SYK Stock Falls Despite Q2 Earnings & Sales Beat, '25 View Up

Core Insights - Stryker Corporation reported second-quarter 2025 adjusted EPS of $3.13, exceeding estimates by 2.3% and showing an 11.4% year-over-year improvement [2] - Total revenues reached $6.02 billion, beating estimates by 1.1% and reflecting an 11.1% year-over-year increase [3] - The company raised its 2025 EPS guidance to $13.45-$13.60 and expects organic revenue growth of 9.5-10% for the full year [10][15] Revenue Details - Revenues in the United States amounted to $4.55 billion, up 2.5% year over year, while international sales increased 6.8% to $1.47 billion [4] - The growth in revenue is attributed to strong demand across the product portfolio, particularly in MedSurg and Neurotechnology, which reported sales of $3.77 billion, up 17.3% year over year [6][10] Segmental Analysis - The Orthopedics segment reported sales of $2.25 billion, a 2% increase year over year, with organic growth of 9% [11] - The company completed the divestment of its U.S. spinal implants business in April, which will now be reported separately within orthopedics [5] Margins - Adjusted gross profit totaled $3.93 billion, up 13% from the previous year, with adjusted gross margin expanding 110 basis points to 65.3% [13] - Total operating expenses increased by 15.3% to $2.73 billion, while adjusted operating income rose 15.8% to $1.55 billion [13] Financial Update - Stryker ended the second quarter with cash and cash equivalents of $2.38 billion, an increase from $2.34 billion at the end of the first quarter [14] - Cumulative net cash provided by operating activities totaled $1.36 billion, compared to $837 million a year ago [14] Market Performance - Despite strong quarterly results, Stryker's shares fell 5.8% in after-hours trading on July 31, while the stock has risen 3.9% year to date [17] - The company noted significant growth in Mako robotic-assisted surgeries, with procedure volumes increasing by 27% year over year [16][18]