Stryker Corp 10-Q for FY2024 Q3
Stryker Corp (SYK)
10-Q
2024-10-30
For: 2024-09-30
View Original
Added on
April 02, 2026
About this 10-Q
Stryker Corp filed this 10-Q on October 30, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.49B
- up 11.9% from $4.91B a year earlier
- Net income
- $834M
- up 20.5% from net income of $692M a year earlier
- Diluted EPS
- $2.16
- up 20.0% from $1.80 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2024
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission file number: 001-13149
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| | |||||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||
| (Registrant’s telephone number, including area code) | |||||||||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||||||||
| Non-accelerated filer | ☐ | Small reporting company | |||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 381,215,773 shares of Common Stock, $0.10 par value, on September 30, 2024.
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
PART I – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS | ||||
Stryker Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | $ | $ | $ | $ | |||||||||||||||||||
| Research, development and engineering expenses | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Total operating expenses | $ | $ | $ | $ | |||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Earnings before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Income taxes | |||||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Net earnings per share of common stock: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average shares outstanding (in millions): | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Effect of dilutive employee stock compensation | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Cash dividends declared per share of common stock | $ | $ | $ | $ | |||||||||||||||||||
Anti-dilutive shares excluded from the calculation of dilutive employee stock options were de minimis in all periods.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Marketable securities | |||||||||||||||||||||||
| Pension plans | ( | ( | ( | ( | |||||||||||||||||||
| Unrealized gains (losses) on designated hedges | ( | ( | |||||||||||||||||||||
| Financial statement translation | ( | ( | ( | ||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to Consolidated Financial Statements.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
CONSOLIDATED BALANCE SHEETS
| September 30 | December 31 | ||||||||||
| 2024 | 2023 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Marketable securities | |||||||||||
Accounts receivable, less allowance of $ | |||||||||||
| Inventories: | |||||||||||
| Materials and supplies | |||||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | $ | $ | |||||||||
| Property, plant and equipment: | |||||||||||
| Land, buildings and improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Total property, plant and equipment | $ | $ | |||||||||
| Less allowance for depreciation | |||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
| Goodwill | |||||||||||
| Other intangibles, net | |||||||||||
| Noncurrent deferred income tax assets | |||||||||||
| Other noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation | |||||||||||
| Income taxes | |||||||||||
| Dividends payable | |||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Current maturities of debt | |||||||||||
| Total current liabilities | $ | $ | |||||||||
| Long-term debt, excluding current maturities | |||||||||||
| Income taxes | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Shareholders' equity | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders' equity | $ | $ | |||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
See accompanying notes to Consolidated Financial Statements.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 2 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Common stock shares outstanding (in millions) | |||||||||||||||||||||||
| Beginning | |||||||||||||||||||||||
| Issuance of common stock under stock compensation and benefit plans | |||||||||||||||||||||||
| Ending | |||||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Beginning | $ | $ | $ | $ | |||||||||||||||||||
| Issuance of common stock under stock compensation and benefit plans | |||||||||||||||||||||||
| Ending | $ | $ | $ | $ | |||||||||||||||||||
| Additional paid-in capital | |||||||||||||||||||||||
| Beginning | $ | $ | $ | $ | |||||||||||||||||||
| Issuance of common stock under stock compensation and benefit plans | ( | ( | ( | ||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||
| Ending | $ | $ | $ | $ | |||||||||||||||||||
| Retained earnings | |||||||||||||||||||||||
| Beginning | $ | $ | $ | $ | |||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Cash dividends declared | ( | ( | ( | ( | |||||||||||||||||||
| Ending | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated other comprehensive income (loss) | |||||||||||||||||||||||
| Beginning | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Ending | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Total shareholders' equity | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to Consolidated Financial Statements.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 3 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Nine Months | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation | |||||||||||
| Amortization of intangible assets | |||||||||||
| Asset impairments | |||||||||||
| Share-based compensation | |||||||||||
| Sale of inventory stepped-up to fair value at acquisition | |||||||||||
| Deferred income tax (benefit) expense | ( | ( | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses and other liabilities | ( | ||||||||||
| Income taxes | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
| Net cash provided by operating activities | $ | $ | |||||||||
| Investing activities | |||||||||||
| Acquisitions, net of cash acquired | ( | ( | |||||||||
| Purchases of short-term investments | ( | ||||||||||
| Purchases of marketable securities | ( | ( | |||||||||
| Proceeds from sales of marketable securities | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Proceeds from settlement of net investment hedges | |||||||||||
| Other investing, net | |||||||||||
| Net cash used in investing activities | $ | ( | $ | ( | |||||||
| Financing activities | |||||||||||
| Proceeds (payments) on short-term borrowings, net | ( | ||||||||||
| Proceeds from issuance of long-term debt | |||||||||||
| Payments on long-term debt | ( | ( | |||||||||
| Payments of dividends | ( | ( | |||||||||
| Cash paid for taxes from withheld shares | ( | ( | |||||||||
| Other financing, net | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | $ | $ | ( | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
| Change in cash and cash equivalents | $ | $ | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
See accompanying notes to Consolidated Financial Statements.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 4 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
General Information
Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries ("Stryker," the "Company," "we," "us" or "our") on September 30, 2024 and the results of operations for the three and nine months 2024. The results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. These statements should be read in conjunction with our Annual Report on Form 10-K for 2023.
New Accounting Pronouncements Not Yet Adopted
In December 2023 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 (Topic 740): Income Taxes: Improvements to Income Tax Disclosures which expands the existing rules on income tax disclosures. This update requires entities to disclose specific categories in the tax rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold and disclose additional information about income taxes paid on an annual basis. The new disclosure requirements are effective for fiscal years beginning after December 15, 2024 and we will adopt this ASU in 2025.
In November 2023 the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. The new disclosure requirements are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We will adopt this ASU in the fourth quarter 2024.
We evaluate all ASUs issued by the FASB for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.
NOTE 2 - REVENUE RECOGNITION
Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2023.
We disaggregate our net sales by business and geographic location for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors.
Beginning in the first quarter 2024, a product line previously included in Instruments has been reclassified to Endoscopy to align with a change in our internal reporting structure. We have reflected this change in all historical periods presented.
| Net Sales by Business | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| MedSurg and Neurotechnology: | |||||||||||||||||||||||
| Instruments | $ | $ | $ | $ | |||||||||||||||||||
| Endoscopy | |||||||||||||||||||||||
| Medical | |||||||||||||||||||||||
| Neurovascular | |||||||||||||||||||||||
| Neuro Cranial | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Orthopaedics and Spine: | |||||||||||||||||||||||
| Knees | $ | $ | $ | $ | |||||||||||||||||||
| Hips | |||||||||||||||||||||||
| Trauma and Extremities | |||||||||||||||||||||||
| Spine | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Net Sales by Geography | |||||||||||||||||
| Three Months 2024 | Three Months 2023 | ||||||||||||||||
| United States | International | United States | International | ||||||||||||||
| MedSurg and Neurotechnology: | |||||||||||||||||
| Instruments | $ | $ | $ | $ | |||||||||||||
| Endoscopy | |||||||||||||||||
| Medical | |||||||||||||||||
| Neurovascular | |||||||||||||||||
| Neuro Cranial | |||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Orthopaedics and Spine: | |||||||||||||||||
| Knees | $ | $ | $ | $ | |||||||||||||
| Hips | |||||||||||||||||
| Trauma and Extremities | |||||||||||||||||
| Spine | |||||||||||||||||
| Other | |||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
| Net Sales by Geography | |||||||||||||||||
| Nine Months 2024 | Nine Months 2023 | ||||||||||||||||
| United States | International | United States | International | ||||||||||||||
| MedSurg and Neurotechnology: | |||||||||||||||||
| Instruments | $ | $ | $ | $ | |||||||||||||
| Endoscopy | |||||||||||||||||
| Medical | |||||||||||||||||
| Neurovascular | |||||||||||||||||
| Neuro Cranial | |||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Orthopaedics and Spine: | |||||||||||||||||
| Knees | $ | $ | $ | $ | |||||||||||||
| Hips | |||||||||||||||||
| Trauma and Extremities | |||||||||||||||||
| Spine | |||||||||||||||||
| Other | |||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
We sell certain customer lease agreements and the related leased assets to third-party financial institutions to accelerate our cash collection cycle. The lease receivables are sold without recourse and are derecognized from our Consolidated Balance Sheets at the time of sale. Under the terms of our arrangements,
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 5 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
we collect lease payments on behalf of the financial institutions but maintain no other form of continuing involvement. Sales of these lease agreements are classified as operating activities in our Consolidated Statements of Cash Flows. Fees earned for our servicing activities are immaterial. Revenue related to customer lease agreements sold under these arrangements represented less than 3
Contract Assets and Liabilities
On September 30, 2024 and December 31, 2023 contract assets recorded in our Consolidated Balance Sheets were not significant.
Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. This occurs primarily when payment is received upfront for certain multi-period extended service contracts. Our contract liabilities of $1,008 and $860 on September 30, 2024 and December 31, 2023 are classified within accrued expenses and other liabilities and other noncurrent liabilities within our Consolidated Balance Sheets based on the timing of when we expect to complete our performance obligations.
Changes in contract liabilities during the nine months 2024 were as follows:
| September 30 | |||||
| 2024 | |||||
| Beginning contract liabilities | $ | ||||
| Revenue recognized from beginning of year contract liabilities | ( | ||||
| Net advance consideration received during the period | |||||
| Ending contract liabilities | $ | ||||
NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)
| Three Months 2024 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
| Beginning | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
| OCI | ( | ( | ( | ( | |||||||||||||
| Income taxes | ( | ||||||||||||||||
| Reclassifications to: | |||||||||||||||||
| Cost of sales | ( | ( | |||||||||||||||
| Other (income) expense, net | ( | ( | |||||||||||||||
| Income taxes | |||||||||||||||||
| Net OCI | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
| Ending | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
| Three Months 2023 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
| Beginning | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
| OCI | ( | ||||||||||||||||
| Income taxes | ( | ( | ( | ||||||||||||||
| Reclassifications to: | |||||||||||||||||
| Cost of sales | ( | ( | |||||||||||||||
| Other (income) expense, net | ( | ( | ( | ( | ( | ||||||||||||
| Income taxes | |||||||||||||||||
| Net OCI | $ | $ | ( | $ | $ | $ | |||||||||||
| Ending | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
| Nine Months 2024 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
| Beginning | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
| OCI | ( | ( | ( | ( | |||||||||||||
| Income taxes | |||||||||||||||||
| Reclassifications to: | |||||||||||||||||
| Cost of sales | ( | ( | |||||||||||||||
| Other (income) expense, net | ( | ( | ( | ||||||||||||||
| Income taxes | |||||||||||||||||
| Net OCI | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
| Ending | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
| Nine Months 2023 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
| Beginning | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
| OCI | |||||||||||||||||
| Income taxes | ( | ( | ( | ( | |||||||||||||
| Reclassifications to: | |||||||||||||||||
| Cost of sales | ( | ( | |||||||||||||||
| Other (income) expense, net | ( | ( | ( | ( | |||||||||||||
| Income taxes | |||||||||||||||||
| Net OCI | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
| Ending | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
NOTE 4 - DERIVATIVE INSTRUMENTS
We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential credit loss in the event of nonperformance by counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2023.
Foreign Currency Hedges
| September 2024 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
| Gross notional amount | $ | $ | $ | $ | ||||||||||
| Maximum term in years | ||||||||||||||
| Fair value: | ||||||||||||||
| Other current assets | $ | $ | $ | $ | ||||||||||
| Other noncurrent assets | ||||||||||||||
| Other current liabilities | ( | ( | ( | |||||||||||
| Other noncurrent liabilities | ( | ( | ( | |||||||||||
| Total fair value | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| December 2023 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
| Gross notional amount | $ | $ | $ | $ | ||||||||||
| Maximum term in years | ||||||||||||||
| Fair value: | ||||||||||||||
| Other current assets | $ | $ | $ | $ | ||||||||||
| Other noncurrent assets | ||||||||||||||
| Other current liabilities | ( | ( | ( | |||||||||||
| Other noncurrent liabilities | ( | ( | ( | |||||||||||
| Total fair value | $ | $ | $ | ( | $ | |||||||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 6 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
We had €2.3 billion and €1.5 billion at September 30, 2024 and December 31, 2023 in certain forward currency contracts designated as net investment hedges, for which the maximum term is 10 years, to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. In addition to these derivative financial instruments designated as net investment hedges, we had €5.0 billion and €4.9 billion at September 30, 2024 and December 31, 2023 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries.
In the nine months 2024 we settled certain foreign currency forward contracts designated as net investment hedges resulting in cash proceeds of $99 . The amounts in AOCI related to settled net investment hedges will remain in AOCI until the hedged investment is either sold or substantially liquidated.
The total after-tax gain (loss) recognized in OCI related to designated net investment hedges was ($67 ) in the nine months 2024.
Currency Exchange Rate Gains (Losses) Recognized in Net Earnings
| Three Months | Nine Months | |||||||||||||||||||||||||
| Derivative Instrument | Recognized in: | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||
| Cash Flow | Cost of sales | $ | $ | $ | $ | |||||||||||||||||||||
| Net Investment | Other income (expense), net | |||||||||||||||||||||||||
| Non-Designated | Other income (expense), net | |||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Pretax gains (losses) on derivatives designated as cash flow hedges of ($4 ) and net investment hedges of $40 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months of September 30, 2024. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the component related to the spot-forward difference from the effectiveness assessment.
Interest Rate Hedges
Pretax gains (losses) of $4 recorded in AOCI related to interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense), net in earnings within 12 months of September 30, 2024. The cash flow effect of interest rate hedges is recorded in cash flow from operations.
NOTE 5 - FAIR VALUE MEASUREMENTS
Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2023.
In the nine months 2024 we recorded $204 of contingent consideration related to various acquisitions described in Note 7.
In 2023 we recorded $192 of contingent consideration related to the acquisition of Cerus Endovascular Limited (Cerus) described in Note 7.
There were no significant transfers into or out of any level of the fair value hierarchy in 2024.
Assets Measured at Fair Value | September 30 | December 31 | |||||||||
| 2024 | 2023 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Trading marketable securities | |||||||||||
| Level 1 - Assets | $ | $ | |||||||||
| Available-for-sale marketable securities: | |||||||||||
| Corporate and asset-backed debt securities | $ | $ | |||||||||
| United States agency debt securities | |||||||||||
| United States treasury debt securities | |||||||||||
| Certificates of deposit | |||||||||||
| Total available-for-sale marketable securities | $ | $ | |||||||||
| Foreign currency exchange forward contracts | |||||||||||
| Level 2 - Assets | $ | $ | |||||||||
| Total assets measured at fair value | $ | $ | |||||||||
Liabilities Measured at Fair Value | September 30 | December 31 | |||||||||
| 2024 | 2023 | ||||||||||
| Deferred compensation arrangements | $ | $ | |||||||||
| Level 1 - Liabilities | $ | $ | |||||||||
| Foreign currency exchange forward contracts | $ | $ | |||||||||
| Level 2 - Liabilities | $ | $ | |||||||||
| Contingent consideration: | |||||||||||
| Beginning | $ | $ | |||||||||
| Additions | |||||||||||
| Change in estimate and foreign exchange | ( | ( | |||||||||
| Settlements | ( | ( | |||||||||
| Ending | $ | $ | |||||||||
| Level 3 - Liabilities | $ | $ | |||||||||
| Total liabilities measured at fair value | $ | $ | |||||||||
Fair Value of Available for Sale Securities by Maturity | |||||||||||
| September 30 | December 31 | ||||||||||
| 2024 | 2023 | ||||||||||
| Due in one year or less | $ | $ | |||||||||
| Due after one year through three years | $ | $ | |||||||||
On September 30, 2024 and December 31, 2023 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest income on cash and cash equivalents, short-term investments and marketable securities income was $30 and $15 in the three months and $92 and $40 in the nine months 2024 and 2023, which was recorded in other income (expense), net.
NOTE 6 - CONTINGENCIES AND COMMITMENTS
We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for certain claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows.
We are currently investigating whether certain business activities in certain foreign countries violated provisions of the Foreign Corrupt Practices Act (FCPA) and have engaged outside counsel to conduct these investigations. We have been contacted by the United States Securities and Exchange Commission, United States Department of Justice and certain other regulatory authorities and are cooperating with these agencies. At this time we are unable to predict the outcome of the investigations or the potential impact, if any, on our financial statements.
We have conducted voluntary recalls of certain products, including our Rejuvenate and ABG II Modular-Neck hip stems and certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Additionally, we are responsible for certain product liability claims, primarily related to certain hip products sold by Wright Medical Group N.V. (Wright) prior to its 2014 divestiture of the OrthoRecon business.
We have incurred, and expect to incur in the future, costs associated with the defense and settlement of claims and lawsuits. Based on the information that has been received related to the matters discussed above, our accrual for these matters was $185 at September 30, 2024, representing our best estimate of probable loss. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly the ultimate cost related to these matters may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows.
Leases | September 30 | December 31 | |||||||||
| 2024 | 2023 | ||||||||||
| Right-of-use assets | $ | $ | |||||||||
| Lease liabilities, current | $ | $ | |||||||||
| Lease liabilities, non-current | $ | $ | |||||||||
| Other information: | |||||||||||
| Weighted-average remaining lease term (years) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
NOTE 7 - ACQUISITIONS
We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. In the nine months 2024 and 2023 cash paid for acquisitions, net of cash acquired was $1,598 and $390 .
In the nine months 2024 we completed various acquisitions for total consideration that includes $1,598 in upfront payments, net of cash acquired, and $395 contingent upon the achievement of certain commercial or clinical milestones. The combined acquisition-date fair values of the contingent milestone payments totaled $204 . Goodwill of $615 and $528 was recorded within our Orthopaedics and Spine and our MedSurg and Neurotechnology segments respectively. The acquired companies expand the product portfolios of our Instruments, Endoscopy, Medical and Neuro Cranial businesses within MedSurg and Neurotechnology and our Trauma and Extremities, Joint Replacement and Spine businesses within Orthopaedics and Spine. The purchase price allocation for our acquisitions are based on preliminary valuations, primarily related to developed technology and customer relationships. Goodwill attributable to the acquisitions reflects the strategic benefits of expanding our market presence, diversifying our product portfolio and advancing innovations. This goodwill is not deductible for tax purposes.
In May 2023 we acquired Cerus for net cash consideration of $289 and up to $225 in future milestone payments that had a fair value of $192 at the acquisition date. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. Cerus is part of our Neurovascular business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition is not deductible for tax purposes.
The purchase price allocations for the acquisitions completed in the nine months 2024 and Cerus are:
| Purchase Price Allocation of Acquired Net Assets | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Total | Cerus | |||||||||||||
| Tangible assets acquired: | ||||||||||||||
| Accounts receivable | $ | $ | ||||||||||||
| Inventory | ||||||||||||||
| Deferred income tax assets | ||||||||||||||
| Other assets | ||||||||||||||
| Debt | ( | |||||||||||||
| Deferred income tax liabilities | ( | ( | ||||||||||||
| Other liabilities | ( | ( | ||||||||||||
| Intangible assets: | ||||||||||||||
| Developed technology | ||||||||||||||
| Customer relationships | ||||||||||||||
| Patents | ||||||||||||||
| Trademarks | ||||||||||||||
| Goodwill | ||||||||||||||
Purchase price, net of cash acquired of $ | $ | $ | ||||||||||||
| Weighted average amortization period at acquisition (years): | ||||||||||||||
| Developed technologies | ||||||||||||||
| Customer relationships | — | |||||||||||||
| Patents | — | |||||||||||||
| Trademarks | — | |||||||||||||
The purchase price allocation for Cerus was finalized in the second quarter 2024 with no material adjustments.
| Consolidated Estimated Amortization Expense | ||||||||||||||
| Remainder of 2024 | 2025 | 2026 | 2027 | 2028 | ||||||||||
| $ | $ | $ | $ | $ | ||||||||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
NOTE 8 - DEBT AND CREDIT FACILITIES
We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on September 30, 2024.
On September 30, 2024 there were no 397 days from the date of issuance. The maximum amount of our commercial paper that can be outstanding at any time is $2,250 .
In May 2024 we repaid the outstanding $600 principal amount of the 3.375 % senior unsecured notes due May 15, 2024. In September 2024 we issued $750 of 4.250 % senior unsecured notes due September 11, 2029, €800 of 3.375 % senior unsecured notes due September 11, 2032, $750 of 4.625 % senior unsecured notes due September 11, 2034 and €600 of 3.625 % senior unsecured notes due September 11, 2036.
| Summary of Total Debt | September 30 | December 31 | ||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Rate | Due | |||||||||||||||||||
| Senior unsecured notes: | ||||||||||||||||||||
| May 15, 2024 | $ | $ | ||||||||||||||||||
| Floating | November 16, 2024 | |||||||||||||||||||
| December 3, 2024 | ||||||||||||||||||||
| June 15, 2025 | ||||||||||||||||||||
| November 1, 2025 | ||||||||||||||||||||
| March 15, 2026 | ||||||||||||||||||||
| November 30, 2027 | ||||||||||||||||||||
| March 7, 2028 | ||||||||||||||||||||
| December 8, 2028 | ||||||||||||||||||||
| December 11, 2028 | ||||||||||||||||||||
| March 1, 2029 | ||||||||||||||||||||
| September 11, 2029 | ||||||||||||||||||||
| June 15, 2030 | ||||||||||||||||||||
| November 30, 2030 | ||||||||||||||||||||
| December 3, 2031 | ||||||||||||||||||||
| September 11, 2032 | ||||||||||||||||||||
| September 11, 2034 | ||||||||||||||||||||
| September 11, 2036 | ||||||||||||||||||||
| April 1, 2043 | ||||||||||||||||||||
| May 15, 2044 | ||||||||||||||||||||
| March 15, 2046 | ||||||||||||||||||||
| June 15, 2050 | ||||||||||||||||||||
| Total debt | $ | $ | ||||||||||||||||||
| Less current maturities | ||||||||||||||||||||
| Total long-term debt | $ | $ | ||||||||||||||||||
| September 30 | December 31 | |||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Unamortized debt issuance costs | $ | $ | ||||||||||||||||||
| Borrowing capacity on existing facilities | $ | $ | ||||||||||||||||||
| Fair value of senior unsecured notes | $ | $ | ||||||||||||||||||
NOTE 9 - INCOME TAXES
NOTE 10 - SEGMENT INFORMATION
| Three Months | Nine Months | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| MedSurg and Neurotechnology | $ | $ | $ | $ | |||||||||||||||||||
| Orthopaedics and Spine | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| MedSurg and Neurotechnology | $ | $ | $ | $ | |||||||||||||||||||
| Orthopaedics and Spine | |||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | |||||||||||||||||||
| Items not allocated to segments: | |||||||||||||||||||||||
Corporate and other | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Acquisition and integration-related costs | ( | ( | ( | ||||||||||||||||||||
Amortization of intangible assets | ( | ( | ( | ( | |||||||||||||||||||
| Structural optimization and other special charges | ( | ( | ( | ( | |||||||||||||||||||
Medical device regulations | ( | ( | ( | ( | |||||||||||||||||||
Recall-related matters | ( | ( | ( | ||||||||||||||||||||
Regulatory and legal matters | ( | ||||||||||||||||||||||
| Consolidated operating income | $ | $ | $ | $ | |||||||||||||||||||
There were no significant changes to total assets by segment from the information provided in our Annual Report on Form 10-K for 2023.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
ABOUT STRYKER
Stryker is a global leader in medical technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Alongside our customers around the world, we impact more than 150 million patients annually.
We segregate our operations into two reportable business segments: (i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine. MedSurg and Neurotechnology products include surgical equipment and navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment and intensive care disposable products (Medical), minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke (Neurovascular), a comprehensive line of products for traditional brain and open skull based surgical procedures; orthobiologic and biosurgery products, including synthetic bone grafts and vertebral augmentation products (Neuro Cranial). Orthopaedics and Spine products consist primarily of implants used in hip and knee joint replacements and trauma and extremity surgeries, and cervical, thoracolumbar and interbody systems used in spinal injury, deformity and degenerative therapies.
Overview of the Three and Nine Months
In the three months 2024 we achieved sales growth of 11.9% from 2023. Excluding the impact of acquisitions and divestitures, sales grew 11.5% in constant currency. We reported operating income margin of 19.7%, net earnings of $834 and net earnings per diluted share of $2.16. Excluding the impact of certain items,
adjusted operating income margin(1) increased by 130 basis points to 24.7%, with adjusted net earnings(1) of $1,107 and adjusted net earnings per diluted share(1) of $2.87, an increase of 16.7% from 2023.
In the nine months 2024 we achieved sales growth of 10.1% from 2023. Excluding the impact of acquisitions and divestitures, sales grew 10.2% in constant currency. We reported operating income margin of 19.2%, net earnings of $2,447 and net earnings per diluted share of $6.35. Excluding the impact of certain items, adjusted operating income margin(1) increased by 70 basis points to 23.7%, with adjusted net earnings(1) of $3,154 and adjusted net earnings per diluted share(1) of $8.18, an increase of 14.6% from 2023.
Recent Developments
In the nine months 2024 we completed various acquisitions for total consideration of $1,598 in upfront payments, net of cash acquired, as well as $395 of contingent consideration if certain commercial or clinical milestones are achieved. Refer to Note 7 to our Consolidated Financial Statements for further information.
In September 2024 we issued $750 of 4.250% senior unsecured notes due September 11, 2029, €800 of 3.375% senior unsecured notes due September 11, 2032, $750 of 4.625% senior unsecured notes due September 11, 2034 and €600 of 3.625% senior unsecured notes due September 11, 2036. Refer to Note 8 to our Consolidated Financial Statements for further information.
(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-GAAP financial measures used in this report and a reconciliation to the most directly comparable GAAP financial measure.
| CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Percent Net Sales | Percentage | Percent Net Sales | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | Change | 2024 | 2023 | 2024 | 2023 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 5,494 | $ | 4,909 | 100.0 | % | 100.0 | % | 11.9 | % | $ | 16,159 | $ | 14,683 | 100.0 | % | 100.0 | % | 10.1 | % | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 3,517 | 3,158 | 64.0 | 64.3 | 11.4 | 10,266 | 9,355 | 63.5 | 63.7 | 9.7 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Research, development and engineering expenses | 377 | 353 | 6.9 | 7.2 | 6.8 | 1,108 | 1,038 | 6.9 | 7.1 | 6.7 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 1,896 | 1,710 | 34.5 | 34.8 | 10.9 | 5,583 | 5,200 | 34.6 | 35.4 | 7.4 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 159 | 164 | 2.9 | 3.3 | (3.0) | 467 | 486 | 2.9 | 3.3 | (3.9) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | (42) | (62) | (0.8) | (1.3) | (32.3) | (144) | (184) | (0.9) | (1.3) | (21.7) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Income taxes | 209 | 177 | nm | nm | 18.1 | 517 | 425 | nm | nm | 21.6 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 834 | $ | 692 | 15.2 | % | 14.1 | % | 20.5 | % | $ | 2,447 | $ | 2,022 | 15.1 | % | 13.8 | % | 21.0 | % | |||||||||||||||||||||||||||||||||||||||
| Net earnings per diluted share | $ | 2.16 | $ | 1.80 | 20.0 | % | $ | 6.35 | $ | 5.27 | 20.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Adjusted net earnings per diluted share(1) | $ | 2.87 | $ | 2.46 | 16.7 | % | $ | 8.18 | $ | 7.14 | 14.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||
nm - not meaningful
| Geographic and Segment Net Sales | Three Months | Nine Months | |||||||||||||||||||||||||||||||||||||||
| Percentage Change | Percentage Change | ||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | As Reported | Constant Currency | 2024 | 2023 | As Reported | Constant Currency | ||||||||||||||||||||||||||||||||||
| Geographic: | |||||||||||||||||||||||||||||||||||||||||
| United States | $ | 4,109 | $ | 3,678 | 11.7 | % | 11.7 | % | $ | 12,070 | $ | 10,901 | 10.7 | % | 10.7 | % | |||||||||||||||||||||||||
| International | 1,385 | 1,231 | 12.5 | 13.0 | 4,089 | 3,782 | 8.1 | 10.1 | |||||||||||||||||||||||||||||||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | |||||||||||||||||||||||||
| Segment: | |||||||||||||||||||||||||||||||||||||||||
| MedSurg and Neurotechnology | $ | 3,224 | $ | 2,859 | 12.8 | % | 12.9 | % | $ | 9,340 | $ | 8,409 | 11.1 | % | 11.5 | % | |||||||||||||||||||||||||
| Orthopaedics and Spine | 2,270 | 2,050 | 10.7 | 10.8 | 6,819 | 6,274 | 8.7 | 9.2 | |||||||||||||||||||||||||||||||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | |||||||||||||||||||||||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 10 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
| Supplemental Net Sales Growth Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Percentage Change | Percentage Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | International | United States | International | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | 2024 | 2023 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MedSurg and Neurotechnology: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Instruments | $ | 679 | $ | 620 | 9.6 | % | 9.5 | % | 9.9 | % | 8.3 | % | 7.8 | % | $ | 2,044 | $ | 1,808 | 13.1 | % | 13.3 | % | 13.9 | % | 9.7 | % | 10.9 | % | |||||||||||||||||||||||||||||||||||||||||||
| Endoscopy | 837 | 746 | 12.2 | 12.5 | 11.3 | 16.6 | 18.1 | 2,383 | 2,166 | 10.0 | 10.5 | 10.2 | 9.1 | 11.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Medical | 938 | 798 | 17.6 | 17.7 | 18.6 | 12.7 | 13.2 | 2,710 | 2,417 | 12.1 | 12.3 | 15.7 | (2.9) | (1.8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Neurovascular | 329 | 311 | 5.5 | 5.9 | 1.5 | 8.1 | 8.6 | 966 | 906 | 6.6 | 8.3 | 2.2 | 9.4 | 12.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Neuro Cranial | 441 | 384 | 15.0 | 15.0 | 16.2 | 9.4 | 9.6 | 1,237 | 1,112 | 11.3 | 11.7 | 11.4 | 10.7 | 12.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 3,224 | $ | 2,859 | 12.8 | % | 12.9 | % | 13.3 | % | 10.9 | % | 11.4 | % | $ | 9,340 | $ | 8,409 | 11.1 | % | 11.5 | % | 12.4 | % | 6.7 | % | 8.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Orthopaedics and Spine: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Knees | $ | 570 | $ | 515 | 10.6 | % | 10.7 | % | 8.4 | % | 17.1 | % | 17.4 | % | $ | 1,760 | $ | 1,643 | 7.1 | % | 7.7 | % | 6.0 | % | 10.2 | % | 12.2 | % | |||||||||||||||||||||||||||||||||||||||||||
| Hips | 420 | 362 | 15.9 | 16.2 | 10.9 | 24.8 | 25.3 | 1,241 | 1,130 | 9.9 | 10.9 | 7.3 | 14.4 | 17.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trauma and Extremities | 849 | 752 | 12.8 | 12.6 | 12.9 | 12.6 | 12.0 | 2,511 | 2,287 | 9.8 | 10.0 | 10.8 | 7.1 | 7.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Spine | 304 | 291 | 4.6 | 4.4 | 3.5 | 7.5 | 6.8 | 911 | 871 | 4.6 | 4.8 | 3.9 | 6.5 | 7.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 127 | 130 | (2.4) | 0.1 | (0.6) | (6.1) | 1.3 | 396 | 343 | 15.4 | 17.8 | 17.4 | 11.2 | 18.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 2,270 | $ | 2,050 | 10.7 | % | 10.8 | % | 9.2 | % | 14.4 | % | 14.8 | % | $ | 6,819 | $ | 6,274 | 8.7 | % | 9.2 | % | 8.3 | % | 9.7 | % | 11.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | 11.7 | % | 12.5 | % | 13.0 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | 10.7 | % | 8.1 | % | 10.1 | % | |||||||||||||||||||||||||||||||||||||||||||
Note: Beginning in the first quarter 2024, a product line previously included in Instruments has been reclassified to Endoscopy to align with a change in our internal reporting structure. We have reflected this change in all historical periods presented.
Consolidated Net Sales
Consolidated net sales increased 11.9% in the three months 2024 as reported and 12.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.1%. Excluding the 0.5% impact of acquisitions and divestitures, net sales in constant currency increased by 10.3% from increased unit volume and 1.2% due to higher prices. The unit volume increase was due to higher product shipments across all MedSurg and Neurotechnology businesses and most Orthopaedics and Spine businesses.
Consolidated net sales increased 10.1% in the nine months 2024 as reported and 10.6% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.5%. Excluding the 0.4% impact of acquisitions and divestitures, net sales in constant currency increased by 9.2% from increased unit volume and 1.0% due to higher prices. The unit volume increase was due to higher product shipments across all MedSurg and Neurotechnology and Orthopaedics and Spine businesses.
MedSurg and Neurotechnology Net Sales
MedSurg and Neurotechnology net sales increased 12.8% in the three months 2024 as reported and 12.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.1%. Excluding the 0.2% impact of acquisitions and divestitures, net sales in constant currency increased by 11.0% from increased unit volume and 1.7% from higher prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology businesses.
MedSurg and Neurotechnology net sales increased 11.1% in the nine months 2024 as reported and 11.5% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 0.2% impact of acquisitions and divestitures, net sales in constant currency increased by 9.6% from increased unit volume and 1.7% from higher prices. The unit
volume increase was due to higher shipments across all MedSurg and Neurotechnology businesses.
Orthopaedics and Spine Net Sales
Orthopaedics and Spine net sales increased 10.7% in the three months 2024 as reported and 10.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.1%. Excluding the 1.1% impact of acquisitions and divestitures, net sales in constant currency increased 9.3% from increased unit volume and 0.4% from higher prices. The unit volume increase was due to higher shipments across most Orthopaedics and Spine businesses.
Orthopaedics and Spine net sales increased 8.7% in the nine months 2024 as reported and 9.2% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.5%. Excluding the 0.6% impact of acquisitions and divestitures, net sales in constant currency increased 8.6% from increased unit volume. The unit volume increase was due to higher shipments across all Orthopaedics and Spine businesses.
Gross Profit
Gross profit was $3,517 and $3,158 in the three months 2024 and 2023. The key components of the change were:
| Gross Profit Percent Net Sales | |||||
| Three Months 2023 | 64.3 | % | |||
| Sales pricing | 40 bps | ||||
| Volume and mix | 60 bps | ||||
| Manufacturing and supply chain costs | (90) bps | ||||
| Structural optimization and other special charges | 20 bps | ||||
| Inventory stepped up to fair value | (60) bps | ||||
| Three Months 2024 | 64.0 | % | |||
Gross profit as a percentage of net sales in the three months 2024 remained relatively flat with 2023.
Gross profit was $10,266 and $9,355 in the nine months 2024 and 2023. The key components of the change were:
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
| Gross Profit Percent Net Sales | |||||
| Nine Months 2023 | 63.7 | % | |||
| Sales pricing | 40 bps | ||||
| Volume and mix | 60 bps | ||||
| Manufacturing and supply chain costs | (70) bps | ||||
| Structural optimization and other special charges | (20) bps | ||||
| Inventory stepped up to fair value | (30) bps | ||||
| Nine Months 2024 | 63.5 | % | |||
Gross profit as a percentage of net sales in the nine months 2024 remained relatively flat with 2023.
While segment mix was not a significant driver of the change in gross profit as a percent of net sales between the three and nine months 2024 and 2023, we generally expect segment mix to have an unfavorable impact for the foreseeable future as we anticipate more rapid sales growth in our lower gross margin MedSurg and Neurotechnology segment than our Orthopaedics and Spine segment.
Research, Development and Engineering Expenses
Research, development and engineering expenses increased $24 or 6.8% in the three months 2024 and decreased as a percentage of net sales to 6.9% from 7.2% in 2023, primarily due to lower product launch costs.
Research, development and engineering expenses increased $70 or 6.7% in the nine months 2024 and decreased as a percentage of net sales to 6.9% from 7.1% in 2023, primarily due to lower spend on medical device regulations in the European Union.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $186 or 10.9% in the three months 2024. As a percentage of net sales, expenses decreased to 34.5% from 34.8% in 2023, primarily due to continued spend discipline that was partially offset by higher acquisition-related costs.
Selling, general and administrative expenses increased $383 or 7.4% in the nine months 2024 and decreased as a percentage of net sales to 34.6% from 35.4% in 2023, primarily due to continued spend discipline and lower charges for structural optimization and certain legal matters, offset by higher acquisition-related costs.
Amortization of Intangible Assets
Amortization of intangible assets was $159 and $164 in the three months and $467 and $486 in the nine months 2024 and 2023. Refer to Note 7 to our Consolidated Financial Statements for further information.
Operating Income
Operating income was $1,085 and $931 in the three months 2024 and 2023. Operating income as a percentage of net sales in the three months 2024 increased to 19.7% from 19.0% in 2023. Refer to the discussion above for the primary drivers of the change.
Operating income was $3,108 and $2,631 in the nine months 2024 and 2023. Operating income as a percentage of net sales in the nine months 2024 increased to 19.2% from 17.9% in 2023. Refer to the discussion above for the primary drivers of the change.
MedSurg and Neurotechnology operating income as a percentage of net sales decreased to 28.7% in the three months 2024 from 30.0% in 2023. Orthopaedics and Spine operating income as a percentage of net sales increased to 28.3% in the three months 2024 from 24.3% in 2023. The key components of
the change were:
| Operating Income Percent Net Sales | ||||||||
| MedSurg and Neurotechnology | Orthopaedics and Spine | |||||||
| Three Months 2023 | 30.0 | % | 24.3 | % | ||||
| Sales pricing | 120 bps | 30 bps | ||||||
| Volume | 340 bps | 530 bps | ||||||
| Manufacturing and supply chain costs | (310) bps | 180 bps | ||||||
| Research, development and engineering expenses | (80) bps | (30) bps | ||||||
| Selling, general and administrative expenses | (200) bps | (310) bps | ||||||
| Three Months 2024 | 28.7 | % | 28.3 | % | ||||
The decrease in MedSurg and Neurotechnology operating income as a percentage of net sales for the three months was primarily driven by higher manufacturing and supply chain costs and higher selling, general and administrative expenses partially offset by higher unit volumes and higher prices.
The increase in Orthopaedics and Spine operating income as a percentage of net sales for the three months was primarily driven by higher unit volumes and lower manufacturing and supply chain costs partially offset by higher selling, general and administrative expenses.
MedSurg and Neurotechnology operating income as a percentage of net sales increased to 27.7% in the nine months 2024 from 26.9% in 2023. Orthopaedics and Spine operating income as a percentage of net sales increased to 28.2% in the nine months 2024 from 27.1% in 2023. The key components of the change were:
| Operating Income Percent Net Sales | ||||||||
| MedSurg and Neurotechnology | Orthopaedics and Spine | |||||||
| Nine Months 2023 | 26.9 | % | 27.1 | % | ||||
| Sales pricing | 130 bps | 0 bps | ||||||
| Volume | 320 bps | 450 bps | ||||||
| Manufacturing and supply chain costs | (80) bps | (40) bps | ||||||
| Research, development and engineering expenses | (90) bps | (60) bps | ||||||
| Selling, general and administrative expenses | (200) bps | (240) bps | ||||||
| Nine Months 2024 | 27.7 | % | 28.2 | % | ||||
The increase in MedSurg and Neurotechnology operating income as a percentage of net sales for the nine months was primarily driven by higher unit volumes and higher prices partially offset by higher selling, general and administrative expenses.
The increase in Orthopaedics and Spine operating income as a percentage of net sales for the nine months was primarily driven by higher sales volume partially offset by higher selling, general and administrative expenses.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 12 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
Other Income (Expense), Net
Other income (expense), net was ($42) and ($62) in the three months and ($144) and ($184) in the nine months 2024 and 2023. The decrease in net expense in the three and nine months 2024 compared to 2023 was primarily due to higher interest income in 2024.
Income Taxes
Our effective tax rates were 20.0% and 17.4% in the three and nine months 2024 and 20.4% and 17.4% in the three and nine months 2023. The effective tax rates for the three and nine months 2024 and 2023 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items. The Organisation for Economic Cooperation and Development (OECD), which represents a coalition of member countries, has put forth two proposed base erosion and profit shifting frameworks that revise the existing profit allocation and nexus rules (Pillar One) and ensure a minimal level of taxation (Pillar Two). On December 12, 2022 the European Union member states agreed to implement the Inclusive Framework’s global corporate minimum tax rate of 15%, and various countries within and outside the European Union have either enacted or proposed new tax laws implementing Pillar Two in 2024. The OECD continues to release additional guidance and we anticipate more countries will enact similar tax laws. Some of the new tax laws are effective in 2024 while others will be effective in future years. These tax law changes and any additional contemplated tax law changes could increase tax expense in future periods.
Net Earnings
Net earnings increased to $834 or $2.16 per diluted share in the three months 2024 from $692 or $1.80 per diluted share in 2023. Net earnings increased to $2,447 or $6.35 per diluted share in the nine months 2024 from $2,022 or $5.27 per diluted share in 2023. Refer to the discussion above for the primary drivers of the change.
Non-GAAP Financial Measures
We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted income taxes; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share (Diluted EPS). We believe these non-GAAP financial measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures. To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates, acquisitions and divestitures, which affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current year and prior year results at the same foreign currency exchange rates excluding the impact of acquisitions and divestitures. To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings. The income tax effect of each adjustment was determined based on the tax effect of the jurisdiction in which the related pre-tax adjustment was recorded. These adjustments are irregular in timing and may not be indicative of our past and future performance. The following are examples of the types of adjustments that may be included in a period:
1.Acquisition and integration-related costs. Costs related to integrating recently acquired businesses (e.g., costs associated with the termination of sales relationships, employee retention and workforce reductions, manufacturing integration costs and other integration-related activities), changes in the fair value of contingent consideration, amortization of inventory stepped-up to fair value, specific costs (e.g., deal costs and costs associated with legal entity rationalization) related to the consummation of the acquisition process and legal entity rationalization and acquisition-related tax items.
2.Amortization of purchased intangible assets. Periodic amortization expense related to purchased intangible assets.
3.Structural optimization and other special charges. Costs associated with employee retention and workforce reductions, the closure or transfer of manufacturing and other facilities (e.g., site closure costs, contract termination costs and redundant employee costs during the work transfers), product line exits (primarily inventory, long-lived
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 13 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
asset and specifically-identified intangible asset write-offs), certain long-lived and intangible asset write-offs and impairments and other charges.
4.Medical device regulations. Costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the new medical device reporting regulations and other requirements of the European Union.
5.Recall-related matters. Changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve the Rejuvenate, LFIT V40, Wright legacy hip products and other product recalls.
6.Regulatory and legal matters. Changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
7.Tax matters. Impact of accounting for certain significant and discrete tax items.
Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, income taxes, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures at the end of the discussion of Consolidated Results of
Operations below. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The weighted-average diluted shares outstanding used in the calculation of adjusted net earnings per diluted share are the same as those used in the calculation of reported net earnings per diluted share for the respective period.
| Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
| Three Months 2024 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
| Reported | $ | 3,517 | $ | 1,896 | $ | 377 | $ | 1,085 | $ | (42) | $ | 209 | $ | 834 | 20.0 | % | $ | 2.16 | |||||||||||
| Reported percent net sales | 64.0 | % | 34.5 | % | 6.9 | % | 19.7 | % | (0.8) | % | nm | 15.2 | % | ||||||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
| Inventory stepped-up to fair value | 29 | — | — | 29 | — | 7 | 22 | 0.2 | 0.06 | ||||||||||||||||||||
| Other acquisition and integration-related (a) | — | (48) | — | 48 | — | 11 | 37 | 0.3 | 0.10 | ||||||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 159 | — | 32 | 127 | 0.7 | 0.32 | ||||||||||||||||||||
| Structural optimization and other special charges (b) | (2) | (26) | — | 24 | — | 4 | 20 | — | 0.05 | ||||||||||||||||||||
| Medical device regulations (c) | — | — | (13) | 13 | — | 2 | 11 | 0.1 | 0.03 | ||||||||||||||||||||
| Recall-related matters (d) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | — | (1) | — | — | ||||||||||||||||||||
| Tax matters (f) | — | — | — | — | — | (57) | 57 | (5.5) | 0.15 | ||||||||||||||||||||
| Adjusted | $ | 3,544 | $ | 1,823 | $ | 364 | $ | 1,357 | $ | (42) | $ | 208 | $ | 1,107 | 15.8 | % | $ | 2.87 | |||||||||||
| Adjusted percent net sales | 64.5 | % | 33.2 | % | 6.6 | % | 24.7 | % | (0.8) | % | nm | 20.1 | % | ||||||||||||||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
| Three Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
| Reported | $ | 3,158 | $ | 1,710 | $ | 353 | $ | 931 | $ | (62) | $ | 177 | $ | 692 | 20.4 | % | $ | 1.80 | |||||||||||
| Reported percent net sales | 64.3 | % | 34.8 | % | 7.2 | % | 19.0 | % | (1.3) | % | nm | 14.1 | % | ||||||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
| Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Other acquisition and integration-related (a) | — | 1 | — | (1) | — | (28) | 27 | (3.1) | 0.07 | ||||||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 164 | — | 36 | 128 | 1.6 | 0.34 | ||||||||||||||||||||
| Structural optimization and other special charges (b) | 19 | (9) | — | 28 | — | 7 | 21 | 0.3 | 0.06 | ||||||||||||||||||||
| Medical device regulations (c) | 1 | — | (18) | 19 | — | 4 | 15 | 0.2 | 0.04 | ||||||||||||||||||||
| Recall-related matters (d) | — | (9) | — | 9 | — | 2 | 7 | 0.1 | 0.01 | ||||||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | 1 | (2) | 0.1 | — | ||||||||||||||||||||
| Tax matters (f) | — | — | — | — | 1 | (55) | 56 | (6.4) | 0.14 | ||||||||||||||||||||
| Adjusted | $ | 3,178 | $ | 1,694 | $ | 335 | $ | 1,149 | $ | (61) | $ | 144 | $ | 944 | 13.2 | % | $ | 2.46 | |||||||||||
| Adjusted percent net sales | 64.7 | % | 34.5 | % | 6.8 | % | 23.4 | % | (1.2) | % | nm | 19.2 | % | ||||||||||||||||
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
| Three Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Termination of sales relationships | $ | — | $ | 2 | ||||||||||
| Employee retention and workforce reductions | 13 | 3 | ||||||||||||
| Changes in the fair value of contingent consideration | 2 | (4) | ||||||||||||
| Manufacturing integration costs | 1 | — | ||||||||||||
| Stock compensation payments upon a change in control | 22 | — | ||||||||||||
| Other integration-related activities | 10 | (2) | ||||||||||||
| Adjustments to Operating Income | $ | 48 | $ | (1) | ||||||||||
| Charges for acquisition-related tax provisions | — | (28) | ||||||||||||
| Other income taxes related to acquisition and integration-related costs | 11 | — | ||||||||||||
| Adjustments to Income Taxes | $ | 11 | $ | (28) | ||||||||||
| Adjustments to Net Earnings | $ | 37 | $ | 27 | ||||||||||
(b) Structural optimization and other special charges represent the costs associated with:
| Three Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Employee retention and workforce reductions | $ | 12 | $ | (5) | ||||||||||
| Closure/transfer of manufacturing and other facilities | 2 | 12 | ||||||||||||
| Product line exits | 4 | 7 | ||||||||||||
| Certain long-lived and intangible asset write-offs and impairments | 12 | 9 | ||||||||||||
| Termination of sales relationships in certain countries | 6 | — | ||||||||||||
| Other charges | (12) | 5 | ||||||||||||
| Adjustments to Operating Income | $ | 24 | $ | 28 | ||||||||||
| Adjustments to Income Taxes | $ | 4 | $ | 7 | ||||||||||
| Adjustments to Net Earnings | $ | 20 | $ | 21 | ||||||||||
(c) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain recall-related matters.
(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
| Three Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $ | (47) | $ | (44) | ||||||||||
| Other tax matters | (10) | (11) | ||||||||||||
| Adjustments to Income Taxes | $ | (57) | $ | (55) | ||||||||||
| Charges / benefits for certain tax audit settlements | — | 1 | ||||||||||||
| Adjustments to Other Income (Expense), Net | $ | — | $ | 1 | ||||||||||
| Adjustments to Net Earnings | $ | 57 | $ | 56 | ||||||||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
| Nine Months 2024 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
| Reported | $ | 10,266 | $ | 5,583 | $ | 1,108 | $ | 3,108 | $ | (144) | $ | 517 | $ | 2,447 | 17.4 | % | $ | 6.35 | |||||||||||
| Reported percent net sales | 63.5 | % | 34.6 | % | 6.9 | % | 19.2 | % | (0.9) | % | nm | 15.1 | % | ||||||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
| Inventory stepped-up to fair value | 38 | — | — | 38 | — | 9 | 29 | 0.3 | 0.08 | ||||||||||||||||||||
| Other acquisition and integration-related (a) | — | (49) | — | 49 | — | 14 | 35 | 0.2 | 0.09 | ||||||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 467 | — | 96 | 371 | 1.0 | 0.96 | ||||||||||||||||||||
| Structural optimization and other special charges (b) | 41 | (72) | — | 113 | — | 24 | 89 | 0.2 | 0.23 | ||||||||||||||||||||
| Medical device regulations (c) | 5 | — | (36) | 41 | — | 9 | 32 | 0.1 | 0.08 | ||||||||||||||||||||
| Recall-related matters (d) | 11 | (11) | — | 22 | — | 5 | 17 | 0.1 | 0.04 | ||||||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | — | (1) | — | — | ||||||||||||||||||||
| Tax matters (f) | — | — | — | — | (1) | (136) | 135 | (4.7) | 0.35 | ||||||||||||||||||||
| Adjusted | $ | 10,361 | $ | 5,452 | $ | 1,072 | $ | 3,837 | $ | (145) | $ | 538 | $ | 3,154 | 14.6 | % | $ | 8.18 | |||||||||||
| Adjusted percent net sales | 64.1 | % | 33.7 | % | 6.6 | % | 23.7 | % | (0.9) | % | nm | 19.5 | % | ||||||||||||||||
| Nine Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
| Reported | $ | 9,355 | $ | 5,200 | $ | 1,038 | $ | 2,631 | $ | (184) | $ | 425 | $ | 2,022 | 17.4 | % | $ | 5.27 | |||||||||||
| Reported percent net sales | 63.7 | % | 35.4 | % | 7.1 | % | 17.9 | % | (1.3) | % | nm | 13.8 | % | ||||||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
| Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Other acquisition and integration-related (a) | — | (7) | — | 7 | — | (25) | 32 | (1.0) | 0.08 | ||||||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 486 | — | 104 | 382 | 1.5 | 1.00 | ||||||||||||||||||||
| Structural optimization and other special charges (b) | 30 | (112) | — | 142 | — | 32 | 110 | 0.5 | 0.29 | ||||||||||||||||||||
| Medical device regulations (c) | 1 | — | (73) | 74 | — | 17 | 57 | 0.3 | 0.15 | ||||||||||||||||||||
| Recall-related matters (d) | — | (12) | — | 12 | — | 3 | 9 | — | 0.02 | ||||||||||||||||||||
| Regulatory and legal matters (e) | — | (19) | — | 19 | — | 4 | 15 | — | 0.04 | ||||||||||||||||||||
| Tax matters (f) | — | — | — | — | (8) | (121) | 113 | (4.9) | 0.29 | ||||||||||||||||||||
| Adjusted | $ | 9,386 | $ | 5,050 | $ | 965 | $ | 3,371 | $ | (192) | $ | 439 | $ | 2,740 | 13.8 | % | $ | 7.14 | |||||||||||
| Adjusted percent net sales | 63.9 | % | 34.4 | % | 6.6 | % | 23.0 | % | (1.3) | % | nm | 18.7 | % | ||||||||||||||||
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
| Nine Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Termination of sales relationships | $ | 3 | $ | 2 | ||||||||||
| Employee retention and workforce reductions | 17 | 3 | ||||||||||||
| Changes in the fair value of contingent consideration | (12) | (7) | ||||||||||||
| Manufacturing integration costs | 2 | 2 | ||||||||||||
| Stock compensation payments upon a change in control | 22 | — | ||||||||||||
| Other integration-related activities | 17 | 7 | ||||||||||||
| Adjustments to Operating Income | $ | 49 | $ | 7 | ||||||||||
| Charges for acquisition-related tax provisions | — | (28) | ||||||||||||
| Other income taxes related to acquisition and integration-related costs | 14 | 3 | ||||||||||||
| Adjustments to Income Taxes | $ | 14 | $ | (25) | ||||||||||
| Adjustments to Net Earnings | $ | 35 | $ | 32 | ||||||||||
(b) Structural optimization and other special charges represent the costs associated with:
| Nine Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Employee retention and workforce reductions | $ | 14 | $ | 63 | ||||||||||
| Closure/transfer of manufacturing and other facilities | 18 | 36 | ||||||||||||
| Product line exits | 19 | 16 | ||||||||||||
| Certain long-lived and intangible asset write-offs and impairments | 22 | 12 | ||||||||||||
| Termination of sales relationships in certain countries | 7 | — | ||||||||||||
| Other charges | 33 | 15 | ||||||||||||
| Adjustments to Operating Income | $ | 113 | $ | 142 | ||||||||||
| Adjustments to Income Taxes | $ | 24 | $ | 32 | ||||||||||
| Adjustments to Net Earnings | $ | 89 | $ | 110 | ||||||||||
(c) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain recall-related matters.
(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 16 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
(f) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
| Nine Months | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $ | (141) | $ | (138) | ||||||||||
| Certain tax audit settlements | (2) | 24 | ||||||||||||
| Other tax matters | 7 | (7) | ||||||||||||
| Adjustments to Income Taxes | $ | (136) | $ | (121) | ||||||||||
| Charges / benefits for certain tax audit settlements | (1) | (9) | ||||||||||||
| Other tax related adjustments | — | 1 | ||||||||||||
| Adjustments to Other Income (Expense), Net | $ | (1) | $ | (8) | ||||||||||
| Adjustments to Net Earnings | $ | 135 | $ | 113 | ||||||||||
FINANCIAL CONDITION AND LIQUIDITY
| Nine Months | |||||||||||
| Net cash provided by (used in): | 2024 | 2023 | |||||||||
| Operating activities | $ | 2,311 | $ | 2,183 | |||||||
| Investing activities | (2,697) | (810) | |||||||||
| Financing activities | 1,269 | (1,308) | |||||||||
| Effect of exchange rate changes | (4) | (49) | |||||||||
| Change in cash and cash equivalents | $ | 879 | $ | 16 | |||||||
Operating Activities
Cash provided by operating activities was $2,311 and $2,183 in the nine months 2024 and 2023. The increase was primarily due to higher net earnings partially offset by the timing of payments and collections in working capital accounts.
Investing Activities
Cash used in investing activities was $2,697 and $810 in the nine months 2024 and 2023. The nine months 2024 included cash paid for various acquisitions and purchases of short-term investments partially offset by proceeds from the settlement of certain foreign currency forward contracts designated as net investment hedges. The nine months 2023 included cash paid for the Cerus acquisition. Refer to Notes 4 and 7 to our Consolidated Financial Statements for further information on derivative instruments and acquisitions.
Financing Activities
Cash provided by financing activities was $1,269 in the nine months 2024 and cash used in financing activities was $1,308 in the nine months 2023. In 2024, cash provided was primarily driven by proceeds from the issuance of various senior unsecured notes as described in Note 8 to our Consolidated Financial Statements. This was partially offset by the repayment of maturing senior unsecured notes, dividend payments and cash paid for taxes on withheld shares. Cash used in 2023 was primarily driven by dividend payments, repayment of the term loan used to fund the acquisition of Vocera and cash paid for taxes on withheld shares, partially offset by proceeds from the issuance of €500 of floating rate senior notes.
We did not repurchase any shares in the nine months 2024 and 2023.
Liquidity
Cash, cash equivalents, short-term investments and marketable securities were $4,684 and $3,053 on September 30, 2024 and December 31, 2023. Current assets exceeded current liabilities by $7,004 and $4,597 on September 30, 2024 and December 31, 2023. We anticipate being able to support our short-term liquidity and operating needs from a variety of sources including cash from operations, commercial paper and existing credit lines.
We have raised funds in the capital markets and have accessed the credit markets in the past and may continue to do so from time-to-time. We continue to have strong investment-grade short-term and long-term debt ratings that we believe should enable us to refinance our debt as needed.
Our cash, cash equivalents, short-term investments and marketable securities held in locations outside the United States was 14% on September 30, 2024 compared to 25% on December 31, 2023.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There were no changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for 2023, except as follows.
We test goodwill annually for impairment at October 31 or whenever events or circumstances indicate that goodwill may be impaired. When it is unlikely that goodwill of a reporting unit is impaired, we perform a qualitative assessment that may be periodically supplemented with a corroborative quantitative analysis.
During 2022 we recognized a goodwill impairment charge of $216 for the Spine reporting unit. Due to the impairment charge in 2022, we performed a quantitative impairment test for our Spine reporting unit at October 31, 2023 and determined that its fair value exceeded its carrying amount by 10% and no additional impairment charges were recorded.
The Spine business’s operating results continue to be affected by inflationary pressures and the competitive environment. These inputs were included in the updated projections used in our annual long-range financial plan, which was approved during the third quarter 2024. Additionally, it is likely we will reorganize our Spine reporting unit during the fourth quarter 2024 to separate the spine enabling technologies portfolio (Enabling Technologies) from the spinal implant portfolio (Core Spine). While changes in reporting units are accounted for on a prospective basis, they may be an indicator that goodwill of a reporting unit is potentially impaired. As a result of these factors, we performed a quantitative impairment test of the Spine reporting unit at September 30, 2024. The outcome of the impairment test was that the fair value of the Spine reporting unit exceeded its carrying amount by 9% and we did not record any impairment charges during the quarter ended September 30, 2024. Goodwill attributable to the Spine reporting unit was approximately $1.0 billion at September 30, 2024.
In our quantitative impairment test, the fair value of the Spine reporting unit was determined using a discounted cash flow analysis, which is a form of the income approach. Significant inputs to the analysis included assumptions for future revenue growth, operating margin and the rate used to discount the estimated future cash flows to their present value based on the reporting unit’s estimated weighted average cost of capital. Our assumptions for revenue growth and operating margin considered several operating factors, including surgery volumes, increased costs and our competitive environment. We believe our estimates are appropriate based upon current and anticipated future market conditions and the best information available at the impairment assessment date. However, future impairment charges could be required if our Spine reporting unit does not
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 17 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
achieve its cash flow, revenue and profitability projections or if there is an increase in the weighted average cost of capital.
The assumptions used in the discounted cash flow analysis are subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of future cash flows and the determination of the discount rate used to reduce such estimated future cash flows to their net present value could materially affect the determination of any impairment charges. Hypothetical changes in our estimates of the discount rate, long-term revenue growth and long-term operating margin would result in impairment charges as follows:
| Change in selected assumption | Percentage decline in fair value | Impairment charge | ||||||
| 100 bps increase in discount rate | 16 | % | $ | 150 | ||||
| 100 bps decrease in long-term revenue growth | 11 | 50 | ||||||
| 100 bps decrease in long-term operating margin | 6 | — | ||||||
During the fourth quarter 2024, it is likely we will reorganize certain of our reporting units, including the Spine reporting unit. Upon a reorganization of our reporting units, the assets (including goodwill) and liabilities will be reassigned to the new reporting units and we will perform a goodwill impairment test immediately before and after the reorganization. We estimate that approximately $265 of goodwill will be assigned to the Core Spine reporting unit upon a reorganization and we expect that a material portion of this balance could be impaired.
Historical impairment assessments for our other reporting units have indicated that their implied fair values exceed their respective carrying amounts by at least 100%. We have not identified any factors in 2024 that would lead us to believe that those reporting units are at risk of a goodwill impairment.
New Accounting Pronouncements Not Yet Adopted
Refer to Note 1 to our Consolidated Financial Statements for information.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, of a magnitude that we believe could have a material impact on our financial condition or liquidity.
OTHER MATTERS
Legal and Regulatory Matters
We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of our business, including proceedings related to product, labor, intellectual property and other matters. Refer to Note 6 to our Consolidated Financial Statements for further information.
FORWARD-LOOKING STATEMENTS
This report contains statements that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current projections about operations, industry conditions, financial condition and liquidity. Words that identify forward-looking statements include, without limitation, words such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," "goal," "strategy" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, an acquisition or our businesses. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from these forward-looking statements, historical experience or our present expectations. Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include the risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for 2023. This Form 10-Q should be read in conjunction with our Consolidated Financial Statements and accompanying notes to our Consolidated Financial Statements in our Annual Report on Form 10-K for 2023. While we believe that the assumptions underlying such forward-looking statements are reasonable, there can be no assurance that future events or developments will not cause such statements to be inaccurate. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. We expressly disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ||||
We consider our greatest potential area of market risk exposure to be exchange rate risk on our operating results. Quantitative and qualitative disclosures about exchange rate risk are included in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for 2023. There were no material changes from the information provided therein.
| ITEM 4. | CONTROLS AND PROCEDURES | ||||
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on September 30, 2024. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial reporting during the nine months 2024 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
| ITEM 1A. | RISK FACTORS | ||||
We are not aware of any material changes to the risk factors included in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for 2023.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | ||||
In the three months 2024 we did not issue shares of our common stock as performance incentive awards to employees. When issued, these shares are not registered under the Securities Act of 1933 based on the conclusion that the awards would not be events of sale within the meaning of Section 2(a)(3) of the Act.
In March 2015 we announced that our Board of Directors had authorized us to purchase up to $2,000 of our common stock.
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 18 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
The manner, timing and amount of repurchases are determined by management based on an evaluation of market conditions, stock price, and other factors and are subject to regulatory considerations. Purchases are made from time-to-time in the open market, in privately negotiated transactions or otherwise.
In the nine months 2024 we did not repurchase any shares of our common stock under our authorized repurchase program. The total dollar value of shares of our common stock that could be acquired under our authorized repurchase program was $1,033 as of September 30, 2024.
| ITEM 5. | OTHER INFORMATION | ||||
Certain of our officers or directors have made elections to participate in, and are participating in, our employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes due or pay the exercise price of stock options, restricted stock units and performance stock units, which may constitute non-Rule 10b5–1 trading arrangements (as defined in Item 408(c) of Regulation S-K).
| ITEM 6. | EXHIBITS | ||||
| 4(i) | |||||
| 4(ii) | |||||
| 4(iii) | |||||
| 4(iv) | |||||
| 31(i)† | |||||
| 31(ii)† | |||||
| 32(i)†† | |||||
| 32(ii)†† | |||||
| 101.INS | iXBRL Instance Document | ||||
| 101.SCH | iXBRL Schema Document | ||||
| 101.CAL | iXBRL Calculation Linkbase Document | ||||
| 101.DEF | iXBRL Definition Linkbase Document | ||||
| 101.LAB | iXBRL Label Linkbase Document | ||||
| 101.PRE | iXBRL Presentation Linkbase Document | ||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) | ||||
| † Filed with this Form 10-Q | |||||
| †† Furnished with this Form 10-Q | |||||
| Dollar amounts are in millions except per share amounts or as otherwise specified. | 19 | ||||
| STRYKER CORPORATION | 2024 Third Quarter Form 10-Q | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| STRYKER CORPORATION | |||||||||||
| (Registrant) | |||||||||||
| Date: | October 30, 2024 | /s/ KEVIN A. LOBO | |||||||||
| Kevin A. Lobo | |||||||||||
| Chair, Chief Executive Officer and President | |||||||||||
| Date: | October 30, 2024 | /s/ GLENN S. BOEHNLEIN | |||||||||
| Glenn S. Boehnlein | |||||||||||
| Vice President, Chief Financial Officer | |||||||||||
20 | ||||||||
Exhibit 31(i)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Kevin A. Lobo, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 of Stryker Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | October 30, 2024 | /s/ KEVIN A. LOBO | ||||||
| Kevin A. Lobo | ||||||||
| Chair, Chief Executive Officer and President | ||||||||
Exhibit 31(ii)
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Glenn S. Boehnlein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 of Stryker Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | October 30, 2024 | /s/ GLENN S. BOEHNLEIN | ||||||
| Glenn S. Boehnlein | ||||||||
| Vice President, Chief Financial Officer | ||||||||
Exhibit 32(i)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Stryker Corporation (the "Company") for the quarter ended September 30, 2024 (the "Report"), I, Kevin A. Lobo, Chair, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | October 30, 2024 | /s/ KEVIN A. LOBO | ||||||
| Kevin A. Lobo | ||||||||
| Chair, Chief Executive Officer and President | ||||||||
Exhibit 32(ii)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Stryker Corporation (the "Company") for the quarter ended September 30, 2024 (the "Report"), I, Glenn S. Boehnlein, Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | October 30, 2024 | /s/ GLENN S. BOEHNLEIN | ||||||
| Glenn S. Boehnlein | ||||||||
| Vice President, Chief Financial Officer | ||||||||