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 June 30, ~~2022~~2023


☐			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.)

2825 Airview Boulevard

Kalamazoo,

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
1.125% Notes due 2023	SYK23	New York Stock Exchange
0.250% Notes due 2024	SYK24A	New York Stock Exchange
2.125% Notes due 2027	SYK27	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

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 ~~378,320,706~~379,778,279 shares of Common Stock, $0.10 par value, on June 30, ~~2022.~~2023.


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

PART I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)


		Three Months				Six Months					Three Months				Six Months
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales	Net sales	$	4,493	$	4,294	$	8,768	$	8,247	Net sales	$	4,996	$	4,493	$	9,774	$	8,768
Cost of sales	Cost of sales	1,667		1,522		3,208		2,966		Cost of sales	1,815		1,667		3,577		3,208
Gross profit	Gross profit	$	2,826	$	2,772	$	5,560	$	5,281	Gross profit	$	3,181	$	2,826	$	6,197	$	5,560
Research, development and engineering expenses	Research, development and engineering expenses	351		310		764		598		Research, development and engineering expenses	346		351		685		764
Selling, general and administrative expenses	Selling, general and administrative expenses	1,539		1,505		3,249		3,080		Selling, general and administrative expenses	1,706		1,539		3,487		3,249
Recall charges		4		76		18		82
Recall charges, net										Recall charges, net	3		4		3		18
Amortization of intangible assets	Amortization of intangible assets	160		149		310		330		Amortization of intangible assets	161		160		322		310

Total operating expenses	Total operating expenses	$	2,054	$	2,040	$	4,341	$	4,090	Total operating expenses	$	2,216	$	2,054	$	4,497	$	4,341
Operating income	Operating income	$	772	$	732	$	1,219	$	1,191	Operating income	$	965	$	772	$	1,700	$	1,219
Other income (expense), net	Other income (expense), net	(52)		(70)		(113)		(162)		Other income (expense), net	(66)		(52)		(122)		(113)
Earnings before income taxes	Earnings before income taxes	$	720	$	662	$	1,106	$	1,029	Earnings before income taxes	$	899	$	720	$	1,578	$	1,106
Income taxes	Income taxes	64		70		127		135		Income taxes	161		64		248		127
Net earnings	Net earnings	$	656	$	592	$	979	$	894	Net earnings	$	738	$	656	$	1,330	$	979

Net earnings per share of common stock:	Net earnings per share of common stock:									Net earnings per share of common stock:
Basic	Basic	$	1.73	$	1.57	$	2.59	$	2.37	Basic	$	1.95	$	1.73	$	3.51	$	2.59
Diluted	Diluted	$	1.72	$	1.55	$	2.56	$	2.34	Diluted	$	1.93	$	1.72	$	3.47	$	2.56

Weighted-average shares outstanding (in millions):	Weighted-average shares outstanding (in millions):									Weighted-average shares outstanding (in millions):
Basic	Basic	378.3		376.9		378.0		376.6		Basic	379.7		378.3		379.4		378.0
Effect of dilutive employee stock compensation	Effect of dilutive employee stock compensation	3.9		5.4		4.5		5.4		Effect of dilutive employee stock compensation	4.2		3.9		4.2		4.5
Diluted	Diluted	382.2		382.3		382.5		382.0		Diluted	383.9		382.2		383.6		382.5

Cash dividends declared per share of common stock	Cash dividends declared per share of common stock	$	0.695	$	0.63	$	1.39	$	1.26	Cash dividends declared per share of common stock	$	0.75	$	0.695	$	1.50	$	1.39

Anti-dilutive shares excluded from the calculation of dilutive employee stock options were 4.5 for the three months 2022 and de minimis in all other periods.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


		Three Months				Six Months					Three Months				Six Months
		2022		2021		2022		2021			2023		2022		2023		2022
Net earnings	Net earnings	$	656	$	592	$	979	$	894	Net earnings	$	738	$	656	$	1,330	$	979
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Marketable securities	Marketable securities	—		—		(1)		—		Marketable securities	—		—		—		(1)
Pension plans	Pension plans	8		(4)		7		3		Pension plans	(1)		8		(3)		7
Unrealized gains (losses) on designated hedges	Unrealized gains (losses) on designated hedges	24		8		25		36		Unrealized gains (losses) on designated hedges	11		24		2		25
Financial statement translation	Financial statement translation	161		(80)		214		175		Financial statement translation	(35)		161		(108)		214
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	$	193	$	(76)	$	245	$	214	Total other comprehensive income (loss), net of tax	$	(25)	$	193	$	(109)	$	245
Comprehensive income	Comprehensive income	$	849	$	516	$	1,224	$	1,108	Comprehensive income	$	713	$	849	$	1,221	$	1,224

See accompanying notes to Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.			1


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

CONSOLIDATED BALANCE SHEETS


		June 30		December 31			June 30		December 31
		2022		2021			2023		2022
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	1,044	$	2,944	Cash and cash equivalents	$	1,401	$	1,844
Marketable securities	Marketable securities	83		75		Marketable securities	77		84
Accounts receivable, less allowance of $144 ($167 in 2021)		3,145		3,022
Accounts receivable, less allowance of $181 ($154 in 2022)						Accounts receivable, less allowance of $181 ($154 in 2022)	3,261		3,565
Inventories:	Inventories:					Inventories:
Materials and supplies	Materials and supplies	790		691		Materials and supplies	1,221		1,006
Work in process	Work in process	315		264		Work in process	391		348
Finished goods	Finished goods	2,644		2,359		Finished goods	2,981		2,641
Total inventories	Total inventories	$	3,749	$	3,314	Total inventories	$	4,593	$	3,995
Prepaid expenses and other current assets	Prepaid expenses and other current assets	804		662		Prepaid expenses and other current assets	819		787
Total current assets	Total current assets	$	8,825	$	10,017	Total current assets	$	10,151	$	10,275
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Land, buildings and improvements	Land, buildings and improvements	1,662		1,656		Land, buildings and improvements	1,646		1,739
Machinery and equipment	Machinery and equipment	3,887		3,842		Machinery and equipment	4,441		4,066
Total property, plant and equipment	Total property, plant and equipment	$	5,549	$	5,498	Total property, plant and equipment	$	6,087	$	5,805
Less accumulated depreciation		2,746		2,665
Less allowance for depreciation						Less allowance for depreciation	3,005		2,835
Property, plant and equipment, net	Property, plant and equipment, net	$	2,803	$	2,833	Property, plant and equipment, net	$	3,082	$	2,970
Goodwill	Goodwill	15,115		12,918		Goodwill	15,172		14,880
Other intangibles, net	Other intangibles, net	5,245		4,840		Other intangibles, net	4,917		4,885
Noncurrent deferred income tax assets	Noncurrent deferred income tax assets	1,625		1,760		Noncurrent deferred income tax assets	1,439		1,410
Other noncurrent assets	Other noncurrent assets	2,419		2,263		Other noncurrent assets	2,648		2,464
Total assets	Total assets	$	36,032	$	34,631	Total assets	$	37,409	$	36,884

Liabilities and shareholders' equity	Liabilities and shareholders' equity					Liabilities and shareholders' equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	1,160	$	1,129	Accounts payable	$	1,326	$	1,413
Accrued compensation	Accrued compensation	779		1,092		Accrued compensation	929		1,149
Income taxes	Income taxes	300		192		Income taxes	298		292
Dividends payable	Dividends payable	263		263		Dividends payable	284		284
Accrued product liabilities	Accrued product liabilities	400		401		Accrued product liabilities	220		230
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,495		1,465		Accrued expenses and other liabilities	1,729		1,744
Current maturities of debt	Current maturities of debt	7		7		Current maturities of debt	1,798		1,191
Total current liabilities	Total current liabilities	$	4,404	$	4,549	Total current liabilities	$	6,584	$	6,303
Long-term debt, excluding current maturities	Long-term debt, excluding current maturities	13,374		12,472		Long-term debt, excluding current maturities	11,149		11,857
Income taxes	Income taxes	787		913		Income taxes	469		641
Other noncurrent liabilities	Other noncurrent liabilities	1,793		1,820		Other noncurrent liabilities	1,846		1,467
Total liabilities	Total liabilities	$	20,358	$	19,754	Total liabilities	$	20,048	$	20,268
Shareholders' equity	Shareholders' equity					Shareholders' equity
Common stock, $0.10 par value	Common stock, $0.10 par value	38		38		Common stock, $0.10 par value	38		38
Additional paid-in capital	Additional paid-in capital	1,989		1,890		Additional paid-in capital	2,127		2,034
Retained earnings	Retained earnings	13,933		13,480		Retained earnings	15,526		14,765
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(286)		(531)		Accumulated other comprehensive loss	(330)		(221)
Total shareholders' equity	Total shareholders' equity	$	15,674	$	14,877	Total shareholders' equity	$	17,361	$	16,616
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	36,032	$	34,631	Total liabilities and shareholders' equity	$	37,409	$	36,884

See accompanying notes to Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.			2


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)


		Three Months				Six Months					Three Months				Six Months
		2022		2021		2022		2021			2023		2022		2023		2022
Common stock shares outstanding (in millions)	Common stock shares outstanding (in millions)									Common stock shares outstanding (in millions)
Beginning	Beginning	378.2		376.7		377.5		376.1		Beginning	379.6		378.2		378.7		377.5
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	0.1		0.4		0.8		1.0		Issuance of common stock under stock compensation and benefit plans	0.2		0.1		1.1		0.8

Ending	Ending	378.3		377.1		378.3		377.1		Ending	379.8		378.3		379.8		378.3

Common stock	Common stock									Common stock
Beginning	Beginning	$	38	$	38	$	38	$	38	Beginning	$	38	$	38	$	38	$	38
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	—		—		—		—		Issuance of common stock under stock compensation and benefit plans	—		—		—		—

Ending	Ending	$	38	$	38	$	38	$	38	Ending	$	38	$	38	$	38	$	38
Additional paid-in capital	Additional paid-in capital									Additional paid-in capital
Beginning	Beginning	$	1,947	$	1,806	$	1,890	$	1,741	Beginning	$	2,090	$	1,947	$	2,034	$	1,890
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	6		(1)		(8)		(4)		Issuance of common stock under stock compensation and benefit plans	(2)		6		(20)		(8)

Share-based compensation	Share-based compensation	36		39		107		107		Share-based compensation	39		36		113		107
Ending	Ending	$	1,989	$	1,844	$	1,989	$	1,844	Ending	$	2,127	$	1,989	$	2,127	$	1,989
Retained earnings	Retained earnings									Retained earnings
Beginning	Beginning	$	13,540	$	12,525	$	13,480	$	12,462	Beginning	$	15,072	$	13,540	$	14,765	$	13,480

Net earnings	Net earnings	656		592		979		894		Net earnings	738		656		1,330		979

Cash dividends declared	Cash dividends declared	(263)		(236)		(526)		(475)		Cash dividends declared	(284)		(263)		(569)		(526)
Ending	Ending	$	13,933	$	12,881	$	13,933	$	12,881	Ending	$	15,526	$	13,933	$	15,526	$	13,933
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)									Accumulated other comprehensive income (loss)
Beginning	Beginning	$	(479)	$	(867)	$	(531)	$	(1,157)	Beginning	$	(305)	$	(479)	$	(221)	$	(531)
Other comprehensive income (loss)	Other comprehensive income (loss)	193		(76)		245		214		Other comprehensive income (loss)	(25)		193		(109)		245
Ending	Ending	$	(286)	$	(943)	$	(286)	$	(943)	Ending	$	(330)	$	(286)	$	(330)	$	(286)

Total shareholders' equity	Total shareholders' equity	$	15,674	$	13,820	$	15,674	$	13,820	Total shareholders' equity	$	17,361	$	15,674	$	17,361	$	15,674

See accompanying notes to Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.			3


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Six Months					Six Months
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	979	$	894	Net earnings	$	1,330	$	979
Adjustments to reconcile net earnings to net cash provided by operating activities:	Adjustments to reconcile net earnings to net cash provided by operating activities:					Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	Depreciation	185		187		Depreciation	194		185
Amortization of intangible assets	Amortization of intangible assets	310		330		Amortization of intangible assets	322		310
Asset impairments	Asset impairments	—		3		Asset impairments	3		—
Share-based compensation	Share-based compensation	107		107		Share-based compensation	113		107
Recall charges		18		82
Recall charges, net						Recall charges, net	3		18
Sale of inventory stepped-up to fair value at acquisition	Sale of inventory stepped-up to fair value at acquisition	12		137		Sale of inventory stepped-up to fair value at acquisition	—		12

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(159)		(24)		Accounts receivable	308		(159)
Inventories	Inventories	(523)		(128)		Inventories	(589)		(523)
Accounts payable	Accounts payable	34		57		Accounts payable	(97)		34
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(257)		22		Accrued expenses and other liabilities	(159)		(257)
Recall-related payments	Recall-related payments	(19)		(163)		Recall-related payments	(23)		(19)
Income taxes	Income taxes	(132)		(98)		Income taxes	(169)		(132)
Other, net	Other, net	177		(76)		Other, net	(103)		177
Net cash provided by operating activities	Net cash provided by operating activities	$	732	$	1,330	Net cash provided by operating activities	$	1,133	$	732
Investing activities	Investing activities					Investing activities
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(2,563)		(104)		Acquisitions, net of cash acquired	(390)		(2,563)
Purchases of marketable securities	Purchases of marketable securities	(38)		(31)		Purchases of marketable securities	(35)		(38)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	29		28		Proceeds from sales of marketable securities	42		29
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(262)		(189)		Purchases of property, plant and equipment	(282)		(262)
Other investing, net		—		(2)

Net cash used in investing activities	Net cash used in investing activities	$	(2,834)	$	(298)	Net cash used in investing activities	$	(665)	$	(2,834)
Financing activities	Financing activities					Financing activities
Proceeds (payments) on short-term borrowings, net	Proceeds (payments) on short-term borrowings, net	(376)		(7)		Proceeds (payments) on short-term borrowings, net	(4)		(376)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	1,500		5		Proceeds from issuance of long-term debt	—		1,500
Payments on long-term debt	Payments on long-term debt	(252)		(1,151)		Payments on long-term debt	(201)		(252)
Payments of dividends	Payments of dividends	(525)		(475)		Payments of dividends	(569)		(525)

Cash paid for taxes from withheld shares	Cash paid for taxes from withheld shares	(84)		(74)		Cash paid for taxes from withheld shares	(111)		(84)

Other financing, net	Other financing, net	(23)		(27)		Other financing, net	(1)		(23)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	240	$	(1,729)	Net cash provided by (used in) financing activities	$	(886)	$	240
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(38)		(5)		Effect of exchange rate changes on cash and cash equivalents	(25)		(38)
Change in cash and cash equivalents	Change in cash and cash equivalents	$	(1,900)	$	(702)	Change in cash and cash equivalents	$	(443)	$	(1,900)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	2,944		2,943		Cash and cash equivalents at beginning of period	1,844		2,944
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,044	$	2,241	Cash and cash equivalents at end of period	$	1,401	$	1,044

See accompanying notes to Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.			4


STRYKER CORPORATION						~~2022~~2023 Second 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 June 30, ~~2022 a~~nd2023 and the results of operations for the three and six months ~~2022.~~2023. 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 ~~2021.~~2022. Certain immaterial reclassifications have been made to prior year's segment operating income to conform with current year presentation in our Consolidated Financial Statements.

New Accounting Pronouncements Not Yet Adopted

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (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.

~~New Accounting Pronouncements Recently Adopted~~

~~On January 1, 2022 we adopted ASU 2021-08,~~ ~~Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606,~~ ~~Revenue from Contracts with Customers. The adoption of this update did not 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 ~~2021.~~2022.

We disaggregate our net sales by ~~product line~~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.

Net Sales by Product Line
Three Months Six Months
2022 2021 2022 2021
MedSurg and Neurotechnology:
Instruments $ 563 $ 517 $ 1,091 $ 986
Endoscopy 600 518 1,138 987
Medical 666 640 1,330 1,262
Neurovascular 306 301 607 590
Neuro Cranial 337 310 660 591
Other 77 73 146 134
$ 2,549 $ 2,359 $ 4,972 $ 4,550
Orthopaedics and Spine:
Knees $ 500 $ 474 $ 964 $ 886
Hips 364 353 691 662
Trauma and Extremities 676 674 1,361 1,314
Spine 290 307 569 585
Other 114 127 211 250
$ 1,944 $ 1,935 $ 3,796 $ 3,697
Total $ 4,493 $ 4,294 $ 8,768 $ 8,247
Beginning in the first quarter 2023 we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business. Endoscopy includes sales related to Other of $87 and $77 for the three months 2023 and 2022 and $168 and $146 for the six months 2023 and 2022. We have reflected these changes in all historical periods presented.


Net Sales by Business
	Three Months				Six Months
	2023		2022		2023		2022
MedSurg and Neurotechnology:
Instruments	$	630	$	563	$	1,205	$	1,091
Endoscopy	705		677		1,403		1,284
Medical	841		666		1,619		1,330
Neurovascular	311		306		595		607
Neuro Cranial	373		337		728		660

	$	2,860	$	2,549	$	5,550	$	4,972
Orthopaedics and Spine:
Knees	$	562	$	500	$	1,128	$	964
Hips	393		364		768		691
Trauma and Extremities	766		676		1,535		1,361
Spine	296		290		580		569
Other	119		114		213		211
	$	2,136	$	1,944	$	4,224	$	3,796
Total	$	4,996	$	4,493	$	9,774	$	8,768

Net Sales by Geography
Three Months 2022 Three Months 2021
United States International United States International
MedSurg and Neurotechnology:
Instruments $ 451 $ 112 $ 401 $ 116
Endoscopy 473 127 407 111
Medical 536 130 488 152
Neurovascular 113 193 115 186
Neuro Cranial 281 56 256 54
Other 75 2 72 1
$ 1,929 $ 620 $ 1,739 $ 620
Orthopaedics and Spine:
Knees $ 368 $ 132 $ 349 $ 125
Hips 230 134 221 132
Trauma and Extremities 489 187 475 199
Spine 209 81 217 90
Other 86 28 99 28
$ 1,382 $ 562 $ 1,361 $ 574
Total $ 3,311 $ 1,182 $ 3,100 $ 1,194
Net Sales by Geography
Six Months 2022 Six Months 2021
United States International United States International
MedSurg and Neurotechnology:
Instruments $ 865 $ 226 $ 756 $ 230
Endoscopy 891 247 761 226
Medical 1,061 269 961 301
Neurovascular 223 384 226 364
Neuro Cranial 545 115 480 111
Other 143 3 132 2
$ 3,728 $ 1,244 $ 3,316 $ 1,234
Orthopaedics and Spine:
Knees $ 713 $ 251 $ 643 $ 243
Hips 432 259 407 255
Trauma and Extremities 976 385 915 399
Spine 409 160 410 175
Other 158 53 193 57
$ 2,688 $ 1,108 $ 2,568 $ 1,129
Total $ 6,416 $ 2,352 $ 5,884 $ 2,363


Net Sales by Geography
	Three Months 2023				Three Months 2022
	United States		International		United States		International
MedSurg and Neurotechnology:
Instruments	$	512	$	118	$	451	$	112
Endoscopy	568		137		548		129
Medical	682		159		536		130
Neurovascular	123		188		113		193
Neuro Cranial	306		67		281		56
	$	2,191	$	669	$	1,929	$	620
Orthopaedics and Spine:
Knees	$	406	$	156	$	368	$	132
Hips	249		144		230		134
Trauma and Extremities	559		207		489		187
Spine	221		75		209		81
Other	85		34		86		28
	$	1,520	$	616	$	1,382	$	562
Total	$	3,711	$	1,285	$	3,311	$	1,182


Net Sales by Geography
	Six Months 2023				Six Months 2022
	United States		International		United States		International
MedSurg and Neurotechnology:
Instruments	$	962	$	243	$	865	$	226
Endoscopy	1,132		271		1,034		250
Medical	1,294		325		1,061		269
Neurovascular	241		354		223		384
Neuro Cranial	595		133		545		115
	$	4,224	$	1,326	$	3,728	$	1,244
Orthopaedics and Spine:
Knees	$	822	$	306	$	713	$	251
Hips	485		283		432		259
Trauma and Extremities	1,113		422		976		385
Spine	433		147		409		160
Other	146		67		158		53
	$	2,999	$	1,225	$	2,688	$	1,108
Total	$	7,223	$	2,551	$	6,416	$	2,352

Contract Assets and Liabilities

On June 30, ~~2022~~2023 and December 31, ~~2021~~2022 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. ~~We generally satisfy performance obligations within one year from the contract inception date.~~This occurs primarily when payment is received upfront for certain multi-period extended service contracts. Our contract liabilities ~~were $640~~of $784 and ~~$529~~$741 on June 30, ~~2022~~2023 and December 31, ~~2021.~~2022 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 six months 2023 were as follows:


	June 2023
Beginning contract liabilities	$	741
Revenue recognized from beginning of year contract liabilities	(230)

Net advance consideration received during the period	273
Ending contract liabilities	$	784


Dollar amounts are in millions except per share amounts or as otherwise specified.			5


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)


Three Months 2022		Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Three Months 2023												Three Months 2023	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	Beginning	$	(1)	$	(156)	$	41	$	(363)	$	(479)	Beginning	$	(1)	$	29	$	43	$	(376)	$	(305)
OCI	OCI	—		8		32		268		308		OCI	(1)		1		24		(24)		—
Income taxes	Income taxes	—		(2)		(4)		(98)		(104)		Income taxes	—		(2)		(5)		(4)		(11)
Reclassifications to:	Reclassifications to:											Reclassifications to:
Cost of sales	Cost of sales	—		—		(3)		—		(3)		Cost of sales	—		—		(9)		—		(9)
Other (income) expense		—		2		(1)		(11)		(10)
Other (income) expense, net												Other (income) expense, net	1		(1)		(1)		(9)		(10)
Income taxes	Income taxes	—		—		—		2		2		Income taxes	—		1		2		2		5
Net OCI	Net OCI	$	—	$	8	$	24	$	161	$	193	Net OCI	—		(1)		11		(35)		(25)
Ending	Ending	$	(1)	$	(148)	$	65	$	(202)	$	(286)	Ending	$	(1)	$	28	$	54	$	(411)	$	(330)

Three Months 2021 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ (3) $ (252) $ 18 $ (630) $ (867)
OCI — (9) 7 (75) (77)
Income taxes — 2 (3) 2 1
Reclassifications to:
Cost of sales — — 4 — 4
Other (income) expense — 4 (1) (9) (6)
Income taxes — (1) 1 2 2
Net OCI $ — $ (4) $ 8 $ (80) $ (76)
Ending $ (3) $ (256) $ 26 $ (710) $ (943)
Six Months 2022 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ — $ (155) $ 40 $ (416) $ (531)
OCI (1) 4 36 354 393
Income taxes — — (6) (123) (129)
Reclassifications to:
Cost of sales — — (3) — (3)
Other (income) expense — 4 (2) (22) (20)
Income taxes — (1) — 5 4
Net OCI $ (1) $ 7 $ 25 $ 214 $ 245
Ending $ (1) $ (148) $ 65 $ (202) $ (286)


Three Months 2022	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(1)	$	(156)	$	41	$	(363)	$	(479)
OCI	—		8		32		268		308
Income taxes	—		(2)		(4)		(98)		(104)
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense, net	—		2		(1)		(11)		(10)
Income taxes	—		—		—		2		2
Net OCI	—		8		24		161		193
Ending	$	(1)	$	(148)	$	65	$	(202)	$	(286)


Six Months 2021		Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Six Months 2023												Six Months 2023	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	Beginning	$	(3)	$	(259)	$	(10)	$	(885)	$	(1,157)	Beginning	$	(1)	$	31	$	52	$	(303)	$	(221)
OCI	OCI	—		(1)		34		198		231		OCI	(1)		3		27		(123)		(94)
Income taxes	Income taxes	—		(2)		(11)		(10)		(23)		Income taxes	—		(5)		(6)		28		17
Reclassifications to:	Reclassifications to:											Reclassifications to:
Cost of sales	Cost of sales	—		—		5		—		5		Cost of sales	—		—		(22)		—		(22)
Other (income) expense		—		8		9		(17)		—
Other (income) expense, net												Other (income) expense, net	1		(2)		(2)		(17)		(20)
Income taxes	Income taxes	—		(2)		(1)		4		1		Income taxes	—		1		5		4		10
Net OCI	Net OCI	$	—	$	3	$	36	$	175	$	214	Net OCI	—		(3)		2		(108)		(109)
Ending	Ending	$	(3)	$	(256)	$	26	$	(710)	$	(943)	Ending	$	(1)	$	28	$	54	$	(411)	$	(330)


Six Months 2022	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	—	$	(155)	$	40	$	(416)	$	(531)
OCI	(1)		4		36		354		393
Income taxes	—		—		(6)		(123)		(129)
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense, net	—		4		(2)		(22)		(20)
Income taxes	—		(1)		—		5		4
Net OCI	(1)		7		25		214		245
Ending	$	(1)	$	(148)	$	65	$	(202)	$	(286)

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 ~~our~~ 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 ~~2021.~~2022.

Foreign Currency Hedges


June 2022		Cash Flow		Net Investment		Non-Designated		Total
June 2023										June 2023	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	Gross notional amount	$	676	$	1,578	$	5,194	$	7,448	Gross notional amount	$	809	$	1,630	$	3,885	$	6,324
Maximum term in years	Maximum term in years							4.4		Maximum term in years							3.4
Fair value:	Fair value:									Fair value:
Other current assets	Other current assets	$	36	$	—	$	158	$	194	Other current assets	$	30	$	—	$	24	$	54
Other noncurrent assets	Other noncurrent assets	2		150		—		152		Other noncurrent assets	2		79		—		81
Other current liabilities	Other current liabilities	(4)		—		(10)		(14)		Other current liabilities	(6)		—		(15)		(21)

Other noncurrent liabilities										Other noncurrent liabilities	—		(27)		—		(27)
Total fair value	Total fair value	$	34	$	150	$	148	$	332	Total fair value	$	26	$	52	$	9	$	87


December 2021		Cash Flow		Net Investment		Non-Designated		Total
December 2022										December 2022	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	Gross notional amount	$	973	$	2,266	$	5,512	$	8,751	Gross notional amount	$	1,053	$	1,598	$	3,417	$	6,068
Maximum term in years	Maximum term in years							4.9		Maximum term in years							3.9
Fair value:	Fair value:									Fair value:
Other current assets	Other current assets	$	15	$	39	$	92	$	146	Other current assets	$	20	$	—	$	9	$	29
Other noncurrent assets	Other noncurrent assets	1		65		—		66		Other noncurrent assets	1		89		—		90
Other current liabilities	Other current liabilities	(7)		—		(10)		(17)		Other current liabilities	(6)		—		(79)		(85)

Other noncurrent liabilities										Other noncurrent liabilities	(1)		(16)		—		(17)
Total fair value	Total fair value	$	9	$	104	$	82	$	195	Total fair value	$	14	$	73	$	(70)	$	17

We had €1.5 billion ~~and €2.0 billion on~~at June 30, ~~2022~~2023 and December 31, ~~2021 of~~2022 in certain ~~foreign~~forward currency ~~forward~~ contracts designated as net investment hedges 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 €4.4 billion onat June 30, ~~2022~~2023 and December 31, ~~2021~~2022 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.

~~On June 30, 2022 the~~The total ~~after tax~~after-tax gain (loss) recognized in ~~AOCI~~OCI related to designated net investment hedges was ~~$254.~~($101) in the six months 2023.

Net Currency Exchange Rate Gains (Losses)


Derivative	Derivative		Three Months				Six Months				Derivative		Three Months				Six Months
instrument:	instrument:	Recorded in:	2022		2021		2022		2021		instrument:	Recorded in:	2023		2022		2023		2022
Cash Flow	Cash Flow	Cost of sales	$	3	$	(4)	$	3	$	(5)	Cash Flow	Cost of sales	$	9	$	3	$	22	$	3
Net Investment	Net Investment	Other income (expense), net	11		9		22		17		Net Investment	Other income (expense), net	9		11		17		22
Non-Designated	Non-Designated	Other income (expense), net	2		1		3		(1)		Non-Designated	Other income (expense), net	5		2		9		3
		Total	$	16	$	6	$	28	$	11		Total	$	23	$	16	$	48	$	28

Pretax gains (losses) on derivatives designated as cash flow hedges of ~~$38~~$30 and net investment hedges of ~~$32~~$34 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months as of June 30, ~~2022.~~2023. 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.


Dollar amounts are in millions except per share amounts or as otherwise specified.			6


STRYKER CORPORATION						2023 Second Quarter Form 10-Q

Interest Rate Hedges

Pretax gains of $5 recorded in AOCI related to other 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 June 30, ~~2022.~~2023. The cash flow effect of interest rate hedges is recorded in cash flow from operations.


~~Dollar amounts are in millions except per share amounts or as otherwise specified.~~			6


~~STRYKER CORPORATION~~						~~2022 Second Quarter Form 10-Q~~

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 ~~2021.~~2022.

In the third quarter 2022 we determined that certain commercial and regulatory milestones related to technology acquired in the purchase of Mobius Imaging and Cardan Robotics were no longer probable of being achieved and recorded a $110 reduction in the fair value of contingent consideration reflected in selling, general and administrative expenses.

In the second quarter 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 ~~2022.~~2023.


Assets Measured at Fair Value	Assets Measured at Fair Value	June		December		Assets Measured at Fair Value	June		December
		2022		2021			2023		2022
Cash and cash equivalents	Cash and cash equivalents	$	1,044	$	2,944	Cash and cash equivalents	$	1,401	$	1,844
Trading marketable securities	Trading marketable securities	160		193		Trading marketable securities	192		166
Level 1 - Assets	Level 1 - Assets	$	1,204	$	3,137	Level 1 - Assets	$	1,593	$	2,010
Available-for-sale marketable securities:	Available-for-sale marketable securities:					Available-for-sale marketable securities:
Corporate and asset-backed debt securities	Corporate and asset-backed debt securities	$	47	$	48	Corporate and asset-backed debt securities	$	36	$	42
Foreign government debt securities	Foreign government debt securities	2		2		Foreign government debt securities	—		1
United States agency debt securities	United States agency debt securities	4		5		United States agency debt securities	5		3
United States Treasury debt securities		27		19
United States treasury debt securities						United States treasury debt securities	35		36

Certificates of deposit	Certificates of deposit	3		1		Certificates of deposit	1		2
Total available-for-sale marketable securities	Total available-for-sale marketable securities	$	83	$	75	Total available-for-sale marketable securities	$	77	$	84
Foreign currency exchange forward contracts	Foreign currency exchange forward contracts	346		212		Foreign currency exchange forward contracts	135		119

Level 2 - Assets	Level 2 - Assets	$	429	$	287	Level 2 - Assets	$	212	$	203
Total assets measured at fair value	Total assets measured at fair value	$	1,633	$	3,424	Total assets measured at fair value	$	1,805	$	2,213


Liabilities Measured at Fair Value	Liabilities Measured at Fair Value	June		December		Liabilities Measured at Fair Value	June		December
		2022		2021			2023		2022
Deferred compensation arrangements	Deferred compensation arrangements	$	160	$	193	Deferred compensation arrangements	$	192	$	166
Level 1 - Liabilities	Level 1 - Liabilities	$	160	$	193	Level 1 - Liabilities	$	192	$	166
Foreign currency exchange forward contracts	Foreign currency exchange forward contracts	$	14	$	17	Foreign currency exchange forward contracts	$	48	$	102

Level 2 - Liabilities	Level 2 - Liabilities	$	14	$	17	Level 2 - Liabilities	$	48	$	102
Contingent consideration:	Contingent consideration:					Contingent consideration:
Beginning	Beginning	$	306	$	393	Beginning	$	121	$	306
Additions	Additions	1		62		Additions	192		1
Change in estimate		(27)		(1)
Change in estimate and foreign exchange						Change in estimate and foreign exchange	(3)		(137)
Settlements	Settlements	(24)		(148)		Settlements	(1)		(49)
Ending	Ending	$	256	$	306	Ending	$	309	$	121
Level 3 - Liabilities	Level 3 - Liabilities	$	256	$	306	Level 3 - Liabilities	$	309	$	121
Total liabilities measured at fair value	Total liabilities measured at fair value	$	430	$	516	Total liabilities measured at fair value	$	549	$	389

											Fair Value of Available for Sale Securities by Maturity
		June 2022		December 2021			June		December
							2023		2022
	Due in one year or less	$	52	$	36	Due in one year or less	$	42	$	53
Due after one year through three years	Due after one year through three years	$	31	$	39	Due after one year through three years	$	35	$	31

On June 30, ~~2022~~2023 and December 31, ~~2021~~2022 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest on cash and cash equivalents, short-term investments and marketable securities income was ~~$20~~$11 and ~~$18~~$20 in the three months and ~~$35~~$25 and $35 in the six months ~~2022~~2023 and ~~2021,~~2022, 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.

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.

In April 2022 the United States District Court for the District of Delaware issued a judgment following a jury verdict in favor of PureWick Corporation (PureWick) for its 2019 complaint seeking patent infringement damages related to our PrimaFit and PrimoFit products. ~~The~~Following a jury trial, the court awarded damages related to this complaint and we recorded charges of $28 in March 2022. Stryker plans to appeal the results of the trial. If ultimately successful, PureWick may seek to recover its legal fees. In June 2022 PureWick filed a motion to ~~seek enhancement~~enhance the damages awarded, which the court denied in March 2023. In 2022 PureWick also filed a separate complaint seeking additional patent infringement damages related to our current PrimaFit products. A trial for this matter is currently set for December 2023.

We are currently investigating whether certain business activities in certain foreign countries violated provisions of the ~~judgment~~Foreign Corrupt Practices Act (FCPA) and ~~if successful,~~have engaged outside counsel to conduct these investigations. We have been contacted by the ~~judgment could total approximately $100~~United States Securities and ~~include an injunction against future sales. We intend~~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 ~~appeal~~predict the outcome of ~~this case.~~the investigations or the potential impact, if any, on our financial statements.

Recall Matters

~~In June 2012 we voluntarily recalled~~We have conducted voluntary recalls of certain products, including our Rejuvenate and ABG II Modular-Neck hip stems and terminated global distribution of these hip products. Product liability lawsuits relating to this voluntary recall have been filed against us. In November 2014 we entered into a settlement agreement to compensate eligible United States patients who had revision surgery prior to November 3, 2014 and in December 2016 the settlement program was extended to patients who had revision surgery prior to December 19, 2016. In September 2020 we entered into a second settlement agreement to compensate eligible United States patients who had revision surgery prior to September 9, 2020. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, there are remaining lawsuits that we will continue to defend against.

~~In August 2016 and May 2018 we voluntarily recalled~~ certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Product liability lawsuits and claims relating to this voluntary recall have been filed against us. In November 2018 we entered into a settlement agreement to resolve a significant number of claims and lawsuits related to the recalls. In April 2022 we executed a second agreement to resolve a significant number of claims and lawsuits related to the recalls. The specific terms of the settlement agreement, including the financial terms, are confidential.

~~With the acquisition of Wright Medical Group N.V. (Wright) in November 2020,~~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 will continue to evaluate each claim and the possible loss we may incur.~~


Dollar amounts are in millions except per share amounts or as otherwise specified.			7


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of ~~these matters. For the six months 2022 we have recorded charges of $18 primarily~~claims and lawsuits related to ~~Wright hip products and made payments of $19 primarily related to Rejuvenate and ABG II Modular-Neck hip stems.~~our recalls. Based on the information that has been received, we have ~~estimated the remaining range~~recorded reserves of $194, representing our best estimate of probable loss related to recall matters ~~globally to be approximately $380 to $515. We have recorded reserves representing the remaining minimum of the range of probable loss.~~globally. 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	Leases	June			December			Leases	June			December
		2022			2021				2023			2022
Right-of-use assets	Right-of-use assets	$	469		$	419		Right-of-use assets	$	481		$	473
Lease liabilities, current	Lease liabilities, current	$	118		$	112		Lease liabilities, current	$	125		$	121
Lease liabilities, non-current	Lease liabilities, non-current	$	353		$	310		Lease liabilities, non-current	$	363		$	357

Other information:	Other information:							Other information:
Weighted-average remaining lease term		5.6 years			5.4 years
Weighted-average remaining lease term (years)								Weighted-average remaining lease term (years)	5.7			5.5
Weighted-average discount rate	Weighted-average discount rate	2.66		%	2.86		%	Weighted-average discount rate	3.60		%	3.22		%

Three Months Six Months
2022 2021 2022 2021
Operating lease cost $ 38 $ 31 $ 73 $ 67


	Three Months				Six Months
	2023		2022		2023		2022
Operating lease cost	$	41	$	38	$	79	$	73

NOTE 7 - ACQUISITIONS

We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. ~~The aggregate purchase price of our~~In the six months 2023 and 2022 cash paid for acquisitions, net of cash acquired was ~~$2,563~~$390 and ~~$108~~$2,563.

On May 2, 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 ~~six months 2022~~acquisition date. Cerus designs, develops and ~~2021.~~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.

In February 2022 we completed the acquisition of Vocera Communications, Inc. (Vocera) for $79.25 per share, or an aggregate purchase price of $2.6 billion, net of cash acquired ($3.0 billion including convertible notes). Vocera is a leader in the digital care coordination and communication category. Vocera is part of our Medical business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition reflects the strategic benefits of expanding our presence in adjacent markets, diversifying our product portfolio, advancing innovations, and accelerating our digital aspirations. This goodwill is not deductible for tax purposes.

In the six months 2022 note holders elected to redeem the 1.50% and 0.50% convertible notes assumed in the Vocera acquisition for $101 and $324. These repayments are classified as financing activities in the Consolidated Statements of Cash Flows.

Share-based awards for Vocera employees vested upon our acquisition and a charge of $132 was recorded in selling, general and administrative expenses in 2022.

Purchase price allocations for our significant acquisitions are:


~~Purchase Price Allocation of Acquired Net Assets~~
~~2022~~	~~Vocera~~
~~Tangible assets and liabilities:~~
~~Accounts receivable~~	$	33
~~Inventory~~	13
~~Deferred income tax assets~~	73
~~Other assets~~	92
~~Debt~~	~~(425)~~
~~Deferred income tax liabilities~~	~~(182)~~

~~Other liabilities~~	~~(115)~~
~~Intangible assets:~~

~~Customer and distributor relationships~~	~~550~~
~~Developed technology and patents~~	~~178~~
~~Trade name~~	18


~~Goodwill~~	~~2,328~~
~~Purchase price, net of cash acquired of $281~~	$	~~2,563~~
~~Weighted-average life of intangible assets~~	13


Purchase Price Allocation of Acquired Net Assets
	2023		2022
	Cerus		Vocera
Tangible assets acquired:
Accounts receivable	$	1	$	33
Inventory	2		13
Deferred income tax assets	7		91
Other assets	1		92
Debt	—		(425)
Deferred income tax liabilities	(60)		(193)
Other liabilities	(22)		(117)
Intangible assets:
Customer and distributor relationships	—		603
Developed technology	240		175
Trade name	—		18
Goodwill	312		2,273
Purchase price, net of cash acquired of $7 and $281	$	481	$	2,563
Weighted average amortization period at acquisition (years):
Developed technologies	15		6
Customer relationships	—		15
Trademarks	—		9

~~Purchase~~The purchase price ~~allocations~~allocation for ~~Vocera were~~Cerus is based on preliminary valuations, primarily related to ~~intangible assets~~developed technology and deferred income taxes. Our estimates and assumptions are subject to change within the measurement period. The purchase price allocation for Vocera was finalized in the first quarter 2023 without material adjustments.


Consolidated Estimated Amortization Expense	Consolidated Estimated Amortization Expense									Consolidated Estimated Amortization Expense
Remainder of 2022		2023		2024		2025		2026
Remainder of 2023										Remainder of 2023	2024		2025		2026		2027
$	320	$	620	$	590	$	570	$	513	319	$	608	$	591	$	534	$	511

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~~Our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on June 30, ~~2022.~~2023.

In February 2022 we entered into a $1.5 billion term loan agreement that matures on February 22, 2025 and bears interest at a base rate based on the Term Secured Overnight Financing Rate (SOFR) plus 0.725%. InThrough June ~~2022~~30, 2023 we have repaid ~~$250~~$850 on the term loan.

In the first quarter 2022 our Board of Directors approved an increase to the maximum amount of commercial paper that can be outstanding from $1,500 to $2,250.

On June 30, ~~2022~~2023 there were no borrowings outstanding under our revolving credit facility or our commercial paper program which allows for maturities up to 397 days from the date of issuance.


Dollar amounts are in millions except per share amounts or as otherwise specified.			8


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q


Summary of Total Debt								Summary of Total Debt			June		December
	Summary of Total Debt			June 2022		December 2021					2023		2022
		Rate	Due						Rate	Due
Senior unsecured notes:	Senior unsecured notes:							Senior unsecured notes:
		1.125%	November 30, 2023	$	577	$	622		1.125%	November 30, 2023	$	598	$	585
		0.600%	December 1, 2023	598		598			0.600%	December 1, 2023	600		599
		3.375%	May 15, 2024	595		593			3.375%	May 15, 2024	597		596
		0.250%	December 3, 2024	890		958			0.250%	December 3, 2024	922		903
		1.150%	June 15, 2025	646		645			1.150%	June 15, 2025	647		647
		3.375%	November 1, 2025	748		748			3.375%	November 1, 2025	749		748
		3.500%	March 15, 2026	994		994			3.500%	March 15, 2026	996		995
		2.125%	November 30, 2027	784		845			2.125%	November 30, 2027	812		795
		3.650%	March 7, 2028	597		597			3.650%	March 7, 2028	597		597
		0.750%	March 1, 2029	836		901			0.750%	March 1, 2029	865		848
		1.950%	June 15, 2030	990		990			1.950%	June 15, 2030	992		991
		2.625%	November 30, 2030	675		727			2.625%	November 30, 2030	699		684
		1.000%	December 3, 2031	779		840			1.000%	December 3, 2031	807		790
		4.100%	April 1, 2043	392		392			4.100%	April 1, 2043	392		392
		4.375%	May 15, 2044	395		395			4.375%	May 15, 2044	396		396
		4.625%	March 15, 2046	982		982			4.625%	March 15, 2046	983		983
		2.900%	June 15, 2050	642		642			2.900%	June 15, 2050	642		642
Term loan	Term loan		February 22, 2025	1,250		—		Term loan			650		850

Other	Other			11		10		Other			3		7
Total debt	Total debt			$	13,381	$	12,479	Total debt			$	12,947	$	13,048
Less current maturities of debt				7		7
Less current maturities								Less current maturities			1,798		1,191
Total long-term debt	Total long-term debt			$	13,374	$	12,472	Total long-term debt			$	11,149	$	11,857

											June		December
				June 2022		December 2021					2023		2022
Unamortized debt issuance costs	Unamortized debt issuance costs			$	57	$	62	Unamortized debt issuance costs			$	47	$	52
Borrowing capacity on existing facilities	Borrowing capacity on existing facilities			$	2,162	$	2,162	Borrowing capacity on existing facilities			$	2,160	$	2,162
Fair value of senior unsecured notes	Fair value of senior unsecured notes			$	11,122	$	13,391	Fair value of senior unsecured notes			$	11,082	$	10,910

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 ofwere 17.9% and 15.7% in the three and six months 2023 and 8.9% and 11.5% in the three and six months 2022. The effective tax rates for the three and six months 2023 and 2022 ~~include~~reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items. In addition, the effective tax rates for the three and six months 2022 reflect the reversal of deferred income tax on undistributed earnings of foreign subsidiaries as our revised capital plan determined ~~to be indefinitely reinvested and~~that certain ~~discrete tax items. Our effective tax rates~~cash outside of ~~10.6% and 13.1% in the three and six months 2021 include certain discrete tax items.~~

~~We are routinely audited by income tax authorities in the jurisdictions we operate. In July 2022 we effectively settled~~ the United States ~~federal income tax audit for years 2014 through 2018. Accordingly in~~would no longer need to be repatriated during the ~~three months ending September 30, 2022 we expect to reduce our accruals for uncertain tax positions and related interest by approximately $220.~~period previously contemplated.

NOTE 10 - SEGMENT INFORMATION

As previously disclosed, effective December 31, 2021 we changed our reportable business segments to (i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine to align to our new internal reporting structure. We have reflected these changes in all historical periods presented.


		Three Months				Six Months					Three Months				Six Months
		2022		2021		2022		2021			2023		2022		2023		2022
MedSurg and Neurotechnology	MedSurg and Neurotechnology	$	2,549	$	2,359	$	4,972	$	4,550	MedSurg and Neurotechnology	$	2,860	$	2,549	$	5,550	$	4,972
Orthopaedics and Spine	Orthopaedics and Spine	1,944		1,935		3,796		3,697		Orthopaedics and Spine	2,136		1,944		4,224		3,796
Net sales	Net sales	$	4,493	$	4,294	$	8,768	$	8,247	Net sales	$	4,996	$	4,493	$	9,774	$	8,768
MedSurg and Neurotechnology	MedSurg and Neurotechnology	$	601	$	702	$	1,212	$	1,337	MedSurg and Neurotechnology	$	780	$	629	$	1,407	$	1,259
Orthopaedics and Spine	Orthopaedics and Spine	607		563		1,129		1,018		Orthopaedics and Spine	601		579		1,202		1,082
Segment operating income	Segment operating income	$	1,208	$	1,265	$	2,341	$	2,355	Segment operating income	$	1,381	$	1,208	$	2,609	$	2,341
Items not allocated to segments:	Items not allocated to segments:									Items not allocated to segments:
Corporate and other	Corporate and other	$	(145)	$	(154)	$	(344)	$	(316)	Corporate and other	$	(165)	$	(145)	$	(387)	$	(344)
Acquisition and integration-related costs	Acquisition and integration-related costs	(37)		(120)		(186)		(369)		Acquisition and integration-related costs	(2)		(37)		(8)		(186)
Amortization of intangible assets	Amortization of intangible assets	(160)		(149)		(310)		(330)		Amortization of intangible assets	(161)		(160)		(322)		(310)
Restructuring-related and other charges		(62)		(17)		(171)		(31)
Structural optimization and other special charges										Structural optimization and other special charges	(72)		(62)		(114)		(171)
Medical device regulations	Medical device regulations	(32)		(26)		(60)		(45)		Medical device regulations	(27)		(32)		(55)		(60)
Recall-related matters	Recall-related matters	(4)		(76)		(18)		(82)		Recall-related matters	(3)		(4)		(3)		(18)
Regulatory and legal matters	Regulatory and legal matters	4		9		(33)		9		Regulatory and legal matters	14		4		(20)		(33)

Consolidated operating income	Consolidated operating income	$	772	$	732	$	1,219	$	1,191	Consolidated operating income	$	965	$	772	$	1,700	$	1,219

There were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for ~~2021, other than the addition of the assets acquired in the Vocera acquisition which are included in the MedSurg and Neurotechnology segment.~~2022.


Dollar amounts are in millions except per share amounts or as otherwise specified.			9


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q


ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ABOUT STRYKER

Stryker is one of the world's leading medical technology companies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and ~~hospital~~healthcare outcomes. Alongside its customers around the world, Stryker impacts more than ~~100~~130 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) ~~and other medical device products used in a variety of medical specialties.~~. 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.

~~COVID-19 Pandemic and~~ Macroeconomic Environment

The ~~COVID-19~~ global ~~pandemic~~economy continues to experience increased inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the macroeconomic environment ~~has led to severe disruptions in the market~~which we anticipate will continue. Higher interest rates and capital costs, higher shipping costs, increased costs of labor, fluctuating foreign currency exchange rates and the global and United States economies that may continue for a prolonged period. In response to the COVID-19 pandemic, various governmental authorities and private enterprises have implemented numerous containment measures, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. A significant number of our global suppliers, vendors, distributors and manufacturing facilities are located in regions that have been affected by the pandemic. Those operations have been materially adversely affected by restrictive government and private enterprise measures implemented in response to the pandemic. This has led to product shortages and an increase in raw material and component pricing as well as other inflationary pressures particularly on our manufacturing costs.

During the quarter we have seen recovery of elective procedures as the impact of the COVID-19 pandemic has subsided in many geographies, with the exception of some countries in the Asia Pacific region. However sales growth in certain products has been constrained by the continuing supply chain challenges and electronic component shortages, especially impacting the capital products in our MedSurg businesses.

~~Russia and Ukraine Conflict~~

~~The~~ military conflict in Russia and Ukraine have created additional economic challenges and uncertainties. These conditions may cause our customers to decrease or delay orders for our products and services, and the sanctions imposed by the United States government and other nations in response to this conflict have caused significant volatility and disruptions to the global markets. Given that we provide life-saving and life-enhancing products, we plan to continue operating in Russia provided we can safely do so. During the six months 2022 net sales in Russia were approximately 0.2% ofhigher interest rates may impact deal mix for our revenues. Although Russia does not constitute a material portion of our business, there is uncertainty around the impact it will have on the global economy, supply chains and fuel prices generally, and therefore our business. Refer to Part II, Item 1A. "Risk

~~Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 for further details.~~capital products.

China Volume-Based Procurement and Import Purchase Evaluation

The government in China has launched regional and national programs for volume-based procurement ~~("VBP")~~(VBP) of high-value medical consumables to reduce healthcare costs. Each VBP program has specific requirements to award contracts to the lowest bidders who are able to satisfy the quality and quantity requirements. The successful bidders may be guaranteed sales volume for certain products, while unsuccessful bidders may lose unit sales volume. We have been a winning bidder in certain national and regional VBP programs, including those for joint replacement and trauma products in 2021 and certain neurovascular products in the fourth quarter 2022 and the first six months of 2023. The prices required for a successful bid have negatively impacted ~~our existing~~the commercial operations of our joint

replacement, trauma and ~~trauma~~certain neurovascular products in China.

We were unsuccessful in our bids in the VBP program for spine products that took place in the third quarter 2022 and as a result we are exiting the spine business in China. To date our other businesses have not been significantly ~~impacted; however,~~impacted, but may be in the ~~national spine~~future as a result of additional VBP programs. In the second quarter 2023 government agencies announced data collection initiatives for sports medicine, biologics and craniomaxilliofacial products in preparation for VBP ~~program was initiated in July 2022.~~ programs that could be announced as soon as the third quarter 2023. The impact of VBP programs, if any, for these products is not expected to be significant. China has also issued national guiding standards for Import Purchase Evaluation which has increased the purchase of locally sourced equipment in China's public hospitals and is impacting our MedSurg business in China. Our business in China represented approximately ~~2.6% of~~1.8% our revenues ~~for~~in the six months ~~2022.~~2023.

Overview of the Three and Six Months

In the three months ~~2022~~2023 we achieved sales growth of ~~4.6%~~11.2% from ~~2021.~~2022. Excluding the impact of acquisitions and divestitures sales grew ~~6.1%~~11.9% in constant currency. We reported operating income margin of ~~17.2%~~19.3%, net earnings of ~~$656~~$738 and net earnings per diluted share of ~~$1.72.~~$1.93. Excluding the impact of certain items, adjusted operating income margin(1) increased by 60 basis points to 24.3%, with adjusted net earnings(1) of $976 and adjusted net earnings per diluted share(1) of $2.54, an increase of 12.9% from 2022.

In the six months 2023 we achieved sales growth of 11.5% from 2022. Excluding the impact of acquisitions and divestitures sales grew 12.7% in constant currency. We reported operating income margin of 17.4%, net earnings of $1,330 and net earnings per diluted share of $3.47. Excluding the impact of certain items, adjusted operating income margin(1) contracted by ~~220~~10 basis points to ~~23.7%~~22.7%, with adjusted net earnings(1) of ~~$860~~$1,796 and adjusted net earnings per diluted share(1) of ~~$2.25 in line with 2021.~~

~~In the six months 2022 we achieved sales growth~~$4.68, an increase of ~~6.3%~~10.9% from 2021. Excluding the impact of acquisitions and divestitures sales grew 7.6% in constant currency. We reported operating income margin of 13.9%, net earnings of $979 and net earnings per diluted share of $2.56. Excluding the impact of certain items, adjusted operating income margin~~(1)~~ ~~contracted by 190 basis points to 22.8%, with adjusted net earnings(1)~~ ~~of $1,612 and adjusted net earnings per diluted share(1)~~ ~~of $4.22 representing growth of 1.0%.~~2022.

Recent Developments

~~In February 2022~~On May 2, 2023 we ~~entered into a $1.5 billion term loan agreement that matures on February 22, 2025~~acquired Cerus Endovascular Limited (Cerus) for net cash consideration of $289 and ~~bears interest at a base rate based on~~up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the ~~Term Secured Overnight Financing Rate (SOFR) plus 0.725%. In June 2022 we repaid $250~~treatment of ~~this term loan.~~

In February 2022 we completed the acquisition of Vocera Communications, Inc. (Vocera) for $79.25 per share, or an aggregate purchase price of $2.6 billion, net of cash acquired ($3.0 billion including convertible notes). Vocera is a leader in the digital care coordination and communication category. Vocerahemorrhagic stroke. Cerus is part of our ~~Medical~~Neurovascular business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition reflects the strategic benefits of expanding our presence in adjacent markets, diversifying our product portfolio, advancing innovations, and accelerating our digital aspirations. Refer to Note 7 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.


Dollar amounts are in millions except per share amounts or as otherwise specified.			10


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q


CONSOLIDATED RESULTS OF OPERATIONS	CONSOLIDATED RESULTS OF OPERATIONS																					CONSOLIDATED RESULTS OF OPERATIONS
		Three Months										Six Months											Three Months										Six Months
						Percent Net Sales				Percentage						Percent Net Sales				Percentage							Percent Net Sales				Percentage						Percent Net Sales				Percentage
		2022		2021		2022		2021		Change		2022		2021		2022		2021		Change			2023		2022		2023		2022		Change		2023		2022		2023		2022		Change
Net sales	Net sales	$	4,493	$	4,294	100.0	%	100.0	%	4.6	%	$	8,768	$	8,247	100.0	%	100.0	%	6.3	%	Net sales	$	4,996	$	4,493	100.0	%	100.0	%	11.2	%	$	9,774	$	8,768	100.0	%	100.0	%	11.5	%
Gross profit	Gross profit	2,826		2,772		62.9		64.6		1.9		5,560		5,281		63.4		64.0		5.3		Gross profit	3,181		2,826		63.7		62.9		12.6		6,197		5,560		63.4		63.4		11.5
Research, development and engineering expenses	Research, development and engineering expenses	351		310		7.8		7.2		13.2		764		598		8.7		7.3		27.8		Research, development and engineering expenses	346		351		6.9		7.8		(1.4)		685		764		7.0		8.7		(10.3)
Selling, general and administrative expenses	Selling, general and administrative expenses	1,539		1,505		34.3		35.0		2.3		3,249		3,080		37.1		37.3		5.5		Selling, general and administrative expenses	1,706		1,539		34.1		34.3		10.9		3,487		3,249		35.7		37.1		7.3
Recall charges		4		76		0.1		1.8		nm		18		82		0.2		1.0		nm
Recall charges, net																						Recall charges, net	3		4		0.1		0.1		(25.0)		3		18		—		0.2		(83.3)
Amortization of intangible assets	Amortization of intangible assets	160		149		3.6		3.5		7.4		310		330		3.5		4.0		(6.1)		Amortization of intangible assets	161		160		3.2		3.6		0.6		322		310		3.3		3.5		3.9

Other income (expense), net	Other income (expense), net	(52)		(70)		(1.2)		(1.6)		(25.7)		(113)		(162)		(1.3)		(2.0)		(30.2)		Other income (expense), net	(66)		(52)		(1.3)		(1.2)		26.9		(122)		(113)		(1.2)		(1.3)		8.0
Income taxes	Income taxes	64		70		nm				(8.6)		127		135		nm				(5.9)		Income taxes	161		64		nm				151.6		248		127		nm				95.3
Net earnings	Net earnings	$	656	$	592	14.6	%	13.8	%	10.8	%	$	979	$	894	11.2	%	10.8	%	9.5	%	Net earnings	$	738	$	656	14.8	%	14.6	%	12.5	%	$	1,330	$	979	13.6	%	11.2	%	35.9	%

Net earnings per diluted share	Net earnings per diluted share	$	1.72	$	1.55					11.0	%	$	2.56	$	2.34					9.4	%	Net earnings per diluted share	$	1.93	$	1.72					12.2	%	$	3.47	$	2.56					35.5	%
Adjusted net earnings per diluted share(1)	Adjusted net earnings per diluted share(1)	$	2.25	$	2.25					—	%	$	4.22	$	4.18					1.0	%	Adjusted net earnings per diluted share(1)	$	2.54	$	2.25					12.9	%	$	4.68	$	4.22					10.9	%

nm - not meaningful


Geographic and Segment Net Sales	Geographic and Segment Net Sales	Three Months								Six Months								Geographic and Segment Net Sales	Three Months								Six Months
						Percentage Change								Percentage Change									Percentage Change								Percentage Change
		2022		2021		As Reported		Constant Currency		2022		2021		As Reported		Constant Currency			2023		2022		As Reported		Constant Currency		2023		2022		As Reported		Constant Currency
Geographic:	Geographic:																	Geographic:
United States	United States	$	3,311	$	3,100	6.8	%	6.8	%	$	6,416	$	5,884	9.0	%	9.0	%	United States	$	3,711	$	3,311	12.1	%	12.1	%	$	7,223	$	6,416	12.6	%	12.6	%
International	International	1,182		1,194		(1.0)		9.7		2,352		2,363		(0.5)		7.8		International	1,285		1,182		8.7		11.5		2,551		2,352		8.5		13.9
Total	Total	$	4,493	$	4,294	4.6	%	7.6	%	$	8,768	$	8,247	6.3	%	8.7	%	Total	$	4,996	$	4,493	11.2	%	11.9	%	$	9,774	$	8,768	11.5	%	12.9	%
Segment:	Segment:																	Segment:
MedSurg and Neurotechnology	MedSurg and Neurotechnology	$	2,549	$	2,359	8.0	%	10.6	%	$	4,972	$	4,550	9.3	%	11.3	%	MedSurg and Neurotechnology	$	2,860	$	2,549	12.2	%	12.9	%	$	5,550	$	4,972	11.6	%	13.0	%
Orthopaedics and Spine	Orthopaedics and Spine	1,944		1,935		0.5		3.9		3,796		3,697		2.7		5.4		Orthopaedics and Spine	2,136		1,944		9.9		10.6		4,224		3,796		11.3		12.8
Total	Total	$	4,493	$	4,294	4.6	%	7.6	%	$	8,768	$	8,247	6.3	%	8.7	%	Total	$	4,996	$	4,493	11.2	%	11.9	%	$	9,774	$	8,768	11.5	%	12.9	%


Supplemental Net Sales Growth Information	Supplemental Net Sales Growth Information																													Supplemental Net Sales Growth Information
		Three Months														Six Months															Three Months														Six Months
						Percentage Change														Percentage Change															Percentage Change														Percentage Change
										United States		International												United States		International													United States		International												United States		International
		2022		2021		As Reported		Constant Currency		As Reported				Constant Currency		2022		2021		As Reported		Constant Currency		As Reported				Constant Currency			2023		2022		As Reported		Constant Currency		As Reported				Constant Currency		2023		2022		As Reported		Constant Currency		As Reported				Constant Currency
MedSurg and Neurotechnology:	MedSurg and Neurotechnology:																													MedSurg and Neurotechnology:
Instruments	Instruments	$	563	$	517	8.9	%	11.3	%	12.3	%	(3.1)	%	7.7	%	$	1,091	$	986	10.7	%	12.7	%	14.3	%	(1.4)	%	7.0	%	Instruments	$	630	$	563	11.9	%	12.4	%	13.2	%	6.7	%	9.1	%	$	1,205	$	1,091	10.4	%	11.6	%	11.1	%	7.8	%	13.3	%
Endoscopy	Endoscopy	600		518		15.7		18.2		16.2		13.8		25.8		1,138		987		15.3		17.5		17.1		9.2		18.9		Endoscopy	705		677		4.1		4.6		3.5		6.9		9.7		1,403		1,284		9.3		10.3		9.5		8.5		13.8
Medical	Medical	666		640		4.1		6.2		10.0		(14.6)		(6.1)		1,330		1,262		5.4		7.0		10.5		(10.7)		(4.3)		Medical	841		666		26.3		26.9		27.2		22.5		25.7		1,619		1,330		21.7		22.9		21.9		21.0		26.9
Neurovascular	Neurovascular	306		301		1.6		7.2		(1.8)		3.7		12.9		607		590		2.7		6.9		(1.6)		5.4		12.2		Neurovascular	311		306		1.5		3.6		9.0		(2.9)		0.3		595		607		(2.0)		1.3		8.1		(7.9)		(2.9)
Neuro Cranial	Neuro Cranial	337		310		8.5		10.3		9.4		4.1		14.7		660		591		11.6		13.1		13.5		3.8		11.7		Neuro Cranial	373		337		10.8		11.3		9.6		16.5		20.0		728		660		10.3		11.3		9.4		15.1		21.3
Other		77		73		5.8		5.8		4.9		68.5		74.5		146		134		8.8		8.8		8.1		57.6		60.7

		$	2,549	$	2,359	8.0	%	10.6	%	10.9	%	(0.1)	%	9.9	%	$	4,972	$	4,550	9.3	%	11.3	%	12.4	%	0.8	%	8.5	%		$	2,860	$	2,549	12.2	%	12.9	%	13.5	%	8.0	%	11.0	%	$	5,550	$	4,972	11.6	%	13.0	%	13.3	%	6.6	%	12.1	%
Orthopaedics and Spine:	Orthopaedics and Spine:																													Orthopaedics and Spine:
Knees	Knees	$	500	$	474	5.5	%	8.7	%	5.3	%	6.2	%	18.6	%	$	964	$	886	8.8	%	11.5	%	10.9	%	3.2	%	13.1	%	Knees	$	562	$	500	12.5	%	13.2	%	10.4	%	18.1	%	21.2	%	$	1,128	$	964	17.0	%	18.4	%	15.3	%	22.0	%	27.8	%
Hips	Hips	364		353		3.2		7.6		4.5		1.2		13.0		691		662		4.5		8.1		6.3		1.5		10.9		Hips	393		364		8.1		9.3		8.8		6.8		10.3		768		691		11.1		13.5		12.3		9.0		15.6
Trauma and Extremities	Trauma and Extremities	676		674		0.2		3.4		3.1		(6.5)		4.4		1,361		1,314		3.6		6.2		6.7		(3.7)		4.8		Trauma and Extremities	766		676		13.3		13.6		14.3		10.7		11.7		1,535		1,361		12.8		14.0		14.0		9.8		14.1
Spine	Spine	290		307		(5.1)		(2.3)		(3.6)		(8.9)		1.0		569		585		(2.6)		(0.3)		(0.1)		(8.5)		(0.7)		Spine	296		290		1.8		2.1		5.2		(7.0)		(6.1)		580		569		1.9		3.0		5.7		(8.0)		(4.6)
Other	Other	114		127		(10.8)		(7.3)		(13.8)		0.1		16.3		211		250		(15.5)		(13.0)		(18.4)		(5.5)		5.9		Other	119		114		4.3		6.2		(1.6)		22.3		30.9		213		211		0.7		2.9		(7.6)		25.3		35.8
		$	1,944	$	1,935	0.5	%	3.9	%	1.6	%	(2.0)	%	9.5	%	$	3,796	$	3,697	2.7	%	5.4	%	4.7	%	(1.9)	%	7.2	%		$	2,136	$	1,944	9.9	%	10.6	%	10.0	%	9.5	%	12.0	%	$	4,224	$	3,796	11.3	%	12.8	%	11.6	%	10.6	%	15.9	%
Total	Total	$	4,493	$	4,294	4.6	%	7.6	%	6.8	%	(1.0)	%	9.7	%	$	8,768	$	8,247	6.3	%	8.7	%	9.0	%	(0.5)	%	7.8	%	Total	$	4,996	$	4,493	11.2	%	11.9	%	12.1	%	8.7	%	11.5	%	$	9,774	$	8,768	11.5	%	12.9	%	12.6	%	8.5	%	13.9	%

Note: Beginning in the first quarter 2023 we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business. Endoscopy includes sales related to Other of $87 and $77 for the three months 2023 and 2022 and $168 and $146 for the six months 2023 and 2022. We have reflected these changes in all historical periods presented.

Consolidated Net Sales

Consolidated net sales increased ~~4.6%~~11.2% in the three months ~~2022~~2023 as reported and ~~7.6%~~11.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~3.0%~~0.7%. ~~Excluding the 1.5% impact of acquisitions and divestitures, net~~Net sales in constant currency increased by ~~7.5%~~11.4% from increased unit volume ~~partially offset by 1.4%~~and 0.5% due to ~~lower~~higher prices. The unit volume increase was due to higher product shipments across ~~most~~ all

MedSurg and Neurotechnology ~~products~~ and ~~most~~ Orthopaedics and Spine ~~products.~~businesses.

Consolidated net sales increased ~~6.3%~~11.5% in the six months ~~2022~~2023 as reported and ~~8.7%~~12.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~2.4%~~1.4%. Excluding the ~~1.1%~~0.2% impact of acquisitions and divestitures, net sales in constant currency increased by ~~8.8%~~12.1% from increased unit ~~volume partially offset by 1.2% due to lower prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology products and most Orthopaedics and Spine products.~~


Dollar amounts are in millions except per share amounts or as otherwise specified.			11


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

volume and 0.6% 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 ~~8.0%~~12.2% in the three months ~~2022~~2023 as reported and 12.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.7%. Net sales in constant currency increased by 11.5% from increased unit volume and 1.4% from higher prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology businesses.

MedSurg and Neurotechnology net sales increased 11.6% in the six months 2023 as reported and 13.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 1.4%. Excluding the 0.4% impact of acquisitions and divestitures, net sales in constant currency increased by 11.0% from increased unit volume and 1.6% 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 9.9% in the three months 2023 as reported and 10.6% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~2.6%~~0.7%. ~~Excluding the 2.7% impact of acquisitions, net~~Net sales in constant currency increased ~~by 7.8%~~11.3% from increased unit volume ~~and 0.1%~~partially offset by 0.7% from ~~higher~~lower prices. The unit volume increase was due to higher shipments across ~~most MedSurg~~all Orthopaedics and ~~Neurotechnology products.~~Spine businesses.

~~MedSurg~~Orthopaedics and ~~Neurotechnology~~Spine net sales increased ~~9.3%~~11.3% in the six months ~~2022~~2023 as reported and ~~11.3%~~12.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 2.0%. Excluding the 2.0% impact of acquisitions, net sales in constant currency increased by 9.3% from increased unit volume. The unit volume increase was due to higher shipments across all MedSurg products.

~~Orthopaedics and Spine Net Sales~~

~~Orthopaedics and Spine net sales increased 0.5% in the three months 2022 as reported and 3.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.4%~~1.5%. Net sales in constant currency increased ~~7.1%~~13.6% from increased unit volume partially offset by ~~3.2% from lower prices. The unit volume increase was due to higher shipments of hips, knees and trauma and extremities products.~~

Orthopaedics and Spine net sales increased 2.7% in the six months 2022 as reported and 5.4% in constant currency, as foreign currency exchange rates negatively impacted net sales by 2.7%. Net sales in constant currency increased 8.2% from increased unit volume partially offset by 2.8%0.8% from lower prices. The unit volume increase was due to higher shipments across ~~most~~all Orthopaedics and Spine ~~products.~~businesses.

Gross Profit

Gross profit was $3,181 and $2,826 in the three months 2023 and 2022. The key components of the change were:


	Gross Profit Percent Net Sales
Three Months 2022	62.9	%
Sales pricing	20 bps
Volume and mix	100 bps
Manufacturing and supply chain costs	(60) bps
Inventory stepped up to fair value	20 bps


Three Months 2023	63.7	%

Gross profit as a percentage of net sales in the three months ~~2022 decreased~~2023 increased to 63.7% from 62.9% ~~from 64.6%~~ in ~~2021. Excluding the impact of the items noted below, gross profit decreased to 63.3% of sales in the three months~~ 2022 ~~from 66.0% in 2021~~ due to ~~increased~~favorable volume and mix partially offset by higher manufacturing and supply chain costs ~~from purchases of electronic components at premium prices on the spot market and other inflationary pressures,~~ primarily ~~related~~due to ~~labor, steel and transportation.~~supply chain inefficiencies.


	Gross Profit Percent Net Sales
Six Months 2022	63.4	%
Sales pricing	20 bps
Volume and mix	100 bps
Manufacturing and supply chain costs	(130) bps
Inventory stepped up to fair value	10 bps


Six Months 2023	63.4	%

Gross profit as a percentage of net sales in the six months 2023 of 63.4% remained flat with 2022 ~~decreased~~due to ~~63.4% from 64.0% in 2021. Excluding the impact of the items noted below, gross profit decreased to 63.7% of sales in the six months 2022 from 65.7% in 2021~~higher prices and favorable volume and mix offset by higher manufacturing and supply chain costs primarily due to ~~increased~~higher raw material costs ~~from purchases of electronic components at premium prices on the spot market~~ and ~~other inflationary pressures, primarily related to labor, steel and transportation. These increased costs were partially offset by higher sales volumes and favorable mix.~~

Percent Net Sales
Three Months 2022 2021 2022 2021
Reported $ 2,826 $ 2,772 62.9 % 64.6 %
Inventory stepped-up to fair value 7 58 0.2 1.4
Restructuring-related and other charges 8 2 0.2 —
Medical device regulations 2 — — —
Adjusted $ 2,843 $ 2,832 63.3 % 66.0 %
Percent Net Sales
Six Months 2022 2021 2022 2021
Reported $ 5,560 $ 5,281 63.4 % 64.0 %
Inventory stepped-up to fair value 12 137 0.2 1.7
Restructuring-related and other charges 10 — 0.1 —
Medical device regulations 2 1 — —
Adjusted $ 5,584 $ 5,419 63.7 % 65.7 %
supply chain inefficiencies.

While segment mix was not a significant driver of the change in gross profit as a percent of net sales between the three and six months 2023 and 2022, 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 $41~~decreased $5 or ~~13.2%~~1.4% in the three months ~~2022~~2023 and ~~increased~~decreased as a percentage of net sales to ~~7.8%~~6.9% from ~~7.2% in 2021. Excluding the impact of the items noted below, expenses increased to 7.2% of sales~~7.8% in 2022, ~~from 6.6%~~primarily due to increased costs for product launches in ~~2021.~~the three months 2022.

Research, development and engineering expenses ~~increased $166~~decreased $79 or ~~27.8%~~10.3% in the six months ~~2022~~2023 and ~~increased~~decreased as a percentage of net sales to ~~8.7%~~7.0% from ~~7.3% in 2021. Excluding the impact of the items noted below, expenses increased to 7.2% of sales~~8.7% in 2022, ~~from 6.7% in 2021.~~

~~The increases~~primarily due to increased costs for ~~the three~~product launches and ~~six months reflect our continued commitment to new product development and technologies, integration of recent acquisitions and for the six months~~ the write-off of certain intangible ~~assets.~~

Percent Net Sales
Three Months 2022 2021 2022 2021
Reported $ 351 $ 310 7.8 % 7.2 %
Medical device regulations (28) (26) (0.6) (0.6)
Adjusted $ 323 $ 284 7.2 % 6.6 %
Percent Net Sales
Six Months 2022 2021 2022 2021
Reported $ 764 $ 598 8.7 % 7.3 %
Restructuring-related and other charges (79) — (0.9) —
Medical device regulations (56) (44) (0.6) (0.6)
Adjusted $ 629 $ 554 7.2 % 6.7 %
assets in the six months 2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$34~~$167 or ~~2.3%~~10.9% in the three months ~~2022~~2023 and decreased as a percentage of net sales to 34.1% from 34.3% ~~from 35.0%~~ in ~~2021. Excluding~~2022, primarily due to disciplined increases in spend and investments to support our growth. Expenses as a percentage of net sales in the three months 2022 included the impact of ~~the items noted below, expenses decreased~~$30 of charges for acquisition and integration-related costs primarily related to ~~32.4% of sales in 2022 from 33.4% in 2021.~~Wright and Vocera.

Selling, general and administrative expenses increased ~~$169~~$238 or ~~5.5%~~7.3% in the six months ~~2022~~2023 and decreased as a percentage of net sales to 35.7% from 37.1% ~~from 37.3%. Share-based~~in 2022. Expenses as a percentage of net sales in the six months 2022 included the impact of $132 of charges for share-based awards for Vocera employees that vested upon our ~~acquisition~~acquisition. The increase in ~~2022~~selling, general and ~~a charge of $132~~administrative expenses in the six months 2023 was ~~recorded. Excluding~~primarily due to disciplined increases in spend and investments to support our growth.

Recall Charges, Net

Recall charges, net were $3 and $4 in the ~~impact of~~three months and $3 and $18 in the ~~items noted below, expenses decreased to 33.7% of sales~~six months 2023 and 2022. Charges in ~~2022 from 34.3% in 2021.~~

~~The decreases as a percentage of sales for~~ the three and six months 2023 were ~~due~~related to LFIT Anatomic CoCr V40 Femoral Heads. Charges in the three and six months 2022 were related to Wright hip products. Refer to Note 6 to our ~~continued cost discipline~~Consolidated Financial Statements for further information.

Amortization of Intangible Assets

Amortization of intangible assets was $161 and ~~fixed cost leverage.~~$160 in the three months and $322 and $310 in the six months 2023 and 2022. Refer to Note 7 to our Consolidated Financial Statements for further information.

Percent Net Sales
Three Months 2022 2021 2022 2021
Reported $ 1,539 $ 1,505 34.3 % 35.0 %
Other acquisition and integration-related (30) (62) (0.8) (1.4)
Restructuring-related and other charges (54) (16) (1.2) (0.4)
Medical device regulations (2) — — —
Regulatory and legal matters 4 9 0.1 0.2
Adjusted $ 1,457 $ 1,436 32.4 % 33.4 %
Operating Income

Percent Net Sales
Six Months 2022 2021 2022 2021
Reported $ 3,249 $ 3,080 37.1 % 37.3 %
Other acquisition and integration-related (174) (232) (2.1) (2.8)
Restructuring-related and other charges (82) (31) (0.9) (0.3)
Medical device regulations (2) — — —
Regulatory and legal matters (33) 9 (0.4) 0.1
Adjusted $ 2,958 $ 2,826 33.7 % 34.3 %
Operating income was $965 and $772 in the three months 2023 and 2022. Operating income as a percentage of net sales in the three months 2023 increased to 19.3% from 17.2% in 2022. Refer to the comments above for discussion of the primary drivers of the change.

Operating income was $1,700 and $1,219 in the six months 2023 and 2022. Operating income as a percentage of net sales in the six months 2023 increased to 17.4% from 13.9% in 2022. Refer to the comments above for discussion of the primary drivers of the change.

MedSurg and Neurotechnology operating income as a percentage of net sales increased to 27.3% in the three months 2023 from 24.7% in 2022. Orthopaedics and Spine operating


Dollar amounts are in millions except per share amounts or as otherwise specified.			12


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q

~~Recall Charges~~

~~Recall charges were $4 and $76~~income as a percentage of net sales decreased to 28.1% in the three months 2023 from 29.8% in 2022. The key components of the change were:


	Operating Income Percent Net Sales
	MedSurg and Neurotechnology		Orthopaedics and Spine
Three Months 2022	24.7	%	29.8	%
Sales pricing	100 bps		(50) bps
Volume	430 bps		510 bps
Manufacturing and supply chain costs	70 bps		(170) bps
Research, development and engineering expenses	30 bps		10 bps
Selling, general and administrative expenses	(370) bps		(470) bps
Three Months 2023	27.3	%	28.1	%

The increase in MedSurg and ~~$18~~Neurotechnology operating income as a percentage of net sales for the three months was primarily impacted by higher unit volumes partially offset by higher selling, general and ~~$82~~administrative expenses due to disciplined increases in spend and investments to support our growth.

The decrease in Orthopaedics and Spine operating income as a percentage of net sales for the three months was primarily impacted by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth and higher manufacturing and supply chain costs primarily due to supply chain inefficiencies partially offset by higher unit volumes.

MedSurg and Neurotechnology operating income as a percentage of net sales increased to 25.4% in the six months ~~2022~~2023 from 25.3% in 2022. Orthopaedics and 2021. Charges in the three and six months 2022 were primarily related to the previously disclosed Wright hip products, and charges in the three and six months 2021 were primarily related to Rejuvenate and ABG II Modular-Neck hip stems. Refer to Note 6 to our Consolidated Financial Statements for further information.

~~Amortization~~Spine operating income as a percentage of ~~Intangible Assets~~

~~Amortization of intangible assets~~net sales was ~~$160 and $149 in the three months and $310 and $330~~28.5% in the six months ~~2022~~2023 and ~~2021. Refer to Note 7 to our Consolidated Financial Statements for further information.~~

~~Operating Income~~

~~Operating income increased $40 to 17.2% of sales in the three months 2022 from 17.0% of sales in 2021. Excluding the impact~~remained flat with 2022. The key components of the ~~items noted below,~~change were:


	Operating Income Percent Net Sales
	MedSurg and Neurotechnology		Orthopaedics and Spine
Six Months 2022	25.3	%	28.5	%
Sales pricing	120 bps		(50) bps
Volume	420 bps		610 bps
Manufacturing and supply chain costs	(150) bps		(100) bps
Research, development and engineering expenses	0 bps		10 bps
Selling, general and administrative expenses	(380) bps		(470) bps
Six Months 2023	25.4	%	28.5	%

The increase in MedSurg and Neurotechnology operating income ~~decreased~~as a percentage of net sales for the six months was primarily impacted by higher unit volumes and higher prices partially offset by higher selling, general and administrative expenses due to ~~23.7% of sales~~disciplined increases in ~~2022 from 25.9% in 2021~~spend and investments to support our growth and higher manufacturing and supply chain costs primarily due to ~~higher costs from inflationary pressures, partially offset by leverage from higher~~the effects of inflation on the cost of raw materials.

Orthopaedics and Spine operating income as a percentage of net sales ~~volumes and cost discipline.~~

~~Operating income increased $28 or 2.4% to 13.9% of sales in~~for the six months remained flat with 2022 ~~from 14.4% of sales~~as higher unit volumes were offset by higher selling, general and administrative expenses due to disciplined increases in ~~2021. Excluding the impact of the items noted below, operating income decreased~~spend and investments to ~~22.8% of sales in 2022 from 24.7% in 2021~~support our growth, higher manufacturing and supply chain costs primarily due to ~~higher costs from inflationary pressures~~supply chain inefficiencies and ~~our continued investments in innovation, partially offset by leverage from higher sales volumes and cost discipline.~~

Percent Net Sales
Three Months 2022 2021 2022 2021
Reported $ 772 $ 732 17.2 % 17.0 %
Inventory stepped-up to fair value 7 58 0.2 1.4
Other acquisition and integration-related 30 62 0.6 1.4
Amortization of purchased intangible assets 160 149 3.6 3.5
Restructuring-related and other charges 62 17 1.4 0.4
Medical device regulations 32 26 0.7 0.6
Recall-related matters 4 76 0.1 1.8
Regulatory and legal matters (4) (9) (0.1) (0.2)
Adjusted $ 1,063 $ 1,111 23.7 % 25.9 %
Percent Net Sales
Six Months 2022 2021 2022 2021
Reported $ 1,219 $ 1,191 13.9 % 14.4 %
Inventory stepped-up to fair value 12 137 0.1 1.7
Other acquisition and integration-related 174 232 2.0 2.8
Amortization of purchased intangible assets 310 330 3.5 4.0
Restructuring-related and other charges 171 31 2.0 0.4
Medical device regulations 60 45 0.7 0.5
Recall-related matters 18 82 0.2 1.0
Regulatory and legal matters 33 (9) 0.4 (0.1)
Adjusted $ 1,997 $ 2,039 22.8 % 24.7 %
lower prices.

Other Income (Expense), Net

Other income (expense), net was ($~~52)~~66) and ($~~70)~~52) in the three months and ($~~113)~~122) and ($~~162)~~113) in the six months ~~2022~~2023 and ~~2021.~~2022. The ~~decrease~~increase in net expense in ~~2022~~the three months 2023 was primarily due to higher interest expense. The increase in net expense in the six months 2023 was primarily due to foreign currency fluctuations and higher interest expense, partially offset by interest income and favorable investment ~~returns and interest income.~~returns.

Income Taxes

Net Earnings

Net earnings increased to $738 or $1.93 per diluted share in the three months 2023 from $656 or $1.72 per diluted share in ~~the three months 2022 from $592 or $1.55 per diluted share in 2021.~~2022. Adjusted net earnings per diluted share(1) was ~~$2.25~~$2.54 in ~~2022 in line with 2021.~~three months 2023, an increase of 12.9% from 2022.

Net earnings increased to $1,330 or $3.47 per diluted share in the six months 2023 from $979 or $2.56 per diluted share in ~~the six months 2022 from $894 or $2.34 per diluted share in 2021.~~2022. Adjusted net earnings per diluted share(1) ~~increased 1.0% to $4.22~~was $4.68 in ~~2022~~the six months 2023, an increase of 10.9% from ~~$4.18 in 2021.~~2022.

Percent Net Sales
Three Months 2022 2021 2022 2021
Reported $ 656 $ 592 14.6 % 13.8 %
Inventory stepped-up to fair value 5 43 0.1 1.0
Other acquisition and integration-related 23 51 0.5 1.2
Amortization of purchased intangible assets 124 113 2.8 2.7
Restructuring-related and other charges 56 15 1.2 0.3
Medical device regulations 26 21 0.6 0.5
Recall-related matters 3 68 0.1 1.6
Regulatory and legal matters (4) (12) (0.1) (0.3)
Tax matters (29) (30) (0.7) (0.7)
Adjusted $ 860 $ 861 19.1 % 20.1 %
Percent Net Sales
Six Months 2022 2021 2022 2021
Reported $ 979 $ 894 11.2 % 10.8 %
Inventory stepped-up to fair value 9 103 0.1 1.2
Other acquisition and integration-related 128 180 1.5 2.2
Amortization of purchased intangible assets 239 264 2.6 3.3
Restructuring-related and other charges 140 33 1.6 0.4
Medical device regulations 50 37 0.6 0.4
Recall-related matters 14 73 0.2 0.9
Regulatory and legal matters 24 (12) 0.3 (0.1)
Tax matters 29 26 0.3 0.3
Adjusted $ 1,612 $ 1,598 18.4 % 19.4 %


~~Dollar amounts are in millions except per share amounts or as otherwise specified.~~			13


~~STRYKER CORPORATION~~						~~2022 Second Quarter Form 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)~~; free cash flow; and free cash flow conversion.~~. 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


Dollar amounts are in millions except per share amounts or as otherwise specified.			13


STRYKER CORPORATION						2023 Second Quarter Form 10-Q

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. ~~To measure free cash flow, we adjust cash provided by operating activities by~~The income tax effect of each adjustment was determined based on the ~~amount~~tax effect of ~~purchases of property, plant and equipment and proceeds from long-lived asset disposals and remove~~ the ~~impact of certain legal settlements and recall payments. To measure free cash flow conversion we divide free cash flow by adjusted net earnings.~~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 and specific costs (e.g., ~~inventory step-up and~~ deal costs) related to the consummation of the acquisition ~~process.~~process and legal entity rationalization.

2.Amortization of purchased intangible assets. Periodic amortization expense related to purchased intangible assets.

3.~~Restructuring-related~~Structural optimization and other ~~charges~~special charges.. Costs associated with ~~the termination of sales relationships in certain countries,~~employee retention and workforce reductions, ~~elimination~~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 ~~lines,~~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 ~~associated costs and~~ other ~~restructuring-related activities.~~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 and the more stringent regulations for medical devices in China.~~Union.

5.Recall-related matters. ~~Our~~Changes in our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40, Wright legacy hip products and other product recalls.

6.Regulatory and legal matters. ~~Our~~Changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and ~~other legal~~the amount of favorable awards from settlements.

7.Tax matters. ~~Charges represent the impact~~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 non-GAAP 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.			14


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q


Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures	Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures																							Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2022		Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Net Earnings			Effective Tax Rate		Diluted EPS
Three Months 2023																								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	Reported	$	2,826		$	1,539		$	351		$	772		$	(52)		$	656		8.9	%	$	1.72	Reported	$	3,181		$	1,706		$	346		$	965		$	(66)		$	161	$	738		17.9	%	$	1.93
Reported percent net sales	Reported percent net sales	62.9		%	34.3		%	7.8		%	17.2		%	(1.2)		%	14.6		%					Reported percent net sales	63.7		%	34.1		%	6.9		%	19.3		%	(1.3)		%	nm		14.8		%
Acquisition and integration-related costs:	Acquisition and integration-related costs:																							Acquisition and integration-related costs:
Inventory stepped-up to fair value	Inventory stepped-up to fair value	7			—			—			7			—			5			0.1		0.01		Inventory stepped-up to fair value	—			—			—			—			—			—		—			—		—
Other acquisition and integration-related		—			(30)			—			30			—			23			0.4		0.06
Other acquisition and integration-related (a)																								Other acquisition and integration-related (a)	—			(2)			—			2			—			2		—			0.1		—
Amortization of purchased intangible assets	Amortization of purchased intangible assets	—			—			—			160			—			124			2.0		0.33		Amortization of purchased intangible assets	—			—			—			161			—			34		127			1.1		0.33
Restructuring-related and other charges		8			(54)			—			62			—			56			(0.4)		0.15
Medical device regulations		2			(2)			(28)			32			—			26			0.2		0.07
Recall-related matters		—			—			—			4			—			3			0.1		—
Regulatory and legal matters		—			4			—			(4)			—			(4)			—		(0.02)
Tax matters		—			—			—			—			(12)			(29)			2.6		(0.07)
Structural optimization and other special charges (b)																								Structural optimization and other special charges (b)	9			(63)			—			72			—			17		55			0.7		0.14
Medical device regulations (c)																								Medical device regulations (c)	—			—			(27)			27			—			8		19			0.4		0.05
Recall-related matters (d)																								Recall-related matters (d)	—			—			—			3			—			1		2			—		0.01
Regulatory and legal matters (e)																								Regulatory and legal matters (e)	—			14			—			(14)			—			(3)		(11)			(0.1)		(0.03)
Tax matters (f)																								Tax matters (f)	—			—			—			—			—			(46)		46			(4.9)		0.11
Adjusted	Adjusted	$	2,843		$	1,457		$	323		$	1,063		$	(64)		$	860		13.9	%	$	2.25	Adjusted	$	3,190		$	1,655		$	319		$	1,216		$	(66)		$	174	$	976		15.2	%	$	2.54
Adjusted percent net sales	Adjusted percent net sales	63.3		%	32.4		%	7.2		%	23.7		%	(1.4)		%	19.1		%					Adjusted percent net sales	63.9		%	33.1		%	6.4		%	24.3		%	(1.3)		%	nm		19.5		%

Three Months 2021 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 2,772 $ 1,505 $ 310 $ 732 $ (70) $ 592 10.6 % $ 1.55
Reported percent net sales 64.6 % 35.0 % 7.2 % 17.0 % (1.6) % 13.8 %
Acquisition and integration-related costs:
Inventory stepped-up to fair value 58 — — 58 — 43 0.6 0.11
Other acquisition and integration-related — (62) — 62 — 51 0.1 0.13
Amortization of purchased intangible assets — — — 149 — 113 1.4 0.29
Restructuring-related and other charges 2 (16) — 17 — 15 (0.1) 0.03
Medical device regulations — — (26) 26 — 21 0.1 0.06
Recall-related matters — — — 76 — 68 (0.4) 0.18
Regulatory and legal matters — 9 — (9) (3) (12) 0.3 (0.03)
Tax matters — — — — — (30) 4.4 (0.07)
Adjusted $ 2,832 $ 1,436 $ 284 $ 1,111 $ (73) $ 861 17.0 % $ 2.25
Adjusted percent net sales 66.0 % 33.4 % 6.6 % 25.9 % (1.7) % 20.1 %
Six Months 2022 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 5,560 $ 3,249 $ 764 $ 1,219 $ (113) $ 979 11.5 % $ 2.56
Reported percent net sales 63.4 % 37.1 % 8.7 % 13.9 % (1.3) % 11.2 %
Acquisition and integration-related costs:
Inventory stepped-up to fair value 12 — — 12 — 9 0.1 0.02
Other acquisition and integration-related — (174) — 174 — 128 2.0 0.33
Amortization of purchased intangible assets — — — 310 — 239 2.6 0.63
Restructuring-related and other charges 10 (82) (79) 171 — 140 0.6 0.37
Medical device regulations 2 (2) (56) 60 — 50 0.2 0.13
Recall-related matters — — — 18 — 14 0.2 0.04
Regulatory and legal matters — (33) — 33 — 24 0.4 0.06
Tax matters — — — — (12) 29 (3.7) 0.08
Adjusted $ 5,584 $ 2,958 $ 629 $ 1,997 $ (125) $ 1,612 13.9 % $ 4.22
Adjusted percent net sales 63.7 % 33.7 % 7.2 % 22.8 % (1.4) % 18.4 %
Six Months 2021 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 5,281 $ 3,080 $ 598 $ 1,191 $ (162) $ 894 13.1 % $ 2.34
Reported percent net sales 64.0 % 37.3 % 7.3 % 14.4 % (2.0) % 10.8 %
Acquisition and integration-related costs:
Inventory stepped-up to fair value 137 — — 137 — 103 1.1 0.27
Other acquisition and integration-related — (232) — 232 — 180 1.6 0.47
Amortization of purchased intangible assets — — — 330 — 264 1.6 0.69
Restructuring-related and other charges — (31) — 31 11 33 0.3 0.08
Medical device regulations 1 — (44) 45 — 37 0.2 0.10
Recall-related matters — — — 82 — 73 (0.3) 0.19
Regulatory and legal matters — 9 — (9) (3) (12) 0.2 (0.03)
Tax matters — — — — — 26 (2.6) 0.07
Adjusted $ 5,419 $ 2,826 $ 554 $ 2,039 $ (154) $ 1,598 15.2 % $ 4.18
Adjusted percent net sales 65.7 % 34.3 % 6.7 % 24.7 % (1.9) % 19.4 %


Three Months 2022	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	$	2,826		$	1,539		$	351		$	772		$	(52)		$	64	$	656		8.9	%	$	1.72
Reported percent net sales	62.9		%	34.3		%	7.8		%	17.2		%	(1.2)		%	nm		14.6		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	7			—			—			7			—			2		5			0.1		0.01
Other acquisition and integration-related (a)	—			(30)			—			30			—			7		23			0.4		0.06
Amortization of purchased intangible assets	—			—			—			160			—			36		124			2.0		0.33
Structural optimization and other special charges (b)	8			(54)			—			62			—			6		56			(0.4)		0.15
Medical device regulations (c)	2			(2)			(28)			32			—			6		26			0.2		0.07
Recall-related matters (d)	—			—			—			4			—			1		3			0.1		—
Regulatory and legal matters (e)	—			4			—			(4)			—			—		(4)			—		(0.02)
Tax matters (f)	—			—			—			—			(12)			17		(29)			2.6		(0.07)
Adjusted	$	2,843		$	1,457		$	323		$	1,063		$	(64)		$	139	$	860		13.9	%	$	2.25
Adjusted percent net sales	63.3		%	32.4		%	7.2		%	23.7		%	(1.4)		%	nm		19.1		%



(a)			Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($0 in 2023, $6 in 2022), employee retention and workforce reductions ($0 in 2023, $14 in 2022), changes in the fair value of contingent consideration (($2) in 2023, ($9) in 2022), manufacturing integration costs ($0 in 2023, $8 in 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($4 in 2023, $11 in 2022).
(b)			Charges represent the costs associated with employee retention and workforce reductions ($47 in 2023, $20 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($12 in 2023, $29 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($6 in 2023, ($8) in 2022), certain long-lived and intangible asset write-offs and impairments ($2 in 2023, $12 in 2022) and other charges ($5 in 2023, $9 in 2022).
(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 minimum of the range of probable loss to resolve certain recall-related matters.
(e)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f)			Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $47 in 2023 and $46 in 2022), certain tax audit settlements (benefit of $4 included in Income Taxes for 2023, $0 for 2022) and the reversal of deferred income tax on undistributed earnings of foreign subsidiaries ($0 for 2023, benefit of $71 for 2022).



Six 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	$	6,197		$	3,487		$	685		$	1,700		$	(122)		$	248	$	1,330		15.7	%	$	3.47
Reported percent net sales	63.4		%	35.7		%	7.0		%	17.4		%	(1.2)		%	nm		13.6		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	—			—			—			—			—			—		—			—		—
Other acquisition and integration-related (a)	—			(8)			—			8			—			3		5			0.1		0.01
Amortization of purchased intangible assets	—			—			—			322			—			68		254			1.4		0.66
Structural optimization and other special charges (b)	11			(103)			—			114			—			25		89			0.6		0.23
Medical device regulations (c)	—			—			(55)			55			—			13		42			0.3		0.11
Recall-related matters (d)	—			—			—			3			—			1		2			—		0.01
Regulatory and legal matters (e)	—			(20)			—			20			—			3		17			—		0.04
Tax matters (f)	—			—			—			—			(9)			(66)		57			(4.0)		0.15
Adjusted	$	6,208		$	3,356		$	630		$	2,222		$	(131)		$	295	$	1,796		14.1	%	$	4.68
Adjusted percent net sales	63.5		%	34.3		%	6.4		%	22.7		%	(1.3)		%	nm		18.4		%


Dollar amounts are in millions except per share amounts or as otherwise specified.			15


STRYKER CORPORATION						~~2022~~2023 Second Quarter Form 10-Q


Six Months 2022	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	$	5,560		$	3,249		$	764		$	1,219		$	(113)		$	127	$	979		11.5	%	$	2.56
Reported percent net sales	63.4		%	37.1		%	8.7		%	13.9		%	(1.3)		%	nm		11.2		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	12			—			—			12			—			3		9			0.1		0.02
Other acquisition and integration-related (a)	—			(174)			—			174			—			46		128			2.0		0.33
Amortization of purchased intangible assets	—			—			—			310			—			71		239			2.6		0.63
Structural optimization and other special charges (b)	10			(82)			(79)			171			—			31		140			0.6		0.37
Medical device regulations (c)	2			(2)			(56)			60			—			10		50			0.2		0.13
Recall-related matters (d)	—			—			—			18			—			4		14			0.2		0.04
Regulatory and legal matters (e)	—			(33)			—			33			—			9		24			0.4		0.06
Tax matters (f)	—			—			—			—			(12)			(41)		29			(3.7)		0.08
Adjusted	$	5,584		$	2,958		$	629		$	1,997		$	(125)		$	260	$	1,612		13.9	%	$	4.22
Adjusted percent net sales	63.7		%	33.7		%	7.2		%	22.8		%	(1.4)		%	nm		18.4		%


(a)			Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($0 in 2023, $14 in 2022), employee retention and workforce reductions ($0 in 2023, $18 in 2022), changes in the fair value of contingent consideration (($3) in 2023, ($25) in 2022), manufacturing integration costs ($2 in 2023, $17 in 2022), stock compensation payments upon a change in control ($0 in 2023, $132 in 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($9 in 2023, $18 in 2022).
(b)			Charges represent the costs associated with employee retention and workforce reductions ($68 in 2023, $29 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($24 in 2023, $46 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($9 in 2023, ($8) in 2022), certain long-lived and intangible asset write-offs and impairments ($3 in 2023, $92 in 2022) and other charges ($10 in 2023, $12 in 2022).
(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 minimum of the range of probable loss to resolve certain recall-related matters.
(e)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f)			Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $94 in 2023 and $92 in 2022), certain tax audit settlements (benefit of $9 included in Other Income (Expense), Net for 2023 and benefit of $24 included in Income Taxes for 2023, $0 for 2022) and the reversal of deferred income tax on undistributed earnings of foreign subsidiaries ($0 for 2023, benefit of $71 for 2022).

FINANCIAL CONDITION AND LIQUIDITY

Six Months 2022 2021
Net cash provided by operating activities $ 732 $ 1,330
Net cash used in investing activities (2,834) (298)
Net cash provided by (used in) financing activities 240 (1,729)
Effect of exchange rate changes on cash and cash equivalents (38) (5)
Change in cash and cash equivalents $ (1,900) $ (702)


	Six Months
	2023		2022
Net cash provided by (used in):
Operating activities	$	1,133	$	732
Investing activities	(665)		(2,834)
Financing activities	(886)		240
Effect of exchange rate changes on cash and cash equivalents	(25)		(38)
Change in cash and cash equivalents	$	(443)	$	(1,900)

Operating Activities

Cash provided by operating activities was ~~$732~~$1,133 and ~~$1,330~~$732 in the six months ~~2022~~2023 and ~~2021.~~2022. The ~~decrease~~increase was primarily due to ~~increased inventory driven by~~net earnings and higher ~~material prices and inventory levels to manage supply chain issues and increased~~ accounts receivable ~~primarily due to timing of sales.~~collections.

Investing Activities

Cash used in investing activities was ~~$2,834~~$665 and ~~$298~~$2,834 in the six months 2023 and 2022. The six months 2023 included cash paid for the Cerus acquisition and the six months 2022 included cash paid for the Vocera acquisition. Refer to Note 7 to our Consolidated Financial Statements for further information.

Financing Activities

Cash (used in) provided by financing activities was ($886) and ~~2021. The~~ ~~increase~~$240 in ~~cash~~the six months 2023 and 2022. Cash used in 2023 was primarily due to dividend payments of $569 and repayments of $200 on the term loan used to fund the acquisition of Vocera. Cash provided by financing activities in 2022 was primarily due to ~~increased payments for acquisitions and investments in capital projects.~~

~~Financing Activities~~

~~Cash provided by (used in) financing activities was $240 and ($1,729) in~~ the ~~six months 2022 and 2021. Cash provided in 2022 was primarily driven~~ ~~by the issuance of a~~ $1,500 term loan used to fund the ~~Vocera~~ acquisition of ~~which $250 has been repaid,~~Vocera, partially offset by ~~the payment~~$250 of ~~dividends. Cash used in 2021 was primarily due to debt repayments of $750 in March 2021 and $400 for~~payments on the term loan, ~~in June 2021. W~~edividend payments of $525 and net repayments of $376 on short-term borrowings.

We did not repurchase any shares in the six months ~~2022~~2023 and ~~2021. Dividends paid to common shareholders were $525 and $475 in the six months 2022 and 2021.~~2022.

Liquidity

Cash, cash equivalents and marketable securities were ~~$1,127~~$1,478 and ~~$3,019~~$1,928 on June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. Current assets exceeded current liabilities by ~~$4,421~~$3,567 and ~~$5,468~~$3,972 on June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. 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 and marketable securities held in locations outside the United States was approximately ~~55%~~35% on June 30, ~~2022~~2023 compared to ~~26%~~36% on December 31, ~~2021.~~2022.

~~Critical Accounting Policies~~

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 ~~2021.~~2022, except as described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

New Accounting Pronouncements Not Yet Adopted

Refer to Note 1 to our Consolidated Financial Statements for information.


Dollar amounts are in millions except per share amounts or as otherwise specified.			16


STRYKER CORPORATION						2023 Second Quarter Form 10-Q

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 ~~referring to us~~ 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 ~~which are intended to take advantage of the "safe harbor" provisions of the Reform Act,~~ 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, including uncertainties related to the impact of the COVID-19 pandemic on our operations and financial results.~~predict. Therefore, actual results could differ materially and adversely from these forward-looking ~~statements.~~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 ~~those~~the risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for ~~2021 and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2022. 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 ~~2021.~~2022. We 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 ~~areas~~area of market risk exposure to be exchange rate risk ~~and the impacts of the COVID-19 pandemic~~ on our ~~operations and financial~~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 ~~2021.~~2022. There were no material changes from the information provided therein. We are not able to quantify the impacts of the COVID-19 pandemic on our financial results. Qualitative disclosures about the COVID-19 pandemic are included in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q and Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for 2021.


~~Dollar amounts are in millions except per share amounts or as otherwise specified.~~			16


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 June 30, ~~2022.~~2023. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of June 30, ~~2022.~~2023.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial reporting during the six months ~~2022~~2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In February 2022 we completed the acquisition of Vocera and are currently integrating Vocera into our operations, compliance programs and internal control processes. Vocera constituted approximately 8.5% of our total assets as of June 30, 2022, including the goodwill and intangible assets recorded as part of the purchase price allocation and approximately 1% of our net sales in the six months ended June 30, 2022. United States Securities and Exchange Commission guidance allows companies to exclude acquisitions from their assessment of the internal control over financial reporting during the first year following an acquisition while integrating the acquired company. We have excluded the acquired operations of Vocera from our assessment of the Company's 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 ~~2021 and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, except for updates to the following risk factor:~~

We use a variety of raw materials, components, devices and third-party services in our global supply chains, production and distribution processes; significant shortages, price increases or unavailability of third-party services could increase our operating costs, require significant capital expenditures, or adversely impact the competitive position of our products: Our reliance on certain suppliers to secure raw materials, components and finished devices, and on certain third-party service providers, such as sterilization service providers, exposes us to product shortages and unanticipated increases in prices, whether due to inflationary pressure, regulatory changes or otherwise. In addition, several raw materials, components, finished devices and services are procured from a sole-source due to the quality considerations, unique intellectual property considerations or constraints associated with regulatory requirements. If sole-source suppliers or service providers are acquired or were unable or unwilling to deliver these materials or services, we may not be able to manufacture or have available one or more products during such period of unavailability and our business could suffer. In certain cases we may not be able to establish additional or replacement suppliers for such materials or service providers for such services in a timely or cost effective manner, largely as a result of FDA and other regulations that require, among other things, validation of materials, components and services prior to their use in or with our products. In addition, during 2022, the market has experienced increasing inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the COVID-19 pandemic, which

2022.

we anticipate will continue. The existence of inflation in the United States and in many of the countries where we conduct business has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, increased costs of labor, weakening exchange rates and other similar effects. We have experienced and may continue to experience inflationary increases in manufacturing costs and operating expenses as well as negative impacts from weakening exchange rates, caused by the COVID-19 pandemic or as a result of general macroeconomic factors, and may not be able to pass these cost increases on to our customers in a timely manner, which could have a material adverse impact on our profitability and results of operations. Inflation may also cause our customers to reduce or delay orders for our products and services, which could have a material adverse impact on our sales and results of operations.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We issued ~~6,071~~5,146 shares of our common stock in the three months ~~2022~~2023 as 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 six months ~~2022~~2023 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 June 30, ~~2022.~~2023.


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).


Dollar amounts are in millions except per share amounts or as otherwise specified.			17


STRYKER CORPORATION						2023 Second Quarter Form 10-Q


ITEM 6.			EXHIBITS


10(i)			Form of grant notice and terms and conditions for re ~~stricted~~restricted stock u ~~nits grant~~edunits granted in ~~2022 under~~2023 under the 2011 Long-Term Incentive Plan to non-employee directors.
10(ii)			Amendment No. 1, dated June 15, 2023, to Credit Agreement, dated as of October 26, 2021, by and among Stryker Corporation, the other borrowers party thereto, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent — Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated June 16, 2023 (Commission File No. 000-09165).
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			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)

			* Furnished with this Form 10-Q


~~Dollar amounts are in millions except per share amounts or as otherwise specified.~~			17			18


STRYKER CORPORATION						~~2022~~2023 Second 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:	~~July 27, 2022~~August 4, 2023	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chair, Chief Executive Officer and President


Date:	~~July 27, 2022~~August 4, 2023	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer


						1819


Net Sales by Product Line
	Three Months				Six Months
	2022		2021		2022		2021
MedSurg and Neurotechnology:
Instruments	$	563	$	517	$	1,091	$	986
Endoscopy	600		518		1,138		987
Medical	666		640		1,330		1,262
Neurovascular	306		301		607		590
Neuro Cranial	337		310		660		591
Other	77		73		146		134
	$	2,549	$	2,359	$	4,972	$	4,550
Orthopaedics and Spine:
Knees	$	500	$	474	$	964	$	886
Hips	364		353		691		662
Trauma and Extremities	676		674		1,361		1,314
Spine	290		307		569		585
Other	114		127		211		250
	$	1,944	$	1,935	$	3,796	$	3,697
Total	$	4,493	$	4,294	$	8,768	$	8,247


Net Sales by Geography
	Three Months 2022				Three Months 2021
	United States		International		United States		International
MedSurg and Neurotechnology:
Instruments	$	451	$	112	$	401	$	116
Endoscopy	473		127		407		111
Medical	536		130		488		152
Neurovascular	113		193		115		186
Neuro Cranial	281		56		256		54
Other	75		2		72		1
	$	1,929	$	620	$	1,739	$	620
Orthopaedics and Spine:
Knees	$	368	$	132	$	349	$	125
Hips	230		134		221		132
Trauma and Extremities	489		187		475		199
Spine	209		81		217		90
Other	86		28		99		28
	$	1,382	$	562	$	1,361	$	574
Total	$	3,311	$	1,182	$	3,100	$	1,194