Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stryker Corp (SYK, Financial) reported robust organic sales growth of 10.1% in Q1 2025, with strong performances in MedSurg, neurotechnology, and orthopedics.
• The company achieved double-digit organic growth in the US across several business segments, including trauma and extremities, neurocranial, medical, endoscopy, and instruments.
• International markets showed healthy growth, particularly in Australia, New Zealand, Japan, and Europe, indicating significant future growth potential.
• Stryker Corp (SYK) completed the acquisition of Inari Medical, which is integrating well and expected to contribute positively to the vascular division.
• The company raised its full-year organic sales growth guidance to 8.5% to 9.5% and expects adjusted EPS of $13.20 to $13.45, reflecting strong commercial execution and innovation pipelines.

Negative Points

• Stryker Corp (SYK) faces a $200 million impact from tariffs in 2025, which they are working to mitigate through sales momentum and cost management.
• The company experienced supply chain disruptions affecting its medical business, which are expected to continue through Q2.
• Foreign currency had a 0.9% unfavorable impact on sales, affecting overall financial performance.
• The US Spinal Implant business was flat organically, and the US other ortho business declined 1.9% organically due to changes in Mako deal mix and a decline in bone cement.
• Higher SG&A spending, driven by the Inari acquisition and other growth investments, partially offset the gross margin favorability.

Q & A Highlights

Q: How is Stryker planning to absorb the $200 million impact from tariffs, and what mitigation strategies are in place? A: Preston Wells, CFO, explained that the $200 million tariff impact is based on current conditions and does not include paused items. Stryker plans to offset this through strong sales momentum, pricing strategies, discretionary spending adjustments, and supply chain optimization. Positive foreign exchange impacts will also help mitigate the tariff costs.

Q: What is the outlook for the Orthopaedics market, and how is Stryker positioned within it? A: Kevin Lobo, CEO, stated that the Orthopaedics market remains healthy with strong demand and significant backlogs for surgeons. Stryker expects market growth of 4-5% and aims to grow above that by leveraging its Mako robotic systems and cementless knees. The company continues to gain market share and anticipates sustained momentum in Trauma and Extremities.

Q: Can you discuss the capital expenditure environment and the integration of Inari Medical? A: Jason Beach, VP of Investor Relations, noted strong growth in capital businesses with no signs of slowdown. Kevin Lobo added that the integration of Inari Medical is progressing well, with strong top-line performance and cultural alignment. The Inari acquisition is expected to contribute positively to Stryker's vascular division.

Q: How is Stryker addressing potential supply chain disruptions, particularly in the Medical segment? A: Kevin Lobo acknowledged ongoing supply chain disruptions in the Medical segment, expected to continue through Q2. However, these issues are factored into the company's guidance, and the rest of the business is in good shape with new product launches and approvals in international markets.

Q: What are Stryker's plans for M&A following the sale of the Spine Implant unit? A: Preston Wells indicated that Stryker is in a strong liquidity position and can pursue additional acquisitions if needed. Kevin Lobo emphasized that tuck-in acquisitions remain a priority, with ongoing efforts to identify and pursue targets that fit within existing businesses. The company is also open to exploring adjacencies like soft tissue robotics and neuromodulation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.