Key points for investors:
- Cyber incident: A late-quarter cyber incident materially disrupted operations, causing delayed shipments and revenue recognition; management states the incident distorted Q1 results but systems and manufacturing were restored (fully operational as of the week of April 1). Patient care was prioritized and customer response has been largely positive. Management will not disclose the usual level of segment detail for Q1 because results were atypical.
- Q1 financials: Organic sales growth of 2.4% (1.9% U.S., 3.9% international). Adjusted EPS was $2.60, down 8.5% year-over-year, pressured by limited sales growth, lost manufacturing absorption from the cyber incident, tariffs, and higher interest expense. Adjusted gross margin was 63.6% (down 190 bps); adjusted operating margin was 21.1% (down 180 bps). Year-to-date operating cash flow was $581 million.
- Full-year guidance maintained: Despite the Q1 disruption, Stryker reaffirmed full-year targets — organic net sales growth of 8.0%–9.5% and adjusted EPS of $14.90–$15.10. Management expects much of the Q1 lost sales to be realized over the rest of 2026, with some recovery in Q2 and a larger catch-up in H2 depending on product types and operating models.
- Business highlights / drivers: Strong fundamentals noted across markets — healthy procedure volumes, elevated capital order book, record Q1 Mako installations and increasing utilization, continued momentum for Mako Shoulder (full launch on Mako 4 mid-year), and positive early feedback for new products (Pangea, LIFEPAK, RPS handheld). Ortho Tech was formed by combining Mako, Enabling Technologies and Orthopaedic Instruments to simplify go-to-market.
- M&A and strategic moves: Announced acquisition of Amplitude Vascular Systems (expected close Q2) to expand peripheral vascular/cardiovascular presence. Management signals an active M&A pipeline and capacity to deploy capital (gross debt/EBITDA ~2.1x at quarter end).
- Guidance & financial posture: Anticipated adjusted other income/expense ~ $420M for 2026; full-year tax rate expected ~15%–16%; free cash flow conversion expected in the ~70%–80% range. Management expects to absorb some input-cost pressures (tariffs, commodity/energy) through procurement and operational discipline.
- Investor takeaways: Q1 headline weakness largely operationally driven and (management asserts) temporary; the company is reiterating full-year targets based on healthy demand, product momentum (especially in robotics and capital), and an expectation that deferred/delayed revenue will be recognized across Q2–Q4 with most catch-up in H2.
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