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    SYK
    Earnings call· Dec 2025(Q4 FY25)

    STRYKER CORP SYK

    Jan 29, 2026 Source

    Executive summary

    Stryker Q4 FY25 — Strong Organic Growth and Mako Momentum

    Stryker delivered robust Q4 FY25 results, driven by double-digit organic sales growth across most divisions and record Mako installations. The company achieved significant adjusted operating margin expansion despite tariff headwinds and generated strong cash flow. Management expresses confidence in continued high-end med tech growth for FY26, supported by a healthy capital order book and ongoing product innovation.

    Highlights

    5

    • Organic sales growth of 11% for Q4 FY25 and 10.3% for full year FY25, surpassing $25 billion in sales.

    • Adjusted operating margin expansion of 100 basis points in Q4 FY25, marking a second consecutive year of at least 100 bps expansion.

    • Record Mako installations, with over 3,000 systems worldwide and utilization rates of 50% for Knees and 20% for Hips globally.

    • Year-to-date cash from operations increased by $802 million to $5 billion, with free cash flow conversion of 81%.

    • Full-year FY26 organic net sales growth guidance of 8% to 9.5%, starting the year with higher confidence.

    Concerns

    3

    • Adjusted gross margin was 10 basis points lower in Q4 FY25 compared to Q4 FY24, reflecting tariff impacts.

    • Vascular's U.S. organic sales growth of 4.3% was offset by competitive pressures in the ischemic business.

    • Full-year FY26 tariff impacts expected to be approximately $400 million, including an incremental $200 million compared to FY25.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year 2026 organic net sales growth
    8% to 9.5%
    high materiality
    High
    Full-year 2026 adjusted net earnings per share
    $14.90 to $15.10
    high materiality
    High
    Full-year 2026 other income and expense
    approximately $420 million
    medium materiality
    Medium
    Full-year 2026 effective tax rate
    15% to 16%
    medium materiality
    Medium
    Full-year 2026 tariff impacts
    approximately $400 million
    high materiality
    High
    Free cash flow as a percentage of adjusted net earnings
    70% to 80%
    medium materiality
    High
    Full-year 2026 sales guidance pricing impact
    modestly positive
    low materiality
    Medium
    Full-year 2026 foreign exchange impact on sales and adjusted EPS
    slightly favorable
    low materiality
    Medium

    Segment performance

    11
    SegmentRevenueYoYQoQMargin
    MedSurg and Neurotechnology
    Exceptional organic sales growth in Q4 FY25, with U.S. organic growth of 13% and International organic growth of 10.9%.
    		—12.6%——
    Instruments
    U.S. organic sales growth fueled by strong capital demand in power tools, Steri-Shield, smoke evacuation, and Neptune Waste Management.
    Orthopaedic instruments growth: high-teensSurgical Technologies growth: high-teens
    		—19.1%——
    Endoscopy
    U.S. organic sales growth led by strong demand for Sports Medicine shoulder products and 1788 video platform.
    Sustainability business growth: robust double-digitSports Medicine business growth: robust double-digitCore Endoscopy portfolio growth: high single-digit
    		—11.1%——
    Medical
    U.S. organic sales growth driven by LIFEPAK 35, ProCuity, Vocera, and Sage products. Supply constraints experienced in 2025 are not expected to negatively impact 2026 growth rates.
    Acute Care growth: strong double-digitSage businesses growth: strong double-digit
    		—13.6%——
    Vascular
    U.S. organic sales growth powered by the recent launch of Surpass Elite flow diverting stent, offset by competitive pressures in the ischemic business. Figures do not include peripheral vascular business.
    Hemorrhagic business growth: strong double-digit
    		—4.3%——
    Neurocranial
    U.S. organic sales growth led by IVS and craniomaxillofacial businesses.
    IVS business growth: outstanding double-digitCraniomaxillofacial business growth: near double-digit
    		—9.9%——
    Orthopaedics
    Organic sales growth with U.S. organic growth of 9.6% and International organic growth of 5.4%. International growth led by Canada and emerging markets.
    		—8.4%——
    U.S. Knee business
    Organic growth reflecting market-leading position in robotic-assisted knee procedures and continued momentum from Mako installations.
    		—7.6%——
    U.S. Hips business
    Organic growth highlighted by the enduring success of Insignia Hip Stem and continuing adoption of Mako robotic kit platform with expanded capabilities.
    		—5.6%——
    U.S. Trauma and Extremities business
    Organic growth led by strong Shoulder growth. Core Trauma had solid high single-digit growth against a very high prior year comparable, driven by Pangea and market-leading nailing.
    Upper extremities business growth: double-digit
    		—8.5%——
    U.S. Other Ortho business
    Organic growth driven by robust installations in the quarter, led by momentum from the successful launch of Mako 4 in the U.S.
    		—28.7%——

    Operational metrics

    26
    Organic sales growth
    11%vs 10.2% in Q4 FY24
    Q4 FY25

    Company-wide organic sales growth.

    Organic sales growth
    10.3%vs 10.2% in FY24
    FY25

    Company-wide organic sales growth.

    Total sales
    $25 billion
    FY25

    Company-wide total sales, surpassed in FY25.

    U.S. organic sales growth
    11.2%
    FY25

    Company-wide U.S. organic sales growth.

    International organic sales growth
    7.5%
    FY25

    Company-wide International organic sales growth, led by South Korea and Japan.

    Pricing impact
    0.4%favorable
    FY25

    Impact from price on sales for the full year.

    Foreign currency impact on sales
    1%favorable
    Q4 FY25

    Impact of foreign currency on sales.

    Foreign currency impact on sales
    0.5%favorable
    FY25

    Impact of foreign currency on sales for the full year.

    Adjusted EPS
    $4.47up 11.5% from Q4 FY24
    Q4 FY25

    Driven by sales growth and operating margin expansion, partially offset by tariffs, higher interest expense, and higher effective tax rate.

    Foreign currency impact on adjusted EPS
    $0.02unfavorable
    Q4 FY25

    Impact of foreign currency translation on adjusted EPS.

    Adjusted EPS
    $13.63up 11.8% from FY24
    FY25

    Driven by outstanding sales growth and return to pre-COVID adjusted operating margins.

    Foreign currency impact on adjusted EPS
    $0.01favorable
    FY25

    Impact of foreign currency translation on adjusted EPS for the full year.

    Adjusted operating margin
    30.2%100 bps favorable to Q4 FY24
    Q4 FY25

    Driven by lower adjusted SG&A as a percentage of sales due to focus on operational excellence and margin expansion.

    Adjusted gross margin
    65.2%10 bps lower than Q4 FY24
    Q4 FY25

    Reflecting the impact of tariffs mostly offset by business mix and cost improvements as supply chain and manufacturing processes are optimized.

    Adjusted other income and expense
    $107 million$56 million higher than Q4 FY24
    Q4 FY25

    Due to increased interest expense from debt issuances early in the year and lower interest income.

    Adjusted effective tax rate
    16.1%
    Q4 FY25

    Reflecting the impact of geographic mix and certain discrete tax items.

    Mako installed base
    >3,000
    Q4 FY25

    Record quarter for Mako installations in both U.S. and worldwide.

    Mako utilization rate
    >2/3
    Q4 FY25

    Percentage of Knees performed on Mako in the U.S.

    Mako utilization rate
    >1/3
    Q4 FY25

    Percentage of Hips performed on Mako in the U.S.

    Mako utilization rate
    ~50%
    Q4 FY25

    Global utilization rates for Knees.

    Mako utilization rate
    >20%
    Q4 FY25

    Global utilization rates for Hips.

    Peripheral vascular procedural growth
    high teens
    Q4 FY25

    Robust procedural growth, partially offset by destocking.

    Capital-related revenue mix
    ~25%
    FY25

    Percentage of total revenue that is capital related.

    Procedurally driven revenue mix
    ~75%
    FY25

    Percentage of total revenue that is procedurally driven.

    ASC performance (Hips & Knees)
    high teens
    Q4 FY25

    Percentage of Hips and Knees flowing through the ASC channel.

    Triathlon Gold market share
    ~5%
    current

    Represents the portion of the market for metal-sensitive patients, which Stryker previously did not serve. Potential for this to grow beyond 5%.

    Industry KPIs

    7
    MetricValueDetails
    Tariff impact$400 millionUSD
    System utilizationover 2/3%
    Pricing realized price0.4%%
    Procedure volume growthrobust
    FCF conversion leverage guidance81%%
    Installed base system placements>3,000systems
    Segment franchise organic growth12.6%%

    Product announcements

    7
    ProductTypeDetails
    Mako RPS (handheld robot)launch
    Vocera Sync Badgelaunch
    Surpass Elite flow diverting stentlaunch
    Broadway (large 4 catheter)launch
    Incompass (total ankle)launch
    Artix (arterial product)launch
    Triathlon Gold (knee implant)launch

    Deals & partnerships

    8
    VoceraCombined with care.ai to form the new SmartCare business unit within Medical.

    Part of the strategy to create new business units and split sales forces for growth.

    care.aiCombined with Vocera to form the new SmartCare business unit within Medical.

    Part of the strategy to create new business units and split sales forces for growth.

    InariNow known as Stryker's peripheral vascular business, reported as part of the Vascular division.

    Approaching its 1-year anniversary as part of Stryker. Management intends to continue building and fortifying the PV business and broader vascular space through acquisitions.

    NICOTuck-in acquisition that continues to fuel extra growth in the AS business.

    Cited as an example of how small acquisitions contribute to MedSurg growth.

    VertosEnabled the addition of specialized pain salespeople.

    The IVS business now sells to interventional oncologists and pain doctors, benefiting from this specialization.

    MOLLIMarker product that contributed to the basket of products for the dedicated breast care sales force within Endoscopy.

    Combined with NOVADAQ tissue and Invuity retractors to create a comprehensive offering for breast care.

    NOVADAQTissue product that contributed to the basket of products for the dedicated breast care sales force within Endoscopy.

    Combined with MOLLI marker and Invuity retractors to create a comprehensive offering for breast care.

    InvuityRetractors initially bought by Instruments business, then moved to Endoscopy to support breast reconstruction procedures.

    Products were strategically moved to Endoscopy to be part of the breast care sales force's offering.

    Risks & headwinds

    5
    Tariff headwindsFY26, H1 FY26

    $400 million for FY26, including an incremental $200 million compared to FY25 (realized in H1 FY26).

    Mitigation: Business mix, cost improvements, supply chain optimization, manufacturing processes. Management expects to drive meaningful operating margin expansion despite this.

    Competitive pressures in ischemic business (Vascular)Q4 FY25 and ongoing for last couple of years.

    Offset strong double-digit performance in hemorrhagic business, leading to 4.3% U.S. organic growth for Vascular.

    Mitigation: Launch of new large 4 catheter called Broadway.

    Slower capital environment in EuropeQ4 FY25

    Not quantified, but offset by robust demand in other international markets.

    Mitigation: Healthy order book for 2026, expecting a good year in Europe.

    EU MDR (Medical Device Regulation)Ongoing, but potential for acceleration with proposed changes.

    Stunting innovation and timely patient access to products, particularly on the implant side (e.g., Insignia, Pangea, LIFEPAK approvals delayed).

    Mitigation: Management welcomes proposed changes to accelerate product launches and improve patient access, as Europe has "woken up to the reality" of the issue.

    Peripheral vascular destockingQ4 FY25, minimal in Q1 FY26

    Partially offset robust procedural growth in the high teens for peripheral vascular in Q4 FY25.

    Mitigation: Expected to be minimal in Q1 FY26, with organic growth rates resuming in late Q1 into Q2.

    What to watch in Q1 FY26

    5

    Mako Shoulder launch on Mako 4

    Midyear 2026
    CurrentLimited launch on Mako 3
    TargetLaunch on Mako 4

    Why it matters

    Expected to be a "really exciting" application, bringing significant value to a hard procedure and further extending Mako's lead.

    Shoulder, which will launch on Mako 4 midyear.

    Q&A highlights

    7

    What gives confidence for the 8-9.5% organic growth guidance for FY26, and is 10% still possible given prior comments?

    Kevin Lobo expressed modest confidence due to the strong order book and Mako performance, stating that 10% organic growth is "certainly possible" for a fifth consecutive year, depending on macro environment and procedure growth.

    “10% is certainly possible, but it does depend on a lot of things that are in the macro environment, procedure growth. But we do have a strong order book, we do feel good about procedures, and it's certainly possible that we could do a fifth year in a row.”

    asked by Larry Biegelsen · answered by Kevin Lobo

    2 min read5 chapters

    Detailed Narrative

    01

    Mako 4 Success and Expansion

    The Mako 4 robot has been an "absolute home run," driving record installations and strong utilization in Knees (over 2/3 in U.S., 50% globally) and Hips (over 1/3 in U.S., 20% globally). New applications like revision Hip and the upcoming Shoulder launch are expected to further enhance its value and drive adoption, particularly in international markets like Japan, where Mako is gaining traction after regulatory approval and data accumulation.

    02

    MedSurg Growth Strategy

    Stryker's MedSurg segment continues to deliver high growth through a strategy of constant product upgrades, tuck-in acquisitions (e.g., NICO), and systematic specialization by splitting sales forces. Examples include the new breast care sales force within Endoscopy, the oral maxillofacial/neuro split, and the infection/injury split within Sage. This offense, combining internal innovation, tuck-ins, and sales force specialization, is deemed sustainable for continued high growth.

    03

    Capital Equipment Market & Order Book

    The U.S. capital-related businesses performed robustly in Q4 FY25, with hospital CapEx budgets remaining healthy. The capital order book is elevated entering FY26, indicating strong demand for Stryker's capital products. While Europe experienced a slower capital environment in Q4, the overall order book for 2026 remains healthy, suggesting continued strength in capital demand.

    04

    Innovation Pipeline Beyond Mako

    Beyond Mako 4, Stryker is excited about new launches including the Mako RPS (a handheld robot for total knee, with initial cases started), Vocera Sync Badge, OptaBlate BBNA, Incompass total ankle, and Artix (a new arterial product within Inari). The company emphasizes a diversified innovation approach, noting that as the company becomes more diversified, individual flagship product launches become less critical to overall growth.

    05

    International Market Opportunity and Regulatory Environment

    While U.S. growth has recently outpaced international markets due to launch timing and regulatory approvals, international markets (e.g., South Korea, Japan, Australia, New Zealand, emerging markets) represent significant growth opportunities. Management expects similar dynamics to the U.S. as products gain regulatory approval and data accumulates. The company welcomes proposed changes to EU MDR, anticipating they will accelerate product launches and improve patient access.

    AI-generated summary of the company’s earnings call. Not investment advice.