Stryker SYK Form 10-Q filing

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 2026 Second 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 2026 Second 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 2026 Second 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 2026 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

General Information

Management believes the accompanying unaudited Consolidated

Financial Statements contain all adjustments, including normal

recurring items, considered necessary to fairly present the

financial position of Stryker Corporation and its consolidated

subsidiaries ("Stryker," the "Company," "we," "us" or "our") on

June 30, 2026 and the results of operations for the three and six

months 2026. 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 2025.

In the first quarter 2026 we announced a change in our

organizational structure. Our new Ortho Tech business combines

the orthopaedic instruments portfolio from our Instruments

business with the Mako and enabling technologies portfolio from

our Other Orthopaedics business. By bringing Mako, power tools,

cutting accessories, enabling technologies and the teams behind

these products together under one business, we are simplifying

the customer experience and striving to increase our speed to

market through focused innovation.

Following this reorganization we continue to have two business

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

Orthopaedics, each of which comprise a reportable segment. All

historical segment financial information has been recast to

conform to this new reporting structure in our financial statements

and accompanying notes.

New Accounting Pronouncements Not Yet Adopted

In September 2025 the Financial Accounting Standards Board

(FASB) issued Accounting Standards Update (ASU) 2025-07

(Topics 815 and 606): Derivatives and Hedging: Derivatives

Scope Refinements and Revenue from Contracts with

Customers: Scope Clarification for Share-Based Noncash

Consideration from a Customer in a Revenue Contract. This

update expands the scope exception in Topic 815 to certain non-

exchange-traded contracts for which settlement is based on

operations or activities specific to one of the parties to the

contract. The update is effective for fiscal years beginning after

December 15, 2026 including interim periods within those fiscal

years. Early adoption is permitted. We are evaluating if the ASU

will have an impact on our Consolidated Financial Statements.

In September 2025 the FASB issued ASU 2025-06 (Subtopic

350-40): Intangibles - Goodwill and Other - Internal-Use

Software: Targeted Improvements to the Accounting for Internal-

Use Software. This update clarifies and modernizes the

accounting for costs related to internal-use software by removing

all references to project stages and clarifying that the probable-

to-complete threshold is not met if significant development

uncertainty exists. The update is effective for fiscal years

beginning after December 15, 2027 including interim periods

within those fiscal years. Early adoption is permitted. We are

evaluating if the ASU will have an impact on our Consolidated

Financial Statements.

In November 2024 the FASB issued 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 evaluating these new

expanded disclosure requirements.

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.

Accounting Pronouncements Recently Adopted

On January 1, 2026 we adopted ASU 2025-05 (Topic 326):

Financial Instruments - Credit Losses: Measurement of Credit

Losses for Accounts Receivable and Contract Assets. This

update provides a practical expedient allowing entities to assume

that current conditions as of the balance sheet date will remain

unchanged for the remaining life of the asset when estimating

expected credit losses for current accounts receivable and

current contract assets arising from transactions accounting for

under Accounting Standards Codification 606, Revenue from

Contracts with Customers. The adoption of this update did not

have a material impact on our Consolidated Financial

Statements.

NOTE 2 - REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those

described in our Annual Report on Form 10-K for 2025.

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 2026 we announced a change in our

organizational structure. Our new Ortho Tech business combines

the orthopaedic instruments portfolio (Orthopaedic Instruments)

from Instruments with Other Orthopaedics. In addition, Neuro

Cranial and the spine enabling technologies portfolio (Enabling

Technologies) from Other Orthopaedics were combined with the

remaining Instruments business to align with our internal

reporting structure. Ortho Tech includes sales related to

Orthopaedic Instruments of $523 and $501 and Other

Orthopaedics of $194 and $148 for the three months 2026 and

2025. For the six months 2026 and 2025 Ortho Tech includes

sales related to Orthopaedic Instruments of $1,012 and $985 and

Other Orthopaedics of $351 and $281. Instruments includes

sales related to Neuro Cranial of $681 and $616 and Enabling

Technologies of $28 and $34 for the three months 2026 and

2025. For the six months 2026 and 2025 Instruments includes

sales related to Neuro Cranial of $1,287 and $1,179 and

Enabling Technologies of $54 and $63. 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 2026 Second 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 June 30, 2026 and December 31, 2025 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 June 30, 2026 and December 31, 2025 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 $997 and $1,024 on June 30,

2026 and December 31, 2025 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 six months 2026 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 and six months

2026 and 2025.

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS)

INCOME (AOCI)

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

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 2025.

We had €2.3 billion at June 30, 2026 and December 31, 2025 in

certain forward currency contracts designated as net investment

hedges, for which the maximum term is 8.2 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 June 30, 2026 and December 31, 2025 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 $180 in the six months

Currency Exchange Rate Gains (Losses) Recognized in Net

Earnings

Pretax gains (losses) on derivatives designated as cash flow

hedges of $8 and net investment hedges of $30 recorded in

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

income in earnings within 12 months of June 30, 2026. 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 of $6 recorded in AOCI related to interest rate

hedges closed in conjunction with debt issuances are expected to

be reclassified to interest expense in earnings within 12 months

of June 30, 2026. 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 2025.

In the six months 2026 we recorded $271 of contingent

consideration related to the acquisition of Amplitude Vascular

Systems, Inc. (AVS) described in Note 7.

In 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.

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

fair value hierarchy in 2026.

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

On June 30, 2026 and December 31, 2025 the aggregate

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

marketable securities was nominal. Interest income on cash and

cash equivalents, short-term investments and income from

marketable securities was $26 and $24 in the three months 2026

and 2025, and $60 and $62 in the six months 2026 and 2025,

which was recorded in other income.

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, tax, intellectual property

and other matters. 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.

Other Contractual Obligations and Commitments

Our outstanding balances of confirmed invoices in the supplier

financing program were $78 and $75 at June 30, 2026 and

December 31, 2025 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 six months 2026 and 2025 cash paid for

acquisitions, net of cash acquired was $459 and $4,814.

In May 2026 we completed the acquisition of AVS for net cash

consideration of $435 and up to $400 in future milestone

payments that had a fair value of $271 at the acquisition date.

AVS is developing a next-generation intravascular lithotripsy

platform designed to treat complex peripheral arterial disease.

AVS is part of our Peripheral Vascular business within MedSurg

and Neurotechnology. Acquired in-process research and

development intangible assets represent projects where the

related product has not yet received regulatory approval. The

purchase price allocation for AVS is based on preliminary

valuations, primarily related to in-process research and

development. Goodwill attributable to the acquisition reflects the

strategic benefits of expanding our peripheral vascular portfolio.

This goodwill is not deductible for tax purposes.

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

per share, or an aggregate purchase price of $4,810, net of cash

acquired. Inari's product portfolio includes minimally invasive

products for the treatment of venous thromboembolism. Inari is

part of our Peripheral Vascular business within MedSurg and

Neurotechnology. 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 six months 2025.

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

The purchase price allocations for AVS and Inari are:

Consolidated estimated annual amortization expense for definite-

lived intangible assets is:

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

June 30, 2026.

On June 30, 2026 we had $250 outstanding under our

commercial paper programs 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 $3,000.

In March 2026 we repaid $1,000 of 3.500% senior unsecured

notes. The following table summarizes our total debt at June 30:

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.

Interest expense on outstanding debt and credit facilities,

including required fees incurred totaled $136 and $159 for the

three months 2026 and 2025 and $278 and $296 for the six

months 2026 and 2025.

NOTE 9 - INCOME TAXES

Our effective tax rates were 18.4% and 16.3% in the three and

six months 2026 and 13.0% and 13.6% in the three and six

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

2026 increased from the three and six months 2025 due to the

2025 tax benefit related to the sale of the Spinal Implants

business. The effective tax rates for the three and six months

2026 and 2025 reflect the continued lower effective income tax

rates as a result of our European operations and certain discrete

tax items.

Income tax authorities in various jurisdictions globally conduct

routine audits of our income tax returns to determine if they agree

with our interpretations of income tax regulations. Any audit

assessment, draft audit assessment or final audit report received

is reviewed for new information and evaluated for proper financial

statement treatment.

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

STRYKER CORPORATION 2026 Second 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 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.

Information about total assets by segment is not disclosed

because such information is not regularly provided to, or used by,

our CODM.

NOTE 11 - GOODWILL AND OTHER INTANGIBLE ASSETS

In the first quarter 2026 we changed our organizational structure

as further described in Note 1.

Following this reorganization we continue to have two reportable

segments, MedSurg and Neurotechnology and Orthopaedics.

The reorganization impacts the composition of the Instruments

and Joint Replacement reporting units and results in a new

reporting unit representing the Ortho Tech business.

In connection with this reorganization we reallocated the goodwill

associated with the impacted businesses using the relative fair

value approach, resulting in a reallocation of $518 of goodwill

from the MedSurg and Neurotechnology segment to the

Orthopaedics segment.

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

Item 1A. "Risk Factors" of our Annual Report on Form 10-K for

2025. 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 2025. While we believe that the assumptions

underlying such forward-looking statements are reasonable,

there can be no assurance that future events or developments

will not cause such statements to be inaccurate. All forward-

looking statements contained in this report are qualified in their

entirety by this cautionary statement. We expressly disclaim any

intention or obligation to publicly update or revise any forward-

looking statement to reflect any change in our expectations or in

events, conditions or circumstances on which those expectations

may be based, or that affect the likelihood that actual results will

differ from those contained in the forward-looking statements.

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

ABOUT STRYKER

Stryker Corporation ("we" or the "Company") 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. Our goal is to achieve sales growth at the high-

end of the medical technology (MedTech) industry and maintain

our long-term capital allocation strategy that prioritizes: (1)

Acquisitions, (2) Dividends and (3) Share repurchases.

MedSurg and Neurotechnology products include surgical

equipment, patient and caregiver safety technologies, and 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 (Instruments), endoscopic and communications

systems (Endoscopy), patient handling, emergency medical

equipment, intensive care disposable products, clinical

communication and artificial intelligence-assisted virtual care

platform technology (Medical), and minimally invasive products

for the treatment of acute ischemic and hemorrhagic stroke and

venous thromboembolism (Vascular). Orthopaedics products

include implants and surgical equipment such as navigation

systems and robotics used in total joint replacements, such as

hip, knee and shoulder, ankle and trauma and extremities

surgeries. We bring patients and physicians advanced implant

designs and specialized instrumentation that make orthopaedic

surgery and recovery simpler, faster and more effective. We

support surgeons with technologies, products and services they

need to support each patient’s clinical challenge.

Overview of the Three and Six Months

In the three months 2026 we achieved sales growth of 9.4% from

2025. Excluding the impact of acquisitions and divestitures, sales

grew 9.0% in constant currency. We reported operating income

margin of 25.2%, net earnings of $1,276 and net earnings per

diluted share of $3.30. Excluding the impact of certain items,

adjusted operating income margin(1) increased by 170 basis

points to 27.4%, with adjusted net earnings(1) of $1,424 and

adjusted net earnings per diluted share(1) of $3.69, an increase of

17.9% from 2025.

In the six months 2026 we achieved sales growth of 6.1% from

2025. Excluding the impact of acquisitions and divestitures, sales

grew 5.8% in constant currency. We reported operating income

margin of 20.6%, net earnings of $2,021 and net earnings per

diluted share of $5.23. Excluding the impact of certain items,

adjusted operating income margin(1) increased by 10 basis points

to 24.4%, with adjusted net earnings(1) of $2,428 and adjusted

net earnings per diluted share(1) of $6.29, an increase of 5.4%

from 2025.

(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. 12

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

Note: In the first quarter 2026 we announced a change in our organizational structure. Our new Ortho Tech business combines the

orthopaedic instruments portfolio (Orthopaedic Instruments) from Instruments with Other Orthopaedics. In addition, Neuro Cranial and

the spine enabling technologies portfolio (Enabling Technologies) from Other Orthopaedics were combined with the remaining

Instruments business to align with our internal reporting structure. Ortho Tech includes sales related to Orthopaedic Instruments of $523

and $501 and Other Orthopaedics of $194 and $148 for the three months 2026 and 2025. For the six months 2026 and 2025 Ortho

Tech includes sales related to Orthopaedic Instruments of $1,012 and $985 and Other Orthopaedics of $351 and $281. Instruments

includes sales related to Neuro Cranial of $681 and $616 and Enabling Technologies of $28 and $34 for the three months 2026 and

2025. For the six months 2026 and 2025 Instruments includes sales related to Neuro Cranial of $1,287 and $1,179 and Enabling

Technologies of $54 and $63. We have reflected these changes in all historical periods presented.

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

Consolidated Net Sales

Consolidated net sales increased 9.4% in the three months 2026

as reported and 9.0% in constant currency, as foreign currency

exchange rates positively impacted net sales by 0.4%. Net sales

in constant currency increased by 9.0% from increased unit

volume. The unit volume increase was due to higher product

shipments across most MedSurg and Neurotechnology

businesses and all Orthopaedics businesses.

Consolidated net sales increased 6.1% in the six months 2026 as

reported and 5.0% in constant currency as foreign currency

exchange rates positively impacted net sales by 1.1%. Excluding

the (0.8)% impact of acquisitions and divestitures, net sales in

constant currency increased by 5.6% from increased unit volume

and 0.2% due to higher prices. The unit volume increase was due

to higher product shipments across all MedSurg and

Neurotechnology businesses and all Orthopaedics businesses.

MedSurg and Neurotechnology Net Sales

MedSurg and Neurotechnology net sales increased 9.7% in the

three months 2026 as reported and 9.2% in constant currency, as

foreign currency exchange rates positively impacted net sales by

0.5%. Net sales in constant currency increased by 9.1% from

increased unit volume and 0.1% from higher prices. The unit

volume increase was due to higher shipments across most

Medsurg and Neurotechnology businesses.

MedSurg and Neurotechnology net sales increased 7.4% in the

six months 2026 as reported and 6.5% in constant currency, as

foreign currency exchange rates positively impacted net sales by

0.9%. Excluding the 1.3% impact of acquisitions and divestitures,

net sales in constant currency increased by 4.9% from increased

unit volume and 0.3% 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 9.1% in the three months 2026

as reported and 8.7% in constant currency, as foreign currency

exchange rates positively impacted net sales by 0.4%. Excluding

the 0.1% impact of acquisitions and divestitures, net sales in

constant currency increased 8.6% from increased unit volume.

The unit volume increase was due to higher shipments across all

Orthopaedics businesses.

Orthopaedics net sales increased 4.5% in the six months 2026 as

reported and 3.3% in constant currency, as foreign currency

exchange rates positively impacted net sales by 1.2%. Excluding

the (3.1)% impact of acquisitions and divestitures, net sales in

constant currency increased 6.4% from increased unit volume.

The unit volume increase was due to higher shipments across all

Orthopaedics businesses.

Gross Profit

Gross profit was $4,498 and $3,841 in the three months 2026

and 2025. The key components of the change were:

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

2026 increased to 68.3% from 63.8% in 2025 primarily driven by

a reduction of certain import tariffs and lower amortization of

inventory stepped up to fair value.

Gross profit was $8,308 and $7,585 in the six months 2026 and

2025. The key components of the change were:

Gross profit as a percentage of net sales in the six months 2026

increased to 65.9% from 63.8% in 2025 driven by a reduction of

certain import tariffs and lower amortization of inventory stepped

up to fair value partially offset by higher manufacturing and

supply chain costs primarily due to idle production time related to

the cybersecurity incident in the first quarter 2026.

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

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

2026 and 2025, 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

$27 or 6.6% in the three months 2026 and $35 or 4.3% in the six

months 2026. Expenses as a percentage of net sales of 6.6% in

the three months and 6.7% in the six months 2026 remained

relatively flat with 6.8% in the three and six months 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $150 or

7.2% in the three months 2026. As a percentage of net sales,

expenses decreased to 33.8% from 34.5% in 2025, primarily due

to continued spend discipline and lower acquisition and

integration-related charges partially offset by higher structural

optimization and other special charges.

Selling, general and administrative expenses increased $131 or

3.0% in the six months 2026. As a percentage of net sales,

expenses decreased to 35.8% from 36.8% in 2025, primarily due

to lower acquisition-related costs and continued spend discipline

partially offset by higher structural optimization and other special

charges. Expenses in the six 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 $175 and $187 in the three

months and $355 and $354 in the six months 2026 and 2025.

Refer to Note 7 to our Consolidated Financial Statements for

further information.

Goodwill and Other Impairments

Goodwill and other impairments was $1 and $55 in the three

months and $1 and $90 in the six months 2026 and 2025.

Operating Income

Operating income was $1,659 and $1,113 in the three months

2026 and 2025. Operating income as a percentage of net sales in

the three months 2026 increased to 25.2% from 18.5% in 2025.

Refer to the discussion above for the primary drivers of the

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

change.

Operating income was $2,595 and $1,950 in the six months 2026

and 2025. Operating income as a percentage of net sales in the

six months 2026 increased to 20.6% from 16.4% in 2025. 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 28.1% in the three months

2026 from 25.6% in 2025. Orthopaedics operating income as a

percentage of net sales increased to 34.0% in the three months

2026 from 33.1% in 2025. 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 selling, general and administrative expenses,

lower manufacturing and supply chain costs and higher unit

volumes, partially offset by higher research, development and

engineering expenses.

The increase in Orthopaedics operating income as a percentage

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

unit volumes, lower research, development and engineering

expenses and lower selling, general and administrative

expenses, partially offset by higher manufacturing and supply

chain costs.

MedSurg and Neurotechnology operating income as a

percentage of net sales of 25.2% in the six months 2026

remained flat with 2025. Orthopaedics operating income as a

percentage of net sales increased to 32.1% in the six months

2026 from 31.7% in 2025. The key components of the change

were:

MedSurg and Neurotechnology operating income as a

percentage of net sales for the six months remained flat and was

primarily driven by lower selling, general and administrative

expenses and higher unit volumes and prices, offset by higher

manufacturing and supply chain costs and research,

development and engineering expenses.

The increase in Orthopaedics operating income as a percentage

of net sales for the six months was primarily driven by lower

selling, general and administrative expenses, lower research,

development and engineering expenses and higher unit volumes,

partially offset by higher manufacturing and supply chain costs.

Interest Expense

Interest expense was $141 and $159 in the three months and

$289 and $296 in the six months 2026 and 2025. The decrease

in interest expense in the three months and six months 2026 from

2025 was due to lower outstanding debt and credit facilities

partially offset by higher average interest rates.

Other Income

Other income was $46 and $62 in the three months and $108

and $126 in the six months 2026 and 2025. The decrease in

other income in the three and six months 2026 from 2025 was

primarily due to lower interest income in 2026.

Income Taxes

Our effective tax rates were 18.4% and 16.3% in the three and

six months 2026 and 13.0% and 13.6% in the three and six

months 2025. The effective tax rate for the three and six months

2026 increased from the three and six months 2025 due to the

2025 tax benefit related to the sale of the Spinal Implants

business. The effective tax rates for the three and six months

2026 and 2025 reflect the continued lower effective income tax

rates as a result of our European operations and certain discrete

tax items.

Our future results of operations could be affected by changes in

the effective tax rate as a result of changes in tax laws,

regulations and judicial rulings. We are continuing to evaluate the

impact of tax reform in the countries in which we operate as new

guidance is published and new regulations are adopted.

Net Earnings

Net earnings increased to $1,276 or $3.30 per diluted share in

the three months 2026 from $884 or $2.29 per diluted share in

2025. Net earnings increased to $2,021 or $5.23 per diluted

share in six months 2026 from $1,538 or $3.98 per diluted share

in 2025. Refer to the discussion above for the primary drivers of

the change.

Non-GAAP Financial Measures

We supplement the reporting of our financial information

determined under accounting principles generally accepted in the

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

including percentage sales growth in constant currency;

percentage organic sales growth; adjusted gross profit; adjusted

selling, general and administrative expenses; adjusted research,

development and engineering expenses; adjusted operating

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

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

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

believe these non-GAAP financial measures provide meaningful

information to assist investors and shareholders in understanding

our financial results and assessing our prospects for future

performance. Management believes percentage sales growth in

constant currency and the other adjusted measures described

above are important indicators of our operations because they

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

core operating results and provide a baseline for analyzing trends

in our underlying businesses. Management uses these non-

GAAP financial measures for reviewing the operating results of

reportable business segments and analyzing potential future

business trends in connection with our budget process and bases

certain management incentive compensation on these non-GAAP

financial measures. To measure percentage sales growth in

constant currency, we remove the impact of changes in foreign

currency exchange rates that affect the comparability and trend

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

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

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 2026 Second Quarter Form 10-Q

nm - not meaningful

(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:

(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:

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

STRYKER CORPORATION 2026 Second 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. 18

STRYKER CORPORATION 2026 Second 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 $1,842 and $1,361 in

the six months 2026 and 2025. The increase was primarily due to

changes in working capital accounts.

Investing Activities

Cash used in investing activities was $824 and $4,240 in the six

months 2026 and 2025. The six months 2026 included cash paid

for purchases of property, plant and equipment. The six 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. Refer to Note 7 to our

Consolidated Financial Statements for further information on

acquisitions.

Financing Activities

Cash used in financing activities was $1,605 in the six months

2026 and cash provided by financing activities was $1,545 in the

six months 2025. In 2026, cash used was primarily driven by

repayments of $1,000 to pay off maturing unsecured notes as

described in Note 8 to our Consolidated Financial Statements

and dividend payments. Cash provided by financing activities in

2025 was primarily driven by proceeds from the issuance of

various senior unsecured notes which was partially offset by

dividend payments.

Liquidity

Cash, cash equivalents, short-term investments and marketable

securities were $3,476 and $4,100 on June 30, 2026 and

December 31, 2025. Current assets exceeded current liabilities

by $7,734 and $6,961 on June 30, 2026 and December 31, 2025.

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 51% on June 30, 2026 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 2025, except as follows:

Refer to Note 11 for discussion on the impact of changes to our

organizational structure in the first quarter 2026 on our reportable

segments and the related goodwill.

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, tax, intellectual property

and other matters. Refer to Note 6 to our Consolidated Financial

Statements for further information.

STRYKER CORPORATION 2026 Second 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 2025. 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 June 30, 2026. Based on that evaluation, the

Certifying Officers concluded the Company's disclosure controls

and procedures were effective as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial

reporting during the six months 2026 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 2025 and Part II, Item 1A. "Risk Factors" in our Quarterly

Report on Form 10-Q for the quarter ended March 31, 2026.

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

We issued 1,929 shares of our common stock in the three

months 2026 as performance incentive awards to employees.

These shares are not registered under the Securities Act of 1933

based on the conclusion that the awards would not be events of

sale within the meaning of Section 2(a)(3) of the Act.

In March 2015 we announced that our Board of Directors had

authorized us to purchase up to $2,000 of our common stock.

The manner, timing and amount of repurchases are determined

by management based on an evaluation of market conditions,

stock price, and other factors and are subject to regulatory

considerations. Purchases are made from time-to-time in the

open market, in privately negotiated transactions or otherwise.

In the six months 2026 we did not repurchase any shares of our

common stock under our authorized repurchase program. The

total dollar value of shares of our common stock that could be

acquired under our authorized repurchase program was $1,033

as of June 30, 2026.

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).

20

STRYKER CORPORATION 2026 Second Quarter Form 10-Q

ITEM 6. EXHIBITS

| | |

10(i)* Transition Agreement, dated May 15, 2026, between Stryker Corporation and William E. Berry, Jr. – Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated May 20, 2026 (Commission File No. 001-13149). 10(ii)* Letter Agreement, dated May 15, 2026, between Stryker Corporation and Emily Baculik – Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K dated May 20, 2026 (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) | | * Compensation arrangement |

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

21

STRYKER CORPORATION 2026 Second Quarter Form 10-Q