Stryker sells hospitals and surgical centers joint implants, surgical equipment, and technology that helps doctors operate. In the third quarter of 2026, sales grew 7.7%, but weaker expectations for its Peripheral Vascular business led to a $293 million write-down. Growth elsewhere and stronger cash generation still give Stryker room to invest; the harder task is turning its acquired technologies into reliable deliveries and profitable growth.
Analysis period: July–September 2026, with January–September comparisons where stated. Research cutoff: October 31, 2026, New York time. The latest Stryker disclosure used is its October 30 filing.
Source: Stryker’s third-quarter 2026 Form 10-Q, statements of earnings, Note 11, and management’s discussion, pages 2, 11–12 and 20.
1. Surgical equipment carried growth while joint implants barely grew
Stryker’s broad product range kept sales growing despite almost flat combined knee and hip revenue. Endoscopy, Medical, and Ortho Tech together supplied about 70% of the quarter’s dollar sales increase. These businesses sell products ranging from surgical cameras and patient-handling equipment to surgical instruments and robots.
The table shows the contrasting contributions of selected businesses.
| Selected business revenue, US$ millions | Third quarter 2025 | Third quarter 2026 | Change |
|---|---|---|---|
| Endoscopy | 896 | 1,021 | +125 |
| Medical | 985 | 1,081 | +96 |
| Ortho Tech | 651 | 754 | +103 |
| Knees and hips combined | 1,085 | 1,088 | +3 |
Source: 2026 third-quarter Form 10-Q, Note 2, pages 6–7. Combined knee and hip revenue and dollar changes are calculated from the disclosed business amounts.
Total sales reached $6.520 billion, up from $6.057 billion. Most of the increase came from selling more products: management attributed 7.6 percentage points of growth to unit volume and 0.1 point to prices. Currency movements and acquisitions or disposals had essentially no net effect on the quarter’s total growth. More products sold to customers therefore supplied almost all of the quarter’s growth.
The United States supplied $379 million of the $463 million sales increase. International revenue also grew, reaching $1.570 billion from $1.486 billion. Stryker therefore had growth in both geographic groups, although the larger U.S. business provided most of the additional dollars.
Ortho Tech needs careful interpretation. Its $754 million of quarterly revenue included $535 million from orthopaedic instruments and $219 million from the former Other Orthopaedics portfolio, which includes Mako. The company brought these activities together in 2026 to simplify the customer experience and speed product development. Its growth measures the broader equipment portfolio; the nearly flat knee and hip figures show that implant sales followed a different course.
Stryker restated the comparison-period segment data to match the new organization. Those figures, used here, are the appropriate comparison; the old segment totals in last year’s release describe a different grouping of products.
Source: 2026 third-quarter Form 10-Q, Notes 1–2 and “Consolidated Net Sales,” pages 6–7 and 13–14.
Growth has nevertheless slowed. Companywide organic sales growth—growth after removing currency changes, acquisitions, and disposals—was 9.5% in the third quarter of 2025 and 7.7% in the third quarter of 2026. For the first nine months of 2026, reported sales grew 6.6% to $19.129 billion, while organic growth was 6.4%. The portfolio is still expanding. Equipment businesses supplied most of the additional quarterly sales, while major joint-implant categories contributed little.
Sources: Stryker’s October 30, 2025 earnings release, “Sales Analysis”; 2026 third-quarter Form 10-Q, pages 12–14.
2. The vascular write-down reflects a weaker business forecast
The $293 million charge reduced accounting profit without an immediate cash payment, but the lower cash-flow forecast behind it matters. Stryker said near-term operating and supply constraints, together with a longer path to expected growth and market recovery, reduced the estimated value of its Peripheral Vascular business.
This is an important test of Stryker’s acquisition strategy. In February 2025, it paid $4.810 billion, net of acquired cash, for Inari. Inari brought products that remove blood clots from veins. Management’s stated purpose was to expand its market presence, broaden its products, and advance innovation.
Stryker added Amplitude Vascular Systems, or AVS, in May 2026. AVS is developing technology that uses pressure waves inside blood vessels to treat complex peripheral arterial disease. The deal required $434 million of cash at closing after deducting acquired cash and could require up to $400 million of future milestone payments. The accounting value assigned to those conditional payments was $271 million, making the initial recorded purchase price $705 million, net of acquired cash.
That distinction matters for cash planning: the $271 million is an estimate of a future obligation, while $400 million is the maximum disclosed milestone payment. Neither amount was all paid at closing. The acquired development projects, recorded at $402 million, had not yet received regulatory approval. AVS therefore adds a future product opportunity with development and approval work still to complete.
Source: 2026 third-quarter Form 10-Q, Notes 5 and 7, pages 8–10.
The impairment applies to the Peripheral Vascular reporting unit, which includes both Inari and AVS. Goodwill is the part of an acquisition price left after separately identifying the purchased assets and liabilities; it largely reflects expected growth and benefits from combining businesses. Writing it down means those expected benefits no longer support the previous recorded amount.
Acquired assets are material to the whole balance sheet: goodwill and other intangible assets represented 52.6% of Stryker’s September assets. After the charge, Peripheral Vascular still carried about $3.259 billion of goodwill. Stryker’s sensitivity analysis shows the importance of delivery: lowering the assumed long-term operating margin by one percentage point would produce an additional $497 million impairment. That is an accounting scenario, not a forecast or another cash bill. It shows how much value still depends on the business achieving its planned profitability.
Source: 2026 third-quarter Form 10-Q, Note 11 and “Critical Accounting Policies and Estimates,” pages 3, 11 and 20.
Competition adds to the recovery challenge. Penumbra’s third-quarter global revenue from clot removal reached $279.2 million, up 18.1%, and its U.S. revenue from treating venous blood clots grew 26.0%. Stryker’s broader Vascular category grew from $525 million to $566 million, but includes other products and geographies. These figures cannot establish a precise market-share change. They do show that strong growth remained available to a direct competitor while Stryker reduced its own unit’s forecasts.
Competition is also developing. On October 20, Penumbra announced U.S. clearance for its Lightning computer-assisted clot-removal technology to treat blood clots in deep veins. Stryker’s recovery consequently depends on resolving its own supply and operating problems while continuing to give hospitals reasons to choose its products.
Sources: Penumbra’s October 29, 2026 financial results, quarterly highlights and product revenue table; Penumbra’s October 20 clearance announcement; Stryker’s Form 10-Q, Note 2.
3. Better operating performance did not prevent a fall in reported quarterly profit
Profit grew before selected costs, but those costs left reported quarterly profit lower. Stryker calls the results with selected items removed “adjusted” results. The distinction is especially important this quarter because the vascular charge received no tax deduction.
Operating profit is what remains after production, selling, research, and other operating costs, before interest and tax. Operating margin expresses that profit as a share of sales.
| Consolidated reported results, US$ millions except margins and per-share amounts | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Revenue | 6,057 | 6,520 | 17,945 | 19,129 |
| Gross profit | 3,852 | 4,248 | 11,437 | 12,556 |
| Operating profit | 1,135 | 1,034 | 3,085 | 3,629 |
| Operating margin | 18.7% | 15.9% | 17.2% | 19.0% |
| Net profit | 859 | 753 | 2,397 | 2,774 |
| Diluted earnings per share, US$ | 2.22 | 1.96 | 6.20 | 7.19 |
Source: 2026 third-quarter Form 10-Q, consolidated statements of earnings and management’s discussion, pages 2 and 14–15. Margins are the company’s disclosed rounded percentages.
Gross profit is sales less the cost of producing and delivering products. It rose during the quarter. But selling and administrative expenses rose faster than sales, mainly because of higher restructuring and other special charges. Impairments also increased sharply. Together, these expenses more than absorbed the additional gross profit, leaving operating profit 8.9% lower.
The reported gross margin improvement needs its own explanation. Of the increase from 63.6% to 65.2%, management attributed one percentage point to the disappearance of an acquisition-accounting inventory cost. When a company buys another business, accounting can increase the recorded value of the purchased inventory. That extra value becomes an expense as the inventory is sold. Once it has passed through expenses, the comparison becomes easier even without a new factory-efficiency gain.
Volume and product mix helped quarterly gross margin, while manufacturing and supply costs slightly hurt it. Across the first nine months, the $158 million reversal of 2025 tariffs also increased reported operating profit; its after-tax benefit was $133 million. Stryker removes that benefit from adjusted results. It is therefore inappropriate to treat the entire reported margin rise as a repeatable improvement in production economics.
Source: 2026 third-quarter Form 10-Q, gross-margin explanations and non-GAAP reconciliations, pages 14 and 16–19.
The segment results show where operating progress occurred. MedSurg and Neurotechnology’s quarterly operating margin increased from 26.1% to 28.7%, helped by higher volume and lower selling and manufacturing costs relative to sales. Orthopaedics moved the other way, from 32.4% to 31.2%, as selling and manufacturing costs took a larger share of revenue. These segment margins exclude corporate expenses and several charges, including the vascular impairment.
Management expects the lower-gross-margin MedSurg and Neurotechnology segment to grow faster than Orthopaedics. That mix could restrain the share of sales left after production costs. Keeping selling and administrative costs from rising as quickly as revenue would become more important to companywide profit growth.
Stryker’s adjusted consolidated operating margin rose from 25.6% to 26.2%, and adjusted quarterly net profit rose from $1.233 billion to $1.357 billion. The adjustment table in the calculation notes shows exactly how those results relate to reported profit. The improvement supports a finding of continuing operating progress, while buying, integrating, and reshaping businesses still carries costs. Amortization spreads the recorded cost of purchased technology and similar assets over their expected useful lives. That expense was $175 million in the quarter, and Stryker expects $682 million of that expense in 2027.
Source: 2026 third-quarter Form 10-Q, Notes 7 and 10 and management’s discussion, pages 10–11 and 15–19.
Taxes made the reported quarterly profit decline larger. Profit before tax fell only from $1.029 billion to $997 million, helped by lower interest expense and higher other income, mainly from intellectual-property licensing. Tax expense nevertheless rose from $170 million to $244 million. The non-deductible goodwill charge was the disclosed reason the effective tax rate increased to 24.5% from 16.5%.
The first nine months tell a different, cumulative story: net profit rose 15.7%, versus 6.9% growth in adjusted net profit. Lower acquisition expenses and the tariff reversal helped the reported comparison. The company’s year-to-date improvement is real, but the reported growth rate includes changes in unusual costs and benefits as well as business growth.
Source: 2026 third-quarter Form 10-Q, Note 9 and pages 15–19. Adjusted net-profit growth is calculated from $3,785 million and $3,541 million.
4. Cash generation improved, although inventory and payments still absorbed money
Stryker generated enough operating cash to cover equipment spending and its cash distributions to shareholders. Operating cash flow rose 13.9% in the first nine months. This provided spending capacity even as quarterly reported profit fell.
| Consolidated cash generation, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Cash from operations | 2,901 | 3,303 |
| Purchases of property, plant and equipment | 493 | 605 |
| Free cash flow, calculated | 2,408 | 2,698 |
| Cash dividends and share repurchases paid | 963 | 2,012 |
| Free cash flow remaining after those payments | 1,445 | 686 |
Calculation notes: Free cash flow here means operating cash flow less cash purchases of property, plant and equipment. Capital spending is shown as a positive use of cash. This measure does not deduct acquisitions. The final row subtracts paid dividends and buybacks from free cash flow.
Source: 2026 third-quarter Form 10-Q, consolidated statement of cash flows, page 5.
The cash result should not be explained simply by comparing it with net profit. Stryker added back expenses that did not require current cash, including depreciation, amortization, the goodwill write-down, and stock compensation. At the same time, cash went into inventory and payments of expenses recognized earlier. The full reconciliation appears in the notes below.
Customer collections released $320 million of cash, although that was less than the $524 million released in the first nine months of 2025. Inventory absorbed $468 million, compared with $373 million. Payments also reduced amounts owed to suppliers and other operating creditors. Current liabilities fell from $7.794 billion at year-end to $6.500 billion, including lower tax, compensation, and supplier balances. In everyday terms, Stryker collected some older customer bills, but used money to hold more products and settle its own bills.
The balance sheet supports that picture. Net receivables fell from $4.039 billion at year-end to $3.693 billion. Inventory rose from $5.310 billion to $5.747 billion, with finished products accounting for $340 million of the $437 million increase. More money is now tied up in products awaiting sale. The filing does not divide that increase into deliberate supply rebuilding and slower-moving stock, so it does not establish that all of the additional inventory will turn quickly into revenue.
Stryker also receives some money before completing services. Those customer advance balances fell from $1.024 billion to $960 million: it recognized $615 million of previously prepaid revenue and received $551 million of net new advances. Thus, prepaid service contracts did not provide an expanding balance of customer financing during the period.
Source: 2026 third-quarter Form 10-Q, balance sheet, cash-flow statement and Note 2, pages 3, 5 and 7. Balance-sheet changes include effects beyond the cash-flow statement’s operating movements.
Investment continued. Cash purchases of property and equipment increased to $605 million, while their net recorded value rose to $4.054 billion. The filing identifies spending by segment but does not split it between replacement equipment and new capacity. Research, development, and engineering expenses were another $1.280 billion. Those expenses support new and existing products and regulatory work; they are separate from the purchased AVS development asset.
After equipment spending, paid dividends, buybacks, and $481 million of net acquisition payments, operating cash left $205 million. That was insufficient to cover all debt repayments and other cash uses. Cash consequently declined despite stronger cash generation. Debt repayments and other cash uses drew on the cash reserve.
Sources: 2026 third-quarter Form 10-Q, pages 3, 5, 11 and 19; 2025 Form 10-K, Note 1, research and development accounting policy, page 32.
5. Near-term funding is available, but debt reduction used much of the cash cushion
Stryker can meet its nearest disclosed debt maturities from existing liquidity, while larger discretionary spending would reduce that flexibility. Cash and marketable securities totaled $3.271 billion at September 30, compared with $754 million of debt due within a year. Available borrowing capacity was another $2.664 billion.
The company repaid $1 billion of notes in March and ended September with $250 million of commercial paper, a form of short-term borrowing. Total financing debt fell from $15.859 billion to $14.930 billion. Cash and marketable securities also fell, however, from $4.100 billion to $3.271 billion. Debt after subtracting those liquid assets declined by only $100 million, to $11.659 billion. This calculated measure excludes operating leases and other operating obligations.
Much of the debt reduction was accompanied by a smaller cash reserve. Also, 44% of the remaining liquid funds was held outside the United States, compared with 20% at year-end. The location of cash affects how Stryker arranges funding; the disclosed foreign balance is not identified as wholly restricted.
Source: 2026 third-quarter Form 10-Q, Note 8 and “Liquidity,” pages 10 and 19–20.
The larger bond refinancing years are ahead. Notes maturing in 2027 have a combined carrying amount of $1.349 billion; the 2028 group totals $2.573 billion. The debt schedule below shows the remaining years. These are recorded balances, which can differ from repayment principal because of currency translation and debt-accounting adjustments.
Stryker’s $3 billion revolving credit agreement runs to February 2030. It includes a debt-to-earnings covenant, a lender’s limit on borrowing relative to earnings calculated under the agreement. The normal limit is 3.75 times, with temporary higher limits available for qualifying acquisitions. Stryker reported compliance at September 30. The filing does not disclose the calculated covenant ratio, so compliance does not provide a numerical measure of unused covenant capacity.
Interest remains a recurring cash demand. The first nine months included $415 million of expense on debt and credit facilities, including required fees; the broader income-statement interest expense was $432 million. The December 2025 contractual schedule showed interest payments of $536 million for 2026 and $957 million for 2027–2028, before subsequent borrowing and currency changes.
Sources: 2026 third-quarter Form 10-Q, Note 8; 2025 Form 10-K, contractual obligations, page 23, and Note 10; February 25, 2025 credit agreement, definitions and Section 7.05.
Operating obligations also deserve room in the budget. Lease liabilities were $503 million, including $160 million current, and operating lease expense was $161 million for the first nine months. The $88 million of supplier invoices in financing programs remained within trade payables, rather than being added again to financing debt. Acquisition-related contingent payments were recorded at $709 million, up from $518 million, chiefly because AVS added $271 million before settlements and estimate changes.
Share repurchases were the largest new discretionary cash use. Stryker paid $1 billion to repurchase about 3 million shares in the third quarter. During the first nine months, employee plans issued about 1.2 million shares, so outstanding shares fell from 382.5 million to 380.7 million. Quarterly diluted weighted-average shares fell from 386.7 million to 384.7 million; a smaller dilution effect from employee awards also contributed. Fewer diluted shares slightly softened the decline in earnings per share, but did not prevent it.
Profits still added to the company’s financial base: equity rose by $1.037 billion despite the buybacks and declared dividends. Employee share compensation and currency-related movements also increased equity; the detailed reconciliation is below.
Management ranks acquisitions first, dividends second, and buybacks third in its capital-allocation priorities. The repurchases returned cash and reduced share count. In October, the board added $3 billion to the authorization, bringing the remaining authorized amount to $3.033 billion. Authorization permits future spending; it is not a payment or a fixed timetable. Its eventual pace will help determine how much capacity remains for deals and debt repayment.
Source: 2026 third-quarter Form 10-Q, statements of earnings, equity and cash flows; Notes 5–6 and 12; “About Stryker”; and Part II, Item 2, pages 2, 4–5, 8–12 and 21.
6. CMR offers a broader robotics opportunity as management lowers near-term expectations
The planned CMR investment expands Stryker’s product opportunity, but it arrives alongside a lower sales outlook for the existing business. These are different time horizons: the company must deliver its current products reliably while building a new source of growth.
On October 29, management reduced its full-year expectations from the ranges issued in July. Chief executive Kevin Lobo said the quarter fell short of the company’s expectations.
| Management’s full-year 2026 forecast | July 30 forecast | October 29 forecast |
|---|---|---|
| Organic sales growth | 8.3%–9.3% | 6.5%–7.0% |
| Adjusted diluted earnings per share, US$ | 14.95–15.10 | 14.80–14.90 |
Sources: July 30, 2026 earnings release, “2026 Outlook”; October 29, 2026 earnings release, opening remarks and “2026 Outlook.” These are management forecasts, not reported results. Stryker did not provide a forecast reconciliation to GAAP earnings because several excluded items could not be reliably predicted.
The March cyber incident is part of the operating background. Stryker’s April 9 filing said manufacturing, ordering, distribution, and commercial systems had been restored. The third-quarter filing nevertheless attributes much of the first nine months’ manufacturing and supply-cost pressure to idle production during the first-quarter incident. Restoring systems and recovering all financial effects are therefore different milestones. The disclosures do not quantify how much of the latest guidance reduction is attributable to that incident.
Sources: Stryker’s April 9, 2026 Form 8-K/A, Item 1.05; third-quarter Form 10-Q, gross-margin discussion, page 14.
The October CMR agreement addresses a longer-term opportunity. Stryker plans to invest approximately $400 million in preferred shares, an ownership investment with negotiated rights. It would also receive exclusive U.S. distribution rights for the Versius portfolio and an exclusive option to acquire the remaining equity later. The expected fourth-quarter closing remains subject to regulatory approval and customary conditions. It was not a completed acquisition or a September cash outflow.
Management sees robots used to operate on organs and other soft tissue as an extension of its surgical cameras, imaging, and related technologies. The commercial logic is understandable: Stryker already sells into operating rooms and can introduce another surgical system to those customers. CMR continues to develop the portfolio and handle commercialization outside the United States. This structure gives Stryker a route into the market before any decision to buy the entire company.
Sources: 2026 third-quarter Form 10-Q, Note 12; Stryker and CMR’s October 12, 2026 announcement.
The earlier U.S. clearance covered gallbladder removal. The cited sources do not substantiate an October 23, 2026 expansion to specified operations treating non-cancerous gynecological conditions in eligible adults aged 22 and over or a restriction on using Monopolar Curved Scissors for those procedures. The clearance establishes labeled indications; 21 U.S.C. § 396 preserves practitioners’ authority to prescribe or administer legally marketed devices for other conditions within a legitimate practitioner–patient relationship.
Sources: FDA’s December 16, 2025 Versius Plus clearance, indications for use, page 4; CMR link cited for the October expansion. This URL redirects to CMR’s homepage; the December 2025 FDA document covers cholecystectomy and does not substantiate the claimed October expansion.
The opportunity comes with a substantial established competitor. Intuitive Surgical reported 12,094 installed da Vinci systems at September 30 and approximately 14% growth in da Vinci procedures in the third quarter. That provides evidence of growing use of surgical robots, but also of the installed equipment Stryker and CMR must compete against. Their business success will depend on hospitals adopting the system, using it regularly, receiving reliable service, and finding its operating costs workable. The reviewed announcements do not provide a revenue or profit contribution forecast for Stryker.
Source: Intuitive Surgical’s October 20, 2026 earnings release, “Q3 Highlights”; Stryker–CMR agreement announcement.
7. Tax disputes and product obligations can claim cash beyond the operating plan
The balance sheet provides funding room, but disclosed tax and product exposures remain meaningful competing uses of cash. Some relate to decisions and products from earlier years, so current sales growth does not remove them.
At December 31, 2025, Stryker disclosed $754 million of German tax assessments for 2010–2017 and another $11 million expected. It planned to contest them and seek foreign tax credits if additional German tax became payable. Separately, its worldwide reserve for uncertain tax positions was $403 million. Assessments, reserves, and potential credits measure different things; none establishes the eventual net payment. The third-quarter tax note provides no new resolution of the German matter. Its settlement amount and timing remain relevant to available funding.
Sources: 2025 Form 10-K, Note 11, “Uncertain Income Tax Positions,” page 43; 2026 third-quarter Form 10-Q, Note 9.
Product obligations persist as well. The annual report recorded a $144 million reserve for specified hip-recall and legacy claims at December 31, 2025; no updated total is provided here. During the first nine months of 2026, Stryker recorded $8 million of recall-related charges and $38 million of regulatory and legal charges in the categories it excludes from adjusted operating profit. Those expenses are not the same as cash settlements or total remaining exposure.
Stryker warns that ultimate product-liability costs could differ materially from its estimates. The reviewed notes do not supply a quantified additional-loss range that can responsibly be added to the funding forecast. The practical implication is to preserve flexibility for settlements while managing the disclosed debt, investment, and distribution plans.
Sources: 2025 Form 10-K, Note 7, pages 38–39; 2026 third-quarter Form 10-Q, Note 6 and non-GAAP reconciliation notes, pages 9 and 18–19.
8. Stryker has the resources to expand, but acquired growth must become operating results
Stryker continues to grow and generate cash, while its vascular expansion has suffered a meaningful setback. Stronger equipment sales and improved MedSurg profitability supported the company while joint implants grew slowly. Cash generation financed substantial investment and shareholder payments, but using cash alongside debt repayment left only a small reduction in debt after liquid assets.
The next stage depends on execution in two areas. Better vascular supply, deliveries, and profitability would support the remaining acquisition value. Successful hospital adoption of Versius would turn the new distribution agreement into an additional business. Continued vascular shortfalls, further pressure on implant sales, or heavy buybacks before those improvements arrive would leave less room to fund both expansion and debt repayment.
Stryker has the financial capacity to pursue its strategy. The lower guidance and vascular write-down now put the emphasis on delivering, selling, and earning money from the technologies it owns.
Sources: 2026 third-quarter Form 10-Q, Notes 7–12 and management’s discussion; October 29 outlook; October 12 CMR agreement.
Reporting basis: Stryker Corporation and its consolidated subsidiaries, U.S. GAAP, unaudited Form 10-Q for September 30, 2026; filed October 30, 2026; accession 0000310764-26-000061; CIK 0000310764. Quarterly earnings cover July 1–September 30; cumulative earnings and cash flows cover January 1–September 30. Balance-sheet comparisons use December 31, 2025. The reporting currency is U.S. dollars. Unless a different unit is stated, the tables below use millions.
Source: SEC submission history and the filed 10-Q, cover page and Note 1. Principal figures were also checked against SEC company facts, using this accession, U.S.-dollar units, and the actual quarterly, nine-month, or balance-sheet dates. These consolidated facts were checked against the statements rather than relying on fiscal-period labels alone.
Calculation notes: Adjusted earnings remove both costs and benefits
The following table starts with reported net profit and adds the company’s adjustments after their tax effects. A minus sign removes a benefit from reported profit. The table retains the exact categories so that a write-down is not mistaken for a recurring cash cost, or an excluded gain for ordinary operating growth.
| Net-profit reconciliation, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Reported net profit | 859 | 753 | 2,397 | 2,774 |
| Purchased inventory value adjustment | +46 | 0 | +121 | 0 |
| Other acquisition and integration costs | +33 | +14 | +270 | +51 |
| Purchased intangible-asset amortization | +150 | +142 | +431 | +434 |
| Restructuring and other special items, net | +28 | +76 | +59 | +227 |
| Goodwill and other impairments | +58 | +293 | +117 | +294 |
| Medical-device regulation costs | +8 | +5 | +23 | +13 |
| Recall-related matters | +1 | −2 | +47 | +7 |
| Regulatory and legal matters | 0 | +26 | +5 | +31 |
| Discrete tax matters | +50 | +50 | +71 | +87 |
| Remove reversal of 2025 tariffs | 0 | 0 | 0 | −133 |
| Adjusted net profit, non-GAAP | 1,233 | 1,357 | 3,541 | 3,785 |
The aggregate check below shows how operating adjustments, gains outside operating profit, and taxes connect. “Additional tax expense” is the net change in tax expense when moving from reported to adjusted profit; it is not cash tax paid.
| Adjustment check, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Reported operating profit | 1,135 | 1,034 | 3,085 | 3,629 |
| Net operating adjustments | +415 | +672 | +1,354 | +1,155 |
| Adjusted operating profit, non-GAAP | 1,550 | 1,706 | 4,439 | 4,784 |
| Gains removed from other income | −10 | −54 | −19 | −71 |
| Total adjustment to profit before tax | +405 | +618 | +1,335 | +1,084 |
| Additional tax expense | 31 | 14 | 191 | 73 |
| Total increase from reported to adjusted net profit | 374 | 604 | 1,144 | 1,011 |
For example, 2026 quarterly restructuring and special items added back $153 million of operating costs, removed $54 million of other income, and added $23 million of tax expense. The net-profit adjustment is therefore $153 million − $54 million − $23 million = $76 million. This avoids counting a gross cost while leaving its associated excluded income in adjusted profit. Taxes on individual adjustments follow the relevant jurisdiction; no single assumed tax rate was imposed.
Source: 2026 third-quarter Form 10-Q, complete GAAP-to-non-GAAP reconciliations and explanatory notes, pages 16–19.
Calculation notes: Following profit into cash
| Operating cash reconciliation, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Net profit | 2,397 | 2,774 |
| Depreciation | +334 | +361 |
| Intangible-asset amortization | +543 | +530 |
| Impairments | +163 | +294 |
| Share-based compensation | +195 | +208 |
| Purchased inventory accounting expense | +160 | 0 |
| Deferred tax expense | +191 | +166 |
| Receivable movements | +524 | +320 |
| Inventory movements | −373 | −468 |
| Supplier payable movements | −205 | −154 |
| Accrued expense and other liability movements | −78 | −279 |
| Income-tax movements | −577 | −395 |
| Other operating movements, net | −373 | −54 |
| Cash from operations | 2,901 | 3,303 |
The cash-flow statement’s $166 million deferred-tax adjustment reverses a noncash expense; it is not an additional tax saving to add to cash flow. The separate $395 million tax-related outflow is an operating-account movement, not a disclosure of total cash taxes paid.
The next table checks the opening and closing cash balances. “Financing” includes borrowing, debt repayments, dividends, and share transactions. “Investing” includes acquisitions, property and equipment, and securities transactions.
| Cash-balance reconciliation, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Opening cash and cash equivalents | 3,652 | 4,011 |
| Operating cash flow | +2,901 | +3,303 |
| Investing cash flow | −4,561 | −1,011 |
| Financing cash flow | +1,206 | −2,998 |
| Exchange-rate effect | +58 | −34 |
| Closing cash and cash equivalents | 3,256 | 3,271 |
No separate restricted-cash balance is presented in this reconciliation. In 2026, investing used $481 million for acquisitions and $605 million for property and equipment. Net security-sale receipts of $89 million partly offset those payments; other investing used $14 million.
Financing included $753 million of net debt repayments: $1,000 million repaid less $247 million of new net short-term borrowing. Besides dividends and buybacks, Stryker paid $156 million of taxes associated with shares withheld from employees and used $77 million in other financing. These amounts reconcile to the table’s financing outflow.
Stryker also sells certain customer equipment-lease agreements to financial institutions to collect cash earlier. These sales do not require Stryker to cover the buyer’s losses if the customer fails to pay. Related cash is included in operations. Revenue associated with these agreements was less than 4% of total revenue in both comparison periods; that revenue disclosure is not a separately quantified cash-flow adjustment.
Source: 2026 third-quarter Form 10-Q, cash-flow statement and Note 2, pages 5 and 7.
Calculation notes: Checking assets, obligations, and equity
| Consolidated financial position, US$ millions | December 31, 2025 | September 30, 2026 |
|---|---|---|
| Cash and current marketable securities | 4,100 | 3,271 |
| Net receivables | 4,039 | 3,693 |
| Inventory | 5,310 | 5,747 |
| Net property, plant and equipment | 3,876 | 4,054 |
| Goodwill | 19,291 | 19,326 |
| Other intangible assets, net | 5,681 | 5,542 |
| Total assets | 47,844 | 47,247 |
| Financing debt, current and long-term | 15,859 | 14,930 |
| All other liabilities, calculated | 9,565 | 8,860 |
| Total liabilities | 25,424 | 23,790 |
| Shareholders’ equity | 22,420 | 23,457 |
Goodwill and other intangible assets together represented a calculated 52.6% of September assets. AVS added $398 million of goodwill and $402 million of development assets; the quarter’s impairment and the period’s amortization reduced acquired-asset values. The quarterly filing does not provide a complete movement schedule for every intangible category. The asset table preserves the reported totals without assigning an unsupported cause to the remaining changes.
Assets equal liabilities plus equity at both dates: September $23,790 million + $23,457 million = $47,247 million; December $25,424 million + $22,420 million = $47,844 million.
The equity table checks the value of assets left after subtracting liabilities. Each account’s change is explained immediately below.
| Equity reconciliation, US$ millions | December 31, 2025 | Nine-month change | September 30, 2026 |
|---|---|---|---|
| Common-stock capital | 38 | 0 | 38 |
| Additional paid-in capital | 2,597 | +167 | 2,764 |
| Retained earnings | 20,472 | +776 | 21,248 |
| Accumulated other comprehensive income or loss | −687 | +94 | −593 |
| Total shareholders’ equity | 22,420 | +1,037 | 23,457 |
Paid-in capital records amounts arising from share transactions. Its $167 million increase comprises $208 million of share compensation, less $20 million from employee-plan transactions and $21 million charged for repurchases.
Retained earnings are accumulated profits kept in the business after specified distributions and share transactions. The $776 million increase comprises $2,774 million of net profit, less $1,011 million of declared dividends and $987 million charged for repurchases. Repurchases reduced outstanding shares and these equity accounts; no separate treasury-stock balance or retirement count is assumed.
Other comprehensive income records certain changes outside net profit. A $153 million net currency-translation contribution was partly offset by $59 million of hedge losses, producing the $94 million increase. Pension movements contributed zero after tax and reclassification.
Repurchase charges to equity totaled $1,008 million, versus $1,000 million paid in cash. Declared dividends were $1,011 million, versus $1,012 million paid. The cash-allocation analysis uses the paid amounts.
Source: 2026 third-quarter Form 10-Q, balance sheet, equity statement and Notes 3, 5, 7 and 11, pages 3–4 and 7–11.
Calculation notes: Debt maturities and lease scope
| Debt grouped by maturity, US$ millions of September 30, 2026 carrying value | Amount |
|---|---|
| Senior notes due 2027 | 1,349 |
| Senior notes due 2028 | 2,573 |
| Senior notes due 2029 | 1,652 |
| Senior notes due 2030 | 2,523 |
| Senior notes due 2031–2050 | 6,568 |
| Commercial paper | 250 |
| Other debt | 15 |
| Total financing debt | 14,930 |
The senior notes carry fixed coupons ranging from 0.750% to 5.200%, with some denominated in euros. The commercial-paper program permits maturities of up to 397 days. The table aggregates each disclosed note once and is not a principal-payment forecast at a fixed exchange rate. Operating lease liabilities are separate from this debt total. Their $503 million September balance had a 4.5-year weighted-average remaining term.
The credit agreement’s normal leverage ceiling is 3.75 times contract-defined funded debt divided by the previous four quarters’ contract-defined EBITDA, an earnings measure before interest, taxes, depreciation, amortization, and specified additional adjustments. A qualifying acquisition above $750 million can permit a temporary ceiling of 4.75 times for four quarters, then 4.50, 4.25, and 4.00 times in successive quarters, subject to the agreement’s election conditions. This report does not assume Stryker elected that relief or substitute a simple reported-profit ratio for the contractual test.
Sources: 2026 third-quarter Form 10-Q, Notes 6 and 8; 2025 Form 10-K, Note 7; credit agreement, definitions and Section 7.05.
Calculation notes: Growth, scope, and rounding
The selected growth contribution is ($125 million + $96 million + $103 million) ÷ ($6,520 million − $6,057 million) = approximately 70%. Free-cash-flow growth is ($2,698 million ÷ $2,408 million − 1) = 12.0%. Debt less cash and current marketable securities is $14,930 million − $3,271 million = $11,659 million, versus $15,859 million − $4,100 million = $11,759 million at year-end. This liquidity measure excludes the $339 million of trading securities matched by deferred-compensation liabilities, which are not the balance sheet’s current marketable securities.
Company-disclosed growth rates and margins use its underlying figures; calculations from published rounded millions may differ slightly. Organic growth and adjusted results are company-defined measures outside GAAP. Competitor evidence concerns disclosed sales, procedures, products, and installed systems; the analysis does not equate the companies’ profit margins or asset bases.
Sources: 2026 third-quarter Form 10-Q, Notes 2, 5 and 8 and non-GAAP definitions; 2025 Form 10-K, Note 1. Information was assessed within the October 31 research cutoff using the specifically dated primary sources cited above; this does not represent an exhaustive check of every development through that date.
This analysis is for information and education. It is not investment advice or a recommendation to buy, sell, or hold securities.