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STRYKER CORP (SYK) Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered strong top-line and margin execution: net sales rose 10.3% to $6.1B and organic growth was 9.5%; adjusted operating margin reached 25.6% (+90 bps YoY) and adjusted EPS increased 11.1% to $3.19 .
  • Results modestly beat Wall Street consensus: adjusted EPS $3.19 vs $3.132* and revenue $6.057B vs $6.045B*; EBITDA also slightly above consensus ($1.658B vs $1.651B*) (Values retrieved from S&P Global).
  • FY25 guidance raised: organic net sales growth to 9.8%–10.2% and adjusted EPS to $13.50–$13.60; FX expected to be slightly positive and pricing modestly favorable .
  • Segment performance was led by MedSurg & Neurotechnology (+14.4% to $3.803B) and robust sub-segment growth (notably Vascular +59.6%); Orthopaedics rose 3.9% reported, or 12.5% excluding divested Spinal Implants .
  • Catalysts: sustained procedural demand, record MEKO installations, pricing tailwinds, and raised guidance; offset by tariff headwinds (~$200M expected FY25) and lingering supply chain impacts in Medical .

What Went Well and What Went Wrong

What Went Well

  • Broad-based organic growth with pricing contribution: organic sales grew 9.5% with 9.1% unit volume and 0.4% price; adjusted EPS up 11.1% to $3.19; adjusted operating margin 25.6% .
  • Record MEKO installations and strong U.S. ortho momentum (knees, hips, trauma & extremities) supporting above-market growth; management reiterated strength in ASC and procedural volumes .
  • CEO tone confident: “We delivered another quarter of strong sales and double-digit adjusted earnings per share growth” ; commitment to ongoing margin expansion and sustained growth reiterated on the call .

What Went Wrong

  • Tariff headwinds intensifying: company now expects ~$200M impact in FY25, more second-half weighted, partially offsetting margin expansion in Q4 .
  • Medical segment supply chain disruptions persisted, creating intra-quarter variability, with acceleration expected in Q4 to achieve ~10% organic growth for the year .
  • Orthopaedics pricing showed slight pressure (organic price -0.3% in Orthopaedics), though overall company price remained positive; management emphasized continued pricing discipline and contracting execution .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$5.866 $6.022 $6.057
Reported EPS ($)$1.69 $2.29 $2.22
Adjusted EPS ($)$2.84 $3.13 $3.19
Gross Profit Margin % (reported)63.8% 63.8% 63.6%
Operating Margin % (reported)14.3% 18.5% 18.7%
Adjusted Operating Margin %22.9% 25.7% 25.6%
Segment Revenue ($USD Billions)Q3 2024Q3 2025YoY %
MedSurg & Neurotechnology$3.324 $3.803 14.4%
Orthopaedics (reported)$2.170 $2.254 3.9%
Orthopaedics (ex Spinal divestiture)——12.5%
Total$5.494 $6.057 10.3%
KPIsQ1 2025Q2 2025Q3 2025
Organic Net Sales Growth %10.1% 10.2% 9.5%
Unit Volume Impact (%)9.4 9.7 9.1
Pricing Impact (%)0.7 0.5 0.4
FX impact on sales (%)(0.9) 0.8 0.7
Adjusted Gross Margin %65.5% 65.4% 65.0%
Adjusted Effective Tax Rate %13.7% 15.9% 14.0%
Actuals vs S&P Global ConsensusQ1 2025Q2 2025Q3 2025
Revenue Actual ($USD)$5,866,000,000 $6,022,000,000 $6,057,000,000
Revenue Consensus Mean ($USD)$5,691,222,620*$5,928,795,670*$6,044,753,380*
Adjusted EPS Actual ($)$2.84 $3.13 $3.19
Primary EPS Consensus Mean ($)2.7305*3.0703*3.1319*
EBITDA Actual ($USD)$1,404,000,000*$1,618,000,000*$1,658,000,000*
EBITDA Consensus Mean ($USD)$1,421,082,940*$1,609,557,120*$1,651,100,460*
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Net Sales Growth %FY 20259.5%–10.0% (Q2 update) 9.8%–10.2% Raised
Adjusted EPS ($)FY 2025$13.40–$13.60 (Q2 update) $13.50–$13.60 Raised (midpoint)
Organic Net Sales Growth %FY 20258.5%–9.5% (Q1 update) 9.8%–10.2% Raised
Adjusted EPS ($)FY 2025$13.20–$13.45 (Q1 update) $13.50–$13.60 Raised
FX impact (sales/EPS)FY 2025Slightly positive (Q2) Slightly positive Maintained
Pricing impactFY 2025Modestly favorable (Q2) Modestly favorable Maintained
Adjusted OI&E ($)FY 2025—~$415M New/Updated
Effective Tax Rate %FY 202515%–16% (range referenced historically)Lower end of 15%–16% Directional lower
Tariff impact ($)FY 2025~$175M (Q2) ~$200M Raised headwind

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025 and Q1 2025)Current Period (Q3 2025)Trend
MEKO/Robotics & TechStrong orthopaedic momentum; Endoscopy, Instruments, Neurocranial growth Record MEKO installations; strong navigational tech performance Strengthening
Supply Chain (Medical)Noted strong demand; no specific disruption cited in Q1/Q2 release Ongoing disruptions in Emergency Care; acceleration expected in Q4 Improving in Q4
Tariffs/MacroFY25 tariff impact ~$175M (Q2) ; ~$200M (Q1 baseline) Now ~$200M, more H2-weighted; offsets some Q4 margin expansion Headwind increasing
Product PerformanceVascular +52.3% (Q2); +31.0% (Q1); broad MedSurg strength Vascular +59.6%; Orthopaedics sub-categories strong (knees, hips, trauma) Sustained high growth
Regional TrendsU.S. growth outpacing international; healthy emerging markets U.S. organic +10.6%; international +6.3%; strong in South Korea/Japan Consistent
Regulatory/LegalNon-GAAP reconciliations; EU MDR costs ongoing Ongoing MDR compliance; discrete tax items impact ETR Ongoing
M&A/PortfolioAcquisition of Inari; tuck-ins not detailed in Q1/Q2 releases Two small tuck-ins (Guard Medical NP Seal; Advanced Medical Balloons); Inari integration progressing Active pipeline

Management Commentary

  • “We delivered another quarter of strong sales and double-digit adjusted earnings per share growth. Our teams continue to execute at a high level, driving performance at the high-end of MedTech and building sustained momentum across our broad portfolio.” — Kevin A. Lobo, Chair & CEO .
  • “We are firmly on track to deliver a second consecutive year of 100 basis points of adjusted operating margin expansion… We are raising our full year 2025 outlook.” — Prepared remarks summary .
  • “Adjusted operating margin was 25.6%… 90 bps favorable YoY, driven by gross margin favorability and SG&A discipline… tariffs will have a net impact of approximately $200 million for the full year 2025.” — Preston Wells, CFO .
  • “Medical… will achieve 10% organic sales growth this year while we manage… supply chain disruptions affecting our Emergency Care business.” — CFO .

Q&A Highlights

  • Margin trajectory and Q4 seasonality: Management expects operational margin improvement in Q4, partially offset by second-half-weighted tariff impacts .
  • Orthopaedics competitive dynamics: Strong knee momentum with cementless and MEKO adoption; additional MEKO software/product innovations forthcoming .
  • Inari integration: Double-digit pro forma growth; destocking headwind to complete by end of Q1 next year; arterial product (Artix) well-received, with OUS expansion expected to inflect in 2H next year .
  • ASC channel: Stryker leverages full portfolio; growth remains high with shoulders and total ankles moving into ASC settings .
  • Capital environment: Hospitals’ balance sheets strong; increased outright purchases of MEKO and strong bed procurement; backlog elevated .

Estimates Context

  • Q3 2025 beats: Adjusted EPS $3.19 vs $3.1319* consensus; revenue $6.057B vs $6.045B*; EBITDA $1.658B vs $1.651B* (Values retrieved from S&P Global).
  • Prior quarters also exceeded consensus on adjusted EPS and revenue (Q1 and Q2) (Values retrieved from S&P Global).
  • Implication: With FY25 organic growth and EPS guidance raised, consensus models likely drift higher on top-line and margins; OI&E guidance ($415M) and tariff headwind ($200M) should be incorporated into EPS bridges .

Key Takeaways for Investors

  • Demand resilience across portfolios and geographies underpins sustained high-single to low-double-digit organic growth; pricing and mix add incremental support .
  • Margin expansion remains intact despite tariffs: adjusted operating margin at 25.6% in Q3 with company guiding to continued improvement; watch Q4 offsets from tariffs .
  • Raised FY25 guidance is a positive revision catalyst; FX and pricing provide modest tailwinds; OI&E/tax guide adds transparency to EPS .
  • Orthopaedics durable: strong knees/hips/trauma aided by MEKO adoption; MEKO pipeline and ASC penetration extend runway .
  • MedSurg & Neurotechnology leadership: Vascular outperforms with new launches (Surpass Elite, Broadway); Emergency Care supply constraints should ease heading into Q4 .
  • Inari integration progressing: near-term destocking headwinds, but procedure growth in teens and new arterial product support double-digit sales growth; OUS opportunity likely 2H next year .
  • Portfolio expansion continues: trauma platform upgrades (Pangea, T2 Alpha) and Incompass total ankle system launch broaden competitive moats .

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