A Memo To Stryker’s Orthopaedics Team About Winning Again
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Shareholders of Stryker (SYK) own two businesses moving at different speeds. Orthopaedics, home to the hip and knee business, posted 4.3% revenue growth in fiscal 2025, while the rest of the company grew 15.6%.
On October 29, management outlined a catch for shareholders when it lowered its 2026 organic sales growth forecast and cited softer hip and knee procedure trends among the reasons. If an investor sent the Orthopaedics team a note this week, it would be short.
What Stryker’s Owners Would Ask Of Orthopaedics
The message would open with the numbers. In fiscal 2025, you brought in 37.7% of Stryker’s revenue, down from 40.2% a year earlier, because the rest of the company grew faster. That gap persisted through the third quarter of 2026, when your organic sales grew 5.9% compared with 9.1% organic growth for MedSurg and Neurotechnology. The two gaps are not on the same basis, because the quarterly figures track organic growth while the 2025 numbers are reported.
While the SAP system installed in July is functioning well, management said the rollout distracted your teams and delayed their view of the market. Orthopaedics was the final Stryker unit to adopt the software, and the system is now fully in place. The request is simple: put the team’s time back into selling, and win hospitals at the rate you used to. Your owners want this team to win.
Why Stryker’s Hip And Knee Sales Slowed
During the October 29 call, management said that hip and knee sales slowed because the market slowed and Stryker stopped taking share at its previous pace. Executives put 2026 growth in the hip and knee market at about 2.5%, a step down from the past five or six years. In the U.S., they pointed to patients worried about higher insurance premiums and deductibles, alongside an increase in pre-authorization denials delaying treatment.
Stryker also said it has not been winning at its historical rate. After years of beating the market by a wide margin, the company has grown in line with it over the past 12 months. Third-quarter U.S. organic sales of knees grew 1.3%, while U.S. organic sales of hips fell 0.6% against a strong prior year.
Management cut its 2026 organic sales growth forecast to a midpoint of 6.8%, down from 8.8% in July. Softer hip and knee trends were one reason, alongside supply limits in peripheral vascular and caution on capital equipment sales.
Where Stryker Is Still Strong
Helped by Mako sales and demand for orthopedic power tools, Stryker’s U.S. orthopedic technology sales rose 18% organically in the third quarter. Management said feedback on the newer Mako RPS and Triathlon Gold has been very positive, even though sales are tracking behind its expectations. The company plans to bring a power hip impaction product to market in 2027.
Stryker as a whole is also keeping more of each sales dollar. Over the twelve months ended September 30, 2026, the company posted an operating margin of 21.8%. That marks the highest level at any of the 40 quarter ends since the close of 2016, and compares with 18.6% for the S&P 500.
Stryker Stock Has Trailed The Market For A Year
Over the year through November 2, 2026, Stryker stock lost 15.9%, including dividends, while the S&P 500 returned 11.8%. The shares have performed better since October 2, returning 11.4% while the broader index lost 2.3%.
At 32.4 times trailing earnings, compared with 22.8 times for the S&P 500, investors are still paying a premium for Stryker’s earnings. Management said it expects 2027 growth to land at the high end of its markets and will issue formal guidance early in 2027. That guidance will come under a new chief executive, as Spencer Stiles, now President and Chief Operating Officer, succeeds Kevin Lobo on January 1, 2027.
When Stryker reports in January 2027, Orthopaedics organic sales growth will be the number to watch.
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