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DATE

Thursday, April 30, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Kevin Lobo
  • Chief Financial Officer — Preston Wells
  • Vice President of Finance and Investor Relations — Jason Beach

TAKEAWAYS

  • Organic sales growth -- 2.4% globally, 1.9% in the U.S., and 3.9% internationally, with growth significantly constrained by the late-quarter cyber incident.
  • Adjusted earnings per share -- $2.60, reflecting a decline of $0.24 or 8.5% from the prior year due to limited sales growth, lost manufacturing absorption, tariffs, and increased interest expense, partially offset by operational excellence and a modest foreign currency benefit.
  • Adjusted gross margin -- 63.6%, a decline of 190 basis points attributed to lost manufacturing absorption from production shutdowns connected to the cyber incident, and tariff impact; no incremental tariffs occurred in 2025 for comparison.
  • Adjusted operating margin -- 21.1%, down 180 basis points, pressured by gross margin contraction and sales deleverage, with some offset from cost discipline.
  • Adjusted other income/expense -- $97 million (expense), $24 million higher due to increased interest expense tied to 2025 debt for the Inari acquisition and lower interest income from reduced cash balances and lower rates.
  • Adjusted effective tax rate -- 14.5%, affected by geographic mix and discrete tax items.
  • Cash from operations -- $581 million, reflecting typical Q1 seasonality and impacts from the cyber incident on earnings and working capital.
  • Full-year 2026 organic net sales guidance -- Maintained at 8%-9.5%, with most lost first-quarter sales expected to be realized in the remainder of the year, varying by business model and product type.
  • Full-year 2026 adjusted EPS guidance -- Confirmed at $14.90 to $15.10, supported by expected sales recovery, operational focus, and some improvement in tariff outlook.
  • Maintain operating margin objective -- Management reiterated commitment to "the 150-plus" basis points expansion target over three years, with no change to full-year margin expectations despite quarterly cadence shifts.
  • Cyber incident recovery timing -- Manufacturing operations were fully restored by the week of April 1, with revenue recognition and rescheduling of procedures expected to recover in Q2 and more substantially in Q3 and Q4, especially in MedSurg make-to-order capital.
  • Segment structure change -- Orthotech business established by combining Mako, Enabling Technologies, and orthopedic instruments, now reported in an updated segment disclosure beginning this quarter; historicals restated for 2023-2025 for consistency.
  • Best-ever Q1 Mako installations -- Both U.S. and international placements hit record highs, with increasing global utilization and sustained positive surgeon feedback for Mako shoulder ahead of its full launch on Mako 4 mid-year.
  • Order book & hospital demand -- The capital order book remains elevated, with no indications of order slowdown or instability in the hospital CapEx environment, per management statements.
  • M&A activity -- Announced acquisition of Amplitude Vascular Systems, expected to close in Q2 to extend capabilities in peripheral vascular; management affirmed ongoing M&A appetite, supported by a 2.1x gross debt-to-EBITDA ratio and an active pipeline.
  • International growth dynamics -- International business delivered 3.9% organic growth; Middle East conflict in Iran caused a modest drag on regional results but limited impact to overall company performance.
  • Product approvals & launches -- Recent approvals for Pangaea (Europe and Japan) and LIFEPAK (major global markets) are expected to support sustained above-market growth in trauma and emergency care; ramp-up and rollout will extend into 2027-2028 due to product complexity and replacement cycles.
  • RPS launch traction -- The new Mako RPS handheld system has received positive early feedback, particularly from ambulatory surgery center (ASC) customers seeking a less complex entry into robotics; not cannibalizing Mako momentum.
  • Management transition -- Nick Mead appointed as Vice President of Investor Relations effective May 1, succeeding Jason Beach, who becomes CFO of MST Group.

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RISKS

  • Preston Wells stated, "Adjusted earnings per share of $2.60 was down $0.24, or 8.5%, from 2025. This decline was driven by limited sales growth and lost manufacturing absorption related to the cyber incident, as well as tariffs and increased interest expense."
  • The cyber incident caused "distortions in our first quarter results that will normalize over the course of the year," revealing vulnerability to operational disruptions and delays in revenue recognition.
  • Gross margin and operating margin compression were attributed to production shutdowns, lost manufacturing absorption, and tariff impacts, as discussed in prepared remarks.
  • Management cited ongoing inflationary and geopolitical pressures on input costs, stating, "We do expect some level of pressure coming out of geopolitical events happening across the world, and as a result, we expect some level of pressure on some of our input costs."

SUMMARY

Stryker (SYK 0.15%) reported quarterly results materially affected by a late-quarter cyber incident, resulting in 2.4% organic sales growth and an 8.5% decline in adjusted EPS. Segment-level growth trends were temporarily masked by revenue recognition delays and production shutdowns, though demand fundamentals and the capital order book remain solid across markets. Management affirmed full-year guidance for both sales growth and EPS, projecting sequential recovery in financial metrics as normalization advances. Product innovation momentum, highlighted by record Mako installations, recent approvals for Pangaea and LIFEPAK, and the upcoming Mako shoulder launch, is expected to support back-half growth acceleration. The acquisition of Amplitude Vascular Systems and a stated commitment to continued M&A activity indicate ongoing strategic expansion, with adequate financial capacity for additional deals.

  • Management detailed that recovery from the cyber disruption will vary by segment, with MedSurg's make-to-order capital expected to rebound later in the year compared to recurring consumables and orthopedic procedures supported by consigned inventory.
  • Geopolitical risk in the Middle East had only a limited impact on international results, but management continues to see significant long-term upside in regions such as Saudi Arabia and other high-growth international markets.
  • The new Orthotech segment aligns with a strategy to streamline reporting, accelerate innovation, and provide a unified customer experience, consolidating capital and recurring revenue streams under a single structure.
  • Resilient customer relationships were reported post-cyber incident, with no evidence of lost business and positive feedback on Stryker's crisis response and operational communication.
  • Continued product development and commercial execution, combined with an elevated order book and broad-based demand, underpin management’s confidence in achieving full-year projections despite Q1 disruptions.

INDUSTRY GLOSSARY

  • Mako: Stryker's robotic-arm assisted orthopedic surgical platform used in joint replacement procedures.
  • Orthotech: Internal business unit integrating Mako, Enabling Technologies, and orthopedic instruments to streamline Stryker's orthopedic product offerings and customer interface.
  • Pangaea: Stryker’s trauma-focused orthopedic platform, newly approved in Europe and Japan, designed to drive above-market growth through complex kit-based solutions.
  • LIFEPAK: Stryker’s flagship line of portable defibrillators for emergency and hospital use.
  • RPS: Mako Robotic Power System, a new handheld robotic system targeting procedural ease, especially for ambulatory surgery centers.
  • AVS (Amplitude Vascular Systems): Target acquisition to expand Stryker's peripheral vascular offerings and cardiovascular presence.
  • Consigned inventory: Products owned by Stryker but located at customer (hospital) sites for immediate use in procedures, enabling higher procedural continuity during disruptions.
  • ASC (Ambulatory Surgery Center): Outpatient medical facilities where surgeries not requiring hospital admission are performed; highlighted as early adopters of RPS.

Full Conference Call Transcript

Kevin Lobo: Welcome to Stryker Corporation’s first quarter earnings call. Joining me today are Preston Wells, Stryker Corporation’s CFO, and Jason Beach, Vice President of Finance and Investor Relations. Today's call will reflect a dynamic quarter. The cyber incident had a big impact on our results, and affected each of our businesses differently given their varied go-to-market models and processes to record revenue. This resulted in distortions in our first quarter results that will normalize over the course of the year. Preston will provide additional color in his remarks, but this situation will not enable us to provide the normal level of detail or explanations that you are accustomed to hearing from us.

The incident occurred late in the quarter and resulted in a global disruption to our business operations. In partnership with third-party experts, our internal teams reacted quickly to remove the unauthorized party from our environment. We also began to work tirelessly to bring our systems back online to mitigate the disruption to our customers, and the patients they serve. Patient care is our top priority, and we are incredibly thankful to our employees, customers, healthcare professionals, and other partners for their continued trust. As of the week of April 1, we were fully operational across our global manufacturing network. We continued to meet demand and support patient care.

We are proud of the resilience shown by our teams and partners during the recovery effort. Now moving to our financial results. For the first quarter, organic sales growth was 2.4% on a worldwide basis, 1.9% in the U.S., and 3.9% internationally. While our growth this quarter was meaningfully impacted by the cyber incident, we remain encouraged by the solid fundamentals of the markets we serve and remain well positioned within them. As a result, we are maintaining our full-year guidance and look forward to another year of healthy performance in 2026. On the M&A front, we recently announced the agreement to acquire Amplitude Vascular Systems, which we expect to close in the second quarter.

The acquisition of AVS will help expand treatment options for our peripheral vascular customers and is also a step toward expanding our presence in the broader cardiovascular space. Also, at the beginning of Q1, we established our new Orthotech business by combining Mako and Enabling Technologies with the orthopedic instruments portfolio from our Instruments business to simplify the customer experience, accelerate innovation, and increase our speed to market. This move aligns two units that serve orthopedic customers with products such as System 9 power tools, Flyte personal protection products, pulse lavage, as well as Mako Enabling Technologies.

Finally, I would like to thank Jason for his last four years as Vice President of Finance and Investor Relations, and wish him continued success as CFO of our MST Group. We look forward to Nick Mead assuming the role of VP of Investor Relations on May 1. With that, I will now turn the call over to Jason. Thanks, Jason.

Jason Beach: My comments today will focus on providing an update on the current procedural environment, select product highlights, and reporting changes. As Kevin mentioned in his remarks, we are fully operational across our global manufacturing network, and we have provided information on our recovery efforts on our website and in recent SEC filings. For today's call, inclusive of Q&A, our focus will remain on recovery and business performance. Turning to the environment, underlying demand across our businesses remained healthy in Q1, even as the cyber incident created operational disruption. Procedural volumes were solid, supported by favorable demographics and the continued adoption of robotic-assisted surgery.

The hospital CapEx environment also remains steady and our capital order book remains elevated as we enter the remainder of the year. Additionally, we delivered our best ever Q1 for Mako installations both in the U.S. and internationally, with high and increasing utilization rates across the globe. We continue to expect sustained momentum from installations and utilization to drive growth in our joint replacement businesses. We also continue to receive ongoing positive feedback from surgeons on Mako shoulder, for which we anticipate fully launching on Mako 4 mid-year. Next, to reflect the launch of the Orthotech business, we have updated our segment disclosures beginning with our first quarter earnings materials.

Within the Orthopedics segment, Orthotech results include our orthopedic instruments, and Mako and Enabling Tech portfolios, as well as other products such as bone cement. Additionally, the neurocranial businesses are now reported together with the remaining Surgical Technologies portfolio under Instruments. These changes align with our internal organizational structure where we have presidents leading both our Orthotech and Instruments businesses. On our investor relations website, we have also provided additional information with our earnings release on segment quarterly revenues for 2023 through 2025 that reflects the changes I have discussed as if they had been effective for those years. With that, I will now turn the call over to Preston.

Preston Wells: Thanks, Jason. Detailed financial information has been provided in today's press release. Today, I will discuss key elements of our performance and provide color on several items that meaningfully impacted our results in the quarter, most notably the recent cyber incident. But before I go into our overall performance, let me start by saying we continue to see healthy demand across our businesses, and we are encouraged by the progress we are seeing as we head into the remainder of the year. For the first quarter, organic sales growth was 2.4%. Pricing had a 0.3% favorable impact and foreign currency had a 1.6% favorable impact. This quarter had the same number of selling days compared to the prior year.

Adjusted earnings per share of $2.60 was down $0.24, or 8.5%, from 2025. This decline was driven by limited sales growth and lost manufacturing absorption related to the cyber incident, as well as tariffs and increased interest expense, partially offset by our ongoing focus on operational excellence and a slightly favorable impact from foreign currency translation. We have diverse businesses, and the incident affected each of them differently. Because their individual results this quarter are not indicative of the underlying market performance, I will not be going into detailed sales results by business.

It is also important to note that the cyber incident occurred towards the end of the quarter, creating an outsized impact on sales due to delays in revenue recognition in addition to delayed shipments. As Kevin noted, patient care remains our top priority. From a sales standpoint, our U.S. and international markets maintained healthy demand trends throughout the quarter despite overall sales growth being constrained by the cyber incident. Differences in the impact of the incident across our businesses primarily reflect their varied operating models and go-to-market strategies.

Certain businesses, such as Acute Care and Emergency Care within Medical, are more heavily weighted towards capital equipment such as beds, stretchers, and defibrillators, which can be made to order and have longer fulfillment cycles. Other businesses are more focused on recurring consumables, such as disposable waste management products, that are replenished regularly and tend to demonstrate greater demand resilience. The degree of the disruption also varied based on inventory levels and consignment structures, including the extent to which products are held locally at customer sites versus centrally within our supply chain. In addition, differences in supply chain and manufacturing complexity, sourcing flexibility, and logistics requirements influence how quickly each business can adapt to the disruption.

Finally, procedural dynamics also affected the degree of the incident's impact. Businesses supporting procedures that could be deferred or rescheduled, such as hip and knees, experienced different timing effects compared to those supporting more urgent or non-deferrable procedures, such as trauma and vascular, resulting in variability in both near-term volume and revenue recognition across the portfolio. Turning to the Middle East, the conflict in Iran has had a modest effect on our international growth for the quarter; however, the impact on our overall results was limited. Despite persistent geopolitical risks, we continue to see meaningful opportunities for long-term growth in countries like Saudi Arabia as well as other markets within the region.

Now I will focus on certain operating and non-operating items in the quarter. Our adjusted gross margin of 63.6% was 190 basis points lower than 2025, reflecting the impact of lost manufacturing absorption from production shutdowns due to the cyber incident as well as the impact of tariffs. As a reminder, there were no incremental tariff impacts in 2025. Our adjusted operating margin was 21.1% of sales, which was 180 basis points lower than 2025, driven by the gross margin pressure I previously discussed and the deleveraging impact of lower sales growth on operating expenses, partially offset by continued cost discipline and our focus on operational excellence.

Adjusted other income and expense of $97 million was $24 million higher than 2025, due to higher interest expense from debt issued in 2025 to help fund the acquisition of Inari, as well as lower interest income from a combination of lower average cash balances and lower interest rates. We continue to expect our full-year 2026 adjusted other income and expense to be approximately $420 million. The first quarter had an adjusted effective tax rate of 14.5%, reflecting the impact of geographic mix and certain discrete tax items. For 2026, 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 $581 million, reflecting the results of normal first-quarter seasonal cash outflows and the cyber incident’s impact on net earnings and working capital, including inventories and the timing of receivables. And now I will discuss our full-year 2026 guidance. Despite the disruption we experienced this quarter, we are maintaining our full-year guidance. Given our presence in attractive end markets, healthy procedural volumes, and strong demand for our capital products, we continue to expect organic net sales growth to be in the range of 8% to 9.5% and adjusted net earnings per share to be in the range of $14.90 to $15.10.

We expect most of the first quarter's lost sales to be realized throughout the rest of the year, with the timing and magnitude reflecting the different product types and operating models we have across our portfolio. In limited cases involving emergent or non-elective care, we expect to offset any permanently lost sales through the strength of our continued commercial execution. And while we do not provide quarterly guidance, the cadence of our sales momentum that occurs through the rest of the year is expected to reflect the catch-up of revenue recognition in Q2, while the rescheduling of certain delayed procedures and the fulfillment of customer orders impacted by production shutdowns will be delayed into the second half of the year.

Our full-year sales guidance reflects a modestly positive pricing impact. Additionally, should rates hold near current levels, we anticipate a slightly favorable impact to both sales and earnings per share. Our full-year adjusted earnings per share guidance reflects our expected sales recovery, our continued focus on operational excellence, and some anticipated improvements in the tariff outlook. Before I wrap up, I would like to reiterate that we are incredibly grateful for the continued trust and partnership from our employees, customers, and healthcare professionals throughout the past several weeks. Patient care remains our highest priority, with a continued focus on supporting healthcare providers and the patients they serve.

Jason Beach: With that, we will now open the call for questions.

Operator: You may remove yourself at any time by pressing 5 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 for the queue to form. Our first question will come from Robbie Marcus with JPMorgan. Your line is open. Please ask your question.

Robbie Marcus: Great. Thanks for taking the questions. I would imagine this was probably a busier last quarter as it was, Jason, but we will miss you. I wanted to ask about the cadence through the rest of the year and how you are thinking about the updated guidance. I think it is pretty fantastic, despite the disruption, that you were able to reiterate the top and bottom line for the full year. Any more specific color on how we should think about the recovery in sales, given how much of a wild card it is and the variability quarter to quarter versus Street numbers?

And then also, one of the discussions with investors is how much of the upside was removed to be able to reiterate the guide, or is this still the typical Stryker Corporation philosophy that you think you will get almost all of it back and there is still the potential for upside?

Preston Wells: Hey, Robbie. Thanks for the question. As you can imagine, you are right. It was definitely a pretty big event, especially as we ended the quarter, and having that disruption so late in the quarter did cause the numbers that you are seeing. In terms of how we think about it for the rest of the year, as I mentioned in my prepared remarks, it depends. We have a lot of variability across our business with the different operating models that we have and how they serve the customers that we support.

In areas like Orthopedics, for example, we know we had procedures that continued, but we do have revenue recognition items that will be caught up in the second half of the year. In cases where some of the cases got deferred or need to be rescheduled, given where scheduling is for those products today, we know that will happen, but it will probably not all be in Q2; it will likely bleed into Q3 and Q4. Similarly, for some of our products that are make-to-order, where we had production down for a bit of time, getting those back into the schedule and made will probably happen in the back half of the year rather than in Q2.

So we will see some recovery in the second quarter, and then we will really see additional recovery as well as what we would normally see in our Q3 and Q4 kind of seasonality happening in the back half of the year. As you know, we do not provide exact guidance on our quarters, so that is how I would frame it. In terms of the overall guidance itself on an annual basis and the upside, at this point, just reconfirming our guidance from where we are—we feel really good about that.

We are going to live into those numbers as we get through second quarter, and when we have our results there, we will take a look at where we are again on a full-year basis and provide an update at that point in time.

Robbie Marcus: Fantastic. Thanks a lot.

Operator: Your next question will come from Larry Biegelsen with Wells Fargo. Your line is open. Please ask your question.

Larry Biegelsen: Congrats, Jason, on the new opportunity there. Same question as Robbie—maybe on the margins, Preston, this year. I am sure that changes the cadence of the recovery here. Do you still expect operating margin to be up about 50 basis points year over year this year? And I have one follow-up.

Preston Wells: Larry, from a full-year perspective, nothing has changed if we think about our guidance and what our expectations were for the year. There is not a change in those margin expectations off of what we set from the three-year window that we gave—the 150-plus—and we are going to continue to expect to live into that. You are right that how it plays out might change slightly quarter over quarter this year. As a reminder, we do have some headwinds on margin in the first and second quarter, given where some of the tariffs are coming in versus last year, and we have talked about that before.

But from a full-year standpoint, given that we have reconfirmed our guidance, we do not expect much of a change overall in terms of margin performance for the year.

Larry Biegelsen: That is helpful. And for my follow-up, Preston, there has been a lot of noise around inflation—higher oil costs, etc. A 50 basis point increase in operating margin is still the guidance. How are you mitigating these higher input costs?

Preston Wells: Thanks, Larry. You cut out a little bit, but I think you are asking about higher input costs as a result of oil and other inflationary areas. We do expect some level of pressure coming out of geopolitical events happening across the world, and as a result, we expect some level of pressure on some of our input costs. Our procurement team is actively working to mitigate those where we can, and we have contracts in place that help. That is factored into our guidance as we have it right now, and based on what we know today, we anticipate being able to absorb those rising input costs.

Operator: Your next question will come from Joanne Wuensch with Citi. Your line is open. Please ask your question.

Joanne Wuensch: Good afternoon. Thank you for taking the question. And Jason, best of luck. I am curious what you are seeing competitively in the market at this stage. There is a lot happening, not just given the cyber issue for Stryker Corporation in the first quarter, but also another orthopedic company looking to be spun, another orthopedic company organizing its sales force. Can you give us a lay of the land of what you are actually seeing out there as the market absorbs these shifts?

Kevin Lobo: Hi, Joanne. I am assuming you are talking about the orthopedic marketplace, and what we would say there is we love our position as market leaders in robotics, and you can see with Mako 4 getting a huge uptake and tremendous excitement about that. In addition to shoulder being launched on Mako 4 mid-year, the feedback is great. We have the Mako RPS, the handheld. It is early stage; we have not had much in the way of revenue yet, but we are getting great feedback from customers, and that will pick up in the second half of the year. We also have the launch of Triathlon Gold, our medial-stabilized insert. There is a lot of momentum.

Regardless of competitive actions, we are not seeing that take away from customer interest in Stryker Corporation and our leading position. Our full-year guidance that we have reaffirmed assumes we will continue to outgrow the orthopedic marketplace by 200 to 300 basis points, just as we have in the last few years. So no change in the end markets, and if anything, probably a bit of an acceleration toward the end of the year with those three launches that are more back-half loaded.

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

Ryan Zimmerman: Thanks for taking our questions, Jason, and echo congrats. On the health of your customer base, can you talk about dynamics in the hospital market right now? I appreciate that you were under very extenuating circumstances this past quarter, but some of that pause in orders—I am wondering if you can parse out between your ability to serve the market versus changes in demand, and how you think about those dynamics interplaying, particularly as it relates to your capital business?

Kevin Lobo: First thing I would say is we did not see a pause in orders. We definitely had a pause in shipments, because we could not make product for almost three weeks, and so we were not able to ship the capital equipment that we normally would ship. But we have a very healthy order book. There is no new dynamic in Q1. There is no way we would be reaffirming our full-year guidance if we suddenly felt there was some kind of slowdown in orders. Hospitals still have healthy balance sheets. They have strong interest in our products.

Mako again had a record Q1 and would have been even higher had we been able to continue to ship through the end of the first quarter. So no, we are not seeing any slowdown in orders, and our hospital environment is still very stable.

Ryan Zimmerman: Very helpful, Kevin. And if I could ask about M&A for a minute here. Looking at M&A contributions to top-line growth, they have come down a bit over the last few years, particularly in Q4 2025 and in Q1 2026. Historically, M&A has contributed closer to 18% to 20% to your growth. Given your comments at AAOS and where net debt to EBITDA sits right now, and your eagerness to deploy capital, what is or is not holding you back to reaccelerate M&A as a contributor to Stryker Corporation’s top-line growth?

Kevin Lobo: Great question. We are very excited about the deal pipeline and our cash position. Ending the quarter at 2.1x gross debt to EBITDA means we have firepower to do more acquisitions. You heard about AVS, which we are very excited about for peripheral vascular, but we have a good pipeline, and you should expect us to be active in M&A through the end of this year and into next year.

Operator: Your next question will come from Travis Steed with Bank of America Global Research. Your line is open. Please ask your question.

Travis Steed: Hey, thanks for the question. One on Amplitude and the deal you did there. Higher level—we rarely see you buy pre-commercial stage companies given how critical commercial excellence is to the Stryker Corporation strategy. Does this signal that you are willing to take on more risk to grow revenue now that your base is over 20-plus billion? Should we expect more earlier-stage deals going forward?

Kevin Lobo: It is not related to the size of our company; it is the nature of the business. If you look at PMA-type products in peripheral vascular, this space sometimes requires early-stage investment. That has been the case for us in Neurovascular. In this case, we are not long away from an approval in the PV space. We might actually be able to sell this product before the end of this year based on the filing of their submission. This is not pre-revenue years away from launch. We will pursue other indications in addition to above-the-knee indications, and this pipeline will live on for many years to come.

We know the technology; we have assessed it; we think it is very differentiated. IVL is a very exciting space, and we are excited to be embracing that. So it is more related to the type of business than the size of our company. As you have seen in the past, we are not afraid to take risks if we believe we will have value-creating deals, and this is one where we feel very confident.

Operator: Your next question will come from David Roman with Goldman Sachs. Your line is open. Please ask your question.

David Roman: Thank you. I appreciate you taking the question. Maybe we could start on Inari. We are just around a year into anniversarying the acquisition. It looks like a lot of the commercial and sales force challenges had faded behind you exiting 2025. Can you give us an update on how you are thinking about that business on a go-forward basis, especially given a pending acquisition in the space and what opportunities that may provide for you to further hit the accelerator?

Kevin Lobo: We are very excited about the space and the company. We have made the management changes that we normally do when we do an acquisition—putting in Stryker Corporation people in charge of some parts of the business and bringing our commercial offense to bear. We would not be doing the AVS deal if we did not feel very strongly about this business, and that will be a turbo booster, because it will be in the same call point with the same physicians doing those procedures. We love the space. There is huge market potential growth, with many people not being treated today who can be treated.

As I said when we did the deal the first time, we are not a one-and-done kind of company. We will continue to look for ways to increase the pace of innovation in the business with either internally developed products or products through acquisitions. It has been a challenging first year as you go through attrition and you Strykerize the sales force, and that is mostly behind us now. We are looking for clear sailing in the years ahead.

David Roman: That is great. Maybe a follow-up on international. I know it has been an area you have continued to highlight over a long period of time and at the Analyst Meeting you had in November. Appreciating that results bounce around quarter to quarter, it looks like you have reaccelerated your relative performance versus peers, especially in orthopedics outside the U.S. Is there anything specific to call out as you look at the spread between your performance versus others widening as we start the year? Any color—product launch or geography—or is it a culmination of efforts that have been in play for a while?

Kevin Lobo: It is more a culmination of efforts that have been playing out. From 2016 to 2023, Europe was the biggest contributor to our international strength. More recently, Japan has come on and performed at a very high level, and that is our second-largest country outside of the United States, experiencing tremendous growth. We saw that last year and will see that again this year. We are starting to get approvals of the great product pipeline that we have been launching in the United States over the past few years. Just recently, we received approval of Pangaea in Europe.

Not the best timing when you have production shut for a period of time, but we are going to ramp up production of Pangaea, and that will start to have an impact in Europe toward the back half of this year and into next year. It is the innovation we have and the commercial model we have put in place. Places like India are accelerating; East Asia, Korea. It has been a culmination of a lot of efforts over a long period of time, and we still have a lot of scope for improvement. The Middle East is a good example—tough time over there now—but Saudi Arabia will be a very big market for us.

We still have work to do in Latin America. We are pleased with the management we have in place and have a path to improve that business, because products like Mako and our fluorescence imaging are really starting to take off in these markets. Over the last three to four years, you have seen double-digit growth internationally or high single digits depending on cadence, and international is still a huge growth engine for Stryker Corporation. There are a lot of market shares that are below where they should be, and we are getting after them.

Operator: Your next question will come from Matthew O'Brien with Piper Sandler. Your line is open. Please ask your question.

Analyst: Hi, this is Samantha on for Matt. Thank you for taking our question. I want to go back and touch on the cyber attack. You mentioned how it impacts the different businesses differently. Could you speak to how it could impact MedSurg versus Ortho differently and the cadence of that throughout the year?

Preston Wells: Certainly. In our Orthopedic businesses, most have consigned inventory, and in many cases that inventory is located at the hospital. Those cases were able to proceed almost normally in many instances. As a result, the procedure happened, but given that our systems were down, we had some revenue recognition that still needs to be performed, so some of those activities and revenues will get pushed into second quarter. Where we had to defer and reschedule surgeries, those will happen throughout the next three quarters, not necessarily all in the second quarter. On the MedSurg side, the impacts were different given that much of that business is capital-related. In some cases, it is make-to-order.

Any make-to-order items will be deferred until later in the year given that production was down; we had to bring production back up and get those items back into the schedule from a production standpoint. In other cases, where we had items that just needed to be shipped, getting those items shipped through our network will take some time. We expect to see some recovery in the second quarter, primarily related to revenue recognition, and then the rest of the recovery in the back half of the year based on delays in rescheduling and production as a result of the shutdown in the first quarter.

Kevin Lobo: The way to think about that in terms of the MedSurg side of the business is that Endoscopy and Medical are more capital intensive than, say, Instruments, so you would expect more of their recovery to occur in Q3 and Q4 as opposed to Q2.

Analyst: Perfect. Thank you. And then I wanted to touch on Pangaea and LIFEPAK, and the room for continued rapid growth there. You touched on international—any more thoughts on the runway for those products?

Kevin Lobo: I am really excited about both of those. We know they are winners. Pangaea has driven explosive growth in our Trauma business in the U.S. We have approval in Japan, and that is starting to take off there. Just a week or two ago, we received approval in Europe, a little bit ahead of schedule, so we are really excited about that. It is a phenomenal platform that will drive above-market growth without question, and our European team is super excited. We just have to make the product as fast as we can. They are very complex kits, and with big orthopedic launches, they take many quarters to be fully launched.

We are going to have this tailwind well into 2027 and even 2028. LIFEPAK is a fantastic product as well. We now have that approved in Europe as well as the United States. I think most markets around the world have LIFEPAK approved. Production was slowed, so we have to re-ramp production on LIFEPAK 35, but it is a great product and still has many years ahead. We will be talking about it as a “new” product five years from now because the replacement cycle on these defibrillators is so long.

Operator: Your next question will come from Matt with Barclays. Your line is open. Please ask your question.

Matt Miksic: Hey, thanks so much for taking the questions. Given everything that happened in the last eight weeks or so, it must have been difficult to get through, but it was great to see the focus on customers and patients in all the communications, and I am sure a lot of hustle to get things together. Congrats on getting through it to this point. I wanted to ask a question around the consolidation of the tech businesses in Orthopedics. It makes a lot of sense—Mako pulls through implants; power instruments pull through blades; service support revenue, and so on.

Could you give us a sense, as those things move into one line, in round numbers, of the recurring revenue aspect of that capital? I am assuming part of that will be blades and service. Just some sense of how much of that is recurring. And then one follow-up.

Preston Wells: Hey, Matt. You have all the different parts right. The one item that does not flow into that line is the knee number; there is no pull-through of the knee number into Orthotech—that knee number will stay separate on its own line item. The other items you mentioned will be part of Orthotech. We are not breaking out the specific components of each business. If you think about the overall mix of large and small capital as part of our overall business, that has remained relatively the same as what we have said in the past.

So, for Orthotech, you will see both the capital elements of the orthopedic instruments business flowing through there, as well as pull-through items, and then also service will be in that number as well.

Matt Miksic: Okay. And on some of the new product launches like RPS—you made a pretty big splash at AAOS—maybe an update on early traction: how it is complementing Mako deals and contracts, or the independent growth if it is being pulled more into the ASC channel? Anything you have seen so far in the launch would be great.

Kevin Lobo: It is still a bit early, but we are getting tremendous feedback from customers who felt that the move all the way to Mako was a bit too big of a leap. So far, ASCs have been a bit of a sweet spot. I am not saying we will limit this to the ASC, but the transition to RPS is much easier for a surgeon than going all the way to Mako. In terms of how you do the procedure, it is very easy to adopt. Some competitive surgeons liked the idea of going to a robotic solution with haptic boundaries, but the move all the way to Mako was a bit too intimidating.

We are in a very active phase of trialing and getting customers to try the product, and they cannot believe how well it performs. We are getting great feedback, and it will be an additional product. It is not slowing down any of our Mako momentum; it is going after a set of customers that we would have left to the sideline prior—who see this as something that can move them from manual power tools into robotics.

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

Mike Matson: Thanks. I just had a few more on the Amplitude Vascular acquisition. When you close the deal, would the idea be that those products—once approved—would largely be sold through the Inari sales team? And is that going to be the approach as you acquire more peripheral and potentially coronary products—to feed them through that sales force—or would you have a separate sales team for IVL?

Kevin Lobo: Initially, given that it is the same call point, it will be run through the peripheral vascular sales force. Is there a chance that we could add additional sales reps? Sure. As the technology gains further indications, or as we pursue additional indications and/or new acquisitions, depending on how broad the applications are and how broad the sales forces need to be, specialization down the line is not something we would rule out, but we are a long way from that right now.

Mike Matson: Okay. And do you know the expected timing on FDA approval for both peripheral and coronary indications for their product, and where they stand with the trials?

Jason Beach: Mike, this is Jason. Given that the transaction has not closed, we will not comment further at this point. Once we get to that point, we will expand on that.

Operator: Your next question will come from Vijay Kumar with Evercore. Your line is open. Please ask your question.

Vijay Kumar: Hi, guys. Thank you for taking my question. Kevin, one for you on big-picture M&A. There have been some questions around soft-tissue robotics. As you look at the landscape, how are you looking at product company versus more instrument/consumable kind of play—remanufacturing, etc.?

Kevin Lobo: I was not sure I understood at first—you are talking about reprocessing? The reprocessing business stands on its own, and we will look for any opportunity to provide products that create value for customers. There was one company that had that approved; we have not pursued that indication yet. We have a good portfolio within our Sustainability Solutions business. When we talk about soft-tissue robotics as an adjacency for Stryker Corporation, we are looking at actually getting into the business of soft-tissue robotics. As you probably know, at least 50 startup companies at all different stages are pursuing indications, and some have FDA approval already. We are evaluating those companies.

If we believe we can find a company that could be successful and value-creating for Stryker Corporation, we would pursue that. It is one of the many adjacencies I have pointed out. One was peripheral vascular, where we actually did an acquisition. We are in the evaluation stage—not predicting that we will do it—but it is an area we like. It is an interesting space but not for the faint of heart. These are not easy, as you have seen with others who have tried to enter the market. None of these adjacencies are ones we have to do. Soft tissue is a good example—we do not have to do it; we are not defending any business.

But if we do it, we will feel very confident that we will create value.

Vijay Kumar: That is very helpful. Maybe, Preston, one for you: how are you thinking about margin cadence? I know you reiterated guidance, but it would be helpful if you can give some guideposts on margin cadence.

Preston Wells: Vijay, from a margin standpoint, again, full year is no different than where we were when we started and gave our initial guide for what we expect to deliver. We had a hiccup in the first quarter as a result of the cyber incident, but we expect to fully recover over the next three quarters in terms of achieving that number. I would not expect any outsized margin component in one quarter versus another, but we will continue to drive delivery through the channels we have talked about—our operational excellence and manufacturing/supply chain focus and pricing being the drivers over the rest of the year.

Operator: Your next question will come from Matt Taylor with Jefferies. Your line is open. Please ask your question.

Analyst: Great. Thanks for taking my questions. This is Yong Lee on for Matt. One more on the cyber incident. Getting manufacturing back to normal—by early April you were back. How long does it take to restock inventories and get enough products back in the field so that your reps can get back to offense?

Preston Wells: You are right—we got things back on track at the beginning of April. As soon as we are back on track, manufacturing is back up and going. We were not completely depleted across our whole portfolio. As I mentioned before, we have areas like Orthopedics where we have a lot of inventory in the field, much of it already at the customer location, and that flows more seamlessly in terms of getting production back online and getting product replenished out into the field and ultimately to the customer. Similarly, many of our disposable businesses are held at distributors, so that also flowed regularly. It will really be some of the MedSurg products where we have make-to-order that take more time.

A lot of it is not just ramping production back up; it is getting those products rescheduled so we can put them back into the program and produce them for specific orders. Our expectation, as mentioned before, is that we will do that throughout the rest of the year, and you will see that recovery—particularly on MedSurg capital-driven products—in the third and fourth quarter.

Analyst: Alright, great. Very helpful. Maybe one more on Mako shoulder. It seems like the early feedback is positive. Can you level-set on ramp expectations and color on the health of the shoulder market, if you have seen enough data points so far?

Jason Beach: A couple of comments. First, on the market—it continues to be a very strong market for us. It is a business that, quarter after quarter (Q1 aside with the cyber incident), is continually growing double digits. We are very happy with that business and that market. As it relates to Mako shoulder, it is available today on Mako 3 and will be available on Mako 4 mid-year. We are very excited to see that on Mako and the potential as we move forward.

Operator: Your next question will come from Steve Lichtman with William Blair and Company. Your line is open. Please ask your question.

Steven Michael Lichtman: Thank you. Good evening, everyone. Kevin, how are you feeling about your customer relationships coming out of the cyber incident? It certainly does not sound like you are expecting any notable impact, given your response to the incident and your guidance for the duration. What kind of response have you gotten as you have talked to customers?

Kevin Lobo: Great question. I have been really overwhelmed by a lot of positive commentary from our customers about how we handled this incident. They are very empathetic to having 40 thousand laptops wiped, having computers wiped—it has not been easy to go through this, including people’s phones. The way we responded, the clarity of our communication, and how we were able to keep a lot of cases going in spite of this were things for which they gave us high marks. You do not know until you are going through a crisis how things are really going to go, and we have come out of this very strong. There is not any business I can think of that we have lost.

We did lose some cases, obviously, when our representatives could not be present, but relationships remain strong and supportive.