Stryker (SYK)

Business Overview

Stryker sits between Intuitive Surgical's robot-and-consumables model and Medtronic's diversified mix: it places Mako robots and earns on the orthopaedic implants they help surgeons fit. FY2025 net sales were $25,116M. Organic growth was 10.3%, of which 9.9 points were volume and 0.4 points price.

Stryker files no recurring share, so the robot's pull is read from procedures. The company reports more than 2.0 million cumulative Mako procedures worldwide, over 1.0 million of them Mako Total Knee, with Mako sold in more than 45 countries. That counts procedures, not systems placed. A figure of more than 3,000 systems was given on the Q4 2025 earnings call but appears in neither the SEC release nor the 10-K. Revenue from leasing equipment to customers was under 4% of the total, so rent is a small part of the business.

GAAP gross margin was 64.0% (65.3% adjusted). GAAP operating margin was 19.5%; adjusted operating margin was 26.3%, up 100 bps. R&D was $1,623M, 6.5% of sales, the lowest of the six.

How the Numbers Read

Organic growth (10.3%). Stryker grew faster than Medtronic (4.9% organic, year to 25 April 2025) and Abbott (5.5%), in line with Edwards (+10.7% at constant currency), and slower than Boston Scientific (15.8% organic) and Intuitive Surgical (21% total). Almost all of it was volume.

Mako procedures (more than 2.0M cumulative). The procedure volumes guide treats cumulative Mako procedures as Stryker's demand signal, like Intuitive's ~3.15M annual da Vinci procedures (+18%) but counted over the platform's life. Orthopaedic implant revenue follows procedure adoption. The installed-base guide sets Stryker's procedure count beside Intuitive's system count and Abbott's Libre users.

Margin expansion (+100 bps adjusted). Adjusted operating margin reached 26.3% as organic sales grew 10.3%, so margin widened with volume. GAAP operating margin was 19.5%, 680 bps lower, and peer tables that default to GAAP need that gap shown. Stryker, Boston Scientific and Medtronic all lead with adjusted figures on earnings calls.

Free cash flow ($4.3B). Operating cash flow of $5,044M less capex of $761M, from the cash flow statement in the earnings release; Stryker does not headline an FCF figure. Medtronic's company-defined FCF was $5.2B and Boston Scientific's non-GAAP FCF $3.7B (80% conversion).

Recurring mix, not filed. No group recurring or consumable share is filed, and the implant and consumable mix is reported only by segment, so Stryker cannot be placed on the recurring-mix screen.

Valuation Framework

Any growth-adjusted P/E for Stryker should divide by the 10.3% organic rate, which excludes acquisitions (the Boston Scientific trap in the organic growth guide).

The razor-and-blade guide treats Stryker as robot-led pull-through without a disclosed recurring share. Mako procedure adoption comes first; Orthopaedics segment organic growth shows whether it reaches revenue.

What to Watch in the Financials

Mako procedure growth. Watch the yearly flow in earnings commentary as well as the cumulative milestone. Procedures slowing while placements accelerate would mean each robot is being used less.

Adjusted operating margin (26.3%, +100 bps). It widened in FY2025 on double-digit organic growth. A stall would raise questions about implant pricing.

GAAP against adjusted (19.5% vs 26.3%). Acquisitions drive most of the gap: amortisation ($732M) plus inventory step-up and integration costs ($508M) were 72% of the $1,714M added back, with restructuring at $191M. A gap that widens without faster organic growth would mean more of the margin rests on adjustments.

Price (0.4 points). Nearly all organic growth was volume. Negative price would point to rebate pressure in hospital contracts.

Key Risks

Robot utilisation. Cumulative Mako procedures are filed, but the annual pace is mostly commentary. Robots used less than planned would slow implant pull-through in time.

Orthopaedic cycle. Elective procedures depend on payer mix and hospital staffing, which makes Stryker more cyclical than Intuitive, whose robots span more kinds of surgery.

Competing robots. Zimmer Biomet, Smith+Nephew and others sell robotic-assisted orthopaedic systems. Mako's cumulative procedures are the filed measure of its lead; no SEC filing supports a comparison of system counts.

What the Screening Shows

Against the Medtech Sector Primer screens:

• Organic growth: 10.3% (9.9% volume + 0.4% price), fourth of the six, just behind Edwards.
• Operating margin: 19.5% GAAP / 26.3% adjusted (+100 bps). Read both.
• Gross margin: 64.0% GAAP / 65.3% adjusted.
• Mako procedures: more than 2.0M cumulative filed; no system count in SEC filings.
• FCF: $4.3B (operating cash flow $5,044M less capex $761M).
• Recurring mix: not filed at group level; lease revenue under 4%.

Without a recurring share, a model of Stryker leans on two filed inputs: 10.3% organic growth and the margin path, 19.5% GAAP and 26.3% adjusted.