Why is reported EPS growth so different from adjusted EPS growth?

Q4 2025 reported EPS of $2.20 includes a $589 million tax charge ($1.53 per share) from transferring certain intellectual property between tax jurisdictions. Full-year reported EPS also absorbs $1.49 per share of amortization of purchased intangibles, $0.78 of other acquisition and integration costs, $0.34 of inventory step-up, and $0.37 of structural optimization charges. Adjusted EPS excludes these items, so growth appears much stronger.

What is driving growth, and is it price or volume?

Growth is overwhelmingly volume-driven. Full-year organic growth of 10.3% included 9.9% from increased unit volume and only 0.4% from higher prices. Q4 showed a similar pattern, with 10.9% from volume and 0.1% from price. The guidance assumes a modestly favorable pricing impact for 2026.

How much of the business is exposed to Orthopaedics versus MedSurg and Neurotechnology?

MedSurg and Neurotechnology is now the larger segment, with FY 2025 sales of $15.6 billion (about 62% of total) versus $9.5 billion for Orthopaedics. MedSurg grew 15.7% reported in 2025, while Orthopaedics grew 4.3% reported. Orthopaedics growth is held back by Spinal Implants, which was largely divested, but its core Knees, Hips, and Trauma businesses grew 9.3% to 12.6% in the full year.

What balance sheet and capital allocation changes should investors note?

Stryker spent $5.0 billion on acquisitions in 2025, up from $1.6 billion in 2024, and long-term debt increased to $14.9 billion from $12.2 billion. Goodwill and other intangibles rose to $25.0 billion from $20.3 billion. Operating cash flow was $5.0 billion, and dividends paid were $1.3 billion. Leverage has increased, making integration performance, including Inari Medical, important to watch.

What does 2026 guidance imply for investors?

Guidance of 8.0% to 9.5% organic sales growth is slightly below the 10.3% organic growth achieved in 2025, while adjusted EPS guidance of $14.90 to $15.10 implies about 9% to 11% growth over $13.63. Management cites healthy procedure volumes and strong demand for capital products. The company does not provide reconciliations for reported guidance because acquisitions, FX, special charges, and tax matters are difficult to forecast.

SYK 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 29, 2026. Cited figures are marked; the original filing is the authoritative source.

Stryker reported fourth-quarter 2025 net sales of $7.2 billion^a, up 11.4% reported and 11.0% organic, with adjusted operating margin expanding 100 bps to 30.2%.

Full-year sales reached $25.1 billion^b (up 11.2%, 10.3% organic), and adjusted EPS rose 11.8% to $13.63. MedSurg and Neurotechnology drove most of the growth, with Q4 sales up 17.5% reported and 12.6% organic, while Orthopaedics grew 8.4% organic in Q4 after a 7.5-point drag from divestitures. Spinal Implants sales fell sharply, which is the main soft spot in the segment detail.

Reported results are distorted by non-recurring items. Q4 reported EPS of $2.20^c (up 56%) includes a $589 million tax charge, or $1.53 per share, tied to the transfer of certain intellectual property between tax jurisdictions. Reported full-year EPS of $8.40 rose only 8.2% because of that charge, $173 million of inventory step-up, $335 million of other acquisition and integration costs (including $140 million of stock compensation payments on change in control), and the 2024 goodwill impairment comparison.

Investors should anchor on adjusted figures, while recognizing that the adjustments are large and recurring in nature for an acquisitive company. For 2026, management guides to organic net sales growth of 8.0% to 9.5% and adjusted EPS of $14.90 to $15.10^d, implying roughly 9% to 11% adjusted EPS growth over $13.63.

The balance sheet is more leveraged after acquisitions: long-term debt rose to $14.9 billion from $12.2 billion, and 2025 acquisitions consumed $5.0 billion of cash, with goodwill and intangibles up to $25.0 billion. Integration of Inari Medical, referenced in the forward-looking statements, is a key execution item for 2026.

02—Key points

Key Highlights

Q4 2025 net sales rose 11.4% to $7.2 billion (11.0% organic); FY 2025 net sales rose 11.2% to $25.1 billion (10.3% organic), with volume driving nearly all organic growth.
Adjusted operating margin expanded 100 bps to 30.2% in Q4 and 26.3% for the full year, the second consecutive year of at least 100 bps expansion.
Q4 reported diluted EPS of $2.20 (up 56%) includes a $1.53 per-share tax charge from intellectual property transfers between tax jurisdictions; adjusted EPS was $4.47 (up 11.5%).
FY 2025 adjusted EPS was $13.63 (up 11.8%); reported EPS of $8.40 was up only 8.2% due to tax, acquisition-related, and amortization charges.
MedSurg and Neurotechnology grew 12.6% organically in Q4 and 10.7% for the year, led by Vascular (up 58% in Q4) and Endoscopy/Medical; Orthopaedics grew 8.4% organically in Q4 and 9.5% for the year.
Spinal Implants sales collapsed to $8 million in Q4 from $186 million a year earlier, a divestiture-related decline that reduced Orthopaedics reported growth to 2.2%.
2026 guidance calls for 8.0% to 9.5% organic sales growth and adjusted EPS of $14.90 to $15.10, with a modestly favorable pricing impact and a slightly positive FX benefit.

03—Questions

Frequently Asked Questions

Why is reported EPS growth so different from adjusted EPS growth?
Q4 2025 reported EPS of $2.20 includes a $589 million tax charge ($1.53 per share) from transferring certain intellectual property between tax jurisdictions. Full-year reported EPS also absorbs $1.49 per share of amortization of purchased intangibles, $0.78 of other acquisition and integration costs, $0.34 of inventory step-up, and $0.37 of structural optimization charges. Adjusted EPS excludes these items, so growth appears much stronger.
What is driving growth, and is it price or volume?
Growth is overwhelmingly volume-driven. Full-year organic growth of 10.3% included 9.9% from increased unit volume and only 0.4% from higher prices. Q4 showed a similar pattern, with 10.9% from volume and 0.1% from price. The guidance assumes a modestly favorable pricing impact for 2026.
How much of the business is exposed to Orthopaedics versus MedSurg and Neurotechnology?
MedSurg and Neurotechnology is now the larger segment, with FY 2025 sales of $15.6 billion (about 62% of total) versus $9.5 billion for Orthopaedics. MedSurg grew 15.7% reported in 2025, while Orthopaedics grew 4.3% reported. Orthopaedics growth is held back by Spinal Implants, which was largely divested, but its core Knees, Hips, and Trauma businesses grew 9.3% to 12.6% in the full year.
What balance sheet and capital allocation changes should investors note?
Stryker spent $5.0 billion on acquisitions in 2025, up from $1.6 billion in 2024, and long-term debt increased to $14.9 billion from $12.2 billion. Goodwill and other intangibles rose to $25.0 billion from $20.3 billion. Operating cash flow was $5.0 billion, and dividends paid were $1.3 billion. Leverage has increased, making integration performance, including Inari Medical, important to watch.
What does 2026 guidance imply for investors?
Guidance of 8.0% to 9.5% organic sales growth is slightly below the 10.3% organic growth achieved in 2025, while adjusted EPS guidance of $14.90 to $15.10 implies about 9% to 11% growth over $13.63. Management cites healthy procedure volumes and strong demand for capital products. The company does not provide reconciliations for reported guidance because acquisitions, FX, special charges, and tax matters are difficult to forecast.

04—Continue

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