Stryker Corporation

05/02/2025 | Press release | Distributed by Public on 05/02/2025 09:35

Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)
UNITED STATES
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 March 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-13149
STRYKER CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
38-1239739
(State of incorporation)
(I.R.S. Employer Identification No.)
1941 Stryker Way
Portage,
Michigan
49002
(Address of principal executive offices)
(Zip Code)
(269)
385-2600
(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
Common Stock, $.10 Par Value
SYK
New York Stock Exchange
2.125% Notes due 2027
SYK27
New York Stock Exchange
3.375% Notes due 2028
SYK28
New York Stock Exchange
0.750% Notes due 2029
SYK29
New York Stock Exchange
2.625% Notes due 2030
SYK30
New York Stock Exchange
1.000% Notes due 2031
SYK31
New York Stock Exchange
3.375% Notes due 2032
SYK32
New York Stock Exchange
3.625% Notes due 2036
SYK36
New York Stock Exchange
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.
Large accelerated filer
☒
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 382,164,865shares of Common Stock, $0.10 par value, on March 31, 2025.
Dollar amounts are in millions except per share amounts or as otherwise specified.
1
STRYKER CORPORATION
2025 First QuarterForm 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Stryker Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months
2025
2024
Net sales
$5,866
$5,243
Cost of sales
2,122
1,910
Gross profit
$3,744
$3,333
Research, development and engineering expenses
405
368
Selling, general and administrative expenses
2,300
1,837
Amortization of intangible assets
167
153
Goodwill and other impairments
35
3
Total operating expenses
$2,907
$2,361
Operating income
$837
$972
Other income (expense), net
(73)
(49)
Earnings before income taxes
$764
$923
Income taxes
110
135
Net earnings
$654
$788
Net earnings per share of common stock:
Basic
$1.71
$2.07
Diluted
$1.69
$2.05
Weighted-average shares outstanding (in millions):
Basic
381.7
380.4
Effect of dilutive employee stock compensation
4.7
4.7
Diluted
386.4
385.1
Cash dividends declared per share of common stock
$0.84
$0.80
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
2025
2024
Net earnings
$654
$788
Other comprehensive income (loss), net of tax:
Marketable securities
-
-
Pension plans
-
2
Unrealized gains (losses) on designated hedges
(14)
2
Financial statement translation
(102)
35
Total other comprehensive income (loss), net of tax
$(116)
$39
Comprehensive income
$538
$827
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified.
2
STRYKER CORPORATION
2025 First QuarterForm 10-Q
CONSOLIDATED BALANCE SHEETS
March 31
December 31
2025
2024
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$2,320
$3,652
Short-term investments
-
750
Marketable securities
89
91
Accounts receivable, less allowance of $221($213in 2024)
3,961
3,987
Inventories:
Materials and supplies
1,196
1,147
Work in process
398
336
Finished goods
3,511
3,291
Total inventories
$5,105
$4,774
Prepaid expenses and other current assets
1,547
1,593
Total current assets
$13,022
$14,847
Property, plant and equipment:
Land, buildings and improvements
1,669
1,627
Machinery and equipment
5,241
5,056
Total property, plant and equipment
$6,910
$6,683
Less allowance for depreciation
3,374
3,235
Property, plant and equipment, net
$3,536
$3,448
Goodwill
19,089
15,855
Other intangibles, net
6,132
4,395
Noncurrent deferred income tax assets
1,411
1,742
Other noncurrent assets
2,816
2,684
Total assets
$46,006
$42,971
Liabilities and shareholders' equity
Current liabilities
Accounts payable
$1,464
$1,679
Accrued compensation
919
1,403
Income taxes
599
539
Dividends payable
320
320
Accrued expenses and other liabilities
2,229
2,266
Current maturities of debt
2,398
1,409
Total current liabilities
$7,929
$7,616
Long-term debt, excluding current maturities
14,383
12,188
Income taxes
372
349
Other noncurrent liabilities
2,392
2,184
Total liabilities
$25,076
$22,337
Shareholders' equity
Common stock, $0.10par value
38
38
Additional paid-in capital
2,439
2,361
Retained earnings
18,862
18,528
Accumulated other comprehensive loss
(409)
(293)
Total shareholders' equity
$20,930
$20,634
Total liabilities and shareholders' equity
$46,006
$42,971
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified.
3
STRYKER CORPORATION
2025 First QuarterForm 10-Q
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Three Months
2025
2024
Common stock shares outstanding (in millions)
Beginning
381.4
380.1
Issuance of common stock under stock compensation and benefit plans
0.7
0.8
Ending
382.1
380.9
Common stock
Beginning
$38
$38
Issuance of common stock under stock compensation and benefit plans
-
-
Ending
$38
$38
Additional paid-in capital
Beginning
$2,361
$2,200
Issuance of common stock under stock compensation and benefit plans
(6)
(30)
Share-based compensation
84
87
Ending
$2,439
$2,257
Retained earnings
Beginning
$18,528
$16,771
Net earnings
654
788
Cash dividends declared
(320)
(305)
Ending
$18,862
$17,254
Accumulated other comprehensive income (loss)
Beginning
$(293)
$(416)
Other comprehensive income (loss)
(116)
39
Ending
$(409)
$(377)
Total shareholders' equity
$20,930
$19,172
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified.
4
STRYKER CORPORATION
2025 First QuarterForm 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months
2025
2024
Operating activities
Net earnings
$654
$788
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation
105
107
Amortization of intangible assets
167
153
Asset impairments
35
3
Share-based compensation
84
87
Sale of inventory stepped-up to fair value at acquisition
34
-
Deferred income tax (benefit) expense
14
(39)
Changes in operating assets and liabilities:
Accounts receivable
144
258
Inventories
(93)
(184)
Accounts payable
(309)
(257)
Accrued expenses and other liabilities
(504)
(635)
Income taxes
49
76
Other, net
(130)
(153)
Net cash provided by operating activities
$250
$204
Investing activities
Acquisitions, net of cash acquired
(4,749)
(246)
Purchases of marketable securities
(11)
(18)
Proceeds from maturity of short-term investments
750
-
Proceeds from sales of marketable securities
17
23
Purchases of property, plant and equipment
(123)
(167)
Other investing, net
(20)
-
Net cash used in investing activities
$(4,136)
$(408)
Financing activities
Proceeds (payments) on short-term borrowings, net
-
(1)
Proceeds from issuance of long-term debt
2,979
-
Payments of dividends
(320)
(304)
Cash paid for taxes from withheld shares
(101)
(113)
Other financing, net
(24)
-
Net cash provided by (used in) financing activities
$2,534
$(418)
Effect of exchange rate changes on cash and cash equivalents
20
(19)
Change in cash and cash equivalents
$(1,332)
$(641)
Cash and cash equivalents at beginning of period
3,652
2,971
Cash and cash equivalents at end of period
$2,320
$2,330
See accompanying notes to Consolidated Financial Statements.
Dollar amounts are in millions except per share amounts or as otherwise specified.
5
STRYKER CORPORATION
2025 First QuarterForm 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
March 31, 2025and the results of operations for the three
months 2025. 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 2024.
New Accounting Pronouncements Not Yet Adopted
In November 2024 the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) 2024-03
(Subtopic 220-40): Income Statement - Reporting
Comprehensive Income - Expense Disaggregation Disclosures
which requires disaggregation of certain expense captions into
specified categories in disclosures within the Notes to the
Consolidated Financial Statements. The new disclosure
requirements are effective for fiscal years beginning after
December 15, 2026 and interim periods within fiscal years
beginning after December 15, 2027. Early adoption is permitted.
We are currently evaluating these new expanded disclosure
requirements.
In December 2023 the FASB issued ASU 2023-09 (Topic 740):
Income Taxes: Improvements to Income Tax Disclosureswhich
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
the fourth quarter 2025.
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 2024.
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.
In the first quarter 2025we changed the name of our
Neurovascular business to Vascular due the acquisition of Inari
Medical, Inc. (Inari).
In the fourth quarter 2024we reorganized our Spine business to
align with certain updates to our internal reporting structure. The
spine enabling technologies portfolio (Enabling Technologies)
was reclassified to Other Orthopaedics and Spine, the
interventional spine (IVS) portfolio was reclassified to Neuro
Cranial and the remaining Spine business was renamed to Spinal
Implants. In addition we changed the name of our "Orthopaedics
and Spine" operating segment to "Orthopaedics." Neuro Cranial
includes sales related to IVSof $118and $98for the three
months 2025and 2024. Other Orthopaedics includes sales
related to Enabling Technologies of $29and $31for the three
months 2025and 2024. We have reflected these changes in all
historical periods presented.
Net Sales by Business
Three Months
2025
2024
MedSurg and Neurotechnology:
Instruments
$730
$667
Endoscopy
867
778
Medical
945
864
Vascular
406
310
Neuro Cranial
563
478
$3,511
$3,097
Orthopaedics:
Knees
$639
$588
Hips
443
393
Trauma and Extremities
945
830
Spinal Implants
166
171
Other
162
164
$2,355
$2,146
Total
$5,866
$5,243
Net Sales by Geography
Three Months 2025
Three Months 2024
United
States
International
United
States
International
MedSurg and Neurotechnology:
Instruments
$587
$143
$532
$135
Endoscopy
710
157
636
142
Medical
802
143
715
149
Vascular
203
203
121
189
Neuro Cranial
465
98
390
88
$2,767
$744
$2,394
$703
Orthopaedics:
Knees
$464
$175
$429
$159
Hips
269
174
251
142
Trauma and Extremities
713
232
611
219
Spinal Implants
118
48
117
54
Other
109
53
112
52
$1,673
$682
$1,520
$626
Total
$4,440
$1,426
$3,914
$1,329
Dollar amounts are in millions except per share amounts or as otherwise specified.
6
STRYKER CORPORATION
2025 First QuarterForm 10-Q
Costs to Obtain or Fulfill a Contract
We typically do not incur costs to fulfill a contract before a
product or service is provided to a customer due to the nature of
our products and services. Our costs to obtain contracts are
typically in the form of sales commissions paid to employees or
third-party agents. Certain sales commissions paid to employees
prior to recognition of sales are recorded as deferred contract
costs. We expense sales commissions associated with obtaining
a contract at the time of the sale or as incurred as the
amortization period is generally less than one year. These costs
have been presented within selling, general and administrative
expenses. On March 31, 2025and December 31, 2024deferred
contracts costs recorded in our Consolidated Balance Sheets
were not significant.
Contract Assets and Liabilities
Our contract assets primarily relate to conditional rights to
consideration for work completed but not billed at the reporting
date. On March 31, 2025and December 31, 2024contract
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 $1,028and $978on
March 31, 2025and December 31, 2024are classified within
accrued expenses and other liabilities and other noncurrent
liabilities in our Consolidated Balance Sheets based on the timing
of when we expect to complete our performance obligations.
Changes in contract liabilities during the three months 2025were
as follows:
March 31
2025
Beginning contract liabilities
$978
Revenue recognized from beginning of year contract liabilities
(199)
Net advance consideration received during the period
249
Ending contract liabilities
$1,028
Transfers and Servicing of Financial Assets
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,
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 4%of our total revenue for the three months 2025and
2024.
NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS)
INCOME (AOCI)
Three Months 2025
Marketable
Securities
Pension
Plans
Hedges
Financial
Statement
Translation
Total
Beginning
$-
$4
$31
$(328)
$(293)
OCI
-
-
(16)
(160)
(176)
Income taxes
-
-
4
66
70
Reclassifications to:
Cost of sales
-
-
(2)
-
(2)
Other (income)
expense, net
-
-
(1)
(11)
(12)
Income taxes
-
-
1
3
4
Net OCI
$-
$-
$(14)
$(102)
$(116)
Ending
$-
$4
$17
$(430)
$(409)
Three Months 2024
Marketable
Securities
Pension
Plans
Hedges
Financial
Statement
Translation
Total
Beginning
$-
$(28)
$39
$(427)
$(416)
OCI
-
2
16
81
99
Income taxes
-
-
(4)
(40)
(44)
Reclassifications to:
Cost of sales
-
-
(10)
-
(10)
Other (income)
expense, net
-
-
(2)
(8)
(10)
Income taxes
-
-
2
2
4
Net OCI
$-
$2
$2
$35
$39
Ending
$-
$(26)
$41
$(392)
$(377)
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 2024.
Foreign Currency Hedges
March 2025
Cash Flow
Net
Investment
Non-
Designated
Total
Gross notional amount
$1,617
$2,436
$4,060
$8,113
Maximum term in years
9.5
Fair value:
Other current assets
$25
$11
$21
$57
Other noncurrent assets
1
7
-
8
Other current liabilities
(16)
(5)
(28)
(49)
Other noncurrent
liabilities
(1)
(17)
-
(18)
Total fair value
$9
$(4)
$(7)
$(2)
Dollar amounts are in millions except per share amounts or as otherwise specified.
7
STRYKER CORPORATION
2025 First QuarterForm 10-Q
December 2024
Cash Flow
Net
Investment
Non-
Designated
Total
Gross notional amount
$1,588
$2,338
$5,164
$9,090
Maximum term in years
9.7
Fair value:
Other current assets
$43
$24
$119
$186
Other noncurrent assets
4
35
-
39
Other current liabilities
(29)
-
(41)
(70)
Other noncurrent
liabilities
(3)
(4)
-
(7)
Total fair value
$15
$55
$78
$148
We had €2.3 billionat March 31, 2025and December 31, 2024in
certain forward currency contracts designated as net investment
hedges, for which the maximum term is 9.5 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 billionat March 31, 2025and December 31, 2024of
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.
The total after-tax gain (loss) recognized in OCI related to
designated net investment hedges was ($218)in the three
months 2025.
Currency Exchange Rate Gains (Losses) Recognized in Net
Earnings
Three Months
Derivative
Instrument
Recognized in:
2025
2024
Cash Flow
Cost of sales
$2
$10
Net Investment
Other income (expense), net
11
8
Non-Designated
Other income (expense), net
13
3
Total
$26
$21
Pretax gains (losses) on derivatives designated as cash flow
hedges of $13and net investment hedges of $40recorded in
AOCI are expected to be reclassified to cost of sales and other
income (expense), net in earnings within 12 months of March 31,
2025.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 $3recorded 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 March 31, 2025.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 2024.
In the three months 2025we assumed contingent consideration
liabilities with a fair value of $90related to previous acquisitions
made by Inari Medical Inc. (Inari). Refer to Note 7 for further
information on the acquisition of Inari.
In 2024we recorded $208of contingent consideration related to
various acquisitions described in Note 7.
There were no significant transfers into or out of any level of the
fair value hierarchy in 2025.
Assets Measured at Fair Value
March 31
December 31
2025
2024
Cash and cash equivalents
$2,320
$3,652
Short-term investments
-
750
Trading marketable securities
262
259
Level 1 - Assets
$2,582
$4,661
Available-for-sale marketable securities:
Corporate and asset-backed debt securities
$58
$53
United States agency debt securities
1
1
United States treasury debt securities
27
34
Certificates of deposit
3
3
Total available-for-sale marketable securities
$89
$91
Foreign currency exchange forward contracts
65
225
Level 2 - Assets
$154
$316
Total assets measured at fair value
$2,736
$4,977
Liabilities Measured at Fair Value
March 31
December 31
2025
2024
Deferred compensation arrangements
$262
$259
Level 1 - Liabilities
$262
$259
Foreign currency exchange forward contracts
$67
$77
Level 2 - Liabilities
$67
$77
Contingent consideration:
Beginning
$452
$289
Additions
90
208
Change in estimate and foreign exchange
-
8
Settlements
(44)
(53)
Ending
$498
$452
Level 3 - Liabilities
$498
$452
Total liabilities measured at fair value
$827
$788
Fair Value of Available for Sale Securities by Maturity
March 31
December 31
2025
2024
Due in one year or less
$44
$47
Due after one year through three years
$45
$44
On March 31, 2025and December 31, 2024the aggregate
difference between the cost and fair value of available-for-sale
marketable securities was nominal. Interest income on cash and
cash equivalents and short-term investments and income from
marketable securities was $38and $36in the three months 2025
and 2024, which was recorded in other income (expense), net.
Our investments in available-for-sale marketable securities had a
minimum credit quality rating of A2 (Moody's), A (Standard &
Poor's) and A (Fitch). We do not plan to sell the investments, and
it is not more likely than not that we will be required to sell the
investments before recovery of their amortized cost basis, which
may be maturity.
Dollar amounts are in millions except per share amounts or as otherwise specified.
8
STRYKER CORPORATION
2025 First QuarterForm 10-Q
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
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 (DOJ) and certain other regulatory
authorities and are cooperating with these agencies. On April 1,
2025 we were informed by the DOJ that it had closed its inquiry
into potential FCPA violations without further action. At this time
we are unable to predict the outcome of the remaining
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 $169at March 31, 2025, 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
March 31
December 31
2025
2024
Right-of-use assets
$570
$516
Lease liabilities, current
$161
$144
Lease liabilities, non-current
$414
$379
Other information:
Weighted-average remaining lease term (years)
5.0
5.1
Weighted-average discount rate
4.00%
3.87%
Three Months
2025
2024
Operating lease cost
$53
$47
Other Contractual Obligations and Commitments
Our outstanding balances of confirmed invoices in the supplier
financing program were $66and $71at March 31, 2025and
December 31, 2024and are included within accounts payablein
our Consolidated Balance Sheets.
NOTE 7 - ACQUISITIONS
We acquire stock in companies and various assets that continue
to support our capital deployment and product development
strategies. In the three months 2025and 2024cash paid for
acquisitions, net of cash acquired was $4,749and $246.
In February 2025we completed the acquisition of Inari for $80
per share, or an aggregate purchase price of $4,745, net of cash
acquired. Inari's product portfolio includes minimally invasive
products for the treatment of venous thromboembolism. Inari is
part of our Vascular business within MedSurg and
Neurotechnology. The purchase price allocation for Inari is based
on preliminary valuations, primarily related to developed
technology and customer relationships. Goodwill attributable to
the acquisition reflects the strategic benefits of expanding our
market presence, diversifying our product portfolio and advancing
innovations. This goodwill is not deductible for tax purposes.
Share-based awards for Inari employees vested upon our
acquisition and a charge of $139was recorded in selling, general
and administrative expenses in the three months 2025.
In 2024 we completed various acquisitions for total consideration
that includes $1,628in upfront payments, net of cash acquired,
and $400contingent upon the achievement of certain commercial
or clinical milestones. The combined acquisition-date fair values
of the contingent milestone payments totaled $208. Goodwill of
$304 and $858was recorded within our Orthopaedics 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 and Joint Replacement within Orthopaedics. 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.
Dollar amounts are in millions except per share amounts or as otherwise specified.
9
STRYKER CORPORATION
2025 First QuarterForm 10-Q
The purchase price allocationsfor the acquisitions completed in
the three months 2025and full year 2024are:
Purchase Price Allocation of Acquired Net Assets
2025
2024
Inari
Total
Tangible assets acquired:
Accounts receivable
$78
$41
Inventory
221
104
Deferred income tax assets
59
28
Other assets
84
26
Debt
-
(32)
Deferred income tax liabilities
(492)
(205)
Other liabilities
(254)
(107)
Intangible assets:
Developed technology
1,473
597
Customer relationships
332
214
Patents
-
6
Trademarks
-
2
Other intangibles
72
-
Goodwill
3,172
1,162
Purchase price, net of cash acquired of $64
and $56
$4,745
$1,836
Weighted average amortization period at
acquisition (years):
Developed technologies
13
12
Customer relationships
13
14
Patents
-
12
Trademarks
-
5
Other intangibles
9
-
The purchase price allocation for SERF SASwas finalized in the
first quarter 2025without material adjustments.
Consolidated Estimated Amortization Expense
Remainder of
2025
2026
2027
2028
2029
$561
$695
$705
$624
$609
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
March 31, 2025.
In February 2025 we entered into a new revolving credit
agreement that replaces our previous agreement dated October
2021. The primary changes included increasing the aggregate
principal amount of the facility by $750to $3,000and extending
the maturity date to February 25, 2030.On March 31, 2025there
were noborrowings outstanding under our revolving credit facility
or our commercial paper program which allows for maturities up
to 397days from the date of issuance. The maximum amount of
our commercial paper that can be outstanding at any time is
$2,250.
In February 2025we issued $500of 4.550%senior unsecured
notes due February 10, 2027, $700of 4.700%senior unsecured
notes due February 10, 2028, $800of 4.850%senior unsecured
notes due February 10, 2030 and $1,000of 5.200%senior
unsecured notes due February 10, 2035.
Summary of Total Debt
March 31
December 31
Rate
Due
2025
2024
Senior unsecured notes:
1.150%
June 15, 2025
649
649
3.375%
November 1, 2025
750
750
3.500%
March 15, 2026
998
998
4.550%
February 10, 2027
497
-
2.125%
November 30, 2027
810
777
4.700%
February 10, 2028
696
-
3.650%
March 7, 2028
598
598
4.850%
December 8, 2028
596
596
3.375%
December 11, 2028
647
621
0.750%
March 1, 2029
863
828
4.250%
September 11, 2029
743
743
4.850%
February 10, 2030
792
-
1.950%
June 15, 2030
994
993
2.625%
November 30, 2030
698
669
1.000%
December 3, 2031
805
772
3.375%
September 11, 2032
859
824
4.625%
September 11, 2034
740
740
5.200%
February 10, 2035
989
-
3.625%
September 11, 2036
640
613
4.100%
April 1, 2043
393
393
4.375%
May 15, 2044
396
396
4.625%
March 15, 2046
984
984
2.900%
June 15, 2050
643
643
Other
1
10
Total debt
$16,781
$13,597
Less current maturities
2,398
1,409
Total long-term debt
$14,383
$12,188
March 31
December 31
2025
2024
Unamortized debt issuance costs
$81
$63
Borrowing capacity on existing facilities
$2,910
$2,160
Fair value of senior unsecured notes
$16,063
$12,780
The fair value of the senior unsecured notes was estimated using
quoted interest rates, maturities and amounts of borrowings
based on quoted active market prices and yields that took into
account the underlying terms of the debt instruments.
Substantially all of our debt is classified within Level 2 of the fair
value hierarchy.
NOTE 9 - INCOME TAXES
Our effective tax rates were 14.4%and 14.6%in the three
months 2025and 2024. The effective tax rates for the three
months 2025and 2024 reflect the continued lower effective
income tax rates as a result of our European operations and
certain discrete tax items.
In the normal course of business, income tax authorities in
various income tax jurisdictions both within the United States and
internationally conduct routine audits of our income tax returns
filed in prior years. These audits are generally designed to
determine if individual income tax authorities are in agreement
with our interpretations of complex income tax regulations
regarding the allocation of income to the various income tax
jurisdictions. Any income tax audit assessment or draft income
tax audit assessment received at the conclusion of an audit is
reviewed and evaluated for proper financial statement treatment.
We have not received any audit assessments or draft
assessments that have not been reviewed and evaluated.
Dollar amounts are in millions except per share amounts or as otherwise specified.
10
STRYKER CORPORATION
2025 First QuarterForm 10-Q
NOTE 10 - SEGMENTINFORMATION
We segregate our operations into tworeportable business
segments: (i) MedSurg and Neurotechnology and (ii)
Orthopaedics which aligns to our internal reporting structure and
how our Chief Operating Decision Maker (CODM)assesses the
performance of and allocates resources. The CODM is the Chief
Executive Officer. The CODM makes decisions on resource
allocation, assesses performance of the business, and monitors
budget versus actual results using segment operating income.
Our reportable segments and related disclosures reflect certain
reclassifications of prior year amounts from our Orthopaedics
segment to our MedSurg and Neurotechnology segment due to
changes in our internal reporting structure.
Segment Results
Three Months
2025
2024
MedSurg and Neurotechnology
$3,511
$3,097
Orthopaedics
2,355
2,146
Net sales
$5,866
$5,243
MedSurg and Neurotechnology
$1,321
$1,238
Orthopaedics
629
591
Cost of sales
$1,950
$1,829
MedSurg and Neurotechnology
$226
$195
Orthopaedics
140
134
Segment research, development and
engineering expenses
$366
$329
MedSurg and Neurotechnology
$937
$763
Orthopaedics
847
751
Segment selling, general and
administrative expenses
$1,784
$1,514
MedSurg and Neurotechnology
$57
$54
Orthopaedics
98
108
Segment depreciation and amortization
$155
$162
Corporate and Other
$39
$40
Amortization of intangible assets
167
153
Total depreciation and amortization
$361
$355
MedSurg and Neurotechnology
$970
$847
Orthopaedics
641
562
Segment operating income
$1,611
$1,409
Items not allocated to segments:
Corporate and Other
$(267)
$(263)
Inventory stepped up to fair value
(34)
-
Acquisition and integration-related charges
(185)
13
Amortization of intangible assets
(167)
(153)
Structural optimization and other special
charges
(41)
(11)
Goodwill and other impairments
(35)
(3)
Medical device regulation
(12)
(13)
Recall-related matters
(33)
(5)
Regulatory and legal matters
-
(2)
Consolidated operating income
$837
$972
Segment Assets
March 31
December 31
2025
2024
Assets:
MedSurg and Neurotechnology
$26,912
$23,115
Orthopaedics
17,878
18,507
Total segment assets
$44,790
$41,622
Corporate and Other
1,216
1,349
Total assets
$46,006
$42,971
Segment Capital Spending
Three Months
2025
2024
Purchases of property, plant and
equipment:
MedSurg and Neurotechnology
$48
$41
Orthopaedics
34
65
Total segment purchases of property, plant
and equipment
$82
$106
Corporate and Other
41
61
Total purchases of property, plant and
equipment
$123
$167
NOTE 11 - ASSETS HELD FOR SALE
During the fourth quarter 2024 management committed to a plan
to sell certain assets associated with the Spinal Implants
business (disposal group) and such assets were classified as
held for sale beginning November 2024. As a result we recorded
a valuation allowance of $362to record the disposal group at its
fair value less cost to sell. In January 2025 we announced a
definitive agreement to sell our United States Spinal Implants
business to Viscogliosi Brothers, LLC. The definitive agreement
includes a binding offer to sell our Spinal Implants business in
certain international markets at later dates, subject to required
consultations with employees and employee representatives.
In the three months 2025we recognized a charge of $33to
record the disposal group at its fair value less cost to sell within
goodwill and other impairments in our Consolidated Statements
of Earnings resulting in a valuation allowance of $395 at
March 31, 2025. The fair value of the disposal group was
measured using a discounted cash flow analysis based upon the
selling price and unobservable inputs, such as market conditions
and the rate used to discount the estimated future cash flows to
their present value based on factors including the disposal
group's cost of equity and market yield rates, which are Level 3
inputs. Future changes in the judgments, assumptions and
estimates that are used in our fair value estimate, including
discount rates and cash flow projections, could result in a
significantly different estimate of fair value. A change in the
amount or timing of consideration received could increase the fair
value byup to $57or decrease the fair value by up to $245.
In April 2025 we completed the sale of our United States Spinal
Implants business as discussed in Note 12.
The assets associated with the Spinal Implants disposal group
are reported in our Orthopaedics segment. The assets and
liabilities held for sale are classified within prepaid expenses and
other current assets and accrued expenses and other liabilities in
our Consolidated Balance Sheets and included the following at
March 31, 2025and December 31, 2024:
March 31
December 31
2025
2024
Accounts receivable, net
$56
$62
Total inventories
195
183
Prepaid expenses and other current assets
27
10
Property, plant and equipment, net
53
51
Other intangibles, net
323
326
Noncurrent deferred income tax assets
9
9
Other noncurrent assets
179
171
Valuation allowance
(395)
(362)
Total assets held for sale
$447
$450
Accounts payable
$41
$28
Accrued compensation
20
26
Accrued expenses and other liabilities
24
29
Other noncurrent liabilities
27
21
Total liabilities held for sale
$112
$104
Dollar amounts are in millions except per share amounts or as otherwise specified.
11
STRYKER CORPORATION
2025 First QuarterForm 10-Q
NOTE 12 - SUBSEQUENT EVENT
In April 2025 we completed the sale of our United States Spinal
Implants business to the Viscogliosi Brothers, LLC. The definitive
agreement includes a binding offer to sell our Spinal Implants
business in certain international markets at later dates, subject to
the completion of all legal and regulatory requirements and
required consultations with employees and employee
representatives.
Dollar amounts are in millions except per share amounts or as otherwise specified.
12
STRYKER CORPORATION
2025 First QuarterForm 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, and Orthopaedicsthat 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. 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 and
venous thromboembolism (Vascular), 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 products consist primarily of
implants used in hip and knee joint replacements and trauma and
extremity surgeries.
Macroeconomic Environment
Beginning in the first quarter 2025, the United States government
has announced new tariffs on goods imported into the United
States from dozens of countries, including China and the
European Union member states. In response, governments have
threatened or imposed reciprocal tariffs or taken other measures,
and the United States is in the process of negotiating with certain
governments. We continue to monitor and evaluate the situation.
Tariffs could result in an increase in certain product costs or have
adverse impacts on, among other things, demand for our
products and supply chains. The overall macroeconomic and
geopolitical environment, including tariffs or changes in trade
policies, slower economic growth or recession, market volatility
and inflation, and uncertainty regarding all of the foregoing, pose
risks that could impact our business and results of operations.
For more information about these risks, see Item 1A. "Risk
Factors" in our Annual Report on Form 10-K for 2024.
Overview of the Three Months
In the three months 2025we achieved sales growth of 11.9%
from 2024. Excluding the impact of acquisitions and divestitures,
sales grew 10.1%in constant currency. We reported operating
income margin of 14.3%, net earnings of $654and net earnings
per diluted share of $1.69. Excluding the impact of certain items,
adjusted operating income margin(1) increasedby 100basis
points to 22.9%, with adjusted net earnings(1)of $1,097and
adjusted net earnings per diluted share(1) of $2.84, an increaseof
13.6%from 2024.
Recent Developments
In the first quarter 2025we completed the acquisition of Inari for
total consideration of $4,745, in upfront payments, net of cash
acquired. Refer to Note 7 to our Consolidated Financial
Statements for further information.
In February 2025 we entered into a new revolving credit
agreement that replaces our previous agreement dated October
2021. The primary changes were to increase the aggregate
principal amount of the facility by $750to $3,000and extend the
maturity date to February 25, 2030. On March 31, 2025there
were noborrowings outstanding under our revolving credit facility
or our commercial paper program which allows for maturities up
to 397days from the date of issuance. The maximum amount of
our commercial paper that can be outstanding at any time is
$2,250.
In February 2025 we issued $500of 4.550%senior unsecured
notes due February 10, 2027, $700of 4.700%senior unsecured
notes due February 10, 2028, $800of 4.850%senior unsecured
notes due February 10, 2030 and $1,000of 5.200%senior
unsecured notes due February 10, 2035.
(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
Percent Net Sales
Percentage
2025
2024
2025
2024
Change
Net sales
$5,866
$5,243
100.0%
100.0%
11.9%
Gross profit
3,744
3,333
63.8
63.6
12.3
Research, development and engineering expenses
405
368
6.9
7.0
10.1
Selling, general and administrative expenses
2,300
1,837
39.2
35.0
25.2
Amortization of intangible assets
167
153
2.8
2.9
9.2
Goodwill and other impairments
35
3
0.6
0.1
nm
Other income (expense), net
(73)
(49)
(1.2)
(0.9)
49.0
Income taxes
110
135
nm
nm
(18.5)
Net earnings
$654
$788
11.1%
15.0%
(17.0)%
Net earnings per diluted share
$1.69
$2.05
(17.6)%
Adjusted net earnings per diluted share(1)
$2.84
$2.50
13.6%
nm - not meaningful
Dollar amounts are in millions except per share amounts or as otherwise specified.
13
STRYKER CORPORATION
2025 First QuarterForm 10-Q
Geographic and Segment Net Sales
Three Months
Percentage Change
2025
2024
As Reported
Constant
Currency
Geographic:
United States
$4,440
$3,914
13.4%
13.4%
International
1,426
1,329
7.3
10.8
Total
$5,866
$5,243
11.9%
12.8%
Segment:
MedSurg and Neurotechnology
$3,511
$3,097
13.4%
14.2%
Orthopaedics
2,355
2,146
9.7
10.7
Total
$5,866
$5,243
11.9%
12.8%
Supplemental Net Sales Growth Information
Three Months
Percentage Change
United
States
International
2025
2024
As Reported
Constant
Currency
As Reported
As Reported
Constant
Currency
MedSurg and Neurotechnology:
Instruments
$730
$667
9.4%
10.1%
10.4%
5.5%
8.7%
Endoscopy
867
778
11.4
12.1
11.6
10.6
14.6
Medical
945
864
9.4
10.1
12.3
(4.3)
(0.6)
Vascular
406
310
31.0
33.3
67.0
7.9
11.1
Neuro Cranial
563
478
17.8
18.5
19.1
12.3
15.8
$3,511
$3,097
13.4%
14.2%
15.6%
6.0%
9.5%
Orthopaedics:
Knees
$639
$588
8.7%
9.8%
8.3%
10.0%
13.9%
Hips
443
393
12.7
14.1
7.6
21.7
25.7
Trauma and Extremities
945
830
13.9
14.7
16.6
6.0
9.2
Spinal Implants
166
171
(2.9)
(2.4)
(0.1)
(10.5)
(7.6)
Other
162
164
(1.2)
0.1
(1.9)
1.2
4.3
$2,355
$2,146
9.7%
10.7%
10.1%
8.8%
12.3%
Total
$5,866
$5,243
11.9%
12.8%
13.4%
7.3%
10.8%
Note: In the first quarter 2025we changed the name of our Neurovascular business to Vascular due the acquisition of Inari. In the fourth
quarter 2024we reorganized our Spine business to align with certain updates to our internal reporting structure. The spine enabling
technologies portfolio (Enabling Technologies) was reclassified to Other Orthopaedics, the interventional spine portfolio was reclassified
to Neuro Cranial and the remaining Spine business was renamed to Spinal Implants. Neuro Cranial includes sales related to
interventional spine of $118and $98for three months 2025and 2024. Other Orthopaedics includes sales related to Enabling
Technologies of $29and $31for three months 2025and 2024. We have reflected these changes in all historical periods presented.
ConsolidatedNet Sales
In the fourth quarter 2024 we reorganized our Spine business to
align with certain updates to our internal reporting structure. The
spine enabling technologies portfolio (Enabling Technologies)
was reclassified to Other Orthopaedics, the Interventional Spine
(IVS) portfolio was reclassified to Neuro Cranial and the
remaining Spine business was renamed to Spinal Implants.
2024 Quarterly Net Sales
Q1
Q2
Q3
Q4
Total
Enabling Technologies
$31
$31
$32
$59
$153
IVS
98
98
100
117
413
Spinal Implants
171
178
172
186
707
Total
$300
$307
$304
$362
$1,273
Consolidated net sales increased 11.9%in the three months
2025as reported and 12.8%in constant currency, as foreign
currency exchange rates negativelyimpacted net sales by 0.9%.
Excluding the 2.7%impact of acquisitions and divestitures, net
sales in constant currency increasedby 9.4%from increasedunit
volume and 0.7%due to higherprices. The unit volume increase
was due to higherproduct shipments across all MedSurg and
Neurotechnology businesses and most Orthopaedics businesses.
MedSurg and Neurotechnology Net Sales
MedSurg and Neurotechnology net sales increased 13.4%in the
three months 2025as reported and 14.2%in constant currency,
as foreign currency exchange rates negativelyimpacted net sales
by 0.8%. Excluding the 3.5%impact of acquisitions and
divestitures, net sales in constant currency increasedby 9.5%
from increasedunit volume and 1.2%from higherprices. The unit
volume increasewas due to highershipments across all
MedSurg and Neurotechnology businesses.
Orthopaedics Net Sales
Orthopaedics net sales increased 9.7%in the three months 2025
as reported and 10.7%in constant currency, as foreign currency
exchange rates negativelyimpacted net sales by 1.0%. Excluding
the 1.4%impact of acquisitions and divestitures, net sales in
constant currency increased 9.3%from increasedunit volume.
The unit volume increasewas due to highershipments across
most Orthopaedics businesses.
Gross Profit
Gross profit was $3,744and $3,333in the three months 2025
and 2024. The key components of the change were:
Dollar amounts are in millions except per share amounts or as otherwise specified.
14
STRYKER CORPORATION
2025 First QuarterForm 10-Q
Gross Profit
Percent Net Sales
Three Months 2024
63.6%
Sales pricing
30 bps
Volume and mix
80 bps
Manufacturing and supply chain costs
70 bps
Structural optimization and other special charges
(40) bps
Inventory stepped up to fair value
(60) bps
Three Months 2025
63.8%
Gross profit as a percentage of net sales in the three months
2025remained relatively flat with 2024.
While segment mix was not a significant driver of the change in
gross profit as a percent of net sales between the three months
2025and 2024, 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 segment.
Research, Development and Engineering Expenses
Research, development and engineering expenses increased
$37or 10.1%in the three months 2025. Expenses as a
percentage of net sales inthe three months 2025of 6.9%
remained relatively flat with 7.0%in 2024.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $463or
25.2%in the three months 2025. As a percentage of net sales,
expenses increasedto 39.2%from 35.0%in 2024, primarilydue
to higher acquisition-related costs and continued investments to
support our growth. Expenses in the three months 2025included
a charge of $139for share-based awards for Inari employees that
vested upon our acquisition.
Amortization of Intangible Assets
Amortization of intangible assets was $167and $153in the three
months 2025and 2024. Refer to Note 7 to our Consolidated
Financial Statements for further information.
Goodwill and other impairments
Goodwill and other impairments was $35and $3in the three
months 2025and 2024. Refer to Note 11 to our Consolidated
Financial Statements for further information on impairment
charges related to assets held for sale at March 31, 2025.
Operating Income
Operating income was $837and $972in the three months 2025
and 2024. Operating income as a percentage of net sales in the
three months 2025 decreasedto 14.3%from 18.5%in 2024.
Refer to the discussion above for the primary drivers of the
change.
MedSurg and Neurotechnology operating income as a
percentage of net sales increasedto 27.6%in the three months
2025from 27.3%in 2024. Orthopaedics operating income as a
percentage of net sales increasedto 27.2%in the three months
2025from 26.2%in 2024. The key components of the change
were:
Operating Income
Percent Net Sales
MedSurg and
Neurotechnology
Orthopaedics
Three Months 2024
27.3%
26.2%
Sales pricing
50 bps
0 bps
Volume
80 bps
80 bps
Manufacturing and supply chain costs
120 bps
40 bps
Research, development and
engineering expenses
(10) bps
40 bps
Selling, general and administrative
expenses
(210) bps
(60) bps
Three Months 2025
27.6%
27.2%
The increasein MedSurg and Neurotechnology operating income
as a percentage of net sales for the three monthswas primarily
driven by lowermanufacturing and supply chain costs and higher
unit volumes and prices offset by higherselling, general and
administrative expenses primarily due to the acquisition of Inari
and continued investments to support our growth.
The increasein Orthopaedics operating income as a percentage
of net sales for the three monthswas primarily driven by higher
unit volumes and lowermanufacturing and supply chain costs
partially offset by higherselling, general and administrative
expenses.
Other Income (Expense), Net
Other income (expense), net was ($73)and ($49)in the three
months 2025and 2024. The increasein net expense in the three
months 2025from 2024was primarily due to higher interest
expense in 2025partially offset by higher interest income.
Income Taxes
Our effective tax rates were 14.4%and 14.6%in the three
months 2025and 2024. The effective tax rates for the three
months 2025and 2024reflect 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
became effective in 2024 while others will be effectivein 2025
and future years. These tax law changes and any additional
contemplated tax law changes could increase tax expense in
future periods.
Net Earnings
Net earnings decreasedto $654or $1.69per diluted share in the
three months 2025from $788or $2.05per diluted share in 2024.
Refer to the discussion above for the primary drivers of the
change.
Dollar amounts are in millions except per share amounts or as otherwise specified.
15
STRYKER CORPORATION
2025 First QuarterForm 10-Q
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
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.
Dollar amounts are in millions except per share amounts or as otherwise specified.
16
STRYKER CORPORATION
2025 First QuarterForm 10-Q
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2025
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
$3,744
$2,300
$405
$837
$(73)
$110
$654
14.4%
$1.69
Reported percent net sales
63.8%
39.2%
6.9%
14.3%
(1.2)%
nm
11.1%
Acquisition and integration-related costs:
Inventory stepped-up to fair value
34
-
-
34
-
8
26
0.5
0.07
Other acquisition and integration-related (a)
13
(171)
(1)
185
-
6
179
(2.5)
0.47
Amortization of purchased intangible assets
-
-
-
167
-
34
133
1.4
0.35
Structural optimization and other special charges (b)
22
(19)
-
41
-
14
27
1.0
0.07
Goodwill and other impairments (c)
-
-
-
35
-
9
26
0.7
0.06
Medical device regulations (d)
1
-
(11)
12
-
3
9
0.1
0.02
Recall-related matters (e)
31
(2)
-
33
-
8
25
0.5
0.06
Regulatory and legal matters (f)
-
-
-
-
-
1
(1)
-
-
Tax matters (g)
-
-
-
-
-
(19)
19
(2.4)
0.05
Adjusted
$3,845
$2,108
$393
$1,344
$(73)
$174
$1,097
13.7%
$2.84
Adjusted percent net sales
65.5%
35.9%
6.7%
22.9%
(1.2)%
nm
18.7%
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
$3,333
$1,837
$368
$972
$(49)
$135
$788
14.6%
$2.05
Reported percent net sales
63.6%
35.0%
7.0%
18.5%
(0.9)%
nm
15.0%
Acquisition and integration-related costs:
Inventory stepped-up to fair value
-
-
-
-
-
-
-
-
-
Other acquisition and integration-related (a)
-
13
-
(13)
-
1
(14)
0.3
(0.04)
Amortization of purchased intangible assets
-
-
-
153
-
32
121
1.4
0.31
Structural optimization and other special charges (b)
3
(8)
-
11
-
3
8
0.2
0.03
Goodwill and other impairments (c)
-
-
-
3
-
-
3
-
-
Medical device regulations (d)
1
-
(12)
13
-
3
10
0.1
0.03
Recall-related matters (e)
-
(5)
-
5
-
1
4
0.1
0.01
Regulatory and legal matters (f)
-
(2)
-
2
-
1
1
-
-
Tax matters (g)
-
-
-
-
-
(41)
41
(4.4)
0.11
Adjusted
$3,337
$1,835
$356
$1,146
$(49)
$135
$962
12.3%
$2.50
Adjusted percent net sales
63.6%
35.0%
6.8%
21.9%
(0.9)%
nm
18.3%
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
Three Months
2025
2024
Termination of sales relationships
$-
$1
Employee retention and workforce reductions
16
-
Changes in the fair value of contingent consideration
(2)
(16)
Manufacturing integration costs
4
-
Stock compensation payments upon a change in control
139
-
Other integration-related activities
28
2
Adjustments to Operating Income
$185
$(13)
Charges for acquisition-related tax provisions
-
-
Other income taxes related to acquisition and integration-related costs
6
1
Adjustments to Income Taxes
$6
$1
Adjustments to Net Earnings
$179
$(14)
(b) Structural optimization and other special charges represent the costs associated with:
Three Months
2025
2024
Employee retention and workforce reductions
$32
$(1)
Closure/transfer of manufacturing and other facilities
5
6
Product line exits
3
-
Other charges
1
6
Adjustments to Operating Income
$41
$11
Adjustments to Income Taxes
$14
$3
Adjustments to Net Earnings
$27
$8
Dollar amounts are in millions except per share amounts or as otherwise specified.
17
STRYKER CORPORATION
2025 First QuarterForm 10-Q
(c) Goodwill and other impairments represent the costs associated with:
Three Months
2025
2024
Certain long-lived and intangible asset write-offs and impairments
$34
$3
Product line exits (e.g., long-lived asset and specifically-identified intangible asset write-offs)
1
-
Adjustments to Operating Income
$35
$3
Adjustments to Income Taxes
$9
$-
Adjustments to Net Earnings
$26
$3
(d) 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.
(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 recall-related matters.
(f) 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.
(g) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
Three Months
2025
2024
Adjustments related to the transfer of certain intellectual properties between tax jurisdictions
$(47)
$(47)
Other tax matters
28
6
Adjustments to Income Taxes
$(19)
$(41)
Charges / benefits for certain tax audit settlements
-
-
Adjustments to Other Income (Expense), Net
$-
$-
Adjustments to Net Earnings
$19
$41
FINANCIAL CONDITION AND LIQUIDITY
Three Months
Net cash provided by (used in):
2025
2024
Operating activities
$250
$204
Investing activities
(4,136)
(408)
Financing activities
2,534
(418)
Effect of exchange rate changes
20
(19)
Change in cash and cash equivalents
$(1,332)
$(641)
Operating Activities
Cash provided byoperating activities was $250and $204in the
three months 2025and 2024. The increasewas primarily due to
higher net earnings partially offset by the timing of payments and
collections in working capital accounts.
Investing Activities
Cash used ininvesting activities was $4,136and $408in the
three months 2025and 2024. The three months 2025included
cash paid to acquire Inari and purchases of property, plant and
equipment partially offset by proceeds from the sale of short-term
investments. The three months 2024included cash paid for the
Serf acquisition. Refer to Note 7 to our Consolidated Financial
Statements for further information on acquisitions.
Financing Activities
Cash provided byfinancing activities was $2,534in the three
months 2025and cash used infinancing activities was $418in
the three months 2024. In 2025, cash providedwas 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 dividend
payments and cash paid for taxes on withheld shares. Cash used
in 2024was primarily driven by dividend payments and cash paid
for taxes on withheld shares. We did not repurchase any shares
in the three months 2025and 2024.
Liquidity
Cash, cash equivalents, short-term investments and marketable
securitieswere $2,409and $4,493on March 31, 2025and
December 31, 2024. Current assets exceededcurrent liabilities
by $5,093and $7,231on March 31, 2025and December 31,
2024. 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 29%on March 31, 2025compared to 20%on December 31,
2024.
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 2024,except as follows.
Refer to Note 11 to our Consolidated Financial Statements for
discussion of estimates related to the Spinal Implants assets
classified as held for sale as of March 31, 2025.
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,
Dollar amounts are in millions except per share amounts or as otherwise specified.
18
STRYKER CORPORATION
2025 First QuarterForm 10-Q
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 2024.
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 2024. 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 2024. 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 March 31, 2025. Based on that evaluation, the
Certifying Officers concluded the Company's disclosure controls
and procedures were effective as of March 31, 2025.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial
reporting during the three months 2025that 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 2024.
ITEM 2.
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
We issued 9,324 shares of our common stock In the three
months 2025as performance incentive awards to employees.
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.
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 three months 2025we 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
$1,033as of March 31, 2025.
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
2(i)
4(i)
4(ii)
4(iii)
4(iv)
19
STRYKER CORPORATION
2025 First QuarterForm 10-Q
10(i)
10(ii)
10(iii)
31(i)†
Certification of Principal Executive Officer of Stryker
Corporation pursuant to Rule 13a-14(a).
31(ii)†
Certification of Principal Financial Officer of Stryker
Corporation pursuant to Rule 13a-14(a).
32(i)††
Certification by Principal Executive Officer of Stryker
Corporation pursuant to 18 U.S.C. Section 1350.
32(ii)††
Certification by Principal Financial Officer of Stryker
Corporation pursuant to 18 U.S.C. Section 1350.
101.INS
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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
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Cover Page Interactive Data File (the cover page
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† Filed with this Form 10-Q
†† Furnished with this Form 10-Q
20
STRYKER CORPORATION
2025 First QuarterForm 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:
May 2, 2025
/s/ KEVIN A. LOBO
Kevin A. Lobo
Chair, Chief Executive Officer and President
Date:
May 2, 2025
/s/ PRESTON W. WELLS
Preston W. Wells
Vice President, Chief Financial Officer
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