Earnings call transcript: Stryker’s Q2 2025 growth raises guidance

Stryker Corporation (SYK) reported robust performance in the second quarter of 2025, driven by significant organic sales growth and strategic product innovations. The company has raised its full-year guidance, reflecting confidence in sustained growth. Following the earnings call, Stryker’s stock showed a modest premarket increase of 0.64%, trading at $371.96. With a market capitalization of $141.7 billion, InvestingPro data shows Stryker is currently trading above its Fair Value, with a P/E ratio of 49.1 - significantly higher than industry averages.

Key Takeaways

• Stryker achieved 10.2% organic sales growth in Q2 2025.
• Adjusted EPS grew by 11.4%, prompting a full-year guidance raise.
• The company launched several new products, including Mako 4 and LifePak 35.
• Strategic acquisitions and international market expansion remain focal points.
• Stock price increased by 0.64% in premarket trading, indicating positive investor sentiment.

Company Performance

Stryker’s performance in Q2 2025 was marked by a strong 10.2% organic sales growth and an 11.4% increase in adjusted EPS. This growth is attributed to successful product launches and continued innovation in key segments such as orthopedic robotics and neurotechnology. The company also noted healthy procedural volumes across surgical specialties and a positive outlook in international markets, particularly in Japan and Europe.

Financial Highlights

• Organic sales growth: 10.2% YoY
• Adjusted EPS growth: 11.4% YoY
• Adjusted gross margin: 65.4%, a 120 basis point improvement
• Adjusted operating margin: 25.7%, a 110 basis point improvement
• Year-to-date cash from operations: $1.4 billion

Outlook & Guidance

Stryker has revised its full-year 2025 guidance, now expecting 9.5-10% organic net sales growth and adjusted EPS in the range of $13.40 to $13.60. The company anticipates continued strong growth in procedural volumes and is targeting a 100 basis point expansion in adjusted operating margin. Strategic initiatives include the integration of Inari Medical and optimizing its global manufacturing footprint.

Executive Commentary

CEO Kevin Lobo highlighted the company’s achievements, stating, "We delivered double-digit organic sales growth of 10.2% and adjusted EPS growth of 11.4%." Jason Beach, VP Finance, emphasized Stryker’s leadership in orthopedic robotics, declaring, "We are the clear leader in orthopedic robotics."

Risks and Challenges

• Potential impacts of healthcare legislation could affect operational costs and market dynamics.
• Tariff impacts and market changes in China present challenges to international operations.
• Integration of Inari Medical and managing non-compete agreements for the sales team are ongoing operational challenges.

Q&A

During the earnings call, analysts inquired about the international expansion of Mako robotics, the company’s strategies for mitigating tariff impacts, and potential market changes in China. Executives also addressed Stryker’s initiatives in AI and digital health, underscoring the company’s commitment to innovation.

Full transcript - Stryker Corporation (SYK) Q2 2025:

Operator: Welcome to the second quarter 2025 Stryker earnings call. My name is Megan and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Following the conference, we will conduct a question and answer session. This conference call is being recorded for replay purposes. Before we begin, I would like to remind you that the discussions during this conference call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company’s most recent filings with the SEC. Also, the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s press release. That is an exhibit to Stryker’s current report on Form 8-K filed today with the SEC. I will now turn the call over to Mr. Kevin Lobo, Chair and Chief Executive Officer.

You may proceed, sir.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Welcome to Stryker’s second quarter Earnings Call. Joining me today are Preston Wells, Stryker CFO, and Jason Beach, Vice President of Finance and Investor Relations. For today’s call, I’ll provide opening comments followed by Jason with the trends we saw during the quarter and some product updates. Preston will then provide additional details regarding our quarterly results and guidance before opening the call to Q&A. Our second quarter results reflect being in diverse and attractive end markets, our focus on innovation, and disciplined operational execution. We delivered double-digit organic sales growth of 10.2% and adjusted EPS growth of 11.4% while managing through the impacts of tariffs, Inari dilution, and the spinal implant divestiture. Our robust organic sales growth was driven by strong demand across our product portfolio and included double-digit growth from MedSurg and Neurotechnology and high single-digit growth from Orthopaedics. Geographically, our U.S.

organic sales growth of 11.5% included double-digit organic growth from our endoscopy, neurocranial, trauma, extremities, and instruments businesses and high single-digit organic growth in medical and hips. We delivered 6.5% organic international sales growth despite supply chain challenges, with notable contributions from South Korea and emerging markets. We continue to view international markets as a big opportunity for future growth. As a growth company, we are excited to continue delivering innovation both internally and through M&A. We maintain a healthy deal pipeline and are well prepared to capitalize on a broad range of opportunities. We exited Q2 with strong momentum and are well positioned for the second half of the year. As a result, we are raising our full year 2025 outlook, which includes delivering another 100 basis points of adjusted operating margin expansion. We are confident in the durability of our growth and earnings power across our businesses.

With that, I will now turn the call over to Jason.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Thanks Kevin. My comments today will focus on providing an update on the current environment, capital demand, and the integration of Inari Medical. Procedural volumes remained healthy in the second quarter, driven by the continued adoption of robotic assisted surgery, a stable pricing environment, favorable demographic trends, and the ongoing shift toward ASCs. We anticipate continued strength in procedural volumes as we move into the second half of the year. Demand for our capital products was strong once again in the quarter, and we exited Q2 with an elevated backlog with healthy hospital CapEx budgets. We expect continued strength in our order book for the remainder of the year. We are also excited to share that during the quarter we reached a milestone of 2 million robotic procedures performed with Mako.

We are the clear leader in orthopedic robotics and continued to launch new applications such as Revision Hip, which is receiving very positive surgeon feedback. Also, we delivered our best ever Q2 for Mako installations both in the U.S. and worldwide. With high utilization rates across the globe, we expect sustained momentum from installations and utilization to continue to drive growth in our hips and knees businesses. The launches of Mako Spine and Shoulder are going well and remain on track for full launches. As discussed on our last earnings call, our platform launches such as LifePak 35 and the Pangea Plating System continue to have success in the marketplace and are driving meaningful contributions to growth. We recently received approval for LifePak 35 in Europe and are on track to launch in late Q3.

As a reminder, many of our new products are still pending approval in Europe such as Insignia and Pangea. In addition to these launches, over the past several quarters we have introduced a number of next generation and innovative products across our diverse businesses that continue to drive our growth. Lastly, we continue to make solid progress on the integration of Inari. We did experience some disruption in Q2, including working through destocking over the first half of the year as well as the onboarding of new sales professionals. We have moved quickly to convert the business to our Stryker offense, which will position us well for the future. Even as we navigate these changes, we still expect double digit pro forma revenue growth for 2025. With that, I will now turn the call over to Preston.

Preston Wells, CFO, Stryker: Thanks, Jason. Today I will focus my comments on our second quarter financial results and related drivers. Our detailed financial results have been provided in today’s press release. Organic sales growth was 10.2% for the quarter compared to 9% in the second quarter of 2024. This quarter had the same number of selling days as 2024. Pricing had a 0.5% favorable impact with both our MedSurg and Neurotechnology and Orthopaedics segments continuing to see overall positive trends from our pricing initiatives. Additionally, foreign currency had a 0.8% favorable impact on sales. Our adjusted EPS of $3.13 was up 11.4% from the same quarter last year, driven by our robust sales growth and margin expansion, partially offset by higher interest expense. Foreign currency translation had a favorable impact of $0.04. Now I will provide some highlights around our quarterly segment performance in the quarter.

MedSurg and Neurotechnology had organic sales growth of 11%, which included 12.5% U.S. organic growth and 5.7% international organic growth. Instruments had U.S. organic sales growth of 10.1%, led by double-digit performance from our Surgical Technologies business, which includes our NEPTUNE waste management and smoke evacuation products. The number of states that have passed smoke-free legislation continues to rise, with 19 states to date having approved smoke-free operating rooms. These states represent over half the national population. Endoscopy had U.S. organic sales growth of 18.6% with strong double-digit performances across all businesses. Growth was fueled by robust demand for operating room infrastructure and renovations and the continued success of the 1788 video platform as well as our sports medicine business, which has expanded its portfolio through the launch of several new shoulder products. Medical had U.S.

organic sales growth of 9.9%, led by double-digit performance in the acute care business, somewhat offset by lower sales in the emergency care business due to the continuing supply disruptions that are now expected to linger through the end of the year. From a product perspective, these supply matters do not affect LifePak 35. Vascular had U.S. organic sales growth of 1.4%. We expect improved growth in the second half of this year, led by recent launches of our Surpass Elite Flow Diverting Stent, Access Lift, Intracranial-based Catheter, and Broadway Large Bore Aspiration Catheter. As a reminder, organic sales figures do not include Inari and finally, neurocranial had U.S. organic sales growth of 14.8% led by strong double-digit growth in our neurosurgical and IVS businesses and near double-digit growth in our cranial maxillofacial business. Internationally, MedSurg and Neurotechnology’s organic sales growth was 5.7%.

Despite the supply disruptions in Medical mentioned earlier, growth was led by our neurocranial instruments, endoscopy, and vascular businesses. Geographically, this included strong performances in South Korea, Canada, and our emerging markets. Orthopaedics had organic sales growth of 9%, which included organic growth of 9.7% in the U.S. and 7.5% internationally. Our U.S. knee business grew 6.2% organically, reflecting our market-leading position in robotic-assisted knee procedures and continued momentum from new Mako installations. Our U.S. hips business grew 8.4% organically, reflecting the ongoing success of our Insignia hip stem and the continued adoption of our Mako robotic hip platform. Our U.S. trauma and extremities business grew 13.6% organically, with double-digit sales growth in our core trauma and upper extremities businesses.

Our core trauma performance continues to be driven by Pangea, our differentiated plating portfolio, which also hit its one-year anniversary of launch in the quarter and continues to generate robust interest and adoption by the market. Our U.S. other ortho business grew 5.6% organically, led by strength of Mako installations and a strong performance in navigational technology products, offset by bone cement. Internationally, Orthopaedics organic growth of 7.5% included strong performances in South Korea, Japan, and many of our emerging markets. Additionally, our international results do include a nominal amount of spinal implant revenue because of previously accepted tenders that we are fulfilling before exiting those markets. Now I will focus on certain operating and non-operating highlights in the first quarter. Our adjusted gross margin of 65.4% was favorable by 120 basis points over the second quarter of 2024 despite the impact of tariffs.

The improvement was primarily driven by cost improvements and business mix. Our adjusted operating margin was 25.7% of sales, which was 110 basis points favorable to the second quarter of 2024, driven by the gross margin favorability I just discussed. Adjusted operating expenses as a percentage of sales were consistent with prior year. Adjusted other income and expense of $106 million for the quarter was $52 million higher than 2024 due to the increased interest expense from our September 2024 and January 2025 debt issuances, slightly offset by favorable foreign exchange impacts. For 2025, we continue to expect our full year adjusted other income and expense to be approximately $430 million. The second quarter had an adjusted effective tax rate of 15.9% reflecting the impact of geographic mix and certain discrete tax items.

For 2025, we continue to expect our full year effective tax rate to be in the range of 15% to 16%. Turning to cash flow, our year to date cash from operations was $1.4 billion, driven by higher net earnings and year over year working capital improvements. Now I will discuss our full year 2025 guidance. Considering our year to date results, strong demand for our products and our operational momentum, we’re raising our full year guidance and now expect organic net sales growth of 9.5% to 10% and adjusted earnings per share to be in the range of $13.40 to $13.60. Our updated sales guidance includes a modestly favorable pricing impact. In addition, foreign exchange is expected to have a slightly positive impact on both sales and earnings per share should rates hold near current levels.

We now estimate a net impact from tariffs of approximately $175 million in 2025. This estimate, which is consistent with the amounts we have previously discussed, does reflect the reduction in the bilateral U.S.-China tariff rates and the announcement of a new framework agreement with the European Union. We continue to take thoughtful measures to address this estimated impact, which we are offsetting through our continued sales momentum, the leveraging of our manufacturing footprint, disciplined cost management, and better than expected foreign currency impacts. With that, I will now open up the call for Q and A.

Operator: At this time, we will open the floor for questions. If you would like to ask a question, please press Star five on your telephone keypad. You may remove yourself at any time by pressing Star five again. We would like to remind callers to please limit themselves to one question and one follow-up question so we can accommodate as many participants as possible. We will pause just a moment. Our first question will come from Larry Beagleson with Wells Fargo. Your line is open.

Good afternoon. Thanks for taking the question. Congrats on a nice quarter here, Kevin. There’s a lot of uncertainty in the market right now. What’s giving you the confidence to raise both your organic growth and your EPS guidance? How much did the supply issue impact growth this quarter? When exactly do you expect to resolve the issue? I had one follow up, please.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yes, thanks Larry. I would say what Jason mentioned related to procedural strength and we’ve even seen that in the month of July, continued procedural strength. That includes implants as well as other procedures across the surgical space. Strong capital demand. Our order book is very healthy. We’re not seeing any slowdown at all on capital. The supply issues are really limited to Medical. The rest of our supply chain is in really good shape, and those issues will continue to persist throughout the year. Medical has a lot of other products that they’re continuing to sell very well, including Pangea Plating System, including LifePak 35, and we’re very excited that LifePak has now received European approval, so that you’ll start to see in Q4. Overall strength across our portfolio, strong demand for the procedures, strong capital demand. That’s why we decided to raise it to the level we are.

We’re very confident in the top line outlook.

That’s very helpful. Kevin, remanufactured instruments are a hot topic. You have unique insight to this with the sustainability business. How are you thinking about remanufactured instruments for soft tissue robotics? Do you see that as a good opportunity for Stryker? If so, how would you enter the market? Thanks for taking the question.

Yeah, thanks, Larry. We don’t really talk about our pipeline, and this would be a pipeline product. There is another company that’s obviously getting into the business, and if we decide to enter that, we’ll let you know when we do.

All right, thank you very much.

Operator: Our next question will come from Robby Marcus with JP Morgan. Your line is open. Great.

Congrats on a nice quarter. Thanks for taking the questions. Maybe first one, Preston, impressive margins here in the quarter. The EPS guide is now basically back to where it was almost pre-tariff, pre-Inari dilution. Maybe just walk us through what’s driving the strength in the underlying margins here to get you almost back to the original guidance, especially as you’re absorbing all of these dilutive pressures.

Preston Wells, CFO, Stryker: Thanks for the question, Ravi. A few things I guess first I’d point to. We started as we came through the pandemic several years ago, really a focus on price. That focus on price has continued, and we’re seeing the benefits of that flowing down and really helping us to drive margin. In addition, we’ve talked about this continued focus on our manufacturing efficiency and really getting our operations into a more efficient manner in terms of supporting the sales growth that we have. We’re really starting to see that take shape as well. We have a lot of different initiatives going on from different lean initiatives in our manufacturing facilities to different initiatives happening across our procurement organization as we think about how we source product, where we source product. All of those are certainly helping us to drive the additional margin improvements that you’re seeing.

I think we’re also just getting more efficient with where we have product and how we’re moving product through our supply chain, which is leading to some reduced costs as well. Finally, I would just point to, we continue to look at how we support the business from an OpEx standpoint, really thinking about G&A as we look at shared service centers and other areas like that as we continue to support the business. The good news, Ravi, is and I’m really pleased with, in the first quarter we saw a consistent, a consistent delivery.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Of that op margin.

Preston Wells, CFO, Stryker: had 100 basis points in the first quarter, 100 basis points in the second quarter, which is really helping us to be much more consistent as we drive to the number that Kevin was talking about, our overall 100 basis points of delivery for the year. All these elements that we’ve been putting in place over the last few years are really starting to take shape and allowing us to drive a more consistent margin story.

Great. Maybe a follow up. Kevin, in the outpatient rule we saw proposal to move heart ablation into the ASC for the first time. I know one of your favorite things is whenever you see construction cranes up, you love it. I was wondering if I could just get your thoughts on where we are in the ASC buildout. I know most people with respect to Stryker are focused on Orthopaedics, but how you think about ASCs across other parts of the hospital and Stryker’s part in it. Thanks.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, listen, I don’t think there’s going to be any slowdown at all in the ASC trend. Obviously, we saw it first with sports medicine and foot and ankle, and then you saw it with hips and knees. It’ll continue, whether it’s cardiology or even general surgery. I could see a lot of those type of more elective procedures being done in ASCs. This trend is not going to stop because it actually lowers the cost of health care. It’s a pleasurable experience for the surgeons. It’s a pleasurable experience for the patients. I could see that healthy patients like to go to a place like this where there aren’t sick people. I absolutely see this trend continuing. If you look at something even like total ankle, right, we just had nice reimbursement increases both in the hospital outpatient as well as in the ASCs for total ankle.

If you asked me five years ago, would we be doing total ankles in the ASCs, I wasn’t even sure about that. Now that the reimbursement was raised, $7,000 because fusions aren’t nearly as successful as total ankle. This trend is absolutely going to continue. There’s no doubt about it. I think you’ll see it across all specialties.

Appreciate it.

Operator: Thanks.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: We like construction, as you say, because we do have a lot of products even in those specialties we don’t play in. We provide a lot of infrastructure that’s used even in other specialties.

Operator: Our next question will come from Ryan Zimmerman with BTIG. Your line is open.

Thank you. Thanks for taking our question. Preston, last quarter I think you called out the tariff impact at about $200 million. If I heard you correctly, it’s $175 million now. Most companies we’ve seen have come down maybe by about half. I’m just wondering if you could elaborate on why it’s only coming down by about $25 million. Is that a reflection of some of the manufacturing locations and so forth? Comment on that.

Preston Wells, CFO, Stryker: Thanks for the question. You’re right. Last quarter we did call out $200 million. We’ve come down to about $175 million. A few things I would probably point to in our original estimate, you may recall, we were just quoting what was in place at the time. At that point in time we really had the baseline 10% that was included for most areas other than some of the specific industry elements around steel and aluminum. I think Canada, China, and Mexico had some different ones at that point in time. As we fast forward here into the second quarter, the big change that we’re seeing, or the two big changes that we’re seeing, the bilateral agreement with China and the U.S. has brought that tariff down pretty significantly. We saw some benefit in our number as a result of that.

We did see some offsetting increase as Europe has entered into the framework of going to 15%, which would have been in our model 10% previously. We’re seeing some puts and takes, which is what gets us to that number. You’re right, it is reflective of how our manufacturing footprint is set up.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, it’s our manufacturing footprint in Europe as well as us not being as strong in China as other companies. That’s why it affects us maybe to a little bit of a lesser degree than others.

Fair enough. The second question is just we’ve seen some kind of install base numbers out there on orthopedic robotics out in the market. Kevin, I’d love your thoughts on what you see as greenfield opportunity within Mako at this point. Obviously, an install base number is always appreciated. You know how you think about that versus maybe adding the second and third robots at various sites around the world. Thank you.

I could tell you in the U.S. there’s very few places that only have one Mako. If they have one Mako, they tend.

To have more than one.

The universe of opportunity for us is every single operating room that does hips and knees. That’s our universe. There are 5,000 hospitals that do procedures and they have a lot of operating rooms. There is still a huge room for us to continue to grow with robotic installations installed. Base number we may provide at the end of the year when we provide our sort of % of procedures being done, which continues to climb. I’ll talk to Jason and Preston. We may provide that number at the end of the year. We tend not to like to be the only person providing these numbers, but we’ll take that under consideration. I would tell you internationally, we’re really starting to pick up steam and we’re kind of where we were in the U.S. about five years ago, especially places like Japan and parts of Europe and Latin America.

We still have a long runway to go. I would say we’re still in the early innings overall in the robotic penetration.

Thank you.

Operator: Our next question will come from Joanne Wench with Citibank. Your line is open. Good evening and thank you for taking the question. I have two. One of them, the supply issue that you’re talking about in MedSurg. Could you remind us please how long it is going to take to resolve that, and then I’ll put my second question right up front. You launched a new make of device, I think it was Gen 4 in the spring at AAOS, which had the shoulder, the hip, the knee, and the spine applications altogether. How is that going? Anything you’d say on shoulder and spine would be great.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Thank you, Joanne. I’ll take the first part of this, Joanne, as it relates to the supply issues and then Kevin can jump in here on Mako. As it relates to the supply issue, and I think Preston touched on this as well, largely in the medical division, we do expect it’ll kind of linger throughout the remainder of the year. That being said, I think what you’ll see of medical in the back half of the year, growth will accelerate and double digit in terms of organic sales growth for them. That is within reach as we think about the full year.

Yeah.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Great. As it relates to Mako 4, we’re really excited about this launch. This is not yet a global launch, so we do have countries around the world where we’re still selling Mako 3. What we added with Mako 4, the hip revision application is only available on Mako 4, the spine application is only available on Mako 4. Right now the shoulder, we’re in a limited launch on shoulder because that’s actually on the Mako 3, and we’re in the process of migrating the shoulder to Mako 4. That’ll be available starting the beginning of next year on Mako 4, which is part of the reason why the shoulder launch won’t be a full launch until next year because we do want to launch that with Mako 4. So far so good. The feedback has been very good.

We haven’t moved to a full launch on spine yet for the same reasons of just getting the workflow right and getting good feedback. Obviously we have to partner with VB Spine to be able to do these deals which include the robot as well as the implants, and we’re working through those commercial contracts and methodologies. Everything so far is looking really good. We have very good applications, very well received by customers. Not going to have much of an impact on our sales this year. Start to see much more of an impact next year.

Operator: Our next question will come from Travis Deed with Bank of America. Your line is open.

Hey, thanks for taking the question. I wanted to ask a question on Inari Medical. I don’t know if you could maybe help with how the business grew this quarter with the destock and sales rep transitions, and what gives confidence in double digit growth in 2025, and then can you get back to kind of market growth rate in 2026?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, listen, you know destocking is not fun. We’ve been through this before, by the way, when we bought other companies, K2M we went through that. A lot of these kind of earlier startups have these kind of practices. One of their practices was quarterly incentives, which helped to drive the stocking. We’ve done away with that practice. We’ve also replaced the sales leader with a Stryker sales leader. We’ve replaced the marketing leader with a marketing leader from Stryker. Of course, the President came from Stryker as well and had prior experience in the peripheral vascular space. We have a Stryker leadership team that’s really in place, which is exciting.

We also took some medicine on forcing all the sales reps to sign non-competes outside of California, and that was a bit of a gutsy move when you’re buying a deal for sales and then you’re making salespeople sign non-compete. Some people deflected not to do that, and we took our medicine and we’ve been rapidly hiring new salespeople. The good news is the underlying actual procedural demand was double digits. It’s not like our procedures and the surgeons doing our products were below market. We’re in pretty good shape from a procedural standpoint, and stocking will burn out, so we’re not too worried. In fact, the second half of the year will be good, and the overall year we expect to be double digit growth length. Most of the bad medicine has been taken already.

There’s still a little bit more stocking probably to burn, but overall we’re setting this up for the future. What we’ve learned in the past is take your medicine early on these kind of deals. We love the pipeline. I was just actually at Inari earlier this week, my second visit down there, and pipeline is great. Talent is really good. We’ve moved them now to a Stryker sales offense and put Stryker people in charge. This is what we’re really good at. They develop this market. They have amazing clinical trials that are underway as well. International is still tiny for them and it has a huge opportunity leveraging our infrastructure. Very, very pleased with Inari being part of the Stryker portfolio. There are good times ahead, even as early as the second half of this year and certainly into 2026 and 2027.

Great, thank you. Maybe the follow up question. There’s some stuff in D.C. on Medicaid exchange cuts. I don’t know how you’re thinking about if there’s any potential impact on that on elective procedures. The knee business did decelerate a little bit this quarter. I hear you on the strong volumes, but I think there was some stuff international like slow down in U.S. and international knees. I don’t know if there’s anything to kind of call out. That was one time in OUS knees this quarter.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Yeah, it sounds like a couple of questions there, Travis, but I’ll take it. This is Jason. First off on the bill side of this, as you can imagine, we are continuing to monitor the situation. As you think about procedures for us that involve Medicaid, it’s really an immaterial amount of procedures for us. Knowing what we know today, no concerns there for us as we think about the bill, but again, we’ll continue to monitor that. On the knee front, I’ll say a couple different things. As you think about how we exited Q2, June can be, with vacations and some of those things, a little bit of a slower month. We saw a little bit of that. I’ll tell you as we went into July, off to a really nice start for the quarter. Overall, I would say no concerns about the knee market.

We continue to think this will be a kind of a mid single digit market with us growing above market obviously. Just the last thing I would say, it’s one quarter. You see some of these fluctuations as you go throughout the year, but overall feel really good about the year.

Great, thanks Nathan.

Operator: Our next question will come from David Roman with Goldman Sachs. Your line is open. Hi, this is Jenny Rabinowitz on for David. You’ve highlighted the international expansion opportunity for a few quarters and you have the Pangea and Insignia launching in Europe. I was hoping you could break down how you’re thinking about inorganic versus organic investment, especially as it relates to international and expansion in new countries. Thinking also here any reflections on Surf as you kind of anniversary at the acquisition and expansion for Orthopaedics in Europe. Thank you.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, thanks for the question. Surf has gone extremely well. We’re really, really pleased. You can see our hip business has done very well internationally and yes, it’ll lapse and now it’s going to become part of Organic, and we are actually going to be bringing our first Surf product to the United States shortly. Very pleased with that acquisition and integration. We haven’t done a lot of deals like that that are primarily revenue based outside the United States. We continue to look for those types of opportunities. I would tell you that the biggest opportunity, frankly, is increasing the penetration of products we already have in our portfolio internationally, and especially acquisitions that primarily have U.S. revenue, taking those acquisitions to the international markets such as Inari.

Obviously, this quarter international was a little bit slower than it’s been over the past three or four years, but nothing alarming there. Pangea, just to be clear, is not yet approved, so that probably won’t be approved until next year. Insignia is still not approved. The only one that just got approved was LifePak 35. Unfortunately, this EU MDR has been a real challenge, not just for Stryker, but for the whole industry, with a much slower regulatory pathway for products. A lot of the super cycle launches that we’re enjoying in the United States are still not arrived in many other international markets. In some cases, we’re launching in Japan before Europe, which was unheard of three or four or five years ago prior to EU MDR. I think this slight slowdown here is still a good growth rate.

When you’re above 6% growth, that’s still pretty good, but not what we’re accustomed to. We do expect to get back in the second half of this year. International growth will be much better than it was in the second quarter.

Operator: Our next question will come from Peter Chickering with Deutsche Bank. Your line is open.

Hey, good afternoon guys. Two questions here. The first one is on the guidance raise. Really nice raise here, but could you bridge us the EPS increase you saw as it relates to better pricing than expected, FX changes, to tariffs versus your core operational strength?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah.

Preston Wells, CFO, Stryker: Peter, thanks for the question. We can walk through a little bit as we think about the guide. It is really reflective, as Kevin mentioned before, of our strong performance and our expectation really on the top line of where we expect to continue for the rest of the year. The bottom part of that and the EPS side of that is really just the flow through of that upside that we see. As you remember, when we talked about tariffs, part of the way that we’re covering off on tariffs is through some spend discipline and some other areas, and that’s not necessarily going to 100% flow through to the bottom line as we’re still trying to spend behind our growth initiatives. The other elements really, we do see some favorable FX that does flow through.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: A little bit as well.

Preston Wells, CFO, Stryker: What you’re just seeing is that top down flow through from the strong performance that we’ve had. The other thing I would just point to, we do have a little bit of a wider range on the bottom, and a lot of that just reflects some of the continued uncertainties, primarily to do with macroeconomic elements like tariffs that we know are still going to have some pluses and minuses for the rest of the year.

The follow up is I’m starting to understand the 19% plus growth you saw in Endo in the U.S. this quarter, up quite a bit since versus first quarter comps were easier, but still a pretty big move up. Are there any reclassifications skewing that number, or if not, can you just walk us through, you know, that great growth? Thank you.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, first thing I’d say no reclassifications, no accounting issues whatsoever, just pure fantastic performance from the endoscopy division. You know, look at last year, it was an 8% comp. It wasn’t exactly soft, but yes, it was a little bit lower than the typical double digit, but it was a boomer of a quarter for our endoscopy division and it was really across the portfolio. The booms and lights in our communications business had a phenomenal quarter and they have great orders. They have the new Oculon light that they’ve launched, which has tremendous demand. Communications will continue to hum the rest of this year. Of course, 1788 and the endoscope, what we call the endoscopy business unit, had a terrific quarter and that’s just been a consistent trend that we’ve had. Sports medicine is just on fire. You’re talking about very strong double digit growth.

They’ve launched about six shoulder products over the past, let’s call it six to eight months. Those products, that shoulder was the one area we were not quite as strong as hip and knee in sports medicine and they had an absolute boomer. You had sort of all the business units kind of clicking at the same time. We also have our reprocessing business that’s part of the endoscopy. They also had a solid quarter as well. Really one of those quarters where kind of everything caught fire. This is a division that’s been performing very consistently. Very high growth quarter after quarter after quarter. Just a little bit higher than normal, let’s say this quarter, which, which of course we enjoy.

Great, thanks so much.

Operator: Our next question will come from Matthew O’Brien with Piper Sandler. Your line is open.

Afternoon. Thanks for taking the questions. I’d love to talk a little bit about Mako again. The commentary about record new system ads is great to hear again, but I mean you’ve been doing that for a while. Anything you can call out as far as what’s driving that again here? I know it’s Q2, but is it the having the shoulder application, the spine application, more people are interested, or is there any kind of pause around competitive launches? Just anything to call out there, because again, you continue to put up these great Mako numbers quarter after quarter.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, listen, I was really pleased with this quarter. This is the first quarter of a new Mako, so Mako 4. I was honestly just not sure that it would. A new robot might cause a little bit of a pause. It hasn’t caused any pause whatsoever. Our team is executing, the robot is performing extremely well. The word is out. We have a fantastic robot. The revision hip the surgeons are buzzing about. It just makes a very hard procedure easy to do. They can see exactly where they’re putting their screws and which part of the bone, and you help a surgeon out on something that’s very difficult. They enjoy that very much. I was actually a little bit pleasantly surprised with the performance just based on when you’re changing a cycle. Other companies have gone through. We do this in cameras, we do this in power tools.

We’ve never done it before in Mako. It has been absolutely seamless in the U.S., this transition. They want their next robot and their next robot. There’s been a few customers that are saying, can I, I just bought a 3, can I upgrade it to a 4? We’re having some of those discussions, but we’ll be very friendly to our customers and help them upgrade if they want to upgrade to the new robot. A lot of customers are saying, okay, I’ll just keep the one I have and I’m just going to buy another one for the next operating room. We expect this to continue and the funnel, like we have a, we have a visibility into the future, so we expect this momentum on Mako to continue. There are a lot of operating rooms still that don’t have robots. Those are all targets.

Got it. I appreciate that. As the follow up, you know, Kevin, you’re pretty, you know, transparent as far as just the thoughts on, you know, your M&A strategy and you’re talking about a full pipeline. Should we expect another sizable type transaction, maybe not quite as big as Inari, you know, for you guys in the near future, somewhat near future? You know, you’ve also given us kind of some of the areas that you’re interested in. Anything else that you would kind of highlight that might be new to that list or something else that you’re really a little more focused on? I don’t know if it’s soft tissue, robots, etc. Thanks so much.

Yeah, no change to the adjacencies. I would say that they’re still the same ones that I’ve talked about in the past. Obviously with Inari now in the fold, if we do another deal in the peripheral or vascular and that kind of space, that won’t be an adjacency anymore. That’ll kind of be a tuck in. Don’t assume that that peripheral deal is the only deal we’re going to do. Once we get into a space we want to continue. There’s a pipeline there of deals that they were looking at themselves that we’re going to start to evaluate. I would say that we have the financial bandwidth to be able to do another Inari size deal. I can’t really predict, you know, when you know deals are uncertain, you don’t know when you’re going to do a deal and what size.

The bulk of our deals will continue to be the tuck in variety. If you think about last year, seven deals we did, that’s kind of the normal Stryker offense. Every once in a while we do a bigger deal like a Wright Medical or an Inari. I really can’t give you more on that. We are always looking at deals, right. Our teams are out there scouring the market. We have a nice pipeline and we have a number of IOIs in process but those sometimes wash out based on the price, based on our due diligence and so it’s kind of hard to predict. I’d be pretty surprised if we don’t announce anything for the rest of the year. There’ll be a deal or two or three. I don’t know exactly how many.

Most will be tuck in and you know, it’s not impossible that we wouldn’t do something bigger. We certainly have the bandwidth financially and you know, I like to spend money. We’ll be active.

Got it. Thank you.

Operator: Our next question comes from Vijay Kumar with Evercore. Your line is open.

Hi guys. Thanks for taking my question and congrats on the nice spring so far. Maybe two product segment kind of questions. First on medical a little bit, obviously questions around CapEx environment. If you could just touch upon the broader CapEx environment and LifePak 35 launch and how that’s progressing.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Yeah, Vijay, this is Jason. I think I got most of your question there, so I’ll take a run at it here. I think the question’s on the capital environment. I would say, you know, similar to my prepared remarks here, we feel really good about the capital environment. If you look at our capital backlog again, it remains very elevated. No signs of slowdown there as we think about the rest of the year. Really confident in that business for sure.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah. And LifePak 35. Yeah. LifePak 35 is doing really well. Really strong order book again. We’re still waiting for certain approvals, now just getting the European approval is exciting. September we’re going to have this kind of a launch in Europe of LifePak 35. Great customer feedback. It’s doing really, really well. These medical launches, they’re a little different than sort of cameras or power tools. This will have a long, we’ll be talking about it as a kind of a new product three years from now. They have a longer cycle of contribution to growth, a longer tailwind than you see with even. Procurity is continuing to have a really great quarter in Q2. It was launched a few years ago, but these are long-term product cycles, so they’ll continue to be tailwinds for a long time to come.

That’s helpful, Kevin. Maybe one on knees, was this just componentially or anything else going on within the knee performance?

Jason Beach, Vice President of Finance and Investor Relations, Stryker: No, I wouldn’t say there’s anything else material to call out other than what I’ve already said. Again, feel really good about the knee market, feel good about the full year, and like I said earlier, July off to a good start here. Really nothing additional that.

Fantastic. Thank you, guys.

Operator: Our next question comes from Matt Miksek with Barclays. Your line is open.

Great. Thanks so much for taking the question. I wanted to follow up on interventional spine, just the launch of Optivlate, investments that you’ve made in that segment. It would be great if you could talk a little bit about any of the quantitative or qualitative metrics about the launch so far, the other products and the investments that you’re making and the growth. I had one follow up.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, listen, we love our interventional spine business and obviously that’s reported under neurocranial. Frankly, one of the fastest growing businesses in Stryker over the past three or four years has been IVS. We’ve added to that with Optiplate, initially the Optiplate launch, which is an organic launch, and now we have the Optiplate BVN launch, which just happened. We also have the Vertos acquisition we did last year, which for now is not appearing in organic sales growth but will later this year. I would say that business is just cooking on gas. We have an amazing leader of the business, a great management team, and we are very focused on the space. We have really done really, really well with balloons early on. The CareFusion acquisition that we did with the Curve balloon has been terrific. We did the SpineJack deal in ventral spine.

Now we have Optiblade, and we’re covering oncology as well as pain and adding salespeople. Just a fantastic business. Little gem. It’s not huge yet, but it’s growing really, really fast. It’s one of the gems of Stryker, and it’s kind of how we drive this kind of growth so consistently. You have a number of these smaller business units that we continue to fuel really high growth, like very consistent, strong double-digit growth. I don’t think that’s going to slow down whatsoever. It’s going to continue, especially with these. Vertos is off to a really good start, and then the BVN is very new, but so far getting good feedback.

That’s great. That’s great to follow up with. Not to sort of pull a, you know, keyword bingo here, but AI is something that we haven’t talked about in a while. I know, you know, Robert, I’m sure, wakes up every day thinking about it and probably goes to sleep working on it. Maybe talk a little bit about some of the digital efforts that you have underway around whether it’s orthopedics or other segments of the business and where we might start to see more of Stryker putting its substantial data and assets and digital technologies to work to deliver solutions in that area. Thanks.

Hey, thanks. We have a lot going on in the world of AI. You know that Blueprint is already FDA-cleared and uses AI to create the surgical plan and inform the surgeon as to which implant they should be doing. Pre-planning is going to be continued. We’re going to proliferate that across our portfolio. As one area of opportunity, we have the Gauss Surgical that quantifies hemoglobin and sponges. That’s an AI product approved. We have a number of other projects, and in addition to that, we’ve hired a new Chief Digital Information Officer, Deborah King, who started pretty recently and has a lot of experience more on the generative AI and is also going to bring a lot of infrastructure that can then be used by our divisions.

I would say that this is a topic that we’ll probably cover in our investor day that’s planned for later this year. We’ll get the specific date out shortly. Rather than spending up time on the earnings call going through this, I think we’ll give you a lot more information on that later this year. Suffice to say we are absolutely aggressively working in this area and see this as a tremendous opportunity to bring more science to healthcare versus just relying on one surgeon’s experience in their residency and in their training to be able to bring more data to life. We have a lot of projects underway. We’ll share more later.

Thanks, Kyla.

Operator: Our next question will come from Steve Lichtman with Oppenheimer & Co. Your line is open.

Thank you. Evening, guys. Kevin, you talked about salesforce change out at Inari. As you put non-competes in place, can you talk about, you know, how much sales disinfecting you’re assuming as a result? I know you mentioned still double-digit growth, but has the absolute expected reported revenue contribution from Inari changed at all?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, look for the full year I think we talked about something like $590 million for the full year. We’re going to be right around that number. We’re absorbing these changes, these challenges of sales repetition. It was starting to happen even before the deal closed and we accelerated that with the non competes. A lot of those people that decided not to sign on were not necessarily all regrettable, not necessarily Stryker type of salespeople. We’ve been aggressively hiring. We know we’re not calling down our number, but it’s a little bumpier. It was a little lower as we destocked and as we dealt with the turnover. The reps are coming on and we’re going to expect very good numbers in Q3 and Q4.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Yes, Steve, maybe just to add a finer point on that, on the $590 million, just to be crystal clear here, that would be for the 10 months.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Period since we’ve owned them.

Right, right. Thanks. On tariffs, should we still expect the impact all in the second half? Was there anything in 2Q? I thought in the prepared remarks I heard something. In the cadence of that $175 million between 3Q and 4Q, can you talk to that a little bit? Thanks.

Preston Wells, CFO, Stryker: Absolutely. When we think about tariffs, there is some impact of tariffs in the second quarter. Remember, because most of the tariffs are flowing through our COGS number, they’re flowing into inventory first and then onto the P&L. We will see a bigger impact in the second half of the year than what we saw in the second quarter or even first half of the year. It is back end loaded because it’s going to flow through inventory and then to the P&L. Certainly, as we pick all of the tariffs up in terms of getting to the final numbers, we’ll see that more consistently in the back half of the year.

Got it. Thanks. Thanks.

Operator: Our next question will come from Chris Pascal with Nephron Research. Your line is open.

Thanks. I wanted to ask a couple questions on the robotics business. The ortho robot landscape now includes a variety of different form factors. You’ve got some competitors taking more of a portfolio approach to try and provide different solutions to physicians who may have different preferences. You guys have been more one size fits all with Mako. Do you see a limit to that strategy, or do you think Mako in a single form factor can continue to kind of cover all your bases?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, like I said before, I had a question earlier about a different product. We’re not going to talk about our pipeline of robotic solutions and whether something else will be added to the Mako portfolio. I’m not going to preview that. That’ll happen if something like that happens. I’ll let you know when it does. We have an absolute winning solution right now, winning in the United States, winning globally. We know we have the best robot on the market and our solution is add applications. Add applications, continue. We’re not finished. We’ve got other applications planned that we’re going to continue to add to the robot to create tremendous value. A hospital buys one robot, they get all these different applications that they can use. We know that we’re in a good position, we have a winning hand. We’re going to continue to play this hand.

Could we do something different in the future? It’s possible. We’ll let you know at that time, but not before.

Okay, I think my follow up question also straight into the pipeline territory, so maybe I’ll pivot and ask about trauma. It’s been a real standout. You noted that you’re now lapping the Pangea Plating System launch. I know you guys tend to talk about product rollouts being multi year affairs, but how do you think about your ability to sustain double digit trauma growth as those comps get tougher?

We sustain double digit growth in a lot of our businesses as comps get tougher. You just look at neurocranial, look at endoscopy, look at, oh, this is something we do. This launch has been fantastic. Just an absolutely beautifully executed, super complex launch. We’re actually still adding to it. We just added some MIS plates. It’s such a comprehensive system that it’s not like the launch ever completely stops. You’re going to continue to add little features here and there to keep it fresh. It hasn’t even launched yet in Europe. That won’t be until next year that it starts. This tremendous growth, even OUS, our growth is really strong in spite of Pangea not being everywhere in OUS.

That combined with upper extremities being on fire, foot and ankle starting to get better, and certainly the change in reimbursement for Total Ankle, where we have a very high market share, is going to be exciting. Timed beautifully with the launch of our Encompass brand new Total Ankle. Just fortuitous for us, tells me that trauma extremities continue to be a high growth division for the company.

Great, thank you.

Operator: Our next question comes from Richard Neutter with Truist Securities. Your line is open.

Hi, thanks for taking the questions. Just two quick ones from me. Following up to Chris’s question just in on robotics portfolio, what’s your view on, you know, fully autonomous robotic? Your competitor obviously, you know, has a solution or wants a solution there. Do you see the market going there? Is there an appetite for that? Just a second question up front here on Neurovascular. Kevin, just curious if you can comment at all on U.S. Neurovascular end markets, particularly in ischemic growth.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Let me start with autonomous. Just to be clear, we’re aware of their portfolio and we know that they were pursuing autonomous. We have the capability today to do Mako autonomous. I’ve actually been in a lab where I’ve seen it operate autonomously. We have chosen not to pursue that because of the regulatory burden and the expenses required to get it through FDA. At some point in the future, if the market really has an appetite for autonomous, we can turn that feature on. Right now that’s not our focus. Our focus is using our R&D dollars to add new applications that provide tremendous value. Even if they try to move our robot outside of the haptic boundaries, they can’t. Whether they’re putting their hand on it to make it move or whether it’s done autonomously, honestly, that’s not a big value add for a surgeon, in our opinion.

Should the market start to move that way, we already have that capability today with Mako. As to Neurovascular, the NV market, obviously the market for hemorrhagic is still stable, I would say. We continue to do well in the hemorrhagic side of the market. The ischemic market was a little bit slower and we’ve seen that market kind of vary from quarter to quarter and there’s a lot of entrants in that market. Obviously it was a bit of a soft quarter for us in Neurovascular this quarter. We have three product launches that we mentioned in the prepared remarks that give us optimism that we’re going to have a much better second half.

Thank you.

Operator: Our next question will come from Mike Matson with Needham and Company. Your line is open.

Yeah, thanks. I just wanted to follow up on the neurovascular question. You mentioned this Broadway large floor catheter. Can you just tell us a little bit more about the timing on that, and will that actually have labeling for aspiration use for stroke timing?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, it is approved and we have just started to launch it with the Salesforce. Initial cases have gone extremely well. It’s made a completely different way. The manufacturing process is completely different to all of our existing catheters. It’s a proprietary manufacturing method that really improves trackability. I think the lumen is a 0.084, I believe. Lumen size, so large lumen size, very trackable. Getting great feedback. It is just being launched right now. Approved in the U.S., being launched in the U.S. It will take some time before it’s launched in other markets around the world.

Is it cleared for delivery use or for actual aspiration use?

It’s cleared for aspirations.

Okay.

Operator: All right, thanks.

I have one on shoulders. I think shoulders have also started to move into the ASC setting, total shoulders. What are you seeing there?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: How does that kind.

Of balance out between maybe increased volume but potential for some pricing pressure?

Yeah, we obviously have a very expensive shoulder implant, really the best shoulder implant on the market with the Perform system. There is a little bit less pricing in the ASC, but more volume to pick up and a lot of people suffering with shoulders. We had another quarter. Every quarter is good. Double-digit growth in shoulder, and we continue to love our shoulder business. We also have some products and offerings that nobody else has. Right. You have the hemiarthroplasty with pyrocarbon. You have the Shoulder ID, which is a custom glenoid customized to the patient so you don’t have to have separate augments. This pipeline is fantastic. The existing implants are modern. We have Blueprint software to help with pre-planning, so we have just a terrific offering.

Yes, we’ve lost a little bit of price on some of those procedures that moved to the ASC, but it certainly hasn’t slowed down our growth at all, let alone the fact that next year we’re going to move to full launch on Mako Shoulder. I don’t expect shoulder to be slowing down anytime soon.

Okay, thank you.

Operator: Our next question comes from Shagan Singh with RBC. Your line is open.

Great.

Thank you so much. Two quick ones for me. Just on your implied second half guide, it seems like a step down in the back half versus front half on an adjusted basis. It’s still really strong, but just wondering if it’s conservatism or any factors to call out there. For my second question, I was just wondering if Kevin, you could talk at a high level or directionally on 2026, any areas that you are most excited about. Just thinking through 2026 as well. We’ve been speaking with some hospitals, especially those who have very high exposure to Medicare, Medicaid. They have talked about budgets coming down in 2026 versus 2025. It sounds like you’re not hearing about it for 2025, but just any color on 2026 would be great. Thank you for taking the questions.

Preston Wells, CFO, Stryker: I’ll take those questions first. As we think about the guide in the second half of the year, certainly we have higher comps as we think about our sales growth that we have to get through in the back half. Also, as you know, our plan always is we want to make sure that we beat and raise as we go throughout the year. I think we’re very well set up to deliver on what we have, and ideally if we overperform, to raise guidance as we continue to perform in the second half of the year. As for 2026, we’re not going to provide any update on 2026 until we get through the end of this year. At this point we have no comments with regards to how we think about 2026 at this point.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, the only thing I’d say, Shagun, is that hospitals need our procedures. They’re very revenue producing, the places that we play in health care. If their finances are affected by less revenue from the bill that was passed, they’re certainly not going to come after our procedure areas. We’re the ones that are making a lot of the money in the hospital. If anything, they’d like to do more of our procedures to help with their financial pressure. It will take a long time before it really starts to hit our business based on where we play within the healthcare system.

Operator: Thank you. Our next question will come from Danielle Antalffy with UBS. Your line is open. Hey, good afternoon guys. Thanks so much for taking the question. Kevin, just two questions for me. First on China, I know you guys have highlighted this as an area where you’re under indexed. It’s, there’s a lot of potential for growth there. I’m just curious. I mean, there’s been a lot of, it’s been evolving very quickly with tariffs, but also the broader healthcare market in China. Curious about how you’re thinking about China from a growth perspective and how much that’s a focus for you guys today. And then just one quick follow up after that.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, we don’t have a large China business, as you probably know. VBP hurt everybody, hurt us a little bit less than some of our competitors because of our presence. It’s a giant market long term. You have to be in China. We’re not withdrawing from China, but we’re also being very thoughtful about the types of investments that we do and having to have sometimes some localized products, which we’re experimenting with in our Dossby division as one example. We’re being, I guess, careful and treading carefully is the way I would describe it, being thoughtful about our distributor arrangements. It’s not something that we’re pouring a lot of money into, but we’re not taking any steps to leave or to exit.

We’re going to hang in there and we’re going to continue to sort of build, have the building blocks to have a sustainable, growing business and trying to have a very good second quarter that’s having a good year this year. We’ve been through some challenges in China. I’m not nearly as bullish as I was, let’s say, five or six years ago, in the pre-VBP era. It’s a lot different, the market right now, but it is a market that we’re going to continue to be active in as we are in a lot of other international markets.

Operator: Okay. My follow up was on international and you mentioned with Mako, where, you know, where we were five years ago in the U.S. Is there anything structural about the international market that would make the ramp look different for Mako than it did in the U.S. or should we think of the U.S. as a good proxy for how to model Mako uptake over the next few years internationally? Thanks so much.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yeah, thanks. It’s a good proxy. Japan is a good proxy for Japan. Japan has the financial wherewithal. They like technology. They can afford this. I say Japan’s a good proxy and some of the European countries are good proxies. The countries that are not quite as good a proxy would be something like France, which is all government paid. It takes a long time. Canada is another example where all of a sudden they’re now starting to be very interested in Mako because they’ve seen long term data that shows that it’s really high performing. The Australian data was tremendous. It showed that Mako not only performed better than manual instruments, but performed better than navigation. That is very credible on a global stage. That data that came out is something that we’re using internationally to help drive the business. It does vary by country.

I would say countries like the UK, countries like Italy, that’ll be moving kind of like the United States. There are some other countries that are purely socialized medicine. It will move a little bit slower. It’s just the nature of the beast.

Operator: Our next question will come from Matthew Zhao with Jefferies. Your line is open.

Thanks for taking the question. This is Matt Taylor. I wanted to quickly ask about or have you expand a little bit on how you’re thinking about the recent OBBVA and the implications for your business. Primarily, are you seeing any shifts in the behavior of purchasing or CapEx budgeting from hospitals given the favorable CapEx treatments they have from whatever accelerated depreciation and et cetera? Also, maybe a follow up to that is how should we be thinking about the tax rate for your business heading into 2026?

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Yeah, Matt, it’s Jason. I’ll take the first part of this and Preston will pick up on the tax rate portion of this. As I said earlier, as we think about the bill, we are continuing to monitor the bill as it relates to the Medicaid piece. You know, a small part of our procedures are Medicaid related. So feel really good about that. I think, as we think about the capital environment again, and Kevin mentioned this, if you think about the majority of our capital, it’s closely tied to procedures, right? As procedures continue to be strong, we expect that there’ll be a high need of our capital. We are positioned well on that.

Preston Wells, CFO, Stryker: As it relates to the tax implications of the bill, we expect that over the next year or so we will see some benefit in terms of our cash tax just given the bill. From an ETR standpoint, we would relatively be in the similar area that we are this year. This year our guide is 15 to 16%. As we get into next year, we’ll confirm what that’s going to be, but we don’t expect it to have a significant impact on our ETR at this point.

Great. Thank you very much.

Operator: Great. Thanks so much for taking the questions and congrats on a great quarter. I guess, you know, just starting off with hips, I think it was a strong number. Are you guys seeing any pressure from, you know, the competitor launches in hips? Any update on whether you’re continuing to trend higher and kind of the % of hip procedures done robotically?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yes, I would say on robotic procedures trending, both knees and hips continue to climb. We’re very excited about the HIP 4.0 software because if you recall the first five or six years, maybe seven years after the acquisition, the hip % hadn’t really changed very much. This new software is very good, and especially now that we’ve added revision hip, I expect that to continue to improve. Insignia has been an absolute home run of a product for us and has really taken off, and I can’t wait for it to get approved in Europe. That’ll continue to contribute to our growth. We’ve done a lot of training around direct anterior, which has been terrific. Overall, we run a really good offense in terms of our commercial offense.

We just focused more on ourselves and what we’re doing with the customers rather than focusing on the competition, and that’s been paying off for us.

Operator: That’s great. Just a quick one on navigation. I think you called that out earlier as being strong. Was that related to Q guidance and maybe the momentum in the spine and perennial portion of the enabling tech portfolio?

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Yes, that’s exactly right. When we say enabling tech, we mean the Q guidance, and the Q guidance, just as a reminder with Mako 4, that’s half of the system. You can use it for spine to do navigation, but you could also combine it with the Mako robotic arm to use Mako. We have this reuse of software type of approach, which is really effective. We also have a Copilot product that’s reported under our neurosurgery business under neurocranial, which is a bur that has haptic feedback as you get close to the key critical anatomy in the spine. That’ll actually buzz, and they actually turn off before the surgeon hits those structures. That has been very, very favorably received by customers. To be able to use Copilot, you have to have the Q guidance system.

Even though the revenue, part of it’s an enabling tech and part of the revenue is in neurosurgery, it does operate as a system, and we had a really good quarter. Q2.

Operator: Great, thanks. Our next question comes from Josh Jennings with TD Cowen. Your line is open.

Hi, this is Eric on for Josh. Thank you for taking the question on capital. I understand you guys bucket items into large and capital items. For large items in particular, I was wondering if there’s any detail you can share on the portion of outright capital sales versus financing options or placements for that category. Maybe an easier one to answer is just whether or not that has seen any meaningful shift in the ratio over the past several quarters.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Yeah, this is Jason. I’ll take this one. As you think about our capital as a % of kind of total revenue, right, you have about 15% of our total revenue. That’s the smaller capital more closely tied to procedures. Then you’ve got the larger capital that’s closer to 9 to 10% of our total revenue, and that business continues to do really well. I think Kevin mentioned earlier our communications business, where you see a large % of our large capital did really well in the quarter, and other areas of our business that have this large capital as well continue to perform really well. We’re really happy with both the large and small capital.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: The only trend towards more financing has really been on the robots under Mako, where there has been especially in the ASC. Most of those deals in the surgery centers are financed versus hospitals, which tend to do more outright purchasing just historically, but not a major change that we’re seeing from the trend that we’ve seen over the past year to 18 months.

Okay, understood. I know there was a question earlier on Mako internationally. If I could focus on Mako Spine and Shoulder in particular, I appreciate the reiteration of the U.S. launch timeline there, but was just curious if you could share your thinking around those new offerings in international markets and what the commercial opportunity could look like outside the U.S.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: I would say the opportunity is large. As you think about just the initial launch, we’re looking at the end of this year for Mako Spine and then the first part of next year for Mako Shoulder. It will be a deliberate, lengthy launch. There’s lots of opportunity both in the U.S. and outside.

Okay, appreciate it. Thank you so much for the questions.

Operator: There are no further questions. I will turn the call over to Kevin Lobo for closing remarks.

Kevin Lobo, Chair and Chief Executive Officer, Stryker: Thank you all for joining our call. We look forward to sharing our Q3 results with you in October.

Jason Beach, Vice President of Finance and Investor Relations, Stryker: Thank you.

Operator: This concludes the second quarter 2025 Stryker earnings call. You may now disconnect.

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