Stryker: The Tortoise of Medical Technology

"Slow and steady wins the race."

– Aesop’s fable "The Tortoise and the Hare”

3x.

That’s how much more a person above the age of 65 spends on healthcare compared to someone younger.

The reasons?

Manyfold.

Higher prevalence of chronic conditions and morbidity. Increased need for intensive and long-term care. Age-related physiological changes. And healthcare system factors — particularly in the US, where out-of-pocket costs can be substantial.

Roughly 80–90% of adults aged 65+ live with at least one chronic condition. Many have multiple. These require ongoing management: regular doctor visits, medications, hospitalizations, specialist care. Patients with multiple chronic conditions account for a disproportionate share of total healthcare spending.

So, the number isn’t far-fetched. It makes perfect sense.

Now, one of the most common major elective surgeries — especially among older adults — is knee and hip replacement. I’m certain you know someone in your family who has gone through it.

Enter the market leader in knee and hip replacements. It’s not Johnson & Johnson (VELYS™). It’s not Zimmer Biomet (ROSA®).

It’s the owner of the Mako robotic system.

Stryker.

Chart 1: Innovation Is in Stryker’s DNA (Medical & Surgical, Orthopaedics, Neurotechnology)

Stryker Leading in Innovation and Growth

First things first.

Stryker designs, manufactures, and markets a broad range of medical equipment, instruments, consumables, and implantable devices.

Its product portfolio spans hip and knee replacements, extremities, endoscopy systems, operating room equipment, embolic coils, hospital beds and stretchers, and orthopedic robotics (chart 1). Stryker remains one of the three largest players in reconstructive orthopedic implants and holds a leadership position in operating room equipment.

Think of Stryker as a heavyweight in the “healthcare hardware” world — not drugs, not insurance, but the physical tools and systems used every day in operating rooms and patient care.

• Orthopaedics (35–40% of revenue — the core business): Hip, knee, shoulder, and other joint implants, plus trauma and extremities products such as plates, screws, and nails used to treat fractures.
• MedSurg (Medical & Surgical — ~50%+ of revenue): Operating room infrastructure including surgical tables, lights, beds, power tools, endoscopy systems, and patient-handling equipment.
• Neurotechnology (spine & vascular — fast-growing): Spinal and neurosurgical implants and tools, stroke and aneurysm devices, expansion into clot-removal systems through Inari Medical, and AI-enabled smart hospital room technology.

On top of that, Stryker holds a significant intellectual property portfolio with 5,800 patents. And switching costs are real. Hospitals and surgeons are understandably reluctant to change products that work — especially in mission-critical procedures.

That creates a durable competitive advantage.

And with it come attractive economics: gross margins around 65% and net income margins of 13%.

Layer onto that a powerful demographic tailwind: the bulk of the world’s baby boomers are now turning 65.

The result for a well-led company like Stryker?

Robust sales growth in the teens outpacing peers by roughly 4% (WAMGR: Weighted Average Market Growth Rate), steady operating margin expansion and rising earnings growth driven by operational efficiency and pricing power (chart 2).

And as boomers enter retirement age, Stryker’s most important segment — Orthopaedics — is perfectly positioned.

Now let’s move to the future growth engine.

The Mako robot.

Chart 2: Stryker’s Strong Track Record of Financial Performance

Stryker’s Irreplaceable Assets and Installed Bases

The Mako robot is Stryker’s flagship product (chart 3). They used their three-year FDA approval head start to aggressively install systems in hospitals — leaving Zimmer Biomet and Johnson & Johnson playing catch-up.

Together, the big three control roughly 70–80% of the market (with Smith & Nephew as a distant fourth).

An oligopoly.

Why does that matter?

Because being the focused growth leader in an oligopoly is a powerful position.

Stryker operates in 75 countries and touches more than 150 million patients annually. Johnson & Johnson is simply too large for robotics to be its core focus. Zimmer Biomet, meanwhile, has struggled following a 2024 recall and FDA warning on its CPT Hip System.

Stryker is gaining market share.

But the real magic word?

Installed base.

They surpassed 3,000 Mako systems worldwide in 2025.

And that installed base changes everything:

• Once a hospital installs Mako, switching becomes extremely difficult. Surgeons are trained on the platform, workflows are embedded, and implants are integrated. Lock-in is real.
• Each system drives recurring, high-margin revenue from implants, disposables, software, and service.
• With over 2 million procedures performed, Stryker continuously improves outcomes through data — widening the moat.

Scale + switching costs + regulation = durable competitive advantage.

This positioning allows Stryker to earn mid-teen returns on invested capital over many years — if not decades. That is the hallmark of a true compounder.

And here’s an important nuance in today’s world of “AI eats everything”: An installed base of physical, certified surgical robots inside operating rooms cannot simply be coded away. You cannot replace regulatory approvals, surgeon training, and hospital infrastructure with a software update.

That makes the story not only attractive — but resilient.

I think we can agree this is a compelling “Good Story.”

Now it’s time for the “Good Chart.”

Chart 3: Stryker’s Mako Journey

Stryker Acting as a Compounding Tortoise

Stryker’s “Good Chart” metrics — particularly price linearity, trend strength, and volatility — are nothing short of solid (chart 4).

A steady uptrend that mirrors the fundamental strength of the business.

An attractive total addressable market. Predictable, resilient cash flows. Growth driven by essential, largely non-cyclical demand. High margins, recurring revenues, visibility, stability, and a well-diversified revenue base.

For me, it perfectly embodies the image of a compounding tortoise.

Sure, there will always be faster hares — exciting stocks sprinting left and right, grabbing headlines and investor attention in the short term.

But over the long term — and that’s what truly matters — Stryker fits the bill of a compounder we are happy to own at arvy.

So dear Stryker, just keep walking like a tortoise.

After all, slow and steady wins the race.

Chart 4: Stryker, Johnson & Johnson and Zimmer Biomet over the last ten years