Stryker Corporation

Welcome to the third quarter 2026 Striker Earnings Call. My name is Layla and I'll be your conference 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.

Welcome to Stryker's third quarter earnings call. Joining me today are Preston Wells, CFO, and Nick Mead, Vice President of Investor Relations. Before I begin, I'd like to congratulate Spencer Stiles on his appointment as Stryker's next CEO. Spencer has spent nearly three decades at Stryker, helping shape our strategy, strengthen our culture, and drive our growth. You will have additional opportunities to hear more from him at various investor events over the next few months, and I am confident you will come away with an even greater appreciation of his capabilities to lead Stryker into the future. For today's call, I'll provide an overview of our performance. Nick will then provide a brief M&A update, followed by Preston with additional details on financial results and guidance. We will then open the call to Q&A. Turning to our third quarter performance, organic sales growth for the quarter was 7.7%, with 9.1% growth in med-surg and neurotechnology, and 5.9% growth in orthopedics. Our endoscopy and orthodontic divisions delivered double-digit performances and medical also delivered near double-digit growth. While we delivered solid growth in several businesses, our overall results fell short of our expectations. As Preston mentioned during an investor conference in September, we are facing challenges with our hip and knee and peripheral vascular businesses. Beginning with hips and knees, it is now clear that there is a market slowdown. In the US, we are seeing slower procedural growth amid affordability concerns from higher insurance premiums and deductibles. We are also observing increased pre-authorization denials, creating additional friction and delaying patient access to treatment. Europe and the Middle East have also remained soft amid regional disruption, strike-related delays, and government funding decisions. In addition to the softer market, we have not been winning at our historical rate. 2026 has been an unusual year marked by the cyber incident in the first quarter and an SAP implementation within our orthopedics businesses in July. This is the last of our businesses to go on to SAP and while the system is functioning well, it has created a distraction for our teams and delayed our visibility of market conditions. Although Mako sales have been strong again this year, We are behind our expectations on new product sales from Mako RPS and Triathlon Gold. The feedback on these innovations is very positive, but the cyber incident and SAP implementation have impacted our commercial execution. We are taking actions to improve competitive conversions and new product adoption. Finally, as a leader in power tools, we are excited about bringing a powered hip impaction solution to the market next year. addressing an important product gap in our HIP portfolio. We remain confident in the long-term attractiveness of the large joint reconstruction market supported by favorable demographics and expanded access through new sites of care such as ASCs. Next, I'd like to give an update on our vascular business, which reflects a sequential improvement from last quarter. The third quarter included one-time revenue from our peripheral vascular joint venture in China, as a result of achieving a regulatory approval milestone in September. This benefit helped offset the impact of lost revenue from the ongoing supply disruption that we discussed during our last earnings call. Our team has made meaningful progress restoring supply throughout the quarter and we now expect inventory levels and product availability to continue normalizing through the end of the year. While this has been a challenging period, We remain convicted in the outlook for peripheral vascular as a growth business accretive to Stryker. Looking ahead to 2027, we expect to begin commercializing AVS's IVL platform and also look forward to important data from our Peerless 2 study of Flowtriever. We are excited about our recently announced strategic investment in CMR Surgical, which Nick will cover in his section. Our updated organic sales guidance anticipates a similar overall organic growth rate for the company in Q4 as we achieved in Q3. This assumes a continuation of the procedure environment we observed this quarter, as well as continued strong capital demand where we continue to maintain an elevated order book. Our successful efforts on margin expansion are limiting the impact of our sales shortfall on adjusted EPS and we continue to generate strong cash flows. As this is the last of 57 earnings calls as CEO, I would have preferred to deliver better news But we've demonstrated before that our business is resilient, our foundation and culture are strong, and we remain confident in our ability to deliver on our long-range financial commitments. I will now turn the call over to Nick.

Thank you, Kevin. My comments today will focus on M&A and will highlight two recent transactions. As announced earlier this week, we have completed our acquisition of Zeromini. which expands the support we can provide to specialists across sports medicine and arthroplasty. Xurimed's differentiated fiber locker technology is designed to increase biomechanical strength in rotator cuff repair and provides a broader platform for orthopedic soft tissue augmentation. Next, we recently announced an investment in CMR Surgical, an agreement to act as the exclusive US sales agent for the Versys platform. Soft tissue robotics is an attractive adjacency that is a natural extension of Stryker's strengths in endoscopy, visualization, and enabling technologies. Versius has been used in more than 50,000 procedures globally and its scalable design can support broader adoption of robotic-assisted surgery. With its new Versius Plus system, approved indications, technology, and growing global clinical experience, We believe now is the right time to partner with CMR and begin scaling the US market through a thoughtful, disciplined approach. Together, these transactions reflect our continued focus on investing in opportunities that support durable, long-term growth and value creation. I'll now turn the call over to Preston to further discuss our third quarter financial performance.