Stryker's hip and knee sales stall, and its sales guidance falls below July's floor

Stryker's hip and knee implant sales stopped growing in the September 2026 quarter. Together they brought in 0.3% more than a year earlier, after growing 5.2% in the first half of the year. Softer hip and knee procedures were the first reason the company gave for cutting its full-year sales guidance, three months after it had raised the bottom of the same range. The cut also reflected supply constraints in peripheral vascular and caution over capital-equipment sales, while expense discipline and higher gross margins kept the cut to adjusted earnings guidance much smaller.

The company now expects organic sales, which leave out currency moves and acquisitions, to grow 6.5% to 7.0% in 2026. When it reported the previous quarter, on 30 July, management lifted the bottom of its range to 8.3% and described the US market for procedures as stable. The top of the new range sits 1.3 points below that floor.

Management offered two causes for the hip and knee slowdown. One is the market. Chief executive Kevin Lobo said US patients are putting off operations as insurance premiums and deductibles rise, and insurers are refusing more requests for prior approval. Asked how fast the market is growing, he said: "It's hard to estimate exactly, but I would say market growth is kind of in the 2.5% range this year." The other cause is Stryker itself. Lobo said the company has not been taking business at its usual pace in a year that included a cyber incident in the first quarter and a move of the orthopaedics businesses onto a new SAP system in July.

The filed results cannot separate the two. The market figure is management's estimate for the whole year, not a measurement of the quarter, but if the market grew while Stryker's sales stood still, the company lost ground in hips and knees, after years in which Lobo said it had been gaining share faster than rivals; he said its sales teams had been distracted. The new system also explains the timing in management's account: order entry was delayed so badly that the slowdown only became clear in September. That fits the stable picture it gave in July, though the reported figures cannot test it.

The rest of the company held up. Organic sales grew 7.7% overall. The larger MedSurg and Neurotechnology segment grew faster than that, and orthopaedics as a whole kept growing because its other lines outgrew hips and knees. Part of the 7.7% will not repeat. Vascular sales rose 8.0%, but the quarter included one-time revenue from a peripheral vascular joint venture in China, earned when it reached a regulatory approval milestone in September. In the quarter before, US vascular organic sales had fallen 6.7%, which the company put down to a supply disruption in peripheral vascular.

Earnings guidance moved much less than sales guidance. The midpoint of the adjusted earnings per share range fell by about 1.2%, while the midpoint of the organic sales range fell by about two percentage points, both calculated from the July and October ranges. Management credited expense discipline and higher gross margins. Adjusted operating margin, which leaves out charges such as impairments, rose to 26.2% from a year earlier. Separately, Stryker bought back $1.0 billion of its shares in the quarter. On a reported basis operating margin was 15.9%, pulled down by a $293 million goodwill impairment, a write-down of the value booked for past acquisitions.

The new guidance assumes fourth-quarter organic growth similar to the third quarter's. Management said that assumes the procedure environment of the third quarter continues. How much of the stall is the market and how much is Stryker will decide how far this year's growth rate is a fair base for 2027.