Stryker cuts outlook after quarterly sales of $6.52 billion and earnings below estimates
Key Facts
Stryker reported net sales of $6.52 billion in the third quarter of 2026, up 7.7% year over year, with organic sales rising at the same rate. But adjusted EPS of $3.52 fell short of analysts’ estimate of $3.55, while revenue also missed the $6.62 billion forecast, according to FactSet estimates cited by Dow Jones Newswires. Chief Executive Kevin Lobo said the results reflected good performance but also came in below management’s expectations. The announcement came on October 29, alongside the company’s cuts to its full-year sales and adjusted earnings outlook. Shares fell 7.6% to $288 in after-hours trading following the outlook cut.
Year over year, adjusted EPS rose 10.3% to $3.52, while reported earnings moved in the opposite direction, falling 11.7% to $1.96. Net income was $753 million, compared with $859 million in the third quarter of the prior year, when reported EPS reached $2.22. The figures underscore the divergence between growth in adjusted earnings and a decline in reported accounting profit. Sales continued to rise year over year, but growth slowed from the second quarter. In that quarter, net sales rose 9.4% to $6.6 billion, organic sales increased 9.0%, and adjusted EPS climbed 17.9% to $3.69.
By segment, MedSurg and Neurotechnology grew faster, with sales of $3.7 billion, up 9.2% in the third quarter. Orthopaedics sales, meanwhile, reached $2.9 billion, an increase of 5.7%. That put the first segment above the overall sales growth rate of 7.7%, while orthopaedics growth came in below it. The gap is consistent with demand and manufacturing pressures that preceded the announcement. Reuters reported that manufacturing constraints in the peripheral vascular business would persist through the fourth quarter, and that recovery in joint replacement procedures remained weak, particularly for hips. The report also cited strong demand for capital equipment at hospitals, with orders building, and continued strength in Trauma & Extremities.
Stryker cut its 2026 organic sales growth forecast to a range of 6.5%–7.0%, from its previous range of 8.3%–9.3%. It also narrowed its adjusted EPS forecast to $14.80–$14.90, from its previous range of $14.95–$15.10. The company had announced the previous ranges in its July guidance for the fiscal year, noting at the time a slight positive effect from pricing on sales. The new revision follows annual sales growth in the third quarter, but lowers its estimate for the full-year trajectory. Lobo said the company’s operating fundamentals remained strong and that it expected strong performance in the fourth quarter and good momentum heading into 2027. That puts the coming quarter at the center of investors’ attention as they assess the business trajectory after the guidance cut.
The company’s financial activity included $1 billion in share repurchases during the third quarter. In October, the board approved a $3 billion increase to its existing repurchase program, according to a company statement. In a separate strategic move, Stryker announced on October 12 a preferred investment of about $400 million in CMR Surgical, along with an exclusive option to acquire all of the company’s shares and an exclusive U.S. sales agency for the Versius portfolio. The acquisition option allows it to purchase 100% of the outstanding shares under the agreement’s terms, while the arrangement also includes distribution of Versius products in the U.S. market. The deal adds expansion in robotic-assisted surgery to the company’s moves, while third-quarter results and the outlook cut remain the focus of the reported operating figures.