1Q26 Ortho Growth Impacted by Cyber/Weather; 2Q Checks Point to Stable Demand

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1Q26 Ortho Growth Impacted by Cyber/Weather; 2Q Checks Point to Stable Demand

USA | Medical Supplies & Devices EquityJuneResearch23, 2026

1Q26 Ortho Growth Impacted by Cyber/Weather;

2Q Checks Point to Stable Demand

We are publishing WW Hip and Knee model ahead of 2Q26 results. In 1Q26,

ortho growth was slower at +2.6% xfx (+3.9% comp-adjusted), impacted

by SYK's cyberattack, ZBH's salesforce transition, and weather. Looking

forward, we forecast more 'normalized' growth in 2Q at 4.9% with MSD growth

in 2H26 and 4.8% in '27. Recent comments from SYK on utilization/CAPEX

were encouraging, and our checks also point to recovery of lost cyber vols

in 2Q.

We continue to think the demand environment is stable with demographic tailwinds, pricing

stability, a move to ASCs, and new tech adoption likely to overcome any impacts from coverage

changes, which we think will be relatively small. SYK has pointed to stable volume trends

excluding the cyberattack and very low Medicaid exposure, continuing to expect ortho markets to

grow MSD. ZBH has noted ACA/Medicaid is <1-2% of the business, and it has not seen any impact,

calling the ortho markets 'very resilient'. JNJ (NC) noted on the 4Q call that it does not expect

the loss of ACA subsidies or any potential policy changes under the OBBBA to have a material

impact on its medtech performance. It noted the primary constraint for its business is really

around clinical capacity, not coverage levels, with robust procedure demand across its portfolio.

Neither SYK nor ZBH has called out any slowdown in capital purchases, with ZBH citing 30%

growth in capital in 1Q and SYK noting orders continue to outpace shipments and the CAPEX

environment remains healthy. SYK is building capacity to meet higher CAPEX demand, hiring