Organic Sales Growth Despite Disruption
Q1 organic net sales growth of 2.4% worldwide, with 1.9% growth in the U.S. and 3.9% internationally. Management emphasized underlying demand remained healthy across businesses despite the cyber incident.
Stryker
· SYK
April 30th, 2026
Summary
- Earnings Call Date:
- 2026-04-30
- Change Since:
- -0.46%
- Next Earnings Date:
- 2026-07-30
Earnings Call Sentiment
PositiveThe call mixed a significant near-term operational setback—the late-quarter cyber incident that materially distorted Q1 results, pressured margins and reduced EPS—with several strong positives: rapid operational recovery, record Mako installations and robust robotic momentum, continued healthy underlying demand, strategic reorganization (Ortho Tech), active M&A (AVS) and maintained full-year guidance (organic sales growth 8.0%–9.5%, adjusted EPS $14.90–$15.10). Management expects most lost Q1 sales to be realized through the rest of the year, with catch-up skewed to the back half, and emphasized customer/employee support and successful recovery efforts.
Company Guidance
Stryker reiterated full‑year guidance despite the late‑quarter cyber incident, forecasting organic net sales growth of 8.0%–9.5% and full‑year adjusted net earnings per share of $14.90–$15.10, with adjusted other income and expense expected to be about $420 million and a full‑year effective tax rate of 15%–16%; management said most first‑quarter disruption will be recovered through the year with some revenue catch‑up in Q2 and more in H2, and that pricing should be modestly positive (with a slightly favorable FX/interest rate tailwind if rates hold and some anticipated tariff improvement). For Q1 they reported 2.4% organic sales growth (U.S. 1.9%, international 3.9%), pricing +0.3%, FX +1.6%, adjusted EPS of $2.60 (down $0.24 or 8.5% YoY), adjusted gross margin 63.6% (‑190 bps) and adjusted operating margin 21.1% (‑180 bps); YTD cash from operations was $581 million, gross debt/EBITDA was ~2.1x, and management continues to target healthy margin and cash conversion (roughly 70%–80% FCF conversion).
Full-Year Guidance Reaffirmed
Company maintained full-year 2026 guidance: expected organic net sales growth of 8.0%–9.5% and adjusted net EPS of $14.90–$15.10, reflecting confidence that most lost Q1 sales will be realized over the remainder of the year.
Rapid Operational Recovery from Cyber Incident
As of the week of April 1, global manufacturing network was fully operational. Management reported successful removal of unauthorized party, restoration from backups, and prioritized patient care during recovery.
Record Mako Installations and Strong Robotic Momentum
Delivered best-ever Q1 for Mako installations in the U.S. and internationally with rising utilization rates. Mako Shoulder feedback positive and full launch on Mako 4 expected mid-year. New RPS handheld receiving strong early customer feedback.
Strategic Reorganization and Product Integration
Established new Ortho Tech business by combining Mako and Enabling Technologies with Orthopaedic Instruments to simplify customer experience, accelerate innovation and speed to market; segment disclosures updated accordingly.
M&A Activity and Pipeline
Announced agreement to acquire Amplitude Vascular Systems (expected to close in Q2) to expand peripheral vascular/cardiovascular offerings; management signaled active M&A pipeline and capacity to deploy capital (gross debt/EBITDA ~2.1x at quarter end).
Key Product Approvals and International Rollouts
Pangea received approval in Europe (and Japan earlier), LIFEPAK approvals in Europe; management expects Pangea and LIFEPAK to drive above-market growth internationally as production ramps.
Financial and Tax Positioning
Q1 adjusted effective tax rate was 14.5%; full-year 2026 effective tax rate expected 15%–16%. YTD cash from operations of $581M; company expects free cash flow conversion in the ~70%–80% range and maintained adjusted other income & expense full-year expectation of ~$420M.
Smart Hospital Launch
Launched Smart Hospital by combining Vocera and care.ai into SmartCare unit to provide integrated solutions (positive early customer feedback reported).
Operator
Welcome to the First Quarter 2026 Stryker Earnings Call. My name is Megan, and I'll be your operator for today's call. [Operator Instructions] This conference call is being recorded for replay purposes. Before we begin, I would like to remind you that the discussions during this conference call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found today -- in today's press conference release that is an exhibit to Stryker's current report on Form 8-K filed today with the SEC. I will now turn the call over to Mr.
Kevin Lobo, Chair and Executive Officer. You may proceed, sir.
Kevin Lobo
Welcome to Stryker's First Quarter Earnings Call. Joining me today are Preston Wells, Stryker's CFO; and Jason Beach, Vice President of Finance and Investor Relations. Today's call will reflect a dynamic quarter. The cyber incident had a big impact on our results and affected each of our businesses differently given their varied go-to-market models and processes to record revenue. This resulted in distortions in our first quarter results that will normalize over the course of the year. Preston will provide additional color in his remarks, but this situation will not enable us to provide the normal level of detail or explanations that you are accustomed to hearing from us. The incident occurred late in the quarter and resulted in a global di...
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