Why did adjusted EPS decline while reported EPS increased?

Reported EPS rose 14.2% to $1.93 because Q1 2025 included large acquisition-related charges (notably $139 million of stock compensation payments upon a change in control and $34 million of inventory step-up) and a $35 million goodwill impairment, none of which recurred at comparable size in Q1 2026. Adjusted EPS fell 8.5% to $2.60 because adjusted operating income declined and adjusted gross margin compressed, with Q1 2026 including $81 million of charges for terminating sales relationships in certain countries and the cyber-related pressures on operations.

Is Stryker still on track to meet its 2026 guidance?

Management reaffirmed full-year guidance of 8.0%–9.5% organic sales growth and adjusted EPS of $14.90–$15.10. Q1 organic growth of 2.4% is well below the guided range, so the company needs a substantial acceleration over the remaining three quarters. Guidance excludes some uncertain items, such as structural optimization charges and regulatory or legal outcomes, which could affect results. Investors should watch whether the cyber recovery and the Inari integration support that acceleration.

What was the impact of the cybersecurity incident on the quarter?

The filing references a cybersecurity incident first reported March 11, 2026, and management says the company recovered quickly and continues to serve customers. The filing does not quantify the direct financial impact, and the press release does not break out cyber-specific costs. The lower U.S. growth (0.8% reported) and weak Medical segment performance (down 4.6% in the U.S.) are areas where investors may want to probe whether disruption contributed. Forward-looking risk factors also list cyber-attacks as a risk to operations and results.

Why did cash and debt decline so much, and what does it mean for capital allocation?

Cash fell from $4.0 billion to $2.9 billion, largely due to $1.0 billion in net debt repayment, $337 million in dividends, $166 million in capex, and a $464 million working capital outflow that offset $581 million of operating cash flow. Long-term debt fell to $14.2 billion from $14.9 billion. Acquisition spending was only $22 million, compared with $4.7 billion in Q1 2025, which reflects the absence of a large deal in the quarter. The Inari acquisition is referenced as a pending or recent transaction whose integration and costs remain a risk factor.

How does the Ortho Tech reorganization affect comparability?

Stryker combined its orthopaedic instruments business and Mako/enabling technologies into a new Ortho Tech segment, and moved Neuro Cranial and spine enabling technologies into Instruments. Prior periods have been recast, so segment growth rates in the filing are comparable across periods. Consolidated financial statements are unchanged. Investors should use the recast segment data and the supplemental quarterly information on the investor relations site when comparing segment trends over time.

SYK 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 30, 2026. Cited figures are marked; the original filing is the authoritative source.

Stryker reported first quarter 2026 results on April 30, 2026, with reported net sales up 2.6% to $6.0 billion^a and organic growth of 2.4%, driven by 2.1% unit volume growth and 0.3% pricing.

The MedSurg and Neurotechnology segment grew reported sales 5.0% to $3.2 billion^b, with Vascular (+27.5% U.S.) and Instruments as standouts, while Orthopaedics was roughly flat reported (+0.1%) at $2.8 billion, with organic growth of 4.1% offset by the divestiture of Spinal Implants (down ~99%). Reported EPS rose 14.2% to $1.93, but adjusted EPS fell 8.5% to $2.60 and adjusted operating margin contracted 180 bps to 21.1%, reflecting pressure from a cyber incident first reported March 11, 2026, and related costs. Management reaffirmed full-year 2026 guidance of 8.0%–9.5% organic sales growth and adjusted EPS of $14.90–$15.10.

Balance sheet and cash flow show a shift in capital allocation: cash fell to $2.9 billion^c from $4.0 billion, and long-term debt declined to $14.2 billion from $14.9 billion after $1.0 billion of net debt repayment. Operating cash flow improved to $581 million from $250 million, though working capital remained a drag, and acquisition spending dropped to $22 million versus $4.7 billion a year earlier. The company also reorganized its orthopaedics business into a new Ortho Tech unit and recast prior-period segment data, which affects comparability of segment trends.

For investors, the key tension is between strong reported top-line and GAAP earnings growth, which benefited from lower acquisition-related and impairment charges, and a weaker underlying profitability picture on an adjusted basis. The reaffirmed guidance implies a significant ramp in the remaining quarters, so execution on the cyber recovery, margin recovery, and the Inari integration will be central to the investment thesis.

02—Key points

Key Highlights

Reported net sales rose 2.6% to $6.02 billion; organic growth was 2.4% (2.1% volume, 0.3% price), with international sales up 8.3% reported and U.S. sales up only 0.8%.
Adjusted operating income margin contracted 180 bps to 21.1%, and adjusted EPS fell 8.5% to $2.60, while reported EPS rose 14.2% to $1.93 on lower impairment and acquisition-related charges.
MedSurg and Neurotechnology grew 5.0% reported (0.9% organic), led by Vascular (+27.5% in the U.S.) and Instruments (+9.9% in the U.S.); Medical segment sales declined 4.6% in the U.S.
Orthopaedics was flat reported (+0.1%) but +4.1% organic, with Trauma and Extremities up 9.5% and Knees up 4.7%; Spinal Implants largely exited, contributing a 1.4% divestiture drag.
Full-year 2026 guidance was maintained: organic sales growth of 8.0%–9.5% and adjusted EPS of $14.90–$15.10, which implies a meaningful acceleration from Q1 levels.
Cash declined to $2.9 billion and long-term debt fell to $14.2 billion after $1.0 billion in net repayments; operating cash flow improved to $581 million from $250 million.
Management cited a cyber incident first reported March 11, 2026, which it says has been recovered quickly; the company also reorganized Orthopaedics into a new Ortho Tech segment, with prior periods recast.

03—Questions

Frequently Asked Questions

Why did adjusted EPS decline while reported EPS increased?
Reported EPS rose 14.2% to $1.93 because Q1 2025 included large acquisition-related charges (notably $139 million of stock compensation payments upon a change in control and $34 million of inventory step-up) and a $35 million goodwill impairment, none of which recurred at comparable size in Q1 2026. Adjusted EPS fell 8.5% to $2.60 because adjusted operating income declined and adjusted gross margin compressed, with Q1 2026 including $81 million of charges for terminating sales relationships in certain countries and the cyber-related pressures on operations.
Is Stryker still on track to meet its 2026 guidance?
Management reaffirmed full-year guidance of 8.0%–9.5% organic sales growth and adjusted EPS of $14.90–$15.10. Q1 organic growth of 2.4% is well below the guided range, so the company needs a substantial acceleration over the remaining three quarters. Guidance excludes some uncertain items, such as structural optimization charges and regulatory or legal outcomes, which could affect results. Investors should watch whether the cyber recovery and the Inari integration support that acceleration.
What was the impact of the cybersecurity incident on the quarter?
The filing references a cybersecurity incident first reported March 11, 2026, and management says the company recovered quickly and continues to serve customers. The filing does not quantify the direct financial impact, and the press release does not break out cyber-specific costs. The lower U.S. growth (0.8% reported) and weak Medical segment performance (down 4.6% in the U.S.) are areas where investors may want to probe whether disruption contributed. Forward-looking risk factors also list cyber-attacks as a risk to operations and results.
Why did cash and debt decline so much, and what does it mean for capital allocation?
Cash fell from $4.0 billion to $2.9 billion, largely due to $1.0 billion in net debt repayment, $337 million in dividends, $166 million in capex, and a $464 million working capital outflow that offset $581 million of operating cash flow. Long-term debt fell to $14.2 billion from $14.9 billion. Acquisition spending was only $22 million, compared with $4.7 billion in Q1 2025, which reflects the absence of a large deal in the quarter. The Inari acquisition is referenced as a pending or recent transaction whose integration and costs remain a risk factor.
How does the Ortho Tech reorganization affect comparability?
Stryker combined its orthopaedic instruments business and Mako/enabling technologies into a new Ortho Tech segment, and moved Neuro Cranial and spine enabling technologies into Instruments. Prior periods have been recast, so segment growth rates in the filing are comparable across periods. Consolidated financial statements are unchanged. Investors should use the recast segment data and the supplemental quarterly information on the investor relations site when comparing segment trends over time.

04—Continue

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