarter 2026 on our reportable
segments and the related goodwill.
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.
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
Dollar amounts are in millions except per share amounts or as otherwise specified. | 19 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
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 June 30, 2026. Based on that evaluation, the
Certifying Officers concluded the Company's disclosure controls
and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial
reporting during the six 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 and Part II, Item 1A. "Risk Factors" in our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2026.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
We issued 1,929 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 six 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 June 30, 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).
20 |
STRYKER CORPORATION | 2026 Second Quarter Form 10-Q |
ITEM 6. | EXHIBITS |
10(i)* | Transition Agreement, dated May 15, 2026, between Stryker Corporation and William E. Berry, Jr. – Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated May 20, 2026 (Commission File No. 001-13149). |
10(ii)* | Letter Agreement, dated May 15, 2026, between Stryker Corporation and Emily Baculik – Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K dated May 20, 2026 (Commission File No. 001-13149). |
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 |
21 |
STRYKER CORPORATION | 2026 Second 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: | July 31, 2026 | /s/ KEVIN A. LOBO | |
Kevin A. Lobo | |||
Chair and Chief Executive Officer | |||
Date: | July 31, 2026 | /s/ PRESTON W. WELLS | |
Preston W. Wells | |||
Vice President, Chief Financial Officer |