SYK Stryker Corporation 10-Q 2026-09-30 section summaries

Stryker Corporation — Q3 and first nine months of 2026

Dollar amounts in millions, except per-share data and shares.

Consolidated results

Q3 sales grew 7.6%, but operating income fell 8.9% and net earnings declined as higher operating expenses—including impairment and restructuring charges—more than offset sales growth. Nine-month sales rose 6.6%, with operating income and net earnings both higher year over year. Nine-month interest expense was $415 versus $453; Q3 interest expense was $137 versus $157.

Segment performance

Segment operating income increased in both segments, but consolidated operating income was reduced by corporate costs, restructuring and special charges, impairments, acquisition/integration costs and intangible amortization.

The $293 Q3 Peripheral Vascular impairment followed an interim valuation that reflected lower forecast cash flows, near-term operating and supply constraints, and a longer recovery and growth timeline. Further adverse changes to projected growth, margins, taxes or discount-rate assumptions could lead to additional material impairment charges.

Revenue categories and organizational changes

For the nine months, revenue by reported business category was: Instruments, $2,919 versus $2,705; Endoscopy, $2,893 versus $2,662; Medical, $3,105 versus $2,920; Vascular, $1,579 versus $1,429; Knees, $1,998 versus $1,907; Hips, $1,392 versus $1,366; Trauma and Extremities, $3,117 versus $2,862; Ortho Tech, $2,117 versus $1,917; and Spinal Implants, $177 (no prior-period comparative shown). In Q3, Instruments revenue was $996 versus $949 and Knees revenue was $635 versus $628.

Stryker created Ortho Tech in Q1 2026, combining Orthopaedic Instruments with Mako and enabling technologies; Neuro Cranial and spine enabling technologies were aligned with the remaining Instruments business, and historical segment information was recast. Ortho Tech included Q3 Orthopaedic Instruments revenue of $535 versus $492 and Other Orthopaedics revenue of $219 versus $159; 9M amounts were $1,547 versus $1,477 and $570 versus $440, respectively. Instruments included Q3 Neuro Cranial revenue of $670 versus $637 and Enabling Technologies revenue of $28 versus $45; 9M amounts were $1,957 versus $1,816 and $82 versus $108.

Balance sheet, cash flow and capital allocation

Stryker repaid $1,000 of 3.500% notes in March. Total debt reported in the debt disclosures was $14,930 at September 30, versus $15,859 at year-end. Commercial paper outstanding was $250 against a $3,000 program limit; available borrowing capacity was $2,664, and the company reported covenant compliance. The board’s October authorization added $3,000 to the share repurchase program, bringing total authorization to $3,033. During the first nine months, Stryker repurchased 3.0 million shares for $1,000.

Acquisitions, taxes and other exposures

Stryker acquired AVS in May for $434 net cash consideration plus milestone payments of up to $400, valued at $271 at acquisition. AVS is developing an intravascular lithotripsy platform for complex peripheral arterial disease; its purchase-price allocation remains preliminary, primarily because of in-process R&D valuation. The prior-year acquisition cash outflow largely reflected Inari, acquired in February 2025 for $4,810 net of acquired cash. In October 2026, Stryker agreed to invest approximately $400 in CMR Surgical preferred equity, obtain exclusive U.S. distribution rights for its Versius portfolio and receive an exclusive option to acquire CMR’s remaining equity; closing was expected in Q4, subject to approvals and customary conditions.

Effective tax rates were 24.5% versus 16.5% in Q3 and 18.7% versus 14.7% for 9M. The higher 2026 rates reflected the nondeductible goodwill impairment; the nine-month comparison also reflected a 2025 tax benefit from the Spinal Implants business sale. The organizational change reallocated $518 of goodwill from MedSurg and Neurotechnology to Orthopaedics.

At September 30, contract liabilities were $960 versus $1,024 at year-end; $615 of revenue was recognized from beginning-period contract liabilities. Customer lease agreements sold without recourse represented less than 4% of revenue. Stryker also faces product-liability, labor, tax, intellectual-property and other proceedings; it is self-insured for certain claims, and actual product-liability costs could materially exceed accruals.

Stryker (SYK) — Q3 and nine months 2026

Consolidated results

Dollar amounts in millions, except per-share data. Q3 and 9M periods are each compared with the corresponding 2025 period.

Q3 sales increased 7.7%, driven primarily by unit volume (+7.6%), with pricing contributing 0.1%. Nine-month sales grew 6.6%; constant-currency growth was 5.9%, including a 0.7% favorable currency effect. Excluding acquisitions and divestitures, nine-month organic growth was 6.4% (6.2% at constant currency).

Gross margin increased to 65.2% from 63.6% in Q3 and to 65.6% from 63.7% for nine months. Q3 improvement reflected volume/mix, lower amortization of inventory stepped up to fair value, and structural optimization, partly offset by manufacturing and supply-chain costs. Nine-month margin benefited from lower fair-value inventory amortization, reversal of 2025 tariffs, volume/mix, and pricing; higher manufacturing and supply-chain costs partly offset those gains. The company attributed some 2026 manufacturing costs to idle production time following the Q1 cybersecurity incident. It expects faster growth in lower-margin MedSurg and Neurotechnology than in Orthopaedics to weigh on future gross margin through mix.

Q3 GAAP operating margin declined to 15.9% from 18.7%, primarily reflecting a $293 million goodwill impairment related to Peripheral Vascular; the impairment was nondeductible and increased the effective tax rate. For nine months, operating margin improved to 19.0% from 17.2%.

Revenue categories and segment performance

MedSurg and Neurotechnology’s Q3 sales grew 9.2%; growth was strongest in Endoscopy, Medical, and Vascular. Its margin improved on volume, lower manufacturing costs, and lower SG&A. Orthopaedics sales grew 5.7%; Ortho Tech and Trauma and Extremities advanced, while Hips declined. Orthopaedics’ margin was pressured mainly by higher SG&A and manufacturing costs. Following the Spinal Implants business sale, that category’s sales were substantially lower.

Adjusted results

Adjusted Q3 diluted EPS increased 10.3%; nine-month adjusted EPS increased 7.1%. Adjustments principally exclude acquisition-related costs, purchased-intangible amortization, structural optimization charges, and impairments. Nine-month 2026 adjusted results also exclude a $158 million benefit from reversal of 2025 tariffs, including a $133 million net-earnings adjustment. Adjusted measures are non-GAAP and should be considered alongside GAAP results.

Cash flows and liquidity

Higher net earnings primarily lifted operating cash flow, partly offset by working-capital changes. Investing outflow reflected AVS acquisition consideration and capital spending; the prior-year outflow included the Inari acquisition. Financing uses included repayment of $1.000 billion of maturing unsecured notes, $1.000 billion of share repurchases, and dividends. The prior-year financing inflow was mainly from unsecured note issuance. Cash, cash equivalents, short-term investments, and marketable securities totaled $3.271 billion at September 30, 2026, versus $4.100 billion at December 31, 2025. Approximately 44% of cash and investments were held outside the U.S., compared with 20% at year-end. Stryker cites operating cash flow, commercial paper, credit lines, and investment-grade ratings as liquidity and refinancing sources.

Impairment and other developments

Peripheral Vascular goodwill was approximately $3.259 billion at September 30, 2026, following the Q3 impairment. Reduced forecasts reflected near-term operational and supply constraints and a longer expected path to growth and market recovery. The company’s sensitivity analysis estimated potential additional impairment charges of $823 million for a 100-basis-point increase in the discount rate, $145 million for a 100-basis-point decrease in long-term revenue growth, and $497 million for a 100-basis-point decrease in long-term operating margin. Further impairment is possible if performance falls short of projections or the discount rate rises.

Stryker also cited uncertainty about the operational and financial effects of the cybersecurity incident first reported March 11, 2026, as well as costs associated with EU medical-device compliance, recalls, and regulatory and legal matters. In Q1 2026, it reorganized reporting categories, including combining Orthopaedic Instruments with Other Orthopaedics in Ortho Tech and moving Neuro Cranial and Enabling Technologies into Instruments; historical periods were recast. Its stated capital-allocation priorities remain acquisitions, dividends, and share repurchases.

Stryker identifies foreign-exchange exposure as its greatest potential market risk. It reports no material change from the exchange-rate risk disclosures in its 2025 Form 10-K; this section provides no new quantitative exposure measures.

Disclosure Controls and Internal Control

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2026. During the nine months ended September 30, 2026, no change in internal control over financial reporting materially affected, or was reasonably likely to materially affect, the company’s internal control over financial reporting.

Stryker reported no material changes to the risk factors described in its 2025 Form 10-K or its Form 10-Q for the quarter ended March 31, 2026. The section identifies no new or changed material risks.

Other information

Certain Stryker officers and directors participate in the company’s employee stock purchase and 401(k) plans. They may elect to have shares withheld to cover taxes or stock-option exercise prices; these elections may constitute trading arrangements that are not intended to satisfy Rule 10b5-1.

Under Exchange Act Section 13(r), Stryker disclosed that its Russian subsidiary files import notifications with, or seeks permits from, Russia’s Federal Security Service (FSB) as required to import products. The subsidiary filed three notifications in Q3 2026. These activities are free of charge and generated no gross revenue or net profit. They are conducted under OFAC General License No. 1B, and Stryker expects to continue them only while permitted by that license, a successor license, or other OFAC authorization.