Stryker SYK Form 10-Q filing Q1 FY2025

ITEM 1. FINANCIAL STATEMENTS

Anti-dilutive shares excluded from the calculation of dilutive employee stock options were de minimis in all periods.

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2025 First 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, 2025 and the results of operations for the three

months 2025. The results of operations included in these

Consolidated Financial Statements may not necessarily be

indicative of our annual results. These statements should be read

in conjunction with our Annual Report on Form 10-K for 2024.

New Accounting Pronouncements Not Yet Adopted

In November 2024 the Financial Accounting Standards Board

(FASB) issued Accounting Standards Update (ASU) 2024-03

(Subtopic 220-40): Income Statement - Reporting

Comprehensive Income - Expense Disaggregation Disclosures

which requires disaggregation of certain expense captions into

specified categories in disclosures within the Notes to the

Consolidated Financial Statements. The new disclosure

requirements are effective for fiscal years beginning after

December 15, 2026 and interim periods within fiscal years

beginning after December 15, 2027. Early adoption is permitted.

We are currently evaluating these new expanded disclosure

requirements.

In December 2023 the FASB issued ASU 2023-09 (Topic 740):

Income Taxes: Improvements to Income Tax Disclosures which

expands the existing rules on income tax disclosures. This

update requires entities to disclose specific categories in the tax

rate reconciliation, provide additional information for reconciling

items that meet a quantitative threshold and disclose additional

information about income taxes paid on an annual basis. The

new disclosure requirements are effective for fiscal years

beginning after December 15, 2024 and we will adopt this ASU in

the fourth quarter 2025.

We evaluate all ASUs issued by the FASB for consideration of

their applicability. ASUs not included in our disclosures were

assessed and determined to be either not applicable or are not

expected to have a material impact on our Consolidated Financial

Statements.

NOTE 2 - REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those

described in our Annual Report on Form 10-K for 2024.

We disaggregate our net sales by business and geographic

location for each of our segments as we believe it best depicts

how the nature, amount, timing and certainty of our net sales and

cash flows are affected by economic factors.

In the first quarter 2025 we changed the name of our

Neurovascular business to Vascular due the acquisition of Inari

Medical, Inc. (Inari).

In the fourth quarter 2024 we reorganized our Spine business to

align with certain updates to our internal reporting structure. The

spine enabling technologies portfolio (Enabling Technologies)

was reclassified to Other Orthopaedics and Spine, the

interventional spine (IVS) portfolio was reclassified to Neuro

Cranial and the remaining Spine business was renamed to Spinal

Implants. In addition we changed the name of our “Orthopaedics

and Spine” operating segment to “Orthopaedics.” Neuro Cranial

includes sales related to IVS of $118 and $98 for the three

months 2025 and 2024. Other Orthopaedics includes sales

related to Enabling Technologies of $29 and $31 for the three

months 2025 and 2024. We have reflected these changes in all

historical periods presented.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

Costs to Obtain or Fulfill a Contract

We typically do not incur costs to fulfill a contract before a

product or service is provided to a customer due to the nature of

our products and services. Our costs to obtain contracts are

typically in the form of sales commissions paid to employees or

third-party agents. Certain sales commissions paid to employees

prior to recognition of sales are recorded as deferred contract

costs. We expense sales commissions associated with obtaining

a contract at the time of the sale or as incurred as the

amortization period is generally less than one year. These costs

have been presented within selling, general and administrative

expenses. On March 31, 2025 and December 31, 2024 deferred

contracts costs recorded in our Consolidated Balance Sheets

were not significant.

Contract Assets and Liabilities

Our contract assets primarily relate to conditional rights to

consideration for work completed but not billed at the reporting

date. On March 31, 2025 and December 31, 2024 contract

assets recorded in our Consolidated Balance Sheets were not

significant.

Our contract liabilities arise as a result of consideration received

from customers at inception of contracts for certain businesses or

where the timing of billing for services precedes satisfaction of

our performance obligations. This occurs primarily when payment

is received upfront for certain multi-period extended service

contracts. Our contract liabilities of $1,028 and $978 on

March 31, 2025 and December 31, 2024 are classified within

accrued expenses and other liabilities and other noncurrent

liabilities in our Consolidated Balance Sheets based on the timing

of when we expect to complete our performance obligations.

Changes in contract liabilities during the three months 2025 were

as follows:

Transfers and Servicing of Financial Assets

We sell certain customer lease agreements and the related

leased assets to third-party financial institutions to accelerate our

cash collection cycle. The lease receivables are sold without

recourse and are derecognized from our Consolidated Balance

Sheets at the time of sale. Under the terms of our arrangements,

we collect lease payments on behalf of the financial institutions

but maintain no other form of continuing involvement. Sales of

these lease agreements are classified as operating activities in

our Consolidated Statements of Cash Flows. Fees earned for our

servicing activities are immaterial. Revenue related to customer

lease agreements sold under these arrangements represented

less than 4% of our total revenue for the three months 2025 and

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS)

INCOME (AOCI)

NOTE 4 - DERIVATIVE INSTRUMENTS

We use operational and economic hedges, foreign currency

exchange forward contracts, net investment hedges (both

derivative and non-derivative financial instruments) and interest

rate derivative instruments to manage the impact of currency

exchange and interest rate fluctuations on earnings, cash flow

and equity. We do not enter into derivative instruments for

speculative purposes. We are exposed to potential credit loss in

the event of nonperformance by counterparties on our

outstanding derivative instruments but do not anticipate

nonperformance by any of our counterparties. Should a

counterparty default, our maximum loss exposure is the asset

balance of the instrument. We have not changed our hedging

strategies, accounting practices or objectives from those

disclosed in our Annual Report on Form 10-K for 2024.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

We had €2.3 billion at March 31, 2025 and December 31, 2024 in

certain forward currency contracts designated as net investment

hedges, for which the maximum term is 9.5 years, to hedge a

portion of our investments in certain of our entities with functional

currencies denominated in Euros. In addition to these derivative

financial instruments designated as net investment hedges, we

had €5.0 billion at March 31, 2025 and December 31, 2024 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 ($218) in the three

months 2025.

Currency Exchange Rate Gains (Losses) Recognized in Net

Earnings

Pretax gains (losses) on derivatives designated as cash flow

hedges of $13 and net investment hedges of $40 recorded in

AOCI are expected to be reclassified to cost of sales and other

income (expense), net in earnings within 12 months of March 31,

2025. This cash flow hedge reclassification is primarily due to the

sale of inventory that includes previously hedged purchases. A

component of the AOCI amounts related to net investment

hedges is reclassified over the life of the hedge instruments as

we elected to exclude the initial value of the component related to

the spot-forward difference from the effectiveness assessment.

Interest Rate Hedges

Pretax gains (losses) of $3 recorded in AOCI related to interest

rate hedges closed in conjunction with debt issuances are

expected to be reclassified to other income (expense), net in

earnings within 12 months of March 31, 2025. The cash flow

effect of interest rate hedges is recorded in cash flow from

operations.

NOTE 5 - FAIR VALUE MEASUREMENTS

Our policies for managing risk related to foreign currency, interest

rates, credit and markets and our process for determining fair

value have not changed from those described in our Annual

Report on Form 10-K for 2024.

In the three months 2025 we assumed contingent consideration

liabilities with a fair value of $90 related to previous acquisitions

made by Inari Medical Inc. (Inari). Refer to Note 7 for further

information on the acquisition of Inari.

In 2024 we recorded $208 of contingent consideration related to

various acquisitions described in Note 7.

There were no significant transfers into or out of any level of the

fair value hierarchy in 2025.

On March 31, 2025 and December 31, 2024 the aggregate

difference between the cost and fair value of available-for-sale

marketable securities was nominal. Interest income on cash and

cash equivalents and short-term investments and income from

marketable securities was $38 and $36 in the three months 2025

and 2024, which was recorded in other income (expense), net.

Our investments in available-for-sale marketable securities had a

minimum credit quality rating of A2 (Moody's), A (Standard &

Poor's) and A (Fitch). We do not plan to sell the investments, and

it is not more likely than not that we will be required to sell the

investments before recovery of their amortized cost basis, which

may be maturity.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

NOTE 6 - CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions

and claims arising in the normal course of business, including

proceedings related to product, labor, intellectual property and

other matters, the most significant of which are more fully

described below. The outcomes of these matters will generally

not be known for prolonged periods of time. In certain of the legal

proceedings the claimants seek damages as well as other

compensatory and equitable relief that could result in the

payment of significant claims and settlements and/or the

imposition of injunctions or other equitable relief. For legal

matters for which management had sufficient information to

reasonably estimate our future obligations, a liability representing

management's best estimate of the probable loss, or the

minimum of the range of probable losses when a best estimate

within the range is not known, is recorded. The estimates are

based on consultation with legal counsel, previous settlement

experience and settlement strategies. If actual outcomes are less

favorable than those estimated by management, additional

expense may be incurred, which could unfavorably affect future

operating results. We are self-insured for certain claims and

expenses. The ultimate cost to us with respect to product liability

claims could be materially different than the amount of the current

estimates and accruals and could have a material adverse effect

on our financial position, results of operations and cash flows.

We are currently investigating whether certain business activities

in certain foreign countries violated provisions of the Foreign

Corrupt Practices Act (FCPA) and have engaged outside counsel

to conduct these investigations. We have been contacted by the

United States Securities and Exchange Commission, United

States Department of Justice (DOJ) and certain other regulatory

authorities and are cooperating with these agencies. On April 1,

2025 we were informed by the DOJ that it had closed its inquiry

into potential FCPA violations without further action. At this time

we are unable to predict the outcome of the remaining

investigations or the potential impact, if any, on our financial

statements.

We have conducted voluntary recalls of certain products,

including our Rejuvenate and ABG II Modular-Neck hip stems

and certain lot-specific sizes and offsets of LFIT Anatomic CoCr

V40 Femoral Heads. Additionally, we are responsible for certain

product liability claims, primarily related to certain hip products

sold by Wright Medical Group N.V. (Wright) prior to its 2014

divestiture of the OrthoRecon business.

We have incurred, and expect to incur in the future, costs

associated with the defense and settlement of claims and

lawsuits. Based on the information that has been received related

to the matters discussed above, our accrual for these matters

was $169 at March 31, 2025, representing our best estimate of

probable loss. The final outcomes of these matters are

dependent on many factors that are difficult to predict.

Accordingly the ultimate cost related to these matters may be

materially different than the amount of our current estimate and

accruals and could have a material adverse effect on our results

of operations and cash flows.

Other Contractual Obligations and Commitments

Our outstanding balances of confirmed invoices in the supplier

financing program were $66 and $71 at March 31, 2025 and

December 31, 2024 and are included within accounts payable in

our Consolidated Balance Sheets.

NOTE 7 - ACQUISITIONS

We acquire stock in companies and various assets that continue

to support our capital deployment and product development

strategies. In the three months 2025 and 2024 cash paid for

acquisitions, net of cash acquired was $4,749 and $246.

In February 2025 we completed the acquisition of Inari for $80

per share, or an aggregate purchase price of $4,745, net of cash

acquired. Inari's product portfolio includes minimally invasive

products for the treatment of venous thromboembolism. Inari is

part of our Vascular business within MedSurg and

Neurotechnology. The purchase price allocation for Inari is based

on preliminary valuations, primarily related to developed

technology and customer relationships. Goodwill attributable to

the acquisition reflects the strategic benefits of expanding our

market presence, diversifying our product portfolio and advancing

innovations. This goodwill is not deductible for tax purposes.

Share-based awards for Inari employees vested upon our

acquisition and a charge of $139 was recorded in selling, general

and administrative expenses in the three months 2025.

In 2024 we completed various acquisitions for total consideration

that includes $1,628 in upfront payments, net of cash acquired,

and $400 contingent upon the achievement of certain commercial

or clinical milestones. The combined acquisition-date fair values

of the contingent milestone payments totaled $208. Goodwill of

$304 and $858 was recorded within our Orthopaedics and our

MedSurg and Neurotechnology segments respectively. The

acquired companies expand the product portfolios of our

Instruments, Endoscopy, Medical and Neuro Cranial businesses

within MedSurg and Neurotechnology and our Trauma and

Extremities and Joint Replacement within Orthopaedics. The

purchase price allocation for our acquisitions are based on

preliminary valuations, primarily related to developed technology

and customer relationships. Goodwill attributable to the

acquisitions reflects the strategic benefits of expanding our

market presence, diversifying our product portfolio and advancing

innovations. This goodwill is not deductible for tax purposes.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

The purchase price allocations for the acquisitions completed in

the three months 2025 and full year 2024 are:

The purchase price allocation for SERF SAS was finalized in the

first quarter 2025 without material adjustments.

NOTE 8 - DEBT AND CREDIT FACILITIES

We have lines of credit issued by various financial institutions that

are available to fund our day-to-day operating needs. Certain of

our credit facilities require us to comply with financial and other

covenants. We were in compliance with all covenants on

March 31, 2025.

In February 2025 we entered into a new revolving credit

agreement that replaces our previous agreement dated October

2021. The primary changes included increasing the aggregate

principal amount of the facility by $750 to $3,000 and extending

the maturity date to February 25, 2030. On March 31, 2025 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. The maximum amount of

our commercial paper that can be outstanding at any time is

$2,250.

In February 2025 we issued $500 of 4.550% senior unsecured

notes due February 10, 2027, $700 of 4.700% senior unsecured

notes due February 10, 2028, $800 of 4.850% senior unsecured

notes due February 10, 2030 and $1,000 of 5.200% senior

unsecured notes due February 10, 2035.

The fair value of the senior unsecured notes was estimated using

quoted interest rates, maturities and amounts of borrowings

based on quoted active market prices and yields that took into

account the underlying terms of the debt instruments.

Substantially all of our debt is classified within Level 2 of the fair

value hierarchy.

NOTE 9 - INCOME TAXES

Our effective tax rates were 14.4% and 14.6% in the three

months 2025 and 2024. The effective tax rates for the three

months 2025 and 2024 reflect the continued lower effective

income tax rates as a result of our European operations and

certain discrete tax items.

In the normal course of business, income tax authorities in

various income tax jurisdictions both within the United States and

internationally conduct routine audits of our income tax returns

filed in prior years. These audits are generally designed to

determine if individual income tax authorities are in agreement

with our interpretations of complex income tax regulations

regarding the allocation of income to the various income tax

jurisdictions. Any income tax audit assessment or draft income

tax audit assessment received at the conclusion of an audit is

reviewed and evaluated for proper financial statement treatment.

We have not received any audit assessments or draft

assessments that have not been reviewed and evaluated.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

NOTE 10 - SEGMENT INFORMATION

We segregate our operations into two reportable business

segments: (i) MedSurg and Neurotechnology and (ii)

Orthopaedics which aligns to our internal reporting structure and

how our Chief Operating Decision Maker (CODM) assesses the

performance of and allocates resources. The CODM is the Chief

Executive Officer. The CODM makes decisions on resource

allocation, assesses performance of the business, and monitors

budget versus actual results using segment operating income.

Our reportable segments and related disclosures reflect certain

reclassifications of prior year amounts from our Orthopaedics

segment to our MedSurg and Neurotechnology segment due to

changes in our internal reporting structure.

NOTE 11 - ASSETS HELD FOR SALE

During the fourth quarter 2024 management committed to a plan

to sell certain assets associated with the Spinal Implants

business (disposal group) and such assets were classified as

held for sale beginning November 2024. As a result we recorded

a valuation allowance of $362 to record the disposal group at its

fair value less cost to sell. In January 2025 we announced a

definitive agreement to sell our United States Spinal Implants

business to Viscogliosi Brothers, LLC. The definitive agreement

includes a binding offer to sell our Spinal Implants business in

certain international markets at later dates, subject to required

consultations with employees and employee representatives.

In the three months 2025 we recognized a charge of $33 to

record the disposal group at its fair value less cost to sell within

goodwill and other impairments in our Consolidated Statements

of Earnings resulting in a valuation allowance of $395 at

March 31, 2025. The fair value of the disposal group was

measured using a discounted cash flow analysis based upon the

selling price and unobservable inputs, such as market conditions

and the rate used to discount the estimated future cash flows to

their present value based on factors including the disposal

group’s cost of equity and market yield rates, which are Level 3

inputs. Future changes in the judgments, assumptions and

estimates that are used in our fair value estimate, including

discount rates and cash flow projections, could result in a

significantly different estimate of fair value. A change in the

amount or timing of consideration received could increase the fair

value by up to $57 or decrease the fair value by up to $245.

In April 2025 we completed the sale of our United States Spinal

Implants business as discussed in Note 12.

The assets associated with the Spinal Implants disposal group

are reported in our Orthopaedics segment. The assets and

liabilities held for sale are classified within prepaid expenses and

other current assets and accrued expenses and other liabilities in

our Consolidated Balance Sheets and included the following at

March 31, 2025 and December 31, 2024:

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

NOTE 12 - SUBSEQUENT EVENT

In April 2025 we completed the sale of our United States Spinal

Implants business to the Viscogliosi Brothers, LLC. The definitive

agreement includes a binding offer to sell our Spinal Implants

business in certain international markets at later dates, subject to

the completion of all legal and regulatory requirements and

required consultations with employees and employee

representatives.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

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

ABOUT STRYKER

Stryker is a global leader in medical technologies and, together

with our customers, we are driven to make healthcare better. We

offer innovative products and services in MedSurg,

Neurotechnology, and Orthopaedics that help improve patient

and healthcare outcomes. Alongside our customers around the

world, we impact more than 150 million patients annually.

We segregate our operations into two reportable business

segments: (i) MedSurg and Neurotechnology and (ii)

Orthopaedics. MedSurg and Neurotechnology products include

surgical equipment and navigation systems (Instruments),

endoscopic and communications systems (Endoscopy), patient

handling, emergency medical equipment and intensive care

disposable products (Medical), minimally invasive products for

the treatment of acute ischemic and hemorrhagic stroke and

venous thromboembolism (Vascular), a comprehensive line of

products for traditional brain and open skull based surgical

procedures; orthobiologic and biosurgery products, including

synthetic bone grafts and vertebral augmentation products

(Neuro Cranial). Orthopaedics products consist primarily of

implants used in hip and knee joint replacements and trauma and

extremity surgeries.

Macroeconomic Environment

Beginning in the first quarter 2025, the United States government

has announced new tariffs on goods imported into the United

States from dozens of countries, including China and the

European Union member states. In response, governments have

threatened or imposed reciprocal tariffs or taken other measures,

and the United States is in the process of negotiating with certain

governments. We continue to monitor and evaluate the situation.

Tariffs could result in an increase in certain product costs or have

adverse impacts on, among other things, demand for our

products and supply chains. The overall macroeconomic and

geopolitical environment, including tariffs or changes in trade

policies, slower economic growth or recession, market volatility

and inflation, and uncertainty regarding all of the foregoing, pose

risks that could impact our business and results of operations.

For more information about these risks, see Item 1A. "Risk

Factors" in our Annual Report on Form 10-K for 2024.

Overview of the Three Months

In the three months 2025 we achieved sales growth of 11.9%

from 2024. Excluding the impact of acquisitions and divestitures,

sales grew 10.1% in constant currency. We reported operating

income margin of 14.3%, net earnings of $654 and net earnings

per diluted share of $1.69. Excluding the impact of certain items,

adjusted operating income margin(1) increased by 100 basis

points to 22.9%, with adjusted net earnings(1) of $1,097 and

adjusted net earnings per diluted share(1) of $2.84, an increase of

13.6% from 2024.

Recent Developments

In the first quarter 2025 we completed the acquisition of Inari for

total consideration of $4,745, in upfront payments, net of cash

acquired. Refer to Note 7 to our Consolidated Financial

Statements for further information.

In February 2025 we entered into a new revolving credit

agreement that replaces our previous agreement dated October

2021. The primary changes were to increase the aggregate

principal amount of the facility by $750 to $3,000 and extend the

maturity date to February 25, 2030. On March 31, 2025 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. The maximum amount of

our commercial paper that can be outstanding at any time is

$2,250.

In February 2025 we issued $500 of 4.550% senior unsecured

notes due February 10, 2027, $700 of 4.700% senior unsecured

notes due February 10, 2028, $800 of 4.850% senior unsecured

notes due February 10, 2030 and $1,000 of 5.200% senior

unsecured notes due February 10, 2035.

(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-

GAAP financial measures used in this report and a reconciliation to the

most directly comparable GAAP financial measure.

nm - not meaningful

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

Note: In the first quarter 2025 we changed the name of our Neurovascular business to Vascular due the acquisition of Inari. In the fourth

quarter 2024 we reorganized our Spine business to align with certain updates to our internal reporting structure. The spine enabling

technologies portfolio (Enabling Technologies) was reclassified to Other Orthopaedics, the interventional spine portfolio was reclassified

to Neuro Cranial and the remaining Spine business was renamed to Spinal Implants. Neuro Cranial includes sales related to

interventional spine of $118 and $98 for three months 2025 and 2024. Other Orthopaedics includes sales related to Enabling

Technologies of $29 and $31 for three months 2025 and 2024. We have reflected these changes in all historical periods presented.

Consolidated Net Sales

In the fourth quarter 2024 we reorganized our Spine business to

align with certain updates to our internal reporting structure. The

spine enabling technologies portfolio (Enabling Technologies)

was reclassified to Other Orthopaedics, the Interventional Spine

(IVS) portfolio was reclassified to Neuro Cranial and the

remaining Spine business was renamed to Spinal Implants.

Consolidated net sales increased 11.9% in the three months

2025 as reported and 12.8% in constant currency, as foreign

currency exchange rates negatively impacted net sales by 0.9%.

Excluding the 2.7% impact of acquisitions and divestitures, net

sales in constant currency increased by 9.4% from increased unit

volume and 0.7% due to higher prices. The unit volume increase

was due to higher product shipments across all MedSurg and

Neurotechnology businesses and most Orthopaedics businesses.

MedSurg and Neurotechnology Net Sales

MedSurg and Neurotechnology net sales increased 13.4% in the

three months 2025 as reported and 14.2% in constant currency,

as foreign currency exchange rates negatively impacted net sales

by 0.8%. Excluding the 3.5% impact of acquisitions and

divestitures, net sales in constant currency increased by 9.5%

from increased unit volume and 1.2% from higher prices. The unit

volume increase was due to higher shipments across all

MedSurg and Neurotechnology businesses.

Orthopaedics Net Sales

Orthopaedics net sales increased 9.7% in the three months 2025

as reported and 10.7% in constant currency, as foreign currency

exchange rates negatively impacted net sales by 1.0%. Excluding

the 1.4% impact of acquisitions and divestitures, net sales in

constant currency increased 9.3% from increased unit volume.

The unit volume increase was due to higher shipments across

most Orthopaedics businesses.

Gross Profit

Gross profit was $3,744 and $3,333 in the three months 2025

and 2024. The key components of the change were:

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

Gross profit as a percentage of net sales in the three months

2025 remained relatively flat with 2024.

While segment mix was not a significant driver of the change in

gross profit as a percent of net sales between the three months

2025 and 2024, we generally expect segment mix to have an

unfavorable impact for the foreseeable future as we anticipate

more rapid sales growth in our lower gross margin MedSurg and

Neurotechnology segment than our Orthopaedics segment.

Research, Development and Engineering Expenses

Research, development and engineering expenses increased

$37 or 10.1% in the three months 2025. Expenses as a

percentage of net sales in the three months 2025 of 6.9%

remained relatively flat with 7.0% in 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $463 or

25.2% in the three months 2025. As a percentage of net sales,

expenses increased to 39.2% from 35.0% in 2024, primarily due

to higher acquisition-related costs and continued investments to

support our growth. Expenses in the three months 2025 included

a charge of $139 for share-based awards for Inari employees that

vested upon our acquisition.

Amortization of Intangible Assets

Amortization of intangible assets was $167 and $153 in the three

months 2025 and 2024. Refer to Note 7 to our Consolidated

Financial Statements for further information.

Goodwill and other impairments

Goodwill and other impairments was $35 and $3 in the three

months 2025 and 2024. Refer to Note 11 to our Consolidated

Financial Statements for further information on impairment

charges related to assets held for sale at March 31, 2025.

Operating Income

Operating income was $837 and $972 in the three months 2025

and 2024. Operating income as a percentage of net sales in the

three months 2025 decreased to 14.3% from 18.5% in 2024.

Refer to the discussion above for the primary drivers of the

change.

MedSurg and Neurotechnology operating income as a

percentage of net sales increased to 27.6% in the three months

2025 from 27.3% in 2024. Orthopaedics operating income as a

percentage of net sales increased to 27.2% in the three months

2025 from 26.2% in 2024. The key components of the change

were:

The increase in MedSurg and Neurotechnology operating income

as a percentage of net sales for the three months was primarily

driven by lower manufacturing and supply chain costs and higher

unit volumes and prices offset by higher selling, general and

administrative expenses primarily due to the acquisition of Inari

and continued investments to support our growth.

The increase in Orthopaedics operating income as a percentage

of net sales for the three months was primarily driven by higher

unit volumes and lower manufacturing and supply chain costs

partially offset by higher selling, general and administrative

expenses.

Other Income (Expense), Net

Other income (expense), net was ($73) and ($49) in the three

months 2025 and 2024. The increase in net expense in the three

months 2025 from 2024 was primarily due to higher interest

expense in 2025 partially offset by higher interest income.

Income Taxes

Our effective tax rates were 14.4% and 14.6% in the three

months 2025 and 2024. The effective tax rates for the three

months 2025 and 2024 reflect the continued lower effective

income tax rates as a result of our European operations and

certain discrete tax items.

The Organisation for Economic Cooperation and Development

(OECD), which represents a coalition of member countries, has

put forth two proposed base erosion and profit shifting

frameworks that revise the existing profit allocation and nexus

rules (Pillar One) and ensure a minimal level of taxation (Pillar

Two). On December 12, 2022 the European Union member

states agreed to implement the Inclusive Framework’s global

corporate minimum tax rate of 15%, and various countries within

and outside the European Union have either enacted or proposed

new tax laws implementing Pillar Two in 2024. The OECD

continues to release additional guidance and we anticipate more

countries will enact similar tax laws. Some of the new tax laws

became effective in 2024 while others will be effective in 2025

and future years. These tax law changes and any additional

contemplated tax law changes could increase tax expense in

future periods.

Net Earnings

Net earnings decreased to $654 or $1.69 per diluted share in the

three months 2025 from $788 or $2.05 per diluted share in 2024.

Refer to the discussion above for the primary drivers of the

change.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

Non-GAAP Financial Measures

We supplement the reporting of our financial information

determined under accounting principles generally accepted in the

United States (GAAP) with certain non-GAAP financial measures,

including percentage sales growth in constant currency;

percentage organic sales growth; adjusted gross profit; adjusted

selling, general and administrative expenses; adjusted research,

development and engineering expenses; adjusted operating

income; adjusted other income (expense), net; adjusted income

taxes; adjusted effective income tax rate; adjusted net earnings;

and adjusted net earnings per diluted share (Diluted EPS). We

believe these non-GAAP financial measures provide meaningful

information to assist investors and shareholders in understanding

our financial results and assessing our prospects for future

performance. Management believes percentage sales growth in

constant currency and the other adjusted measures described

above are important indicators of our operations because they

exclude items that may not be indicative of or are unrelated to our

core operating results and provide a baseline for analyzing trends

in our underlying businesses. Management uses these non-

GAAP financial measures for reviewing the operating results of

reportable business segments and analyzing potential future

business trends in connection with our budget process and bases

certain management incentive compensation on these non-GAAP

financial measures. To measure percentage sales growth in

constant currency, we remove the impact of changes in foreign

currency exchange rates that affect the comparability and trend

of sales. Percentage sales growth in constant currency is

calculated by translating current and prior year results at the

same foreign currency exchange rate. To measure percentage

organic sales growth, we remove the impact of changes in

foreign currency exchange rates, acquisitions and divestitures,

which affect the comparability and trend of sales. Percentage

organic sales growth is calculated by translating current year and

prior year results at the same foreign currency exchange rates

excluding the impact of acquisitions and divestitures. To measure

earnings performance on a consistent and comparable basis, we

exclude certain items that affect the comparability of operating

results and the trend of earnings. The income tax effect of each

adjustment was determined based on the tax effect of the

jurisdiction in which the related pre-tax adjustment was recorded.

These adjustments are irregular in timing and may not be

indicative of our past and future performance. The following are

examples of the types of adjustments that may be included in a

period:

1.Acquisition and integration-related costs. Costs related to

integrating recently acquired businesses (e.g., costs

associated with the termination of sales relationships,

employee retention and workforce reductions, manufacturing

integration costs and other integration-related activities),

changes in the fair value of contingent consideration,

amortization of inventory stepped-up to fair value, specific

costs (e.g., deal costs and costs associated with legal entity

rationalization) related to the consummation of the

acquisition process and legal entity rationalization and

acquisition-related tax items.

2.Amortization of purchased intangible assets. Periodic

amortization expense related to purchased intangible assets.

3.Structural optimization and other special charges. Costs

associated with employee retention and workforce

reductions, the closure or transfer of manufacturing and

other facilities (e.g., site closure costs, contract termination

costs and redundant employee costs during the work

transfers), product line exits (primarily inventory, long-lived

asset and specifically-identified intangible asset write-offs),

certain long-lived and intangible asset write-offs and

impairments and other charges.

4.Medical device regulations. Costs specific to updating our

quality system, product labeling, asset write-offs and product

remanufacturing to comply with the new medical device

reporting regulations and other requirements of the

European Union.

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

probable loss, or the minimum of the range of probable

losses when a best estimate within a range is not known, to

resolve the Rejuvenate, LFIT V40, Wright legacy hip

products and other product recalls.

6.Regulatory and legal matters. Changes in our best estimate

of the probable loss, or the minimum of the range of

probable losses when a best estimate within a range is not

known, to resolve certain regulatory or other legal matters

and the amount of favorable awards from settlements.

7.Tax matters. Impact of accounting for certain significant and

discrete tax items.

Because non-GAAP financial measures are not standardized, it

may not be possible to compare these financial measures with

other companies' non-GAAP financial measures having the same

or similar names. These adjusted financial measures should not

be considered in isolation or as a substitute for reported sales

growth, gross profit, selling, general and administrative expenses,

research, development and engineering expenses, operating

income, other income (expense), net, income taxes, effective

income tax rate, net earnings and net earnings per diluted share,

the most directly comparable GAAP financial measures. These

non-GAAP financial measures are an additional way of viewing

aspects of our operations when viewed with our GAAP results

and the reconciliations to corresponding GAAP financial

measures at the end of the discussion of Consolidated Results of

Operations below. We strongly encourage investors and

shareholders to review our financial statements and publicly-filed

reports in their entirety and not to rely on any single financial

measure.

The weighted-average diluted shares outstanding used in the

calculation of adjusted net earnings per diluted share are the

same as those used in the calculation of reported net earnings

per diluted share for the respective period.

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:

(b) Structural optimization and other special charges represent the costs associated with:

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

STRYKER CORPORATION 2025 First Quarter Form 10-Q

(c) Goodwill and other impairments represent the costs associated with:

(d) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device

reporting regulations and other requirements of the new medical device regulations in the European Union.

(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to

resolve certain recall-related matters.

(f) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to

resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.

(g) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:

FINANCIAL CONDITION AND LIQUIDITY

Operating Activities

Cash provided by operating activities was $250 and $204 in the

three months 2025 and 2024. The increase was primarily due to

higher net earnings partially offset by the timing of payments and

collections in working capital accounts.

Investing Activities

Cash used in investing activities was $4,136 and $408 in the

three months 2025 and 2024. The three months 2025 included

cash paid to acquire Inari and purchases of property, plant and

equipment partially offset by proceeds from the sale of short-term

investments. The three months 2024 included cash paid for the

Serf acquisition. Refer to Note 7 to our Consolidated Financial

Statements for further information on acquisitions.

Financing Activities

Cash provided by financing activities was $2,534 in the three

months 2025 and cash used in financing activities was $418 in

the three months 2024. In 2025, cash provided was primarily

driven by proceeds from the issuance of various senior

unsecured notes as described in Note 8 to our Consolidated

Financial Statements. This was partially offset by dividend

payments and cash paid for taxes on withheld shares. Cash used

in 2024 was primarily driven by dividend payments and cash paid

for taxes on withheld shares. We did not repurchase any shares

in the three months 2025 and 2024.

Liquidity

Cash, cash equivalents, short-term investments and marketable

securities were $2,409 and $4,493 on March 31, 2025 and

December 31, 2024. Current assets exceeded current liabilities

by $5,093 and $7,231 on March 31, 2025 and December 31,

2024. We anticipate being able to support our short-term liquidity

and operating needs from a variety of sources including cash

from operations, commercial paper and existing credit lines.

We have raised funds in the capital markets and have accessed

the credit markets in the past and may continue to do so from

time-to-time. We continue to have strong investment-grade short-

term and long-term debt ratings that we believe should enable us

to refinance our debt as needed.

Our cash, cash equivalents, short-term investments and

marketable securities held in locations outside the United States

was 29% on March 31, 2025 compared to 20% on December 31,

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no changes to our critical accounting policies and

estimates from those disclosed in our Annual Report on Form 10-

K for 2024, except as follows.

Refer to Note 11 to our Consolidated Financial Statements for

discussion of estimates related to the Spinal Implants assets

classified as held for sale as of March 31, 2025.

New Accounting Pronouncements Not Yet Adopted

Refer to Note 1 to our Consolidated Financial Statements for

information.

Guarantees and Other Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing

arrangements, including variable interest entities, of a magnitude

that we believe could have a material impact on our financial

condition or liquidity.

OTHER MATTERS

Legal and Regulatory Matters

We are involved in various ongoing proceedings, legal actions

and claims arising in the normal course of our business, including

proceedings related to product, labor, intellectual property and

other matters. Refer to Note 6 to our Consolidated Financial

Statements for further information.

STRYKER CORPORATION 2025 First Quarter Form 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We consider our greatest potential area of market risk exposure

to be exchange rate risk on our operating results. Quantitative

and qualitative disclosures about exchange rate risk are included

in Item 7A "Quantitative and Qualitative Disclosures About Market

Risk" of our Annual Report on Form 10-K for 2024. There were

no material changes from the information provided therein.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive

Officer and Chief Financial Officer (the Certifying Officers),

evaluated the effectiveness of the Company's disclosure controls

and procedures (as defined in Rules 13a-15(e) or 15d-15(e)

promulgated under the Securities Exchange Act of 1934, as

amended) on March 31, 2025. Based on that evaluation, the

Certifying Officers concluded the Company's disclosure controls

and procedures were effective as of March 31, 2025.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial

reporting during the three months 2025 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 2024.

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

We issued 9,324 shares of our common stock In the three

months 2025 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 months 2025 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, 2025.

ITEM 5. OTHER INFORMATION

Certain of our officers or directors have made elections to

participate in, and are participating in, our employee stock

purchase plan and 401(k) plan and have made, and may from

time to time make, elections to have shares withheld to cover

withholding taxes due or pay the exercise price of stock options,

restricted stock units and performance stock units, which may

constitute non-Rule 10b5–1 trading arrangements (as defined in

Item 408(c) of Regulation S-K).

ITEM 6. EXHIBITS

| | |

2(i) Agreement and Plan of Merger, dated as of January 6, 2025, by and between Stryker Corporation and Inari Medical, Inc. – Incorporated by reference to Exhibit 2.1 the Company’s Form 8-K dated January 7, 2025 (Commission File No. 001-13149) 4(i) Thirty-Second Supplemental Indenture (including the form of the note), dated as of February 10, 2025, between Stryker Corporation and U.S. Bank Trust Company, National Association, as trustee – Incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K dated February 10, 2025 (Commission File No.001-13149) 4(ii) Thirty-Third Supplemental Indenture (including the form of the note), dated as of February 10, 2025, between Stryker Corporation and U.S. Bank Trust Company, National Association, as trustee – Incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K dated February 10, 2025 (Commission File No.001-13149) 4(iii) Thirty-Fourth Supplemental Indenture (including the form of the note), dated as of February 10, 2025, between Stryker Corporation and U.S. Bank Trust Company, National Association, as trustee – Incorporated by reference to Exhibit 4.4 to the Company’s Form 8-K dated February 10, 2025 (Commission File No.001-13149) 4(iv) Thirty-Fifth Supplemental Indenture (including the form of the note), dated as of February 10, 2025, between Stryker Corporation and U.S. Bank Trust Company, National Association, as trustee – Incorporated by reference to Exhibit 4.5 to the Company’s Form 8-K dated February 10, 2025 (Commission File No.001-13149)

19

STRYKER CORPORATION 2025 First Quarter Form 10-Q

| | |

10(i) Credit Agreement, dated as of February 25, 2025, among Stryker Corporation, certain of its subsidiaries as designated borrowers, the various lenders and issuing banks 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 February 27, 2025 (Commission File No. 001-13149) 10(ii) Transition Agreement, dated January 24, 2025, between Stryker Corporation and Glenn S. Boehnlein – Incorporated by reference to Exhibit 10(xxxi) to the Company’s Form 10-K for the year ended December 31, 2024 (Commission File No. 001-13149) 10(iii) Letter Agreement, dated January 27, 2025, between Stryker Corporation and Preston Wells – Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K dated January 28, 2025 (Commission File No. 001-13149) 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)

| | † Filed with this Form 10-Q | | | †† Furnished with this Form 10-Q |

20

STRYKER CORPORATION 2025 First Quarter Form 10-Q