UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 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 ~~379,608,166~~379,778,279 shares of Common Stock, $0.10 par value, on ~~March 31,~~June 30, 2023.


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

PART I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)


		Three Months				Three Months				Six Months
		2023		2022				2023		2022		2023		2022
Net sales	Net sales	$	4,778	$	4,275		Net sales	$	4,996	$	4,493	$	9,774	$	8,768
Cost of sales	Cost of sales	1,762		1,541			Cost of sales	1,815		1,667		3,577		3,208
Gross profit	Gross profit	$	3,016	$	2,734		Gross profit	$	3,181	$	2,826	$	6,197	$	5,560
Research, development and engineering expenses	Research, development and engineering expenses	339		413			Research, development and engineering expenses	346		351		685		764
Selling, general and administrative expenses	Selling, general and administrative expenses	1,781		1,710			Selling, general and administrative expenses	1,706		1,539		3,487		3,249
Recall charges, net	Recall charges, net	—		14			Recall charges, net	3		4		3		18
Amortization of intangible assets	Amortization of intangible assets	161		150			Amortization of intangible assets	161		160		322		310

Total operating expenses	Total operating expenses	$	2,281	$	2,287		Total operating expenses	$	2,216	$	2,054	$	4,497	$	4,341
Operating income	Operating income	$	735	$	447		Operating income	$	965	$	772	$	1,700	$	1,219
Other income (expense), net	Other income (expense), net	(56)		(61)			Other income (expense), net	(66)		(52)		(122)		(113)
Earnings before income taxes	Earnings before income taxes	$	679	$	386		Earnings before income taxes	$	899	$	720	$	1,578	$	1,106
Income taxes	Income taxes	87		63			Income taxes	161		64		248		127
Net earnings	Net earnings	$	592	$	323		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	$	1.56	$	0.86		Basic	$	1.95	$	1.73	$	3.51	$	2.59
Diluted	Diluted	$	1.54	$	0.84		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	379.0		377.7			Basic	379.7		378.3		379.4		378.0
Effect of dilutive employee stock compensation	Effect of dilutive employee stock compensation	4.2		5.0			Effect of dilutive employee stock compensation	4.2		3.9		4.2		4.5
Diluted	Diluted	383.2		382.7			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	$	0.750	$	0.695		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				Three Months				Six Months
		2023		2022				2023		2022		2023		2022
Net earnings	Net earnings	$	592	$	323		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	(2)		(1)			Pension plans	(1)		8		(3)		7
Unrealized gains (losses) on designated hedges	Unrealized gains (losses) on designated hedges	(9)		1			Unrealized gains (losses) on designated hedges	11		24		2		25
Financial statement translation	Financial statement translation	(73)		53			Financial statement translation	(35)		161		(108)		214
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	$	(84)	$	52		Total other comprehensive income (loss), net of tax	$	(25)	$	193	$	(109)	$	245
Comprehensive income	Comprehensive income	$	508	$	375		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						2023 ~~First~~Second Quarter Form 10-Q

CONSOLIDATED BALANCE SHEETS


		March 31		December 31			June 30		December 31
		2023		2022			2023		2022
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	1,671	$	1,844	Cash and cash equivalents	$	1,401	$	1,844
Marketable securities	Marketable securities	86		84		Marketable securities	77		84
Accounts receivable, less allowance of $180 ($154 in 2022)		3,215		3,565
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	1,144		1,006		Materials and supplies	1,221		1,006
Work in process	Work in process	366		348		Work in process	391		348
Finished goods	Finished goods	2,823		2,641		Finished goods	2,981		2,641
Total inventories	Total inventories	$	4,333	$	3,995	Total inventories	$	4,593	$	3,995
Prepaid expenses and other current assets	Prepaid expenses and other current assets	850		787		Prepaid expenses and other current assets	819		787
Total current assets	Total current assets	$	10,155	$	10,275	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	1,770		1,739		Land, buildings and improvements	1,646		1,739
Machinery and equipment	Machinery and equipment	4,200		4,066		Machinery and equipment	4,441		4,066
Total property, plant and equipment	Total property, plant and equipment	$	5,970	$	5,805	Total property, plant and equipment	$	6,087	$	5,805
Less allowance for depreciation	Less allowance for depreciation	2,933		2,835		Less allowance for depreciation	3,005		2,835
Property, plant and equipment, net	Property, plant and equipment, net	$	3,037	$	2,970	Property, plant and equipment, net	$	3,082	$	2,970
Goodwill	Goodwill	14,849		14,880		Goodwill	15,172		14,880
Other intangibles, net	Other intangibles, net	4,779		4,885		Other intangibles, net	4,917		4,885
Noncurrent deferred income tax assets	Noncurrent deferred income tax assets	1,443		1,410		Noncurrent deferred income tax assets	1,439		1,410
Other noncurrent assets	Other noncurrent assets	2,567		2,464		Other noncurrent assets	2,648		2,464
Total assets	Total assets	$	36,830	$	36,884	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	$	1,366	$	1,413	Accounts payable	$	1,326	$	1,413
Accrued compensation	Accrued compensation	713		1,149		Accrued compensation	929		1,149
Income taxes	Income taxes	371		292		Income taxes	298		292
Dividends payable	Dividends payable	285		284		Dividends payable	284		284
Accrued product liabilities	Accrued product liabilities	227		230		Accrued product liabilities	220		230
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,700		1,744		Accrued expenses and other liabilities	1,729		1,744
Current maturities of debt	Current maturities of debt	1,204		1,191		Current maturities of debt	1,798		1,191
Total current liabilities	Total current liabilities	$	5,866	$	6,303	Total current liabilities	$	6,584	$	6,303
Long-term debt, excluding current maturities	Long-term debt, excluding current maturities	11,857		11,857		Long-term debt, excluding current maturities	11,149		11,857
Income taxes	Income taxes	625		641		Income taxes	469		641
Other noncurrent liabilities	Other noncurrent liabilities	1,587		1,467		Other noncurrent liabilities	1,846		1,467
Total liabilities	Total liabilities	$	19,935	$	20,268	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	2,090		2,034		Additional paid-in capital	2,127		2,034
Retained earnings	Retained earnings	15,072		14,765		Retained earnings	15,526		14,765
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(305)		(221)		Accumulated other comprehensive loss	(330)		(221)
Total shareholders' equity	Total shareholders' equity	$	16,895	$	16,616	Total shareholders' equity	$	17,361	$	16,616
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	36,830	$	36,884	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						2023 ~~First~~Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)


		Three Months				Three Months				Six Months
		2023		2022				2023		2022		2023		2022
Common stock shares outstanding (in millions)	Common stock shares outstanding (in millions)						Common stock shares outstanding (in millions)
Beginning	Beginning	378.7		377.5			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	0.9		0.7			Issuance of common stock under stock compensation and benefit plans	0.2		0.1		1.1		0.8

Ending	Ending	379.6		378.2			Ending	379.8		378.3		379.8		378.3

Common stock	Common stock						Common stock
Beginning	Beginning	$	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		Ending	$	38	$	38	$	38	$	38
Additional paid-in capital	Additional paid-in capital						Additional paid-in capital
Beginning	Beginning	$	2,034	$	1,890		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	(18)		(14)			Issuance of common stock under stock compensation and benefit plans	(2)		6		(20)		(8)

Share-based compensation	Share-based compensation	74		71			Share-based compensation	39		36		113		107
Ending	Ending	$	2,090	$	1,947		Ending	$	2,127	$	1,989	$	2,127	$	1,989
Retained earnings	Retained earnings						Retained earnings
Beginning	Beginning	$	14,765	$	13,480		Beginning	$	15,072	$	13,540	$	14,765	$	13,480

Net earnings	Net earnings	592		323			Net earnings	738		656		1,330		979

Cash dividends declared	Cash dividends declared	(285)		(263)			Cash dividends declared	(284)		(263)		(569)		(526)
Ending	Ending	$	15,072	$	13,540		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	$	(221)	$	(531)		Beginning	$	(305)	$	(479)	$	(221)	$	(531)
Other comprehensive income (loss)	Other comprehensive income (loss)	(84)		52			Other comprehensive income (loss)	(25)		193		(109)		245
Ending	Ending	$	(305)	$	(479)		Ending	$	(330)	$	(286)	$	(330)	$	(286)

Total shareholders' equity	Total shareholders' equity	$	16,895	$	15,046		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						2023 ~~First~~Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Three Months					Six Months
		2023		2022			2023		2022
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	592	$	323	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	96		92		Depreciation	194		185
Amortization of intangible assets	Amortization of intangible assets	161		150		Amortization of intangible assets	322		310
Asset impairments	Asset impairments	2		—		Asset impairments	3		—
Share-based compensation	Share-based compensation	74		71		Share-based compensation	113		107
Recall charges, net	Recall charges, net	—		14		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	—		5		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	365		53		Accounts receivable	308		(159)
Inventories	Inventories	(314)		(229)		Inventories	(589)		(523)
Accounts payable	Accounts payable	(56)		(52)		Accounts payable	(97)		34
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(405)		(348)		Accrued expenses and other liabilities	(159)		(257)
Recall-related payments	Recall-related payments	(14)		(9)		Recall-related payments	(23)		(19)
Income taxes	Income taxes	23		(3)		Income taxes	(169)		(132)
Other, net	Other, net	(79)		136		Other, net	(103)		177
Net cash provided by operating activities	Net cash provided by operating activities	$	445	$	203	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)		Acquisitions, net of cash acquired	(390)		(2,563)
Purchases of marketable securities	Purchases of marketable securities	(28)		(9)		Purchases of marketable securities	(35)		(38)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	25		11		Proceeds from sales of marketable securities	42		29
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(130)		(119)		Purchases of property, plant and equipment	(282)		(262)

Other investing, net		1		(2)

Net cash used in investing activities	Net cash used in investing activities	$	(132)	$	(2,682)	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	(2)		(170)		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		Proceeds from issuance of long-term debt	—		1,500
Payments on long-term debt	Payments on long-term debt	(100)		—		Payments on long-term debt	(201)		(252)
Payments of dividends	Payments of dividends	(284)		(262)		Payments of dividends	(569)		(525)

Cash paid for taxes from withheld shares	Cash paid for taxes from withheld shares	(94)		(72)		Cash paid for taxes from withheld shares	(111)		(84)

Other financing, net	Other financing, net	(1)		(3)		Other financing, net	(1)		(23)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	(481)	$	993	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	(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	$	(173)	$	(1,486)	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	1,844		2,944		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	$	1,671	$	1,458	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						2023 ~~First~~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 ~~March 31,~~June 30, 2023 andand the results of operations for the three and six months 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 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.

NOTE 2 - REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2022.

We disaggregate our net sales by business and geographic location for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors.

Beginning in the first quarter of 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 ~~$81~~$87 and ~~$69~~$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	Net Sales by Business						Net Sales by Business
		Three Months				Three Months						Six Months
		2023		2022				2023		2022			2023		2022
MedSurg and Neurotechnology:	MedSurg and Neurotechnology:						MedSurg and Neurotechnology:
Instruments	Instruments	$	575	$	528		Instruments	$	630	$	563		$	1,205	$	1,091
Endoscopy	Endoscopy	698		607			Endoscopy	705		677			1,403		1,284
Medical	Medical	778		664			Medical	841		666			1,619		1,330
Neurovascular	Neurovascular	284		301			Neurovascular	311		306			595		607
Neuro Cranial	Neuro Cranial	355		323			Neuro Cranial	373		337			728		660

		$	2,690	$	2,423			$	2,860	$	2,549		$	5,550	$	4,972
Orthopaedics and Spine:	Orthopaedics and Spine:						Orthopaedics and Spine:
Knees	Knees	$	566	$	464		Knees	$	562	$	500		$	1,128	$	964
Hips	Hips	375		327			Hips	393		364			768		691
Trauma and Extremities	Trauma and Extremities	769		685			Trauma and Extremities	766		676			1,535		1,361
Spine	Spine	284		279			Spine	296		290			580		569
Other	Other	94		97			Other	119		114			213		211
		$	2,088	$	1,852			$	2,136	$	1,944		$	4,224	$	3,796
Total	Total	$	4,778	$	4,275		Total	$	4,996	$	4,493		$	9,774	$	8,768


Net Sales by Geography	Net Sales by Geography									Net Sales by Geography
		Three Months 2023				Three Months 2022					Three Months 2023				Three Months 2022
		United States		International		United States		International			United States		International		United States		International
MedSurg and Neurotechnology:	MedSurg and Neurotechnology:									MedSurg and Neurotechnology:
Instruments	Instruments	$	450	$	125	$	414	$	114	Instruments	$	512	$	118	$	451	$	112
Endoscopy	Endoscopy	564		134		486		121		Endoscopy	568		137		548		129
Medical	Medical	612		166		525		139		Medical	682		159		536		130
Neurovascular	Neurovascular	118		166		110		191		Neurovascular	123		188		113		193
Neuro Cranial	Neuro Cranial	289		66		264		59		Neuro Cranial	306		67		281		56
											$	2,191	$	669	$	1,929	$	620
		$	2,033	$	657	$	1,799	$	624
Orthopaedics and Spine:	Orthopaedics and Spine:									Orthopaedics and Spine:
Knees	Knees	$	416	$	150	$	345	$	119	Knees	$	406	$	156	$	368	$	132
Hips	Hips	236		139		202		125		Hips	249		144		230		134
Trauma and Extremities	Trauma and Extremities	554		215		487		198		Trauma and Extremities	559		207		489		187
Spine	Spine	212		72		200		79		Spine	221		75		209		81
Other	Other	61		33		72		25		Other	85		34		86		28
		$	1,479	$	609	$	1,306	$	546		$	1,520	$	616	$	1,382	$	562
Total	Total	$	3,512	$	1,266	$	3,105	$	1,170	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 ~~March 31,~~June 30, 2023 and December 31, 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. This occurs primarily when payment is received upfront for certain multi-period extended service contracts. Our contract liabilities of ~~$757~~$784 and $741 on ~~March 31,~~June 30, 2023 and December 31, 2022 are classified within accrued expenses and other liabilities and other noncurrent liabilities within our ~~consolidated balance sheets~~Consolidated Balance Sheets based on the timing of when we expect to complete our performance obligations.

Changes in contract liabilities during the ~~year~~six months 2023 were as follows:


	~~March~~June 2023
Beginning contract liabilities	$	741
Revenue recognized from beginning of year contract liabilities	~~(129)~~(230)

Net advance consideration received during the period	~~145~~273
Ending contract liabilities	$	~~757~~784

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

Three Months 2023 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ (1) $ 31 $ 52 $ (303) $ (221)
OCI — 2 3 (99) (94)
Income taxes — (3) (1) 32 28
Reclassifications to:
Cost of sales — — (13) — (13)
Other (income) expense, net — (1) (1) (8) (10)
Income taxes — — 3 2 5
Net OCI — (2) (9) (73) (84)
Ending $ (1) $ 29 $ 43 $ (376) $ (305)


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


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

Three Months 2022 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ — $ (155) $ 40 $ (416) $ (531)
OCI (1) (4) 4 86 85
Income taxes — 2 (2) (25) (25)
Reclassifications to:
Other (income) expense, net — 2 (1) (11) (10)
Income taxes — (1) — 3 2
Net OCI (1) (1) 1 53 52
Ending $ (1) $ (156) $ 41 $ (363) $ (479)
NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)


Three Months 2023	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(1)	$	29	$	43	$	(376)	$	(305)
OCI	(1)		1		24		(24)		—
Income taxes	—		(2)		(5)		(4)		(11)
Reclassifications to:
Cost of sales	—		—		(9)		—		(9)
Other (income) expense, net	1		(1)		(1)		(9)		(10)
Income taxes	—		1		2		2		5
Net OCI	—		(1)		11		(35)		(25)
Ending	$	(1)	$	28	$	54	$	(411)	$	(330)


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 2023	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(1)	$	31	$	52	$	(303)	$	(221)
OCI	(1)		3		27		(123)		(94)
Income taxes	—		(5)		(6)		28		17
Reclassifications to:
Cost of sales	—		—		(22)		—		(22)
Other (income) expense, net	1		(2)		(2)		(17)		(20)
Income taxes	—		1		5		4		10
Net OCI	—		(3)		2		(108)		(109)
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 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 2022.

Foreign Currency Hedges


March 2023		Cash Flow		Net Investment		Non-Designated		Total
June 2023										June 2023	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	Gross notional amount	$	1,109	$	1,636	$	3,268	$	6,013	Gross notional amount	$	809	$	1,630	$	3,885	$	6,324
Maximum term in years	Maximum term in years							3.6		Maximum term in years							3.4
Fair value:	Fair value:									Fair value:
Other current assets	Other current assets	$	14	$	—	$	9	$	23	Other current assets	$	30	$	—	$	24	$	54
Other noncurrent assets	Other noncurrent assets	1		78		—		79		Other noncurrent assets	2		79		—		81
Other current liabilities	Other current liabilities	(5)		—		(46)		(51)		Other current liabilities	(6)		—		(15)		(21)
Other noncurrent liabilities	Other noncurrent liabilities	—		(25)		—		(25)		Other noncurrent liabilities	—		(27)		—		(27)
Total fair value	Total fair value	$	10	$	53	$	(37)	$	26	Total fair value	$	26	$	52	$	9	$	87


December 2022	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	1,053	$	1,598	$	3,417	$	6,068
Maximum term in years							3.9
Fair value:
Other current assets	$	20	$	—	$	9	$	29
Other noncurrent assets	1		89		—		90
Other current liabilities	(6)		—		(79)		(85)
Other noncurrent liabilities	(1)		(16)		—		(17)
Total fair value	$	14	$	73	$	(70)	$	17

We had €1.5 billion at ~~March 31,~~June 30, 2023 and December 31, 2022 in certain forward currency 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 at ~~March 31,~~June 30, 2023 and December 31, 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.

The total after-tax gain (loss) recognized in OCI related to designated net investment hedges was ($~~106)~~101) in the ~~three~~six months 2023.

Net Currency Exchange Rate Gains (Losses)


Derivative	Derivative		Three Months				Derivative		Three Months					Six Months
instrument:	instrument:	Recorded in:	2023		2022			instrument:	Recorded in:	2023		2022			2023		2022
Cash Flow	Cash Flow	Cost of sales	$	13	$	—		Cash Flow	Cost of sales	$	9	$	3		$	22	$	3
Net Investment	Net Investment	Other income (expense), net	8		11			Net Investment	Other income (expense), net	9		11			17		22
Non-Designated	Non-Designated	Other income (expense), net	(4)		1			Non-Designated	Other income (expense), net	5		2			9		3
		Total	$	17	$	12			Total	$	23	$	16		$	48	$	28

Pretax gains (losses) on derivatives designated as cash flow hedges of ~~$20~~$30 and net investment hedges of $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 ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 2023. The cash flow effect of interest rate hedges is recorded in cash flow from operations.

NOTE 5 - FAIR VALUE MEASUREMENTS

Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 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 2023.

Assets Measured at Fair Value March December
2023 2022
Cash and cash equivalents $ 1,671 $ 1,844
Trading marketable securities 179 166
Level 1 - Assets $ 1,850 $ 2,010
Available-for-sale marketable securities:
Corporate and asset-backed debt securities $ 41 $ 42
Foreign government debt securities 1 1
United States agency debt securities 6 3
United States treasury debt securities 37 36
Certificates of deposit 1 2
Total available-for-sale marketable securities $ 86 $ 84
Foreign currency exchange forward contracts 102 119
Level 2 - Assets $ 188 $ 203
Total assets measured at fair value $ 2,038 $ 2,213


Assets Measured at Fair Value	June		December
	2023		2022
Cash and cash equivalents	$	1,401	$	1,844
Trading marketable securities	192		166
Level 1 - Assets	$	1,593	$	2,010
Available-for-sale marketable securities:
Corporate and asset-backed debt securities	$	36	$	42
Foreign government debt securities	—		1
United States agency debt securities	5		3
United States treasury debt securities	35		36

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

Level 2 - Assets	$	212	$	203
Total assets measured at fair value	$	1,805	$	2,213


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

Level 2 - Liabilities	$	48	$	102
Contingent consideration:
Beginning	$	121	$	306
Additions	192		1
Change in estimate and foreign exchange	(3)		(137)
Settlements	(1)		(49)
Ending	$	309	$	121
Level 3 - Liabilities	$	309	$	121
Total liabilities measured at fair value	$	549	$	389


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


~~STRYKER CORPORATION~~						~~2023 First Quarter Form 10-Q~~

Liabilities Measured at Fair Value March December
2023 2022
Deferred compensation arrangements $ 179 $ 166
Level 1 - Liabilities $ 179 $ 166
Foreign currency exchange forward contracts $ 76 $ 102
Level 2 - Liabilities $ 76 $ 102
Contingent consideration:
Beginning $ 121 $ 306
Additions — 1
Change in estimate and foreign exchange — (137)
Settlements (1) (49)
Ending $ 120 $ 121
Level 3 - Liabilities $ 120 $ 121
Total liabilities measured at fair value $ 375 $ 389

											Fair Value of Available for Sale Securities by Maturity
		March 2023		December 2022			June		December
							2023		2022
	Due in one year or less	$	51	$	53	Due in one year or less	$	42	$	53
Due after one year through three years	Due after one year through three years	$	35	$	31	Due after one year through three years	$	35	$	31

On ~~March 31,~~June 30, 2023 and December 31, 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 ~~$14~~$11 and ~~$15~~$20 in the three months and $25 and $35 in the six months 2023 and 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. 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 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 acertain foreign ~~country~~countries violated provisions of the Foreign Corrupt Practices Act (FCPA) and have engaged outside counsel to conduct ~~this investigation.~~these investigations. We have been contacted by the United States Securities and Exchange Commission, ~~and~~ United States Department of Justice and certain other regulatory authorities and are cooperating with ~~both~~these agencies. At this time we are unable to predict the outcome of the ~~investigation~~investigations or the potential impact, if any, on our financial statements.

Recall Matters

We have conducted voluntary recalls of certain products, including our Rejuvenate and ABG II Modular-Neck hip stems and certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Additionally, we are responsible for certain product liability claims, primarily related to certain hip products sold by Wright Medical Group N.V. (Wright) prior to its 2014 divestiture of the OrthoRecon business.


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


STRYKER CORPORATION						2023 Second Quarter Form 10-Q

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of claims and lawsuits related to our recalls. Based on the information that has been received, we have recorded reserves of ~~$202,~~$194, representing our best estimate of probable loss related to recall matters 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	March			December			Leases	June			December
		2023			2022				2023			2022
Right-of-use assets	Right-of-use assets	$	489		$	473		Right-of-use assets	$	481		$	473
Lease liabilities, current	Lease liabilities, current	$	132		$	121		Lease liabilities, current	$	125		$	121
Lease liabilities, non-current	Lease liabilities, non-current	$	367		$	357		Lease liabilities, non-current	$	363		$	357

Other information:	Other information:							Other information:
Weighted-average remaining lease term (years)	Weighted-average remaining lease term (years)	5.3			5.5			Weighted-average remaining lease term (years)	5.7			5.5
Weighted-average discount rate	Weighted-average discount rate	3.40		%	3.22		%	Weighted-average discount rate	3.60		%	3.22		%

Three Months
2023 2022
Operating lease cost $ 38 $ 31


	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. ~~There were no acquisitions in~~In the ~~three~~six months ~~2023. The aggregate purchase price of our~~2023 and 2022 cash paid for acquisitions, net of cash acquired was ~~$2,563~~$390 and $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 ~~three months 2022.~~acquisition date. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. Cerus is part of our Neurovascular business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition is not deductible for tax purposes.

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.


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


~~STRYKER CORPORATION~~						~~2023 First Quarter Form 10-Q~~

In the ~~three~~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 acquired:~~
~~Accounts receivable~~	$	33
~~Inventory~~	13
~~Deferred income tax assets~~	91
~~Other assets~~	92
~~Debt~~	~~(425)~~
~~Deferred income tax liabilities~~	~~(193)~~

~~Other liabilities~~	~~(117)~~
~~Intangible assets:~~

~~Customer and distributor relationships~~	~~603~~
~~Developed technology~~	~~175~~
~~Trade name~~	18


~~Goodwill~~	~~2,273~~
~~Purchase price, net of cash acquired of $281~~	$	~~2,563~~
~~Weighted average amortization period at acquisition (years):~~
~~Developed technologies~~	6
~~Customer relationships~~	15
~~Trademarks~~	9


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

The purchase price allocation for Cerus is based on preliminary valuations, primarily related to 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 ~~three months~~first quarter 2023 without material adjustments.

On May 2, 2023 we acquired Cerus Endovascular Limited (Cerus) for $300 in cash and up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. We plan to integrate Cerus into our Neurovascular business within MedSurg and Neurotechnology.


Consolidated Estimated Amortization Expense	Consolidated Estimated Amortization Expense									Consolidated Estimated Amortization Expense
Remainder of 2023	Remainder of 2023	2024		2025		2026		2027		Remainder of 2023	2024		2025		2026		2027
$	463	$	590	$	571	$	514	$	493	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. Our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on ~~March 31,~~June 30, 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%. Through ~~March 31,~~June 30, 2023 we have repaid ~~$750~~$850 on the term loan.

In the first quarter of 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 ~~March 31,~~June 30, 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.

Summary of Total Debt March 2023 December 2022
Rate Due
Senior unsecured notes:
1.125% November 30, 2023 $ 599 $ 585
0.600% December 1, 2023 599 599
3.375% May 15, 2024 597 596
0.250% December 3, 2024 925 903
1.150% June 15, 2025 647 647
3.375% November 1, 2025 748 748
3.500% March 15, 2026 996 995
2.125% November 30, 2027 814 795
3.650% March 7, 2028 597 597
0.750% March 1, 2029 868 848
1.950% June 15, 2030 991 991
2.625% November 30, 2030 701 684
1.000% December 3, 2031 809 790
4.100% April 1, 2043 392 392
4.375% May 15, 2044 395 396
4.625% March 15, 2046 983 983
2.900% June 15, 2050 642 642
Term loan 750 850
Other 8 7
Total debt $ 13,061 $ 13,048
Less current maturities 1,204 1,191
Total long-term debt $ 11,857 $ 11,857
March 2023 December 2022
Unamortized debt issuance costs $ 51 $ 52
Borrowing capacity on existing facilities $ 2,160 $ 2,162
Fair value of senior unsecured notes $ 11,274 $ 10,910


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


STRYKER CORPORATION						2023 Second Quarter Form 10-Q


Summary of Total Debt			June		December
			2023		2022
	Rate	Due
Senior unsecured notes:
	1.125%	November 30, 2023	$	598	$	585
	0.600%	December 1, 2023	600		599
	3.375%	May 15, 2024	597		596
	0.250%	December 3, 2024	922		903
	1.150%	June 15, 2025	647		647
	3.375%	November 1, 2025	749		748
	3.500%	March 15, 2026	996		995
	2.125%	November 30, 2027	812		795
	3.650%	March 7, 2028	597		597
	0.750%	March 1, 2029	865		848
	1.950%	June 15, 2030	992		991
	2.625%	November 30, 2030	699		684
	1.000%	December 3, 2031	807		790
	4.100%	April 1, 2043	392		392
	4.375%	May 15, 2044	396		396
	4.625%	March 15, 2046	983		983
	2.900%	June 15, 2050	642		642
Term loan			650		850

Other			3		7
Total debt			$	12,947	$	13,048
Less current maturities			1,798		1,191
Total long-term debt			$	11,149	$	11,857

			June		December
			2023		2022
Unamortized debt issuance costs			$	47	$	52
Borrowing capacity on existing facilities			$	2,160	$	2,162
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 were ~~12.8%~~17.9% and ~~16.3%~~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 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 that certain cash outside of the United States would no longer need to be repatriated during the period previously contemplated.

NOTE 10 - SEGMENT INFORMATION


		Three Months				Three Months						Six Months
		2023		2022				2023		2022			2023		2022
MedSurg and Neurotechnology	MedSurg and Neurotechnology	$	2,690	$	2,423		MedSurg and Neurotechnology	$	2,860	$	2,549		$	5,550	$	4,972
Orthopaedics and Spine	Orthopaedics and Spine	2,088		1,852			Orthopaedics and Spine	2,136		1,944			4,224		3,796
Net sales	Net sales	$	4,778	$	4,275		Net sales	$	4,996	$	4,493		$	9,774	$	8,768
MedSurg and Neurotechnology	MedSurg and Neurotechnology	$	627	$	630		MedSurg and Neurotechnology	$	780	$	629		$	1,407	$	1,259
Orthopaedics and Spine	Orthopaedics and Spine	601		503			Orthopaedics and Spine	601		579			1,202		1,082
Segment operating income	Segment operating income	$	1,228	$	1,133		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	$	(222)	$	(199)		Corporate and other	$	(165)	$	(145)		$	(387)	$	(344)
Acquisition and integration-related costs	Acquisition and integration-related costs	(6)		(149)			Acquisition and integration-related costs	(2)		(37)			(8)		(186)
Amortization of intangible assets	Amortization of intangible assets	(161)		(150)			Amortization of intangible assets	(161)		(160)			(322)		(310)
Structural optimization and other special charges	Structural optimization and other special charges	(42)		(109)			Structural optimization and other special charges	(72)		(62)			(114)		(171)
Medical device regulations	Medical device regulations	(28)		(28)			Medical device regulations	(27)		(32)			(55)		(60)
Recall-related matters	Recall-related matters	—		(14)			Recall-related matters	(3)		(4)			(3)		(18)
Regulatory and legal matters	Regulatory and legal matters	(34)		(37)			Regulatory and legal matters	14		4			(20)		(33)

Consolidated operating income	Consolidated operating income	$	735	$	447		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 2022.


Dollar amounts are in millions except per share amounts or as otherwise specified.			89


STRYKER CORPORATION						2023 ~~First~~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 healthcare outcomes. Alongside its customers around the world, Stryker impacts more than 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). 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.

Macroeconomic Environment

The global economy ~~is experiencing~~continues to experience increased inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the ~~current~~ macroeconomic environment 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 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 higher interest rates may impact deal mix for our capital products.

Our operations continue to be adversely impacted by inflationary pressures, labor shortages and supply chain challenges. Supply chain constraints modestly improved during the quarter, however sales growth in certain products continues to be constrained by supply chain challenges and electronic component shortages, especially impacting the capital products in our MedSurg businesses.

China Volume-Based Procurement and Import Purchase Evaluation

The government in China has launched regional and national programs for volume-based procurement (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 of 2022 and the first ~~quarter~~six months of 2023. The prices required for a successful bid have negatively impacted the commercial operations of our joint

replacement, trauma and 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 of 2022 and as a result we are exiting the spine business in China. To date our other businesses have not been significantly impacted, but may be in the 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 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 ~~1.6%~~1.8% our revenues in the ~~three~~six months 2023.

Overview of the Three and Six Months

In the three months 2023 we achieved sales growth of ~~11.8%~~11.2% from 2022. Excluding the impact of acquisitions and divestitures sales grew ~~13.6%~~11.9% in constant currency. We reported operating income margin of ~~15.4%~~19.3%, net earnings of ~~$592~~$738 and net earnings per diluted share of ~~$1.54.~~$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 7010 basis points to ~~21.1%~~22.7%, with adjusted net earnings(1) of ~~$820~~$1,796 and adjusted net earnings per diluted share(1) of ~~$2.14,~~$4.68, an increase of ~~8.6%~~10.9% from 2022.

Recent Developments

On May 2, 2023 we acquired Cerus Endovascular Limited (Cerus) for ~~$300 in~~net cash consideration of $289 and up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. ~~We plan to integrate~~ Cerus ~~into~~is part of our Neurovascular business within MedSurg and Neurotechnology. 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.			910


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


CONSOLIDATED RESULTS OF OPERATIONS	CONSOLIDATED RESULTS OF OPERATIONS												CONSOLIDATED RESULTS OF OPERATIONS
		Three Months										Three Months						Six Months
						Percent Net Sales				Percentage						Percent Net Sales				Percentage						Percent Net Sales				Percentage
		2023		2022		2023		2022		Change				2023		2022		2023		2022		Change		2023		2022		2023		2022		Change
Net sales	Net sales	$	4,778	$	4,275	100.0	%	100.0	%	11.8	%		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	3,016		2,734		63.1		64.0		10.3			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	339		413		7.1		9.7		(17.9)			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	1,781		1,710		37.3		40.0		4.2			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, net	Recall charges, net	—		14		—		0.3		nm			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	161		160		3.2		3.6		0.6		322		310		3.3		3.5		3.9

Amortization of intangible assets		161		150		3.4		3.5		7.3
Other income (expense), net	Other income (expense), net	(56)		(61)		(1.2)		(1.4)		(8.2)			Other income (expense), net	(66)		(52)		(1.3)		(1.2)		26.9		(122)		(113)		(1.2)		(1.3)		8.0
Income taxes	Income taxes	87		63		nm				38.1			Income taxes	161		64		nm				151.6		248		127		nm				95.3
Net earnings	Net earnings	$	592	$	323	12.4	%	7.6	%	83.3	%		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	$	1.54	$	0.84					83.3	%		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)	$	2.14	$	1.97					8.6	%		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								Geographic and Segment Net Sales	Three Months						Six Months
						Percentage Change											Percentage Change									Percentage Change
		2023		2022		As Reported		Constant Currency					2023		2022			As Reported		Constant Currency		2023		2022			As Reported		Constant Currency
Geographic:	Geographic:											Geographic:
United States	United States	$	3,512	$	3,105	13.1	%	13.1	%			United States	$	3,711	$	3,311		12.1	%	12.1	%	$	7,223	$	6,416		12.6	%	12.6	%
International	International	1,266		1,170		8.2		16.5				International	1,285		1,182			8.7		11.5		2,551		2,352			8.5		13.9
Total	Total	$	4,778	$	4,275	11.8	%	14.0	%			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	$	2,690	$	2,423	11.0	%	13.1	%			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	2,088		1,852		12.7		15.1				Orthopaedics and Spine	2,136		1,944			9.9		10.6		4,224		3,796			11.3		12.8
Total	Total	$	4,778	$	4,275	11.8	%	14.0	%			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														Three Months							Six Months
						Percentage Change											Percentage Change														Percentage Change
										United States		International													United States		International												United States		International
		2023		2022		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	$	575	$	528	8.9	%	10.7	%	8.9	%	8.8	%	17.6	%			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	698		607		15.0		16.6		16.2		10.2		18.2				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	778		664		17.2		18.8		16.5		19.5		28.1				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	284		301		(5.5)		(1.1)		7.3		(13.0)		(6.3)				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	355		323		9.9		11.4		9.1		13.7		22.7				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

		$	2,690	$	2,423	11.0	%	13.1	%	13.0	%	5.3	%	13.3	%				$	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	$	566	$	464	22.0	%	24.2	%	20.6	%	26.2	%	35.5	%			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	375		327		14.4		18.1		16.2		11.4		21.6				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	769		685		12.4		14.5		13.7		9.0		16.5				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	284		279		1.9		3.8		6.3		(9.0)		(2.9)				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	94		97		(3.4)		(1.0)		(14.8)		28.5		41.5				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
		$	2,088	$	1,852	12.7	%	15.1	%	13.2	%	11.6	%	20.2	%				$	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	$	4,778	$	4,275	11.8	%	14.0	%	13.1	%	8.2	%	16.5	%			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 of 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 ~~$81~~$87 and ~~$69~~$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 ~~11.8%~~11.2% in the three months 2023 as reported and ~~14.0%~~11.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~2.2%~~0.7%. Net sales in constant currency increased by 11.4% from increased unit volume and 0.5% due to higher prices. The unit volume increase was due to higher product shipments across all

MedSurg and Neurotechnology and Orthopaedics and Spine businesses.

Consolidated net sales increased 11.5% in the six months 2023 as reported and 12.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by 1.4%. Excluding the ~~0.4%~~0.2% impact of acquisitions and divestitures, net sales in constant currency increased by ~~12.9%~~12.1% from increased unit ~~volume and 0.7% due to higher prices. The unit volume~~

~~increase was due to higher product shipments across most MedSurg and Neurotechnology businesses and all Orthopaedics and Spine businesses.~~

~~MedSurg and Neurotechnology Net Sales~~

~~MedSurg and Neurotechnology net sales increased 11.0% in the three months 2023 as reported and 13.1% in constant currency, as foreign currency exchange rates negatively impacted net sales~~


Dollar amounts are in millions except per share amounts or as otherwise specified.			1011


STRYKER CORPORATION						2023 ~~First~~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 12.2% in the three months 2023 as reported and 12.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~2.1%~~0.7%. ~~Excluding the 0.7% impact of acquisitions and divestitures, net~~Net sales in constant currency increased by ~~10.5%~~11.5% from increased unit volume and ~~1.9%~~1.4% from higher prices. The unit volume increase was due to higher shipments across ~~most~~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 ~~12.7%~~9.9% in the three months 2023 as reported and ~~15.1%~~10.6% in constant currency, as foreign currency exchange rates negatively impacted net sales by ~~2.4%~~0.7%. ~~Excluding the (0.1)% impact of acquisitions and divestitures, net~~Net sales in constant currency increased ~~16.0%~~11.3% from increased unit volume partially offset by 0.7% from lower prices. The unit volume increase was due to higher shipments across all Orthopaedics and Spine businesses.

Orthopaedics and Spine net sales increased 11.3% in the six months 2023 as reported and 12.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 1.5%. Net sales in constant currency increased 13.6% from increased unit volume partially offset by 0.8% from lower prices. The unit volume increase was due to higher shipments across all Orthopaedics and Spine businesses.

Gross Profit

Gross profit was ~~$3,016~~$3,181 and ~~$2,734~~$2,826 in the three months 2023 and 2022. The key components of the change were:


	Gross Profit Percent Net Sales
Three Months 2022	~~64.0~~62.9	%
Sales pricing	3020 bps
Volume and mix	100 bps
Manufacturing and supply chain costs	~~(230)~~(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 2023 increased to 63.7% from 62.9% in 2022 due to favorable volume and mix partially offset by higher manufacturing and supply chain costs primarily due to 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


~~Three~~Six Months 2023	~~63.1~~63.4	%

Gross profit as a percentage of net sales in the ~~three~~six months 2023 ~~decreased to 63.1% from 64.0% in~~of 63.4% remained flat with 2022 due to higher prices and favorable volume and mix offset by higher manufacturing and supply chain costs primarily due to higher raw material costs ~~partially offset by higher prices~~ and ~~favorable volume and mix.~~ 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 decreased ~~$74~~$5 or ~~17.9%~~1.4% in the three months 2023 and decreased as a percentage of net sales to ~~7.1%~~6.9% from ~~9.7%~~7.8% in 2022, primarily due to ~~higher spend~~increased costs for product launches in the three months 2022.

Research, development and engineering expenses decreased $79 or 10.3% in the six months 2023 and decreased as a percentage of net sales to 7.0% from 8.7% in 2022, primarily due to increased costs for product launches and the write-off of certain intangible ~~assets.~~assets in the six months 2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$71~~$167 or ~~4.2%~~10.9% in the three months 2023 and decreased as a percentage of net sales to ~~37.3%~~34.1% from ~~40.0%~~34.3% in ~~2022.~~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 $30 of charges for acquisition and integration-related costs primarily related to Wright and Vocera.

Selling, general and administrative expenses increased $238 or 7.3% in the six months 2023 and decreased as a ~~charge~~percentage of net sales to 35.7% from 37.1% 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. ~~In addition to the impact of this charge, the change~~The increase in selling, general and administrative expenses ~~as a percentage of~~in the six months 2023 was primarily due to disciplined increases in spend and investments to support our growth.

Recall Charges, Net

Recall charges, net ~~sales~~were $3 and $4 in the three months and $3 and $18 in the six months 2023 ~~was affected by the moderating of cost controls previously implemented as well as sales force expansion.~~

~~Recall~~and 2022. Charges ~~Net~~

~~There were no recall charges, net~~ in the three and six months ~~2023.~~2023 were related to LFIT Anatomic CoCr V40 Femoral Heads. Charges ~~of $14~~ in the three and six months 2022 were ~~primarily~~ related to ~~the previously disclosed~~ Wright hip products. Refer to Note 6 to our Consolidated Financial Statements for further information.

Amortization of Intangible Assets

Amortization of intangible assets was $161 and ~~$150~~$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.

Operating Income

Operating income was ~~$735~~$965 and ~~$447~~$772 in the three months 2023 and 2022. Operating income as a percentage of net sales in the three months 2023 increased to ~~15.4%~~19.3% from ~~10.5%~~17.2% in 2022. Refer to the ~~sections~~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 ~~decreased~~increased to ~~23.3%~~27.3% in the three months 2023 from ~~26.0%~~24.7% in 2022. Orthopaedics and Spine operating ~~income as a percentage of net sales increase to 28.8% in the three months 2023 from 27.2% in 2022. The key components of the change were:~~

Operating Income
Percent Net Sales
MedSurg and Neurotechnology Orthopaedics and Spine
Three Months 2022 26.0 % 27.2 %
Sales pricing 140 bps (60) bps
Volume 410 bps 700 bps
Manufacturing and supply chain costs (400) bps (20) bps
Research, development and engineering expenses (30) bps 20 bps
Selling, general and administrative expenses (390) bps (480) bps
Three Months 2023 23.3 % 28.8 %

The decrease in MedSurg and Neurotechnology operating income as a percentage of net sales was primarily impacted by higher manufacturing and supply chain costs due to the effects of inflation on the costs of raw materials and higher selling, general and administrative expenses due to moderating of cost controls previously implemented as well as sales force expansion, partially offset by higher sales prices and unit volumes.

The increase in Orthopaedics and Spine operating income as a percentage of net sales was primarily due to higher unit volumes, partially offset by higher selling, general and administrative expenses due to moderating of cost controls previously implemented as well as sales force expansion.

~~Other Income (Expense), Net~~

~~Other income (expense), net was ($56) and ($61) in the three months 2023 and 2022.~~

~~Income Taxes~~

Our effective tax rates were 12.8% and 16.3% in the three months 2023 and 2022. The effective tax rates for the three months 2023 and 2022 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items.

~~Net Earnings~~

~~Net earnings increased to $592 or $1.54 per diluted share in the three months 2023 from $323 or $0.84 per diluted share in 2022. Adjusted net earnings per diluted share(1)~~ ~~was $2.14 in 2023, an increase of 8.6% from 2022.~~


Dollar amounts are in millions except per share amounts or as otherwise specified.			1112


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

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 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 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 2023 from 25.3% in 2022. Orthopaedics and Spine operating income as a percentage of net sales was 28.5% in the six months 2023 and remained flat with 2022. The key components of the 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 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 disciplined increases in spend and investments to support our growth and higher manufacturing and supply chain costs primarily due to the effects of inflation on the cost of raw materials.

Orthopaedics and Spine operating income as a percentage of net sales for the six months remained flat with 2022 as higher unit volumes were offset by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth, higher manufacturing and supply chain costs primarily due to supply chain inefficiencies and lower prices.

Other Income (Expense), Net

Other income (expense), net was ($66) and ($52) in the three months and ($122) and ($113) in the six months 2023 and 2022. The increase in net expense in 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.

Income Taxes

Our effective tax rates were 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 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 that certain cash outside of the United States would no longer need to be repatriated during the period previously contemplated.

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 2022. Adjusted net earnings per diluted share(1) was $2.54 in 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 2022. Adjusted net earnings per diluted share(1) was $4.68 in the six months 2023, an increase of 10.9% from 2022.

Non-GAAP Financial Measures

We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted income taxes; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share (Diluted EPS). We believe these non-GAAP financial measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures. To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates, acquisitions and divestitures, which affect the comparability and trend of sales. Percentage


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. The income tax effect of each adjustment was determined based on the tax effect of the jurisdiction in which the related pre-tax adjustment was recorded. These adjustments are irregular in timing and may not be indicative of our past and future performance. The following are examples of the types of adjustments that may be included in a period:

1.Acquisition and integration-related costs. Costs related to integrating recently acquired businesses (e.g., costs associated with the termination of sales relationships, employee retention and workforce reductions, manufacturing integration costs and other integration-related activities), changes in the fair value of contingent consideration, amortization of inventory stepped-up to fair value and specific costs (e.g., deal costs) related to the consummation of the acquisition process and legal entity rationalization.

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

3.Structural optimization and other special charges. Costs associated with employee retention and workforce reductions, the closure or transfer of manufacturing and other facilities (e.g., site closure costs, contract termination costs and redundant employee costs during the work transfers), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs), certain long-lived and intangible asset write-offs and

impairments and other charges.

4.Medical device regulations. Costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the new medical device reporting regulations and other requirements of the European Union.

5.Recall-related matters. Changes in our best estimate of the 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. 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.

7.Tax matters. Impact of accounting for certain significant and discrete tax items.

Because non-GAAP financial measures are not standardized, it

may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, income taxes, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures at the end of the discussion of Consolidated Results of Operations below. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The weighted-average diluted shares outstanding used in the calculation of 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.			1214


STRYKER CORPORATION						2023 ~~First~~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 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		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	$	3,016		$	1,781		$	339		$	735		$	(56)		$	87	$	592		12.8	%	$	1.54	Reported	$	3,181		$	1,706		$	346		$	965		$	(66)		$	161	$	738		17.9	%	$	1.93
Reported percent net sales	Reported percent net sales	63.1		%	37.3		%	7.1		%	15.4		%	(1.2)		%	nm		12.4		%					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	—			—			—			—			—			—		—			—		—		Inventory stepped-up to fair value	—			—			—			—			—			—		—			—		—
Other acquisition and integration-related (a)	Other acquisition and integration-related (a)	—			(6)			—			6			—			1		5			0.1		0.01		Other acquisition and integration-related (a)	—			(2)			—			2			—			2		—			0.1		—
Amortization of purchased intangible assets	Amortization of purchased intangible assets	—			—			—			161			—			34		127			2.0		0.33		Amortization of purchased intangible assets	—			—			—			161			—			34		127			1.1		0.33
Structural optimization and other special charges (b)	Structural optimization and other special charges (b)	2			(40)			—			42			—			8		34			0.3		0.09		Structural optimization and other special charges (b)	9			(63)			—			72			—			17		55			0.7		0.14
Medical device regulations (c)	Medical device regulations (c)	—			—			(28)			28			—			5		23			0.2		0.06		Medical device regulations (c)	—			—			(27)			27			—			8		19			0.4		0.05
Recall-related matters (d)	Recall-related matters (d)	—			—			—			—			—			—		—			—		—		Recall-related matters (d)	—			—			—			3			—			1		2			—		0.01
Regulatory and legal matters (e)	Regulatory and legal matters (e)	—			(34)			—			34			—			6		28			0.3		0.07		Regulatory and legal matters (e)	—			14			—			(14)			—			(3)		(11)			(0.1)		(0.03)
Tax matters (f)	Tax matters (f)	—			—			—			—			(9)			(20)		11			(2.9)		0.04		Tax matters (f)	—			—			—			—			—			(46)		46			(4.9)		0.11
Adjusted	Adjusted	$	3,018		$	1,701		$	311		$	1,006		$	(65)		$	121	$	820		12.8	%	$	2.14	Adjusted	$	3,190		$	1,655		$	319		$	1,216		$	(66)		$	174	$	976		15.2	%	$	2.54
Adjusted percent net sales	Adjusted percent net sales	63.2		%	35.6		%	6.5		%	21.1		%	(1.4)		%	nm		17.2		%					Adjusted percent net sales	63.9		%	33.1		%	6.4		%	24.3		%	(1.3)		%	nm		19.5		%


Three Months 2022	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		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	Reported	$	2,734		$	1,710		$	413		$	447		$	(61)		$	63	$	323		16.3	%	$	0.84	Reported	$	2,826		$	1,539		$	351		$	772		$	(52)		$	64	$	656		8.9	%	$	1.72
Reported percent net sales	Reported percent net sales	64.0		%	40.0		%	9.7		%	10.5		%	(1.4)		%	nm		7.6		%					Reported percent net sales	62.9		%	34.3		%	7.8		%	17.2		%	(1.2)		%	nm		14.6		%
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	5			—			—			5			—			1		4			0.1		0.01		Inventory stepped-up to fair value	7			—			—			7			—			2		5			0.1		0.01
Other acquisition and integration-related (a)	Other acquisition and integration-related (a)	—			(144)			—			144			—			39		105			4.9		0.27		Other acquisition and integration-related (a)	—			(30)			—			30			—			7		23			0.4		0.06
Amortization of purchased intangible assets	Amortization of purchased intangible assets	—			—			—			150			—			35		115			3.6		0.30		Amortization of purchased intangible assets	—			—			—			160			—			36		124			2.0		0.33
Structural optimization and other special charges (b)	Structural optimization and other special charges (b)	2			(28)			(79)			109			—			25		84			2.5		0.22		Structural optimization and other special charges (b)	8			(54)			—			62			—			6		56			(0.4)		0.15
Medical device regulations (c)	Medical device regulations (c)	—			—			(28)			28			—			4		24			0.2		0.06		Medical device regulations (c)	2			(2)			(28)			32			—			6		26			0.2		0.07
Recall-related matters (d)	Recall-related matters (d)	—			—			—			14			—			3		11			0.4		0.04		Recall-related matters (d)	—			—			—			4			—			1		3			0.1		—
Regulatory and legal matters (e)	Regulatory and legal matters (e)	—			(37)			—			37			—			9		28			1.0		0.08		Regulatory and legal matters (e)	—			4			—			(4)			—			—		(4)			—		(0.02)
Tax matters (f)	Tax matters (f)	—			—			—			—			—			(58)		58			(15.1)		0.15		Tax matters (f)	—			—			—			—			(12)			17		(29)			2.6		(0.07)
Adjusted	Adjusted	$	2,741		$	1,501		$	306		$	934		$	(61)		$	121	$	752		13.9	%	$	1.97	Adjusted	$	2,843		$	1,457		$	323		$	1,063		$	(64)		$	139	$	860		13.9	%	$	2.25
Adjusted percent net sales	Adjusted percent net sales	64.1		%	35.1		%	7.2		%	21.8		%	(1.4)		%	nm		17.6		%					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, $8$6 in 2022), employee retention and workforce reductions ($0 in 2023, $4$14 in 2022), changes in the fair value of contingent consideration (($1)2) in 2023, ($~~16)~~9) in 2022), manufacturing integration costs ($~~2 in 2023, $9 in 2022), stock compensation payments upon a change in control ($~~0 in 2023, ~~$132~~$8 in 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($54 in 2023, $7$11 in 2022).
(b)			Charges represent the costs associated with employee retention and workforce reductions ($2147 in 2023, $9$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, ~~$17~~$29 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($36 in 2023, $0($8) in 2022), certain long-lived and intangible asset write-offs and impairments ($12 in 2023, ~~$80~~$12 in 2022) and other charges ($5 in 2023, $3$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						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 ~~$28~~$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

Three Months 2023 2022
Net cash provided by operating activities $ 445 $ 203
Net cash used in investing activities (132) (2,682)
Net cash provided by (used in) financing activities (481) 993
Effect of exchange rate changes on cash and cash equivalents (5) —
Change in cash and cash equivalents $ (173) $ (1,486)


	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 ~~$445~~$1,133 and ~~$203~~$732 in the ~~three~~six months 2023 and 2022. The increase was primarily due to net earnings and higher accounts receivable collections.

Investing Activities

Cash used in investing activities was ~~$132~~$665 and ~~$2,682~~$2,834 in the ~~three~~six months 2023 and 2022. The ~~three~~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 ($~~481)~~886) and ~~$993~~$240 in the ~~three~~six months 2023 and 2022. Cash used in 2023 was primarily ~~driven by~~due to dividend payments of ~~$284~~$569 and ~~a repayment~~repayments of ~~$100~~$200 on the term loan used to fund the acquisition of Vocera. Cash provided by financing activities in 2022 was primarily due to the ~~issuance of the~~ $1,500 term loan used to fund the acquisition of Vocera, partially offset by $250 of payments on the term loan, dividend payments of ~~$262~~ $525 and net repayments of ~~$170~~$376 on short-term borrowings.

We did not repurchase any shares in the ~~three~~six months 2023 and 2022.

Liquidity

Cash, cash equivalents and marketable securities were ~~$1,757~~$1,478 and $1,928 on ~~March 31,~~June 30, 2023 and December 31, 2022. Current assets exceeded current liabilities by ~~$4,289~~$3,567 and $3,972 on ~~March 31,~~June 30, 2023 and December 31, 2022. We anticipate being


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


~~STRYKER CORPORATION~~						~~2023 First Quarter Form 10-Q~~

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 ~~31%~~35% on ~~March 31,~~June 30, 2023 compared to 36% on December 31, 2022.

~~Critical Accounting Policies and Estimates~~

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 2022, except as ~~follows:~~

We test goodwill annually for impairment at October 31 or whenever events or circumstances indicate that goodwill may be impaired. When it is unlikely that goodwill of a reporting unit is impaired, we perform a qualitative assessment that may be periodically supplemented with a corroborative quantitative analysis. The supplemental analysis supporting our 2021 annual goodwill impairment tests was performed using a market approach that utilizes trading multiples derived from a peer set of similar companies. The results of that supplemental analysis indicated that, at October 31, 2021, the implied fair values of our reporting units exceeded their respective carrying amounts by approximately 50% for our Spine reporting unit and at least 100% for all other reporting units.

When necessary, we perform a quantitative impairment test and determine the fair value of a reporting unit using an income approach and we corroborate our concluded value under the income approach using a market approach that utilizes trading multiples derived from a peer set of similar companies. The income approach calculates the present value of estimated future cash flows and requires certain assumptions and estimates to be made regarding market conditions and our future profitability. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows used to measure fair value. Assumptions useddescribed in our impairment evaluations, such as forecasted growth rates and cost of capital, are consistent with internal business plans. We believe such assumptions and estimates are also comparable to those that would be used by other marketplace participants.

During 2022 our Spine reporting unit’s operating performance was affected by several factors, including a slower than anticipated recovery of surgery volumes as we emerged from the COVID-19 pandemic, rising costs and our competitive environment. Consequently,Quarterly Report on Form 10-Q for the ~~year~~quarter ended ~~December~~March 31, 2022 revenues, gross margin and operating income were 3%, 4% and 33% below budgeted amounts. For the annual impairment test of our Spine reporting unit at October 31, 2022, we performed a quantitative impairment test and recognized a goodwill impairment charge of $216. The fair value of our Spine reporting unit was determined using a discounted cash flow analysis, which is a form of the income approach. Significant inputs to the analysis included assumptions for future revenue growth, operating margin and the rate used to discount the estimated future cash flows to their present value, based on the reporting unit’s estimated weighted average cost of capital. The impairment charge for our Spine reporting unit was also significantly affected by the discount rate, which was impacted by central banks raising interest rates during 2022 and increased

risk due to macroeconomic conditions. Our assumptions for revenue growth and operating margin considered the operating factors described above, including surgery volumes, increased costs and our competitive environment.

The assumptions used in the discounted cash flow analysis are subject to inherent uncertainties and subjectivity. The use of different assumptions, estimates or judgments with respect to the estimation of future cash flows and the determination of the discount rate used to reduce such estimated future cash flows to their net present value could materially change any related impairment charge. We believe our estimates are appropriate based upon current and future market conditions and the best information available at the impairment assessment date. However, future impairment charges could be required if we do not achieve our cash flow, revenue and profitability projections or if there is an increase in the weighted average cost of capital. Changes in our estimates of the discount rate, long-term revenue growth and long-term operating margin would result in additional goodwill impairment charges as follows:


~~Change in selected assumption~~			~~Amount~~
~~100 bps increase in discount rate~~			~~220~~
~~100 bps decrease in long-term revenue growth~~			~~130~~
~~100 bps decrease in long-term operating margin~~			40

For our other reporting units we performed qualitative assessments and concluded it was more likely than not that the fair values of those reporting units exceeded their respective carrying amounts. No impairment was identified for those reporting units in 2022 and we did not identify any factors at October 31, 2022 that would lead us to believe that those reporting units are at risk of a goodwill impairment. Future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount rates and cash flow projections, could result in significantly different estimates of the fair values. A significant reduction in the estimated fair values could result in impairment charges that could materially affect our results of operations.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.


~~Dollar amounts are in millions except per share amounts or as otherwise specified.~~			14


~~STRYKER CORPORATION~~						~~2023 First Quarter Form 10-Q~~

FORWARD-LOOKING STATEMENTS

This report contains statements that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current projections about operations, industry conditions, financial condition and liquidity. Words that identify forward-looking statements include, without limitation, words such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," "goal," "strategy" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, an acquisition or our businesses. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from these forward-looking statements, historical experience or our present expectations. Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include the risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for 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 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 area of market risk exposure to be exchange rate risk on our operating results. Quantitative and qualitative disclosures about exchange rate risk are included in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for 2022. There were no material changes from the information provided therein.


ITEM 4.			CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on ~~March 31,~~June 30, 2023. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2023.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial reporting during the ~~three~~six months 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION


ITEM 1A.			RISK FACTORS

We are not aware of any material changes to the risk factors included in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for 2022.


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

We issued ~~10,155~~5,146 shares of our common stock in the three months 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 ~~three~~six months 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 ~~March 31,~~June 30, 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 restricted stock units granted in 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.~~			15			18


STRYKER CORPORATION						2023 ~~First~~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:	~~May 2,~~August 4, 2023	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chair, Chief Executive Officer and President


Date:	~~May 2,~~August 4, 2023	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer


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