Stryker (NYSE:SYK) executives highlighted double-digit organic growth, record robotic system installations, and another year of margin expansion during the company’s fourth-quarter and full-year 2025 earnings call, while also outlining expectations for continued strength in 2026 despite incremental tariff headwinds.
2025 results: double-digit organic growth and $25 billion-plus in sales
Chair and CEO Kevin Lobo said 2025 results were “outstanding” in both the fourth quarter and full year, noting organic sales growth of 11% in Q4 and 10.3% for the year, surpassing $25 billion in sales. Lobo characterized demand as “robust” across the portfolio, citing double-digit organic sales growth globally for the full year in Neurocranial, Endoscopy, Instruments, and Trauma and Extremities.
Margins and cash flow: expansion continues amid tariff pressure
CFO Preston Wells said fourth-quarter adjusted earnings per share were $4.47, up 11.5% year over year, driven by sales growth and operating margin expansion, partially offset by tariffs, higher interest expense, and a higher effective tax rate. Full-year adjusted EPS was $13.63, up 11.8% from 2024.
Wells said Stryker delivered a second consecutive year of at least 100 basis points of adjusted operating margin expansion and described full-year margins as having returned to “pre-COVID adjusted operating margins.” In Q4, adjusted gross margin was 65.2%, down 10 basis points from the prior-year quarter due to tariffs that were “mostly offset” by mix and cost improvements. Adjusted operating margin was 30.2%, up 100 basis points year over year, driven by lower adjusted SG&A as a percentage of sales.
On cash generation, Wells reported $5 billion in cash from operations for 2025, up $802 million from 2024, citing higher earnings and working capital improvements. Free cash flow as a percentage of adjusted net earnings rose to 81% from 75% last year, and the company reiterated its long-range target of 70%–80%.
Non-operating items included adjusted other income/expense of $107 million in Q4, which Wells said was $56 million higher than 2024 due to increased interest expense from debt issuances early in the year and lower interest income. For 2026, the company expects other income and expense of approximately $420 million. The adjusted effective tax rate was 16.1% in Q4, and the company guided to a 15%–16% effective tax rate for 2026.
Robotics, capital demand, and segment performance highlights
Vice President of Finance and IR Jason Beach said procedural volumes were healthy in Q4 and that the company expects markets to remain strong in 2026, supported by adoption of robotic-assisted surgery, favorable demographics, and demand for capital products. Beach said hospital CapEx budgets were healthy and Stryker’s capital order book remained “elevated” entering 2026.
Beach highlighted “yet another record quarter” for Mako installations in both the U.S. and globally, saying the install base now exceeds 3,000 systems worldwide. Utilization also increased: in the U.S., management said more than two-thirds of knees and more than one-third of hips were performed on Mako exiting 2025, with global utilization around 50% for knees and over 20% for hips. Lobo said he sees no inherent ceiling for robotics adoption and believes it could become “standard of care” over time.
In prepared remarks, Wells detailed segment performance, including:
- MedSurg and Neurotechnology: Q4 organic sales growth of 12.6% (U.S. 13%, international 10.9%).
- Instruments: U.S. organic sales growth of 19.1%, driven by capital demand in power tools, Steri-Shield, smoke evacuation, and Neptune waste management.
- Endoscopy: U.S. organic sales growth of 11.1%, led by Sustainability and Sports Medicine, with high single-digit growth in core Endoscopy; management cited strong demand for shoulder products and the 1788 platform.
- Medical: U.S. organic sales growth of 13.6%, driven by LIFEPAK 35, ProCuity, Vocera, and Sage products. Wells said supply constraints experienced in 2025 are not expected to negatively impact 2026 growth rates.
- Vascular: U.S. organic sales growth of 4.3%, with strength in hemorrhagic products aided by the launch of Surpass Elite flow-diverting stent, offset by competitive pressures in ischemic products. Wells noted vascular segment organic growth figures exclude the peripheral vascular business.
- Orthopaedics: organic sales growth of 8.4% (U.S. 9.6%, international 5.4%), including U.S. knees up 7.6% and U.S. hips up 5.6%. Trauma and Extremities grew 8.5% in the U.S., led by upper extremities.
In Q&A, Lobo said Trauma and Extremities faced a difficult comparison and described ongoing strength in shoulders, while noting foot and ankle was “a bit soft” in 2025. He said Stryker is launching a new total ankle called Incompass, with the company expecting limited impact in Q1 but more contribution beginning in Q2.
Management also discussed Stryker’s peripheral vascular business (formerly Inari), which Beach said posted procedural growth in the “high teens” in Q4 but faced stocking effects that were expected to be “minimal” in Q1. In response to an analyst question about pulmonary embolism study timing, Beach said results would be “closer to middle of next year.”
2026 outlook: 8%–9.5% organic growth, EPS guidance, and tariff expectations
For 2026, Stryker guided to organic net sales growth of 8%–9.5% and adjusted EPS of $14.90–$15.10. Wells said the sales outlook includes a “modestly positive” impact from price and, if exchange rates remain near year-to-date levels, a slightly favorable impact on both sales and adjusted EPS. The company expects the same number of selling days in each quarter of 2026 as in 2025 and similar seasonality.
Tariffs were a recurring topic, with Wells saying Stryker expects full-year tariff impacts of approximately $400 million in 2026, including an incremental $200 million versus 2025 that will be realized in the first half of the year. Lobo emphasized that the company expects to continue driving margin expansion despite the incremental tariff pressure, pointing to what he described as stronger “margin muscle” built over time.
Strategy and leadership: specialization, M&A capacity, and commercial leadership changes
Lobo reiterated the company’s strategy of specialization—splitting sales forces and forming focused business units—to sustain growth. He cited the creation of a SmartCare business unit combining Vocera and care.ai and pointed to the Breast Care sales force within Endoscopy launched at the beginning of 2025, which he said contributed to growth. He also described Stryker’s approach to tuck-in acquisitions and sales force splits as part of a “secret sauce” supporting the MedSurg growth profile.
On leadership, Lobo explained the rationale for elevating Spencer Stiles to president and chief operating officer in December, saying it provides a platform to lead the global commercial organization and enables a “cascade” of other leadership promotions. Lobo also said the change will allow him to spend more time with operations and on information technology and AI, including productivity opportunities.
Stryker also reiterated its interest in M&A. Lobo said the balance sheet remains strong and the deal pipeline is “very healthy,” including tuck-ins and potential adjacencies, though he did not provide specifics.
About Stryker (NYSE:SYK)
Stryker Corporation is a global medical technology company that designs, manufactures and markets a broad range of products and services for use in hospitals, surgeons’ offices and other healthcare facilities. Its primary business activities span orthopedics (including joint replacement implants, trauma and extremities products), surgical equipment and operating room technologies (such as visualization, navigation and powered instruments), neurotechnology and spine solutions, and patient-handling and emergency medical equipment.
