Stryker (SYK) Q1 FY26 earnings call: guidance and Q&A

How should investors think about the cadence of sales recovery throughout the year following the cyber incident, and does the reaffirmed guidance still leave room for upside?

Preston Wells explained that recovery will vary by business, with some revenue catch-up in Q2 and deferred procedures/made-to-order products recovering in Q3/Q4. He stated that reaffirming guidance is a strong outcome given the disruption, and the company will reassess potential upside after Q2 results.

“we'll see some recovery in the second quarter, and then we'll really see some additional recovery as well as what we would normally see in our Q3 and Q4 kind of seasonality happening in the back half of the year.”

asked by Robert Marcus · answered by Preston Wells

What is the expected cadence for operating margin, and does the company still expect a 50 bps YoY increase despite inflationary pressures?

Preston Wells confirmed that full-year operating margin expectations remain unchanged, aligning with the long-term target of 150+ bps over three years. He noted that while Q1 and Q2 might see some headwinds from tariffs, the company's procurement team and existing contracts are actively mitigating rising input costs, which is factored into the current guidance.

“from a full year perspective, nothing has changed. If we think about what our guidance is and what our expectations were for the year, there's not a change in even those margin expectations off of what we set from the 3-year window that we gave, the 150-plus.”

asked by Larry Biegelsen · answered by Preston Wells

What is Stryker's view on the competitive environment in the orthopaedic market, given recent activities by other companies?

Kevin Lobo stated that Stryker is confident in its market-leading position, particularly in robotics with Mako 4, Mako Shoulder, and Mako RPS, as well as new products like Triathlon Gold. He emphasized that competitive actions are not detracting from customer interest, and the company expects to continue outgrowing the orthopaedic market by 200-300 basis points.

“regardless of what competitive actions are occurring, we're really not seeing that take away from customer interest in Stryker, our leading position.”

asked by Joanne Wuensch · answered by Kevin Lobo

Can management differentiate between the impact of the cyber incident on Stryker's ability to serve the market versus any changes in underlying hospital demand, especially for capital equipment?

Kevin Lobo clarified that there was no pause in orders, only in shipments due to the cyber incident's impact on production. He affirmed that hospitals maintain healthy balance sheets and strong interest in Stryker's products, citing Mako's record Q1 installations as evidence of stable demand and no slowdown in orders.

“we did not see a pause in orders. We definitely had a pause in shipments because we obviously couldn't make product for almost 3 weeks.”

asked by Ryan Zimmerman · answered by Kevin Lobo

Does the acquisition of Amplitude Vascular Systems (AVS) signal a willingness to take on more risk with pre-commercial or earlier-stage companies to drive revenue growth?

Kevin Lobo explained that the AVS acquisition is not about taking on more risk due to company size, but rather the nature of the Peripheral Vascular (PV) business, where PMA-type products sometimes require earlier investment. He noted that AVS is close to approval in the PV space and could be selling products before year-end, making it a differentiated and value-creating deal.

“it's not really related to the size of our company. It's the nature of the business. So if you look at these PMA-type products in Peripheral Vascular, this space sometimes requires early-stage investment.”

asked by Travis Steed · answered by Kevin Lobo

How did the cyberattack impact MedSurg and Ortho businesses differently, and what is the expected recovery cadence for each throughout the year?

Preston Wells explained that Orthopaedics, with consigned inventory at hospitals, saw procedures continue, but revenue recognition was delayed to Q2. MedSurg, particularly capital and make-to-order products, will see recovery later in Q3/Q4 due to production shutdowns and shipping delays. Kevin Lobo added that capital-intensive MedSurg segments like Endo and Medical will have a later recovery.

“In our Orthopaedic businesses, where we have a lot of -- most of those businesses have consigned inventory. So in many cases, that inventory is located at the hospital. And so those cases we're able to proceed as almost normal in many instances.”

asked by Samantha Kurtz · answered by Preston Wells

How are customer relationships holding up after the cyber incident, and what has been the customer response?

Kevin Lobo reported overwhelmingly positive feedback from customers regarding Stryker's handling of the incident, praising communication and resilience. He stated that no business was lost, and customers were empathetic to the challenges, ultimately strengthening the Stryker brand.

“I've been really overwhelmed by a lot of positive commentary from our customers about how we handled this incident.”

asked by Steven Lichtman · answered by Kevin Lobo

What should be expected from the Neuro Cranial business now that it's rolled into Instruments, and what is the outlook for Mako 4's installed base growth and utilization?

Kevin Lobo explained the Neuro Cranial move aligns with internal structure, allowing for greater focus and granularity on its fast-growing businesses and innovations like Sonopet 4. For Mako 4, he noted similar initial utilization rates to past Makos, but its multifunctional capabilities (including advanced hip/revision hip and upcoming shoulder) will drive more demand and pressure for additional robots over time, leading to increased installed base growth.

“What's different about Mako 4 is you're getting into new procedures. Advanced hip and revision hip is really getting tremendous feedback from our surgeons.”

asked by Andrew Ranieri · answered by Kevin Lobo